A Holiday Shopping Spree : Planet Money On today's show, we go shopping. We're bringing you stories about how we spend our money and what these purchases teach us about economics.
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A Holiday Shopping Spree

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A Holiday Shopping Spree

A Holiday Shopping Spree

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JOHN CLEESE: (As customer) Stilton?

MICHAEL PALIN: (As owner) Sorry.

CLEESE: (As customer) Gruyere? Emmental?

PALIN: (As owner) No.

CLEESE: (As customer) Any Norwegian Jarlsberg?

PALIN: (As owner) No.


CLEESE: (As customer) Liptauer?

PALIN: (As owner) No.

CLEESE: (As customer) Lancashire?

PALIN: (As owner) No.

CLEESE: (As customer) White Stilton?

PALIN: (As owner) No.

CLEESE: (As customer) Danish Blue?

PALIN: (As owner) No.

CLEESE: (As customer) Double Gloucester?

PALIN: (As owner) No.

CLEESE: (As customer) Cheshire?

PALIN: (As owner) No.

CLEESE: (As customer) Dorset Blue Vinney?


V V BROWN: (Singing) Don't you think it's funny how we're different, but yet we're all the same?


Hello, and welcome to PLANET MONEY. I'm Robert Smith.


I'm Zoe Chace. Today is Friday, December 2. That was John Cleese and Michael Palin you heard at the top of the show shopping for cheese. Any luck yet?


CLEESE: (As customer) Czechoslovakian sheep's milk cheese?

PALIN: (As owner) No.

CLEESE: (As customer) Venezuelan beaver cheese?

PALIN: (As owner) Not today, sir, no.


CLEESE: (As customer) Well, let's keep it simple then. How about cheddar?

SMITH: Today on the podcast, we will visit a cheese shop that has actual cheese in it. It's the holiday season, so we're going to spend the entire podcast shopping.

CHACE: We're economics reporters. So when we buy stuff, we think about what it says about the economy.

SMITH: Every purchase is a story. And in fact, today we're going to play a couple of stories that aired on NPR - on the radio but not here on the podcast - about stuff we buy.

CHACE: Cheese, electronics, babies.

SMITH: Yeah, babies - we do pay for babies.

CHACE: All that after the indicator brought to us by our very own Caitlin Kenney. Hey, Caitlin.

CAITLIN KENNEY, BYLINE: Hey, guys. Yeah, Jacob's in China, so I'm filling in for him this week and next. So today's PLANET MONEY indicator - you ready?

CHACE: Hit it.

KENNEY: 8.6 percent - that's the unemployment rate in November, according to government figures released today. And that's the lowest the unemployment rate has been since March of 2009. In the last month, the retail sector added a bunch of jobs. So did the hospitality and leisure - basically, restaurants and bars - health care, professional and business services. So there were some significant job additions. But before we celebrate too much...

SMITH: Oh, no.

CHACE: No, don't do it.

KENNEY: No, I have to. I have to. All right, here's another number - 315,000. That's how many people left the labor force from October to November. And a big part of that is basically people who've gotten discouraged and given up looking for work.

SMITH: That is an amazing number - 315,000 people. That is a medium-sized city in the United States of people who just said, nope...


SMITH: ...Not looking anymore.

KENNEY: And when you look at how long people have been unemployed, over 40 percent of people who are unemployed right now have been looking for a job for six months or longer. So you can understand why people are feeling discouraged and why they might, you know, take a break from looking for a little bit.

SMITH: Our very own Caitlin Kenney, thank you so much.

KENNEY: Thanks, guys.

SMITH: OK, enough of the depressing data - onto the podcast.

CHACE: Let's do it. Today, we have a bunch of new stories - new to the podcast anyway - stories about stuff we buy and the crazy lessons we can learn from them.

SMITH: We're going to open today with an hors d'oeuvre.

CHACE: This is my favorite part of the party - is just before it happens. Everything's laid out on the table, untouched before the guests come in and mess it up. So we're going to start out visiting a cheesemonger in New York City who is following the latest news in Europe very closely because his Christmas bonus is riding on it. Here's our own David Kestenbaum.


DAVID KESTENBAUM, BYLINE: At Murray's Cheese Shop in Manhattan, the entire continent of Europe is represented - represented in cheese.

AARON FOSTER: We've got - gosh - like, 250 different cheeses at least.

KESTENBAUM: This is Aaron Foster, the cheese buyer here. We stand at the cheese counter and play a game. I name a troubled country, he names a cheese.

So do you have cheese from Portugal?

FOSTER: Yes, amanteigado.


FOSTER: Ireland - we have Cashel Blue.


FOSTER: Greece - we have manouri. We have halloumi. We have feta.


FOSTER: Manchego.


FOSTER: Italy - we have Parmigiano-Reggiano - a lot of it.

KESTENBAUM: Cheese from different countries, all sharing a common currency - the euro. He's not kidding about lots of Parmesan. In a backroom, we pass a huge stack of Parmesan wheels.

That's a pallet of Parmesan?

FOSTER: That's a pallet of Parmesan - taller than me actually. How many pounds? So four wide and one, two, three, four, five, six - 2,500 pounds. Give or take.

KESTENBAUM: Over one ton of cheese.

FOSTER: That's just one pallet. It's early in the day.

KESTENBAUM: When you read about how the U.S. imports $2 trillion worth of stuff in a year, maybe you think of cars from Japan or computers from China. Add to that cheese. Something like 60 percent of the cheese in this store comes from Europe. Aaron's paycheck is going to depend on how cheaply he can buy that cheese.

FOSTER: I don't think of myself as an importer, but that's absolutely what I do day in, day out. It's not on my business card, but I'm an importer.

KESTENBAUM: Another thing his business card does not say - Aaron trades in the global currency markets. When Aaron buys cheese from Europe, he does not pay for it in dollars. No, no, he has to pay in euros.

FOSTER: It's funny to think of buying money. But we have an accountant who will call up the bank and say, hey, I need this many euros. What kind of exchange rate can you get me? And the bank will sort of look around and see what they can do.

KESTENBAUM: For an example, Aaron took me down to the cheese cave underneath the store. Yes, there's a cheese cave under Bleecker Street in Greenwich Village, N.Y. On the shelf, he pointed to wheels of Ossau Iraty cheese from France. To get those, he explains, he's got to pay the cheesemaker in euros. Then he's got to pay someone to drive the cheese from southern France to the port - also in euros. He's got a whole fancy spreadsheet. And in normal times, the exchange rate from dollars to euros is pretty steady. But these days, because of the debt crisis over there, the exchange rate is jumping all over the place. And this is how the European debt crisis affects Aaron. The cheaper he can buy the cheese, the bigger a bonus he gets. Basically when things get worse in Europe, the euro drops in value. The cheese gets cheaper, and his bonus gets bigger. Things got really weird for him the other week when it looked like Greece was going to have a nationwide referendum on whether to accept the latest bailout terms.

FOSTER: The Greek prime minister said, eh, I'm going to put it up to a vote. And the euro started to tank immediately. And I'm like, yes, this is great. And then I realized that these strangers half a world away could be determining my margins and my bonus - the Greek man on the street. And at first, I was thinking, no, that couldn't be the case. It must not make that big of a difference. But five or 10 cents on the exchange rate makes a huge difference - thousands and thousands of dollars difference in cost.

KESTENBAUM: A good bonus would help him pay off his student loans. But Aaron says he is actually hoping Europe can sort things out. He's got a friend in Greece. And he does have this other financial incentive. If the euro mess gets worse, it could drag us and the rest of the world into another recession, which would not be good for cheese sales. David Kestenbaum, NPR News.

CHACE: Here's what I love about cheesemongers - is the samples. Like, they lure you in with the samples. And they're like, oh, this Gouda is Danish. It's extremely rare. Why don't you try some? And here's a fig - like, have a fig with that. And then you're like, oh, if I get a hard cheese, I need a soft cheese. You know what I mean?

SMITH: Yeah, or goat cheese like Camembert - love, love, love Camembert.

CHACE: Yes, that's my favorite. And once you're in the cheese shop, and you've tasted the Gouda. You're talking to the guy. And you're like, oh, I should buy the soft cheeses - you know what I'm talking about.

SMITH: This is done all over the retail sector - where they get you to buy one thing, and then you're hooked. You have to buy more and more things after that. A great example - and this aired on NPR recently - was about the Kindle Fire just released by Amazon. Zoe, you did the piece. Let's give it a listen.


CHACE: If you wanted a tablet and sat out from the iPad frenzy because it cost too much or the line was too long, Amazon has a message for you - you can't afford not to get this one.

ANDREW RASSWEILER: Amazon is trying to put a storefront in your hands for which they're willing to more or less give it away.

CHACE: Andrew Rassweiler knows what he's talking about because he's one of the only people in the world who can speak confidently about how much it costs Amazon to make one of these things. He does what are called teardowns for the research firm IHS iSuppli. And it's exactly what it sounds like.

RASSWEILER: It's really hard to tell until you've taken a screwdriver to it.

CHACE: Is that what you guys do? You actually, like, rip it apart with your bare hands?

RASSWEILER: There's no other way.

CHACE: So Andrew hasn't been able to tear the thing apart. But they did a preliminary estimate - adding up things like the touch screen, the memory, the battery, based on the other tablets they've ripped apart in the past.

RASSWEILER: $209 for materials and manufacturing.

CHACE: Amazon sells the Kindle Fire for a $199. But they're out much more than $10 on each of the Fires because Rassweiler's estimate doesn't include the licensing deals that Amazon cuts to stream content or the marketing costs so that we all knew the Fire was coming out this week.

RASSWEILER: For Kindle and Amazon, it's very similar to the business model of service providers like AT&T, T-Mobile, Verizon.

CHACE: Phone companies that sell the actual phones at a loss but make up for it when they lock you into that contract. That is exactly what Amazon hopes to do. Once you're inside their ecosystem, there are a whole bunch of ways they can make money off of you. You buy their books, their movies, their music. You're locked in. There's no Apple Store on an Amazon device. Amazon is basically spending $10 to buy your loyalty. The loyalty will turn a profit. Eduardo Porter has written about this strategy in his book "The Price Of Everything."

EDUARDO PORTER: Printers and printer ink - one very common tactic of printer manufacturers is to sell printers very, very cheap and printer ink very expensive.

CHACE: Get it? Forty-dollar printer seems like a steal. It will last for a long time. It's fancy and high-tech. But a printer without ink is useless. And you have to buy the ink that goes with that particular brand of printer - HP ink or Canon ink. And the ink will run you...

PORTER: Four thousand, seven hundred and thirty-one dollars a gallon. That's the price of 1985 vintage Krug Champagne.

CHACE: Do you purchase those often?

PORTER: No, I do not.

CHACE: Amazon didn't start out as a computer company unlike, say, Apple. For Amazon, the computer is simply a means to an end.

PORTER: Amazon was a store that just happened to be online, and you can get at it on whatever device you wanted.

CHACE: Primarily a bookstore at first. And though Amazon sells much more than books now - you can buy basically anything you would ever want on Amazon - it's their identity as a bookseller that drove them to make the tablets.

PORTER: I think it was driven by a realization that more and more reading was going to happen on these objects rather than on books. And if it was going to stay in the book business, it had to move into this new platform.

CHACE: You've heard the expression there's no such thing as a free lunch.

PORTER: The practice by bars in the mid-19th century in the United States - to give you a free meal if you had drinks. And of course there was lots of salt in the meal.

CHACE: The Kindle Fire is not free, but it's certainly cheap. And if having one of those makes you thirsty for more Amazon products, then the loss pays off. Zoe Chace, NPR News, New York.

You know, Robert, I've noticed these stories so far have been a little 1 percent.

SMITH: A little bit for the rich?

CHACE: Yeah.

SMITH: All about Gouda and computers?

CHACE: I kind of like those things, you know, because, as a member of the 1 percent, I feel that I've been underrepresented in the media lately. So I'm glad we could take some time out and focus on my issues.

SMITH: Well, as our listeners know, there's been a lot of attention recently on the 1 percent and the 99 percent. Of course, we've done pieces and podcasts on Occupy Wall Street. And not too long ago, the Congressional Budget Office released a report that showed, statistically, if you look back over the last 30 years, the gap between wealthy and poor Americans has become much wider. And so I got together with our political correspondent, Andrea Seabrook, and we cooked up a little candy piece to talk about this.


ANDREA SEABROOK, BYLINE: The CBO report has great graphs and charts to illustrate just how much more the wealthy have added to their incomes over the past 30 years. Sadly, graphs and charts make terrible radio. So I picked up the nerd hotline and got one of the PLANET MONEY team - NPR's Robert Smith. He came up with a kind of audio graphic, so we can hear how people's incomes have changed. And we start with the poor.

SMITH: Each little candy corn is worth about $1,000 of annual income. So let's look back 30 years ago, say. In 1979, you would have made this many candy corns - 10.



SMITH: Thirty years later, you're doing a little bit better in society. You are doing about two candy corns better.


SEABROOK: Two candy corns better.

SMITH: You're making about $2,000 more a year.

SEABROOK: OK, that's an 18 percent increase, according to the CBO numbers here, yes?

SMITH: Absolutely.

SEABROOK: OK. Now, talk about the middle.

SMITH: Sure. 1979, if your family made $30,000 a year, you were well in the middle. So here's what 30 candy corns sounds like.


SMITH: You know, not bad, pretty good for the middle class. Over the last 30 years, you would make about 12 candy corns more. Here we go.


SEABROOK: OK. That's an increase of about 40 percent.

SMITH: Everyone's doing a little bit better over the last 30 years, but the increases are fairly modest all the way up until you get to the rich.


SMITH: Are you ready for the rich?

SEABROOK: I'm ready for the rich (laughter).

SMITH: Now, everyone talks about the top 1 percent. And so that's what we're going to go to. The whole family would have made - let's say around $200,000 a year. Here's 200 candy corn.


SEABROOK: OK, that's a good haul. How much are they making now? What's the difference?

SMITH: Well, this is the real news of the study. Their annual income - their annual candy corn take-home haul - let me start to pour this.


SMITH: Five hundred and fifty more candy corns a year - and they're spilling all over the table here (laughter). But this - any kid in America would love to have this many candy corns.

SEABROOK: According to the numbers that I have here, that's an increase of 275 percent.

SMITH: And when they talk about income inequality in America, this is what they're talking about.

SEABROOK: To go over the numbers once again, the lower-income people in America gained about 18 percent.

SMITH: Two candy corns.

SEABROOK: The middle-income gained about 40 percent.

SMITH: Twelve candy corns.

SEABROOK: And the highest gained an average of 275 percent.

SMITH: Five hundred and fifty candy corns - and they're going to need that money for the dentist.

CHACE: That was NPR's Andrea Seabrook along with you. Robert, what happened to the candy corn? I didn't really see it. Like, where'd it go?

SMITH: Well, after the story, I just poured it all into a giant bowl. And I put it out here in the offices of NPR New York, where we're based. And nobody really wanted it, which is probably because I actually touched...

CHACE: You touched every piece of candy corn.

SMITH: I had to count out all the candy corn. That was a very accurate piece.

CHACE: Yeah, people are weird like that.

SMITH: OK, the last piece we have today on the podcast - it's a little bit of a stretch for a shopping show. So a few weeks ago, NPR marked the birth of the seven billionth person on planet Earth. And as public radio does, we did a lot of serious and very good stories about places that are crowded and overpopulated. But we were thinking here at PLANET MONEY, what about all of those countries where the population isn't growing - places where the government is actually paying people to have babies?

CHACE: And it's not the craziest thing, right? A baby is worth a lot to a country. Let's set aside for a moment all those goo-goo feelings about that big ball of chub - no, a baby is also an economic investment.

SMITH: Sure, businesses get a new worker and a new consumer for products. And parents, they get someone who will support them when they grow old. And governments get a new taxpayer. And everyone gets this guarantee with a new baby that your country will live on.

NICK EBERSTADT: For most of human history, the idea of elimination or extinction seemed like a pretty plausible danger.

SMITH: That's Nick Eberstadt. He studies population growth at the American Enterprise Institute. And he says that once that threat of extinction was removed from countries during the last century - once we started living longer, well, that return on the baby investment that we were talking about, that changed. People in rich countries, they started to invest in other things.

EBERSTADT: People have more of just about everything. They've got more money per capita. They've got more square feet of housing per capita. They've got more cars. They've got more music. They've got more vacation. They've got more leisure time. There's one thing they don't have more of. And that's babies.

CHACE: Germany, Japan, Russia, Taiwan - the list goes on and on. They're not having enough children to replace themselves. The economic calculations shifted. Women found they could earn far more money in the workplace than staying at home.

SMITH: And it's a fact of more money and more education, which tends to reduce the birthrate. We saw this even in developing countries like Brazil and Iran. They had their birthrates drop. And don't get me wrong. I mean, this is good for a little while, right? Everyone's richer. Everyone's more educated. There are fewer children. There's a young workforce. There are fewer babies to take care of at home. In this situation, a country can show enormous growth.

CHACE: Double income, no kids.

SMITH: Yeah, exactly - at least for a while. And then people start to get old. And governments say uh-oh.

PATRICIA BOLING: Who's going to pay the bills? Who's going to pay for pensions? And in countries that have really low fertility rates, that's a very extreme problem. It makes what we have in the United States with respect to generational inequity look like peanuts.

SMITH: That's Patricia Boling. She's a professor at Purdue. She studies countries with shrinking populations. She specializes in Japan actually. The problem she says is that many of these countries have set up their retirement systems in this sort of strange way we've done it here in the United States.

CHACE: Meaning - have the young workers pay for the older retirees. No babies, no young workers, more retirees - you can see how the math gets difficult. And the answer - it's easy, right? Pay people to have babies.

SMITH: And, you know, it's funny because countries around the world have come up with this same solution. If we need more workers, if we need the money that a baby brings eventually, then it's good return on investment to just pay people. So in Australia, you can get a baby bonus, where they send out an actual check of close to $1,000 when the kid comes out. And then they pay every couple of weeks after that. In Germany, they have paid child care leave. The government gives you two-thirds of your income to stay home with the baby. And that can be, when I translate it from euros, up to $35,000. But, you know, Boling says that despite all these countries trying this, it is not entirely clear that money can buy more babies.

BOLING: And the basic reason is it's so expensive to raise a child that even if you were to offer a pretty substantial bonus, it's going to be used up in a heartbeat.

CHACE: And so far, Germany's very generous paid maternity leave hasn't produced a baby boom. And Boling thinks she knows why. You can't pay women to stay away from work and have babies. Women want to work, and jobs pay more than any government fertility program.

BOLING: So policies that allow women to work and have kids and not treat it as an either-or trade-off are the ones that are most likely to produce healthy fertility rates.

SMITH: So as I said, those countries that just write you out a check, they haven't had much success. But Boling points to France and Scandinavia. So they've used their money not just to pay parents but to expand child care options and to allow women to work more flexible schedules - to not have to work late into the night or five days a week. And therefore, the fertility rates are higher in those countries than the rest of Europe. And women are still in the workforce. It's kind of a win-win. But Boling says there are no guarantees that countries can just spend their way to population growth, even with these techniques. Japan - perfect example - shrinking even after the government has spent a fortune trying to ramp up baby benefits and do this child care thing. It's the same in Italy, Southern Europe. They're all having the same problem.

CHACE: And there is a theory that in these countries perhaps the biggest impediment isn't the money. Perhaps, Robert, it's the dads. Seriously, Boling says in macho cultures, women may just be deciding it's not worth it.

BOLING: Deciding - look - if it's all on me - I'm doing all of the childbearing and maybe working outside the home as well, and you are just, you know, going off to drink with your buddies every night - forget it. I don't want to have kids. I don't want to have two kids. Or maybe I don't want to have any kids.

SMITH: And so like all of the products we've talked about on today's podcast, babies are far more complex than they seem. You can't just throw money at the problem or change your child care or just give big checks to people. You have to actually change a society. And as we know, especially in Europe, that's a little more difficult than it sounds. And at that point, governments may just have to make a decision - perhaps they're going to be a smaller country, or perhaps they're just going to have to invite more people in through immigration. But whatever it is, the baby investment, that went broke.


BROWN: (Singing) Why we always fussing over silly, little things? Why do we care?

CHACE: That's it for today's show. As always, let us know what you think. Email us at planetmoney@npr.org.

SMITH: Or you can reach us on Facebook, Twitter or the blog, npr.org/money. We see all. I'm Robert Smith.

CHACE: I'm Zoe Chace. Thanks for listening.


BROWN: (Singing) But maybe if we took a look and listened good, we'd all know what to do. Everybody needs love in their life - how it hits us all the same. Everybody needs boy and needs girl - how we need it every day. Everybody needs you and needs me. We're not differently the same. Everybody say yes if you do. Everybody shout out if it's true. Everybody needs love in their life - how it hits us all the same.

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