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Walk me through your attraction to the delaware story. When did that began in how, when I was a, an annual reports seem to lead to delaware, elon musk. those under the microscope in delaware, twitter is sent to depose. They tesla ceo in wilmington. Ninety five percent of the corporations that incorporate incorporated Oh, I don't really do any significant business here at a dense and bring brought against victor view for weapons trafficking. in hot spots around the world that span afghanistan, colombia, rwanda, congo, out of Buddhist I delaware is important, but not really

why nobody else seem to be asking that question. The truth is most people don't ask any questions about delaware or even think about delaware. It is the second smallest. U S, state by area the six smallest by population. he calls itself the first state since it was the first of the original thirteen to ratify the constitution. What else, Is it known for the delaware beaches are absolutely spectacular. have the grand opera house we have the dupont. Theatre delawares a little hidden jen from that perspective, della is also a gem. If you are looking to hide something yourself, the horses as enabled tax, dodging money laundering? The flow of dot money to the? U s political system and the tree if of people, drugs and arms delaware,

established its own rules for how corporations, incorporate you can set up a delaware company mostly on the internet, without giving any verified information for how legislators legislate you an elected make you have no right to make laws only the unelected lawyers have the right to make laws and even for how lawyers lawyer also known as a bar that operates in what I call the Delaware way. We're in happy position where most lawyers in the country speak delaware. Today, on, for example, radio How did one tiny state come to have so much leverage and does anyone care enough to fix it and I think the this is free

mix radio, the podcast but explores the hidden side of everything with your host stephen No Hell weitzman, recently published a book called. What's the matter with delaware, how the first state has favoured the rich powerful in criminal and how it costs us all weights, and also has a day job at the university of chicago on the editor in chief If Chicago booth review, where we take academic, research and try to make it intelligible to a non academic audience. I also teach business communication before that. You worked for financial times as an editor in london and as a foreign correspondent. During that time, he came to notice just how many companies, large and small, are incorporated in delaware, facebook, twitter view.

master card for rise in tesla, chrysler, we're all touch by where all the time, delaware is everywhere. Delaware in fact, has more companies, then people? If you look at the fortune, five hundred, roughly two thirds of those companies are legally registered in delaware, but only one of those companies duped is physically based there. So why is delaware such an attractive, legal home wasn't about that question. Is that when you ask people who know why the company's incorporate in delaware, they typically have one response and their very sure about the real reason. So, if you ask me they'll say, is the chance record because they have this I shall call the handles business cases if you ask a tax fan is campaign mit, all demo as a tax haven? That's why and some people say because it so easy to set up companies as well

stephen, you and I could set up a com in delaware before the end of recording this podcast. I actually set one up. While you were starting to talk a couple seconds ago, as you say, He could do it while recording the podcast, because we don't need to go there. We don't need to show any identification. We don't need to do anything at them, pay the fees and if we pay the right fees, we can get it done. in as little as half an hour. In fact, since writing this book, I've been informed that if you call the right person, you can get it done in about ten minutes. Did I engineer, rope until midnight to process locations what office? You know government office this these open till midnight just so they can be as business friendly as possible, keep going. Are there other players who might give different answers? Yeah there are corporate secrecy campaign will say it's because they,

cooper anonymity. They have this, don't ask, don't tell policy where you can set up a company, you don t say who's behind it and then there's a whole load of sort of other way his people who don t know why their incorporating in delaware, they just told lawyers seldom that's the place to go all the people who are funding them, tell them. Well, if you won't funding from us we're venture cap, so firm. You gotta set up in delaware. We only fun delaware companies, and so you can these single answers and all of these single on is a valid. There is no single simple. Is there a one point? Eight million companies registered in delaware and they range from google amazon tesla too. Joe schmo LLC, so that motion patients are not going to be the same. If so all this together stephen. I would say that if there's one over

arching theme of what makes delaware so attractive. It's probably efficiency nothing against efficiency. But what is the cost efficiency about the only should I ask the weitzman argues there are a lot of costs to delawares way of doing business, That's what I call the franchise is kind of legal industrial complex. For starters, let's consider what delawares tax policy is costing other states. If you look at stake corporate income tax receipts over the past fifty years, they ve completely collapsed, partly because Companies have used attacks dodge called the delaware loophole where they funneled profits through debt. holding companies to avoid paying tax in other states an delaware, doesn't charge tax on so called tangible profit, so things trademarks and slogans, and firms

been creative in deciding what falls into that intangible profit category, oh yeah, so one of my favorite examples of the so called delaware loophole is world com? You remember the telecoms company, paid. Its holding company in delaware twins, a billion dollars over just three is for an intangible assets level, avoiding tax elsewhere not paying in dover cause they don't tax, intangibles worldcom, you may recall turned out to be one big heap of accounting fraud. In the Early two thousands, the company blew up and at ceo, went to prison, in the intangible ass. It was painful, was management foresight, in other words, saying that the profits it was making war because it management had superior skill to all other executives, and therefore that was an intangible assets.

You come up a twenty billion dollars to shuffle off to delaware. It does suggest superior skill of once or you will get accountants. That's what it suggests to be fair. The accountants have a to work with in delaware. Let's go back to the ease of setting up a company there, it's easier. set up a company in delaware than to get a library card indelible. if you want to get a library card, you need to turn up person, you need to show a valid idea, but you can set up a delaware company remotely on the internet without giving any verified inflammation, and he is Dan Nielsen. He is a professor of government at the university of texas austin who studies, corruption, I was breaking the law by not demanding photo id in delaware, because the delaware law does not require it. So you know that's the problem, and why is that a problem? Because anonymity makes it a lot easier to hide illegal

activity. John Cassandra is recently retired agent, an investigator with the? U S, treasury department who spent years cheap in money launderers? There's lots of different death missions of money laundering, but the one I use is very simple: it's really hiding artists. I seen the proceeds of any form of criminal activity and drug trafficking, but it's also human trafficking. It's also arms trafficking. It could be the proceeds of child pornography. The way casares sees it kind of anonymity offered by delaware makes money laundering pretty easy to be a money launderer and to be caught now care, whether it's the united states or overseas, you would have to be really really stupid or real really unlucky now there are, of course, a lot of stupid criminal and there are some unlucky ones and we get them, but your odds of getting caught are slim and none. I've spent

lot of my time overseas. Doing training talking about the importance of crew came down on money laundering- and I would invariably have a student or a colleague, come up to me and say yeah, Mister John. I hear you but work acting a money laundering investigation in my country, and it goes to your country. It goes to the state of delaware. We can't giddy, information about this company. Can you help us? There was nothing I could do, and I was just embarrassed just embarrassed now to be fair. Cassandra is talking about the big and mostly law, abiding corporations that register in delaware for the legal and tax advantages, he is primarily talking about l, l seas, limited liability companies in Twenty one alone, a quarter. of a million new elsie's registered in delaware. Many of these are perfectly legitimate.

Operations that are simply exploiting the delaware advantages, but del? where is also known for anonymous elsie's, some of which are shell companies, What's a shell company? It's a company you without an active business organization or significant assets tyrker hollow, and that's what frustrates, investigators. So often because- following the money. Trail often comes back to the: u s, lower Elwell seas and the problem is there's nothing! There. We don't know whose sleep behind the company. Let's have an example. I think a lot of people are familiar with victor boot, or at least the name victor boot boot is a russian arms dealers

Who until recently was in? U s federal prison, the bided ministration exchange victor boot? They released him in exchange. For u S, basketball start. Brittany, greener boot is known as the urgent of death, basically supplied. You know long running civil wars in places like sierra leone and goal in the central african republic in sudan, libya, on and on and on and on now to set up his network. Victor boo, and his organization needed to set a number of shell companies to mask their work and to wander the money to wander the proceeds of crime? So I've seen some reports that in his organization, established up to ten shell companies

in delaware alone. Here's the thing the: u s prides itself on the legitimacy of its financial the legitimacy of this sort typically includes a high level of transparency. Yes, we do have financial frauds and opaque investments and bank failures, but We also have a ton of regulations, reporting and compliance disclosure regulations designed to boost transparency. So how does the U s compared to other countries when it comes to transparency. Well, that is an empirical quest and for the answer we need to go back to Daniel Nielsen at the university of texas. I research international development, broadly with a focus on the control of corruption which brought me to this topic: of anti money laundering, the world's foremost anti money laundering organization is called the financial action task force it

as thirty nine members, including the? U s its mission, is to set international. Standards to ensure national authorities can effectively go after illicit funds. Linked two serious crimes. These are there financial action task force, recommendations, they're, not laws, Therefore, we call on international relations soft law, so there's no enforcement mechanism right like there's some global police that can bust you and put in handcuffs and take you away to global jail. That doesn't happen, but what they do have is the ability to that expectations lots of international centres, their voluminous One of the main ones we focused on is that you need to know who controls the come? these that move, that money who is autumn in charge of that company and that bank account. This is called the beneficial owner and in

or to make sure you can track that person. International standards require that you get, photo idee of the official owner and to start with that dislike to what degree, as this practice being followed, Nielsen along with fellow researchers, Michael Findley and jason sherman conducted a massive experiment to learn where this recommendation was and was not being followed. We'd thought it best way to learn. To ask directly. We just created a bunch of false names from all around the world asking for shell companies saying confidentiality is important. I think it was like seventy five red, read emails that we sent, we kind of gave them a hint If we get away with something here, we want to, we said: what's required, what documents do need from us and then they tell as you know whether or not they required photo idee nielson and his co authors come

I held their findings in a twenty fourteen book called global shall games. We reported the united states was the easiest place in the world to get an anonymous. Shall company and the easy plays in the ice days was delaware. They replicated the experiment when you nineteen and the results suggested still pretty easy to get a shell company in the? U S, neil, it is not the only researcher to find a result like this. In twenty twenty two, the uk based tax justice network, released a financial secrecy index. which rank the- u s, number one in the world, as quote the most complicit in helping individuals to hide their finances from the rule of law. This is now a good look for any country, and over the years some members of congress have tried to address the problem. The united states pass.

I think a landmark law, the corporate transparency act in twenty twenty. So that's pretty important legislation that requires that company owners that we get photo idea for them. This law is scheduled to take fact in twenty twenty four. So will this change? How things are done in delaware? Quite likely not according to how weitzman delaware was heavily involved in the lobbying around this new federal law yeah. So the solution but we ve come up with is rather than asking people at the point where they register the company. Who is behind this company? We're going the register accompany anonymously and then a month They have to file another form with the federal government saying whose behind the company is a bit, like imagine, see, Imagine you gonna flights, a new flu somewhere internationally and then a month later, yet to send in a photocopy of your passport

It's a bit like that, and so, when you asked transparency campaigners, what do you think we should do with just ass people at the moment? they incorporate who they are you going to register at the state level, but then you're going to identify yourself at the federal level a month later. Why would we set up a bifurcated system like that? Only because delaware does want to adds another question to its former. Who are you and then ask its registering agents to verify, by that, you are who you say you are coming up after the break. How did delaware get this kind of life which and how do they keep it? bottom line. Is it comes down to money? Ok, also, I'm really happy too. That the friggin amatory radio network is launching a new show called the economics of everyday things. Earlier this year we ran a short pilot series to see how it felt to see how, You liked it. The good news

is it felt good and you loved so starting in june, you will hear post Zachary, crockett and the ecb. So everyday things every week you can go ahead and the show now in your podcast app. I am stephen dubner. This is we radio, we will be right back, freedom through EU sponsored by mint mobile from the gas pump to the grocery, store, your utility bills and favorite streaming services. Inflation is everywhere, thankfully, there's one mobile company out there that's giving you a much needed break its mint mobile mint mobile lets, you order from your home and save ton with phone play starting at just fifteen dollars a month by online. Only and eliminating the traditional costs of retail mint mobile passes significance. Things? Aren't you all plans come with unlimited talk and text plus I speak data delivered on the nations largest, five g network use your.

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of scale on your favorite listening from what we ve learned so far, the delaware franchise. What how weitzman calls this its legal industrial complex is value. To legitimate corporations looking to profit maximize and too? illegitimate players looking to dodge the law. But, let's be honest, it is also incredibly valuable to delaware itself. The legal industry is very important to delawares economy that dues demean damon. I am a director, richard lateness finger, which is the largest law firm and Wilmington Delaware, Wilmington is the biggest city in delaware, but still roma has around seventy thousand residents. That includes a lot of lawyers, many of whom demon knows personally The delaware bar as very intimate with also known as a bar that operates in what I call the delaware way that me

and you may be with different law firms, and you may compete with other law firms some of the same business, but at the end of the day, we're all moving in the same direction and how influence so is the delaware way The laws in delaware absolutely have formed the basis for some. The most monumental decisions when it comes to corporations? We are very protective of our laws. They are especially protective what's known as the delaware general corporation law. That is the statute that governs the companies that are incorporated in delaware, which, as we have already heard, includes most big companies and what's involved in this protection, so there's a corporate council that is constantly reviewing the corporate statute. Looking at how in these are used. Issues that have popped up through various court cases that might need to be addressed. Take, for example, the use of electronic means

when these statutes were initially drafted, everything was done on paper. If you about where we are now most things are electronically over the computer, so updating statute over time to allow for electronic signatures and the filing of documents electronically. That's what the bars you committees are laser, focused on doing making sure that that work, is done in a very meaningful way in a very concise, stint way and also in a very timely way, is how weitzman described it earlier. Delaware, franchise is an efficiency maximizing yeah! That's right! What exam devices iconic club ii system, but The delaware way heavy on back room wheeling and dealing scant on democratic oversight, as weitzman sees it. The chief crop of delaware is corporate law

sports corporate law, all over the united states and all over the world. It sets the standard code is written by twenty seven working lawyers who are part of this cooperation or counts. Of the delaware bar they meet in private and they issue proposed changes every year to the law, and then they present these often fairy technical proposal. To the delaware state legislature without any explanation, without any just Asia. Why these changes are necessary? As I imagine the state legislators trying to say ass. The merits of this argument and have also read in your book that delaware has the least well educated state house in the: u s, with a pretty high share of lawmakers, not holding a college degree in a very low level of lawyers and legislatures, well, Imagine this transaction as if someone brings to me the fine

of a recent set of experiments about nuclear fusion and says: hey debonair. What do you think that about what we're talking about me told these: are the experts, here's the proposals and they effectively rubber stamp them? That thing that I found interesting about it, Oh says: is these working lawyers they appear in court. They argue kay is under the laws that they them Those are writing so being an invest if Chicago it. It brings to mind. The work of the legendary you chicago nobel laureate, george stiegler, who introduced idea delay tree, captured in regular recapture interest groups come control law. Making and regulation of their own sectors? And then the regulators soda become lobbyists for the industries oversee delaware It gonna perfected that, because the lawyers

don't even need to lobby the legislature to change the corporate code. They just write it themselves and it gets rubber stamps of the systems efficient. It's effective, it's just not democratic, with no checks and balances. There's an interesting story that encapsulates This system in twenty seventeen is a law. Maker in delaware, now retired, a guy called John Collado styled himself? was the Bernie sanders of delaware and john koala comb proposed that Delaware should require agents who register companies. to check the name of a company's against a list? Gobio fight was basically a list of organisations that the? U S is deemed to be terrorist organization, This is a pretty non controversial proposal. In fact, it actually was adopted later by delaware, as a law,

when Jon Kolko tried to promote it. He was asked: has this through the process. Cologne says: what do you mean? What price, ass in delaware, changed the galapagos have to come from a corporate no council, delaware bar, in other words you analyze, the law makers have no right to make laws. Only the unelected lawyers have the right to make laws. And these lawyers weitzman argues inevitably make laws that protect and promote the delaware franchise. He points back to the corporate transparency act. The federal legislation that delaware pushed hard the shape, thereby preserving delawares right to allow companies to read stir anonymously. Is it so resistant to knowing whose behind them, because most companies would be perfectly happy to tell us who the owners are. So it's really as who we protecting a tiny number of wrongdoers. I think it's definitely and unfairly

for us to have Janine damon and for the defense, the probability of better There is using delaware entities for nefarious purposes, increases just by the sheer number of entities that are being formed on an annual basis, but I dont think that a fair analysis. If there is a rigorous process in place. form an entity in delaware. You have council working with you to submit the proper doc patient. It's not as easy. You know to simply draft up three paragraph. Seven something to the state and you're done. I think oftentimes people assume that, because it's a relatively quick process that it's also a relative the easy process? And those two are not analogous it's a quick process because we have a system in place the law firms here and the lawyers here are well versed in entity. Craig, she's. So we know what advice to give our clients. We know how to lead them through the process. This is what we do every day: This is what we do for a living.

the bottom line. Is it comes down to money? Ok, that again is John cassandra the former treasury investigator. This is state government greed That's the bottom line. They do it because it generates revenue and, to a lesser extent it generates some job opportunities. Now this is dead, Where would then you extrapolate dad or seas, and you ve got all these little islands in the south, pacific or in the caribbean or elsewhere. They don't really have much out there, but you know that guano, and so what are you gonna? Do you gotta get something to generate money, so they set up these financial agencies, tax havens and it attracts money. It was upton sinclair, who once said it is difficult to get. Em

and to understand something when his salary depends upon his, not understanding it. In a given year, the delaware franchise generates roughly two billion dollars for the state for a big state like new york or california. That would be a rounding error, but for tiny delaware that represents about one third of government revenues. One reason that delaware, levies, no state or local sales taxes, and then there the jobs for lawyers, pair illegals, ministries of assistance, notaries and I'll be their jobs and supported by the money those people spend. So it's easy to see why delaware has little incentive to impose transparency, regulations or other regulations at my under cut its franchise space because they're lucky to have the franchise

in the first place: here's how weitzman again, delaware didn't when this industry, because at a better business model it wanted by picking it up from new jersey who bowed out. This request is a brief history lesson. So an eighteen. Eighty eight new jersey aloud the companies where one company owns another and then the decade after that. Relax the rules, a lot on corporate structures and what they can do so by nineteen eleven. This had attracted a lot of course patients to set up in new jersey and their franchise tax accounted for about a third of their state revenue. That's aim shared delaware has today and other states, including delaware, copy them they just couldn't get market share. Until the election of nineteen thirteen when there was this interesting. Three way contest for the presidency between tat too, is

incumbent woodrow, Wilson, was the democrat and teddy Roosevelt was the progressive candidate and A big issue in the election was how to regulate corporations and teddy Roosevelt attacked wilson in public saying you haven't reigned in. Companies in your own stay. I going to do that in the united states. He was rattled by this and when will soon won the election, he went home to new jersey fired up in his lame duck session, his eyes in the state legislature introduced a bill to ban holding companies, a host of other measures and the corporations fled new jersey. An delaware which had copied their law was that to welcome them with open arms, delawares very aware of this history, and it wants to me sure didn't do anything to jeopardize this. Loss revenue as new jersey did, and it's always

to stay ahead of any competitors by making itself as business friendly as possible. Are there any campaigns either overt or covert to steal the franchise from delaware. Perhaps you how, in your book or part of some stealth campaign by some other state, I mean your book is published by princeton university presage. Looking at the new jersey, why should save as well, not paid by any states to provide any kind of services of their nature? There have been some attempts. Nevada is one state as attempted. two. When this business and wyoming another state has attempted to win this business, how do they do it by sort of being a cut price version of the real thing that kind of the private label cola you know and light private label color some people, like it but most people don't what about south dakota? They show up in this round now and again, don't they get in

nineteen eightys. There was an interesting battle between south dakota in delaware to win the admiration of financial institutions. South Dakota was the first they are believed to say, will get rid of interest rate caps for credit card companies, and there was a great cons time in delaware that the credit card companies we just go south dakota, and so they in I did in to the biggest wall street names to re, write their financial rules, They did in private. Of course, just delaware, nothing is public, it was all very secret They introduce them to the legislature than the latter. The noon said you got three hours to approve these and nobody. If cos, understand what the hell they were reading, so it all got voted through and that's how the credit card companies ended up in dallas but south Dakota was able to win the trust business. If you look at how much the trust businesses worth south Dakota is negligible was basically nothing because there are as many trusts right.

Whereas companies there are one point, eight million of them. It's a volume. Business is kind of you. stuck a mind so cheap, but also weitzman admits delaware, has become so good at being delaware, that the other places just can't compete so Most people go for the real thing being Adela companies means of me is how We create the reputation target We create things like that recall. Coming up after the break, we will hear about the chancery court, perhaps the most special feature of the delaware franchise. do sit on a high bench with a robot. Fortunately do wigs. Also Joe Biden is from delaware so, what's his connection to the franchise, I'm stephen Dublin, this is reconfirm its radio. We will be right back.

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The longer answer is that, where a quart of equity and I'd be happy to spell it out, if you, here the log story. Let's hear the medium story, sure so a quarter equity, is an artifact of really the middle ages legal system in britain. If you think back to the thirteen hundreds, the rain King edward, the legal system in england had gotten very, very formal and fair except they would only let you file a case if you could fill out a form called a writ and fill in them. Thanks precisely what you are, the member, the nobility you had another recourse, and that was that you could go to the king and the king had something better than the court's he had soldiers, so he send out his soldiers and regardless of what the court said, his soul,

yours could either make you do something or they could make you stop doing something. So it happened was privileged people would access the king and the king got tired of here these petitions, but our kings in england had a right hand? Man and he was the chancellor- and so starting in king edward time he would refer these petitions to the chancellor and the chancellor we make decisions about what to do with them and over time. What grew up was this separate system in england, where there was a word of chancery, headed by the chancellor and eventually vice chancellors, listing beside the court of law and when the colonies were established. That system came over here now, let's fast forward most, places in this country today, do not a separate, courted chancery. There are only three states that have a separate court: answered delaware, tennessee and mississippi in most places they said: why do we need

what systems work and combine them. So why did it system- delaware, it system in delaware, because part of the traditional jurisdiction of the court of chancery is over fiduciary relationships, fiduciary relationships include trustees, guardians and similar relationships like directors of a corporation, so that is the entry point for business dixon in the quarter chancery and that's the entry point for delaware being a special place and the court being a special place for hearing business disputes. One thing that makes the court of and three especially special is there are no juries if you're cases assigned to me, I mean it. I'm both ruler on the law and to find of the facts and part of what our court, known for is putting out detailed opinion?

that not only resolve the case at hand, but also give people guidance for how to deal with the next situation The other thing that I think people like about is there's a know. Your jurist factor so there are ten members of the court. All of us are for better or for worse very well known, particularly the delaware practitioners and part of the value you bring. The delaware lawyer is to be able to that psycho analyze your judge and be able to predict what they will do in particular situations. I know people throughout their cycle. Analyzing me in terms of every case and what would such an analysis come up with it? Is they that lasted, doesn't have patience for people who make extreme arguments or things that just sound good? But you don't test them. There are gonna, tell you to be completely transparent, part of what we were too and offers high integrity and part of.

Integrity is high transparency and that extends to the lead against as well. So what does judge last year say about delawares reputation as a whole? Four anonymous l, l season, shell companies and money launderers, no once delaware corporations or alternative entities being used for money laundering or criminal activity. If you, aid me: u s, king for a day. I would require across the or some level of disclosure for all jurisdictions. you have. There is a first mover problem. This is one this places where, if delaware starts requiring disclosure and nobody else, as requiring disclosure. Then that's a place where we can conceivably suffer harm to the franchise in delaware, as we have already noted, is not interested in suffering harm to its franchise.

Does this mean the franchise itself is, to some degree corrupt. A lot of people would say yes to some degree and what about the court of chancery here, even how weitzman is a defender. It has some quirks, it definitely operates in the interests of delaware, but I'm not sure that that necessarily means that the judgments that it issues are not fair and well thought out and technically excellent, so they charge you go is a great advantage, delaware and once again, if it's really about the chance record then, why do we need anonymous corporations, which we almost by definition, cannot pierre enchants record. Now Let me ask you this. As I hear you talk about book. I see why this topic was so attractive. It's this bizarre den of anomalies that everyone kind of shrugs out in a way

I'm curious why you wrote the book of the fact, it's a good story, you're a writer and that's what you do. Do you want? to serve as some kind of polemic early cautionary tale, or were you just telling the story? I think a bit of both. I am attracted to really interesting stories, particularly obscure stories, and this was one of those when I was writing this book. Do you ever get that moment when you're working on a story- This can't be right, and I had a last minute panic, because it's just so we exhort called the sector's takes office in Delaware said swung to check how many companies of all the one point: eight million companies in delaware. How many are owned by people resident outside U s and how many are owned by? U s rest, and they said we don't know and there is no way of knowing if you dont collecting information, then there's nothing to dig into

sort of the dead end. The investigators have always come up with when they're trying to pursue cases that lead to doha. Let's Imagine for a moment that the franchise in delaware were shut down, which is hard to imagine it so entrenched and it seems like it's got I have friends in high places and very few enemies really with any sort of leverage, but let's pretend just for a moment that it did happen. I am assuming that now of the activity that facilitating their would stop images, find other willing hosts, you agree. Yes, what that tells us is. This is an american problem. It's not just the delaware problem, but Delaware has set the rules it set. The rules. world has to follow, is set the rules that enable copper, anonymity and limited interest rates on credit gods. The other elements of the corporate coat and it's done

So in a way that as effectively bypassed democratic oversight? Now, if I recall correct, there was a long time you s, senator from Delaware named Joe Biden, who I believe is president of the united states. Now what was his position on the delaware franchise as you call it? How much did he defend it and how did he benefit from it? Joe Biden, did not create the franchise the delaware way, but he's very much creature of about system in terms of his style is known for his belief in Bi partisanship is deal making That's very much: delaware, ian type, way of approaching politics, in terms of its funding throughout his six years in the senate is main donors. Will all big law firms that benefit from the system? and then in terms of his voting record, he led the efforts to tighten bankruptcy rules because of the credit card companies

based in delaware and their interests states tried to put caps on how much interest credit card companies could charge, but the credit gum The big ones are registered in delaware because I registered in delaware. They were subject to delaware alone and what is the cap? the delaware law established for credit cards no cup, so If I am a credit card company and I register in delaware, could I charge three hundred percent interest? I don't something legally. Stopping you from doing so. Here is something that Elizabeth Warren wrote about Joe Biden in two thousand and two his energetic work on behalf of the credit card companies has earned him. The effect of the banking industry and protected him from any wealth. the challenges for his senate seat, as it seemed like a fair assessment or even its oversight yup. He certainly was a strong defender of the interests of credit card companies on capitol hill

you remember there was a lender called mba, nay, they were the ones who came up with loyalty cards, so if you wanted to have a shit go bears credit card, universe if chicago credit card would be issued by mba almost schwarzenegger credit card. What have you wanted and dna was a huge operator in delaware and at one time Biden with teeth teeth and by say he was the sensitive. Remember any reacted very badly that I'm not the senator from embryonic it oversee rattled him. nothing he rattled in because there was something to that. If you could sit down with Joe Biden and do a postscript to this book. He is the present united states. He is, after all, from the state that is the focus of this book, which has a lot of critical elements. One of the first few questions one ask him: are you an american citizen? I'm not I'm, not. Ok,

they can't even take that away from you, you're free to say anything. Well, I've got a green card. So hang on a second. I bet to get you a green card in delaware and like five disrupts, so I think he would say that reason that its in delaware. This is the location of the experts. We have built and expertise illinois, you know you grow corn. This is what we do. So this goes back to David Ricardo. This is what play is due specialization, he satellite you make wall, I make textiles. Somebody else has salt yeah, we launder money, that's what we do now, I'm just getting what we do is provide excellent, a league, expertise to company around the world? You know

then all wrong. I don't have any beef with that particular aspects of what they do is not like. I want to shut down the chance record, it definitely has its place in corporate amerika and there is no doubt that the expertise is there. I just think that the way that the experts just given free rein is not democratic and it's not transparent one. The having about the rise in this book is nothing is broken and I don't really want to break it. I just wanna. a little bit of sunlight in. That was how weitzman author of, what's the matter with delaware, how the first state has favoured the rich, powerful and criminal and how it costs us all. I'd love to know what you thought this episode or any episode. We can be reached at radio at freakonomics dot com and you can find our entire archive on any podcast app while you're there. Please

leave a rating were review. That is the best way to support the package. You love coming up next. Time on the show? Have you just arise in swearing, swear words. Have this very particular set of Illogical and emotional effects Have you also noticed how versatile some swear? Words have become everything Was that get your hands the gulf of me? I don't have any more left give when we swear I swear, and should we he's wearing a lot? More. That's nice I'm on the show until then take care of yourself, and if you can, someone else to Britain three was produced by stature and ran, but radio. This episode was produced by ryan Kelly and mixed by gregg ribbon withheld from Jeremy Johnston. Our staff also includes zack levinsky. More

levy, catherine month you're, Lena common, rebecca early Douglas Julie? Can sarah Lily eleanor osborne, jasmine, clear, dairy, cluttered, immaterial bout it and also Hernandez the executive team, We can demonstrate your network is Neil corinthe, Gabriel wroth, and me Stephen dubner. Our theme song is: your fortune by the hitchhikers, all the other music was composed by luis gara. As always, thanks for listening are you asking me to give you advice on how to launder money? Sure the freak radio network they head inside of everything, the stitcher.