(SOUNDBITE OF ARCHIVED RECORDING)
PAUL HARVEY: Today, together, you and I are going to learn the rest of the story.
(SOUNDBITE OF THE BLACK KEYS', "THE LENGTHS")
ROBERT SMITH, HOST:
Hello, and welcome to PLANET MONEY. I'm Robert Smith. And that was the late, great Paul Harvey you heard at the top of the show. And that can only mean one thing. Today, we bring you the rest of the story. It's our second annual follow-up show where we look at all of the stories that we've done in 2012 and we figure out what we got right, what we got wrong, and we tally up the number of votes for our fake presidential candidate. Today's show will be co-hosted by the members of the PLANET MONEY team, but we want to start with an update on our shell companies.
This year, we at PLANET MONEY wanted to figure out this whole maybe-shady-maybe-not world of offshore companies. And what better way to do that than to just start one or two of them? And it was pretty easy. There's a company in Belize that will create a corporation for you - give you all the proper documents. Our corporation is called Unbeliezable. And amazingly enough, this company will also - for a fee - provide a fake director and a fake shareholder of the corporation so we can keep our names secret. Our director was Dezeree (ph). She sits at a desk somewhere in Belize and puts her name on shell companies for a living, I guess. Umberto (ph), also in Belize, was our designated shareholder. Chana Joffe-Walt and David Kestenbaum really wanted to meet these people, our employees. And Dezeree and Umberto declined, so we went to a lawyer and we asked, can we make them talk to us?
CHANA JOFFE-WALT, BYLINE: So as reporters, you know, that leaves us kind of stuck. But as owners of Unbeliezable, we had more options. Our tax lawyers told us, you want to meet these guys? Write yourselves into the annual meeting.
DANIEL: So we have here - the company may hold once every calendar year an annual meeting. You can amend this to say the company shall have - if you want.
DAVID KESTENBAUM, BYLINE: In Belize, at her house maybe or something?
DANIEL: Right, right, absolutely.
KESTENBAUM: Would you guys help us write that?
KESTENBAUM: Do it. Let's do it.
JOFFE-WALT: Let's do it.
SMITH: David tears out a piece of paper from his legal pad. He hands it to you, Chana, and gives you a pen. And then Daniel (ph) just starts dictating, like, off the top of his head.
DANIEL: So - OK. So you could write - resolution of the members of Unbeliezable, Inc.
DANIEL: OK. And then you say...
SMITH: It's kind of amazing to watch him. He kind of leans back in his chair, looking up at the ceiling. He goes on for several whole paragraphs just off the top of his head - pursuant to Article 16, we hear by resolve as follows.
DANIEL: ...And this is the, you know, this is the guts here. The company shall hold...
KESTENBAUM: Instead of May.
DANIEL: ...Instead of may - its annual meeting in Belize.
JOFFE-WALT: In Belize.
DANIEL: And I think the crucial part is that you should say, you know, and Chana and David shall attend.
JOFFE-WALT: Well, this is a run-on sentence. Am I still going...
DANIEL: That's OK. That's OK.
DANIEL: And there you have it. And then you would send that.
DANIEL: There it is. And now it's the law. You have to go.
SMITH: Joining us are the masterminds behind our shell companies. We have Chana Joffe-Walt And David Kestenbaum.
So you sent this letter that you got drafted by the lawyer. What happened?
KESTENBAUM: Can I say a word about the letter first?
KESTENBAUM: Chana just wrote it on, like, a legal pad, you know, in really sloppy handwriting. It's the first time I ever written anything legal on a legal pad. And I was like, you can't send that. You got to, like, type it up and send it to them.
JOFFE-WALT: We just scanned it and attached it to an email and sent it to Richard (ph), the guy in Belize who sold us this company package that came along with the fake shareholders with Dezeree. And he wrote me back to my email and said - in light of the unorthodox amendment, our manager is dealing with this matter, and we will revert to your query as soon as he returns from being out of the country.
But I have to say, when we got this, I still thought that it was going to happen because I - the lawyer seemed really certain, like, these people's one job is to do what you tell them to do. And so just tell them to meet with you and they will meet with you. I still thought that it was going to happen.
KESTENBAUM: I thought it was definitely going to work.
SMITH: You thought it was checkmate. It was legal checkmate 'cause this is - it is your company, right?
JOFFE-WALT: Yeah. And they actually were already having meetings. Like the paperwork that we got, Dezeree and Umberto had had a meeting to make themselves the nominees of our company.
SMITH: And so?
JOFFE-WALT: So then after a bunch of back-and-forth with Richard where he was trying to clarify what exactly we were asking for - and he kind of thought we wanted to come to Belize to be able to write it off as a corporate expense for a while.
SMITH: Which is a great idea.
JOFFE-WALT: Right. We said really clearly no, we just - we want to meet with them. And we want the two of them to be in the room. And then Richard heard the podcast, and he basically wrote us and said, you totally mischaracterized what nominees do. These are nominees. There's nothing fake about them. They are very real. You opted for this service, and we charged you for it. And this is what they're meant to do. And there's nothing shady about it. And because you mischaracterized it and because you named Dezeree and Umberto - you actually said their names on the air and now that's out there in public - they're going to resign and we need to give them new names for new director and shareholders.
SMITH: Wait. You have to come up with the names?
SMITH: I thought that was part of the package?
KESTENBAUM: We just sort of were like oh, what do we do? What do we do? We didn't do anything. And so then they made Chana the director (laughter).
SMITH: Which defeats the whole purpose of a shell company, right?
JOFFE-WALT: Exactly - it defeats the purpose of having the secret fake shareholders that are not actually you.
KESTENBAUM: They sent us an official new certificate of incorporation. It says this is to certify that Chana Joffe-Walt, holder of passport number blah, blah, blah, is the registered proprietor of all common shares, signed Dezeree Singh (ph) - director, not fake director.
SMITH: It's so sad. I mean, all you want to do is just, like, ask questions. What's it like to be on the board of - what? - a hundred companies, 200 companies? We don't know.
JOFFE-WALT: Yeah. And I just wanted to see what a meeting was like. Like, do they actually sit in a room and talk about Unbeliezable business?
SMITH: Yeah. They're not getting paid that much. Does it - is it 30 seconds for a corporate meeting and then done, stamp?
KESTENBAUM: I mean, Dezeree is director of lord knows how many companies.
SMITH: Well, there's one she's not director of anymore. David, Chana, thanks for the update.
GRACE POTTER AND THE NOCTURNALS: Sure.
(SOUNDBITE OF SONG, "NEVER GO BACK")
GRACE POTTER AND THE NOCTURNALS: (Vocalizing)
SMITH: Earlier this year, we met a very, very interesting person - Jestina Clayton (ph). Jacob Goldstein joins us. Tell us about Jestina.
JACOB GOLDSTEIN, BYLINE: So Jestina, Robert - she grew up in Sierra Leone. She lives in Utah now. And she's apparently really good at braiding hair. And so she had this business in her home braiding people's hair - kind of a low-key thing. She stayed home, you know, watched her kids and basically made a little money on the side. And then one day, she gets this email from a stranger who'd seen some little ad she ran about her business.
JESTINA CLAYTON: Said it's illegal in the state of Utah to do any kind of extensions without a cosmetology license. And I thought, no way. I responded. I said, go ahead and report me.
GOLDSTEIN: And, in fact, the lady did report her. And it turns out, it was illegal in Utah to braid hair without a license. And you had to go to cosmetology school, which took thousands of hours and was really not about braiding hair. It was about washing and dyeing and cutting and all these other things that Jestina didn't need to know about.
SMITH: And it turns out this is a really big deal in the economy - this whole licensing thing. And it amazed me when you did this show how many different professions and licenses there are. I don't think - we always talk about doctors and lawyers but there's so many more.
GOLDSTEIN: Yeah, there's been this huge licensing creep, sort of, throughout the economy. And cosmetology is sort of one of the classics. But it has become this interesting issue. And there's this really interesting important idea that comes out of this whole licensing thing which is this. We usually think of business as being opposed to regulation, but one of the things you see when you look at licensing is existing businesses can really benefit from government regulation. So you have people who are already cosmetologists, people who run beauty schools - they want everybody to have to go to cosmetology school. So they go to state legislatures and then they say, pass this law so that everybody has to do a ton of training - has to go to my school so that people can't come compete with me. And they benefit from this regulation.
SMITH: So when we last left this story of regulation, Jestina had challenged this in court. In fact, she became a little bit of a national-cause celeb for the - these problems with regulation. So what's happened since?
GOLDSTEIN: I actually called Jestina this week. Here's what she told me.
CLAYTON: Well, we finally made it to court. And Judge Sam (ph) is a really cool judge. And he ruled in my favor.
GOLDSTEIN: So you won your case?
CLAYTON: Yes, I did. It was great.
SMITH: She won?
GOLDSTEIN: Yeah, she won, Robert.
SMITH: So what does that mean in terms of hair braiding in Utah and elsewhere?
GOLDSTEIN: It means she's now braiding hair again. I mean, it means, you know, now she has this little business. In fact, she just moved. I talked to her. She just moved. And she said in her basement, there's this nice little area where she's hoping to get, you know, somebody to come in and put some drywall and she's going to put a chair. But there is one sort of important asterisk here in this story before we get to the end of it. And that is there is this new bill that has been introduced in the legislature in Utah that says, OK, to braid hair, you do not have to go to thousands of hours of cosmetology school, but you have to do a few hundred hours of training to braid hair. And Jestina - she and her lawyers think really you shouldn't even have to do that. So they're planning to fight it. And this is going to be debated apparently in the Utah legislature in 2013.
SMITH: Do we know, nationwide, is there a trend toward more licensing regulations? Are there more businesses wanting to protect themselves or are people finally just saying, like, enough is enough?
GOLDSTEIN: Certainly the long-term trend has been toward more and more licensing. I mean, there are some people now who are fighting it. But, you know, my sense is the long-term picture is more licensing, not less.
SMITH: There you go - still unlicensed to do what he does, Jacob Goldstein.
GOLDSTEIN: Thanks, Robert.
(SOUNDBITE OF MUSIC)
SMITH: Today, we have a sad update to report. Chana Joffe-Walt joins me now. We did a whole story on the organ allocation system - the way in which when you're waiting for a transplant, doctors decide who gets which organ.
JOFFE-WALT: Yeah. So there's a long waiting list, you know, for pretty much every organ available. And we're interested in a sort of an economic question. Like, this is a scarce resource. How do you decide who gets it and who doesn't? And as I was reporting this story in Cleveland at the Cleveland Clinic, I met Ashley Diaz, who is a 15-year-old with cystic fibrosis who was waiting for lungs.
SMITH: Let's hear a little bit from the original show.
UNIDENTIFIED MAN #1: Hi, how are you?
UNIDENTIFIED WOMAN: Hi - I'm well, thanks, and yourself?
UNIDENTIFIED MAN #1: I'm fine. Are you Ashley's mom?
UNIDENTIFIED WOMAN: I am.
JOFFE-WALT: The only time I see Ashley make a real effort - an enormous effort, actually - at communication is when the doctor comes in.
UNIDENTIFIED MAN #1: Another quiet night - you got some sleep? Anything else? 'Cause otherwise, it's status quo? We're waiting.
JOFFE-WALT: At this point, Ashley pulls out a marker from somewhere and writes in enormous big caps as if it is the only thing she has ever wanted a voice to say. She writes, ANY NEWS ON LUNGS?
UNIDENTIFIED MAN #1: No. You will be the first person to know. OK. It'll happen. It's a long wait, and I know it's frustrating. Everyone always feels this way when they're waiting for long, but it'll happen. All right. Have a great day. Take care. Nice meeting you.
UNIDENTIFIED WOMAN: You, too.
He wouldn't say it's going to happen so you have to - you can't be discouraged. They all feel as confident as they can. So you do, too. You have to. OK. It's going to happen.
JOFFE-WALT: At this point, Ashley doesn't text or mouth anything back to her mom. She doesn't even look at her. She just settles back into waiting - waiting for a peculiar bureaucratic system to give her life.
(SOUNDBITE OF SONG, "HEARTLINES")
FLORENCE AND THE MACHINE: Oh, the river, oh, the river, it's running free...
JOFFE-WALT: So, Robert, Ashley waited for another month, and she died waiting. She died in June this year.
SMITH: Do we know why?
JOFFE-WALT: Well, she was really close to the top of the list - list changes every day, you know, depending on who's waiting, but she was really close to the top of the list. Her problem was that she was really small, as a lot of people with cystic fibrosis are. So she basically needed a child's lungs, and those are harder to come by. So there is this question in the whole allocation system now of if, you know, doctors want to tweak it a little bit to maybe give somebody like Ashley more points so that she would be at the very, very top of the list if any lungs that would fit her body came available.
SMITH: Now are they changing this all the time? I mean, does one sad story after another come and then everyone sits around and goes, we have to do something about this? I mean, that must be incredibly difficult.
JOFFE-WALT: And doctors are pretty self-aware that they're very biased towards their patients. And you see - you meet somebody like Ashley and you totally want the system to prioritize this particular disadvantage, but there's a ton of disadvantages. You know, people have - don't match organs for all sorts of reasons. They have a weird blood type or they - you know, whatever. There's a million reasons why it would be hard for you to match with an organ. So it's like something that they're discussing all the time. I heard from her doctor recently that this was something that she brought up at conferences that she went to basically over the last couple of months.
SMITH: What - she brought up Ashley?
JOFFE-WALT: She brought up the size issue which, I think, she has seen with multiple cystic fibrosis patients. But she said, you know, there's no particular policy on the table right now to change it.
SMITH: You know, I remember part of the show was - was it mathematicians at MIT? - who had thought really about sort of more scientific and rational ways to allocate organs. But you're telling me here that they sort of lurch back-and-forth with these sad stories, and someone discovers a problem. And then they try and fix it. And then there's a different problem. Is there always going to be a balance between those two things?
JOFFE-WALT: Yeah. I mean, the thing that was really striking to me about the story was that the doctors were very self-aware that they were like the worst people to be making the decisions of how exactly organs are distributed because they have these very human emotional experiences that make them incredibly biased. And the doctors had sort of handed over this process to not exactly those MIT guys but people like them to come up with models that were based on very objective metrics or as objective as you can get.
SMITH: Yeah. I mean, it must be hard because I - after hearing the story of Ashley, like, you're just pulling for her.
JOFFE-WALT: Totally want her to get lungs. I know.
SMITH: I want her to get the lungs. And yet, the doctors see those stories again and again.
SMITH: Thanks, Chana.
JOFFE-WALT: Thank you.
(SOUNDBITE OF SONG, "HEARTLINES")
FLORENCE AND THE MACHINE: (Singing) Oh the river, oh the river, it's running free. And, oh, the joy, oh, the joy it brings to me. But I know it'll have to drown me before it can breathe easy. And I've seen it in the flights of birds. I've seen it in you...
SMITH: Earlier this year, we did a series of stories and shows on Facebook. And our real question about Facebook was, can they really change the world of online advertising? You know, they promised they were going to make a ton of money by changing the way in which we sell things to each other by basically being able to sell to your friends. Zoe Chace was one of the hosts of that show, and she joins me now.
Now you did an interesting experiment back in the day - back before the Facebook IPO - to figure out how advertising would work on Facebook.
ZOE CHACE, BYLINE: Yeah, we basically found some people that were thinking about advertising on Facebook for the first time and kind of followed them through it. There were these kids in New Orleans that had just opened up a pizza takeout window.
UNIDENTIFIED MAN #2: Can you make a New York pizza outside of New York? And the dough is, like, the most important thing.
CHACE: Basically, we followed them through this process. So they sit down with this Facebook ad guru and come up with this little advertising campaign for their pizza place. And they ran a couple Facebook ads. And all of them bombed, except for this one that targeted people that live in New Orleans that like Italian food. And basically, all they got out of the Facebook ad campaign was that they got a ton of new Facebook fans. That is what they got. They never necessarily got any more customers out of it. And so the story that we did - the way the story ended was kind of - we'll see, but the implication was it's going to be kind of hard for Facebook to make good on its promise that its special, special data - that it knows what you like, that it knows who your friends are - is going to explode the world of Internet advertising.
SMITH: Now, this was all before the Facebook IPO, when the assumption pretty much everywhere was that Facebook was going to be the most amazing IPO ever. I think we all know what happened, but what did the Pizza Delicious guys think of what happened?
CHACE: I called them up to check on them and they remember the day that Facebook IPO'd really well. It was actually a really awkward day for them.
UNIDENTIFIED MAN #2: The day that the stock is hitting the market and it's just tanking. And it's just, like, this new story that I - I mean, we didn't hear much about the Faceboook ads themselves, but we - (laughter) the people were like, we heard you on NPR. Like, sounds like Facebook ads suck (laughter). And just, like, hear all this, like, spinning around in my head. And then I'm, like, checking the stock price. And I'm like, are we responsible for this country's economy? (Laughter).
SMITH: Yeah, I'm sure the Pizza Delicious guys are going to get sued along with Morgan Stanley (laughter). It was really their fault.
CHACE: Yeah, I told them not to feel too bad about it. I don't feel bad about it, personally. The thing about Facebook's promise is that they haven't quite delivered on it. You know, it's just that they have all these users and they know all this stuff. So their stock price now, it's still less than what they promised it was going to be for the IPO and whatever stock price. But they have launched this new thing with their advertising and this new thing - I've been reading a bunch about it.
And it might actually be the thing that the investors were waiting for - the big promise that Facebook made that what it has is the most special thing, which is basically like, you know, how advertisers pay Google to kind of stock you on the Internet and like serve ads to you. And Google owns that marketplace. Facebook is launching this competitor to that. People say it's doing better than Google. It might be the game-changer. Facebook has promised a lot of game-changers. Like, we will see.
SMITH: Oh, just what I needed - someone else dogging me on the Internet. But what about the Pizza Delicious guys? Are they OK?
CHACE: The pizza guys are great. They never needed Facebook. They just opened their restaurant, and they have all of these customers. Like, they have more customers than they could ever want. They have too many customers. And I asked them, like, what's the latest pizza that you guys have made? And it's this braised Brussels sprout pizza with speck, which is like kind of a little bitty prosciutto guy. And I've heard it's really awesome.
SMITH: All right. New Yorkers - doing good. That's what I like to hear.
SMITH: Thank you, Zoe.
(SOUNDBITE OF MASSIVE ATTACK'S "ATLAS AIR")
SMITH: Now an update on the results of the presidential elections. How exactly did PLANET MONEY's fake presidential candidate do? Oh, what - wait, you don't remember our fake presidential candidate? Let's check back in.
Previously On PLANET MONEY, six economists from across the political spectrum...
DEAN BAKER: Dean Baker.
RUSS ROBERTS: Russ Roberts.
LUIGI ZINGALES: I'm Luigi Zingales.
ROBERTS: Hardcore free-market.
ZINGALES: Pro-market but not necessarily pro-business.
SMITH: ...Thrown together with one impossible mission - to come up with an economic plan to rescue the economy. One catch - in order to save the country, they're going to have to work together...
(SOUNDBITE OF MUSIC)
SMITH: ...To restructure the tax code...
ROBERT FRANK: The corporate income tax makes no sense whatsoever.
SMITH: ...Eliminate cherished deductions...
FRANK: The mortgage interest deduction.
SMITH: ...To preserve the environment...
KATHERINE BAICKER: Tax energy use or carbon emissions.
SMITH: ...And finally deal once and for all with the scourge of illegal drugs.
ROBERTS: Make them legal.
(SOUNDBITE OF SONG, "SOLSBURY HILL")
PETER GABRIEL: (Singing) Climbing up on Solsbury Hill.
SMITH: And maybe, just maybe, this ragtag team can come up with a platform that every economist would love and every presidential candidate would hate - except for our fake one.
FAKE PRESIDENTIAL CANDIDATE: God bless you and God bless the United States of America.
(SOUNDBITE OF SONG, "SOLSBURY HILL")
GABRIEL: (Singing) Grab your things, I've come to take you home.
ALEX BLUMBERG, BYLINE: We're so proud of that.
SMITH: That's Alex Blumberg, my co-conspirator in running this fake presidential candidate. So...
SMITH: ...We had the election. We did not win. We'll make that very clear. But, you know, our political consultant said you would not get a single vote. They said, no one will vote for this candidate. And yet...
BLUMBERG: We did get one vote, I mean, one vote that we know of because the vote caster, Aaron V. (ph), a listener of ours, sent in a picture of his ballot where he had written in PLANET MONEY's fake presidential candidate.
SMITH: Yeah, he wrote that whole thing. We should've given him a name.
BLUMBERG: I know, exactly.
SMITH: It would've been easier. But the fascinating thing about this was part of our premise was that these were issues that nobody was talking about in presidential politics. And yet, after the election, something strange has happened.
BLUMBERG: Yes. So a bunch of stuff that our political experts and consultants said would never ever happen are now being discussed and on the table. So, for example, the first deduction that every single economist we talked to hated - they were saying this is a gigantic distorting problem in the middle of the U.S. tax code - the mortgage interest deduction for homeowners. And I'm holding right now a Reuters article from December of this year. (Reading) The U.S. tax code has many politically sacrosanct tax breaks and few rank higher than the deduction for home mortgage interest. For decades, politicians feared even to speak its name, but that may be changing as Washington grapples with ways to reduce the budget deficit.
SMITH: Oh, does it actually mentioned us in this article? Are we the reason?
BLUMBERG: Let's see.
BLUMBERG: Oh, right here - PLANET MONEY...
GABRIEL: No, it does not.
BLUMBERG: No, just joking. It doesn't mention us.
SMITH: You know, I won't take credit for it, but at the same time, I think we might have miscalculated something, which is we were sort of saying people don't talk about this during election campaigns, it's impossible during election campaigns with the premise that that's where change actually happens. But as we've seen with this whole fiscal cliff debate, like, real change may happen after an election's been settled, it's too far from the next election and there's a deadline and people are desperate.
SMITH: It just needed the right circumstances to talk about things that are incredibly unpleasant to talk about.
BLUMBERG: Yes, exactly. I haven't heard a lot of discussion about switching over from an income-tax-based system to a consumption-tax-based system. That doesn't seem to be a part of the political debate right now. But one other sort of surprising - I would say - plank from our platform, the legalization of marijuana. That has become law in two states this election season.
SMITH: Colorado and Washington - yeah.
BLUMBERG: Exactly. That's something that sort of - again, the experts were like that's a tough sell to the electorate, but at least in those two states, it was widely supported.
SMITH: And the thing that I liked about that was it was no longer sort of a, you know, personal freedom issue. In those two states, when they actually debated marijuana legalization, they debated in the same way we did, which was this is something that is an opportunity to tax and to regulate and to bring this out in the open, to take the money away from the illegal cartels and the drug dealers and move it into hands of legitimate businesses in the states. I mean, that's - they had an actual economic discussion over marijuana.
BLUMBERG: Exactly. Again - oh, with that, let's take credit for it.
SMITH: Yeah, let's do it. We are the champions. We win.
BLUMBERG: Yes. Our candidate died, but our candidate's platform lives on.
SMITH: Thank you, Alex.
(SOUNDBITE OF PETER GABRIEL'S "SOLSBURY HILL")
GABRIEL: As always, we love to hear what you think of our shows, PLANET MONEY, and all the stories we've done right and done wrong over the past year. Write us - firstname.lastname@example.org. Or if you'd like to hear more about any of the stories that we followed up on today, they are all available for your listening pleasure on our blog - npr.org/money. Have a very Happy New Year's Eve and a very prosperous 2013. I'm Robert Smith - thanks for listening.
(SOUNDBITE OF MUSIC MONTAGE)
BRUNO MARS: (Singing) Never had much faith in love or miracles.
SMITH: Thank you, Alex. This is not a hard cue for you.
BLUMBERG: (Laughter) My pleasure. It's great to be on your program. I was trying to figure out, like, what do I say?
SMITH: (Laughter) Say you're welcome. - Alex, listen. It's so good to have you back - thank you.
BLUMBERG: You're welcome. It was great to be here - great to be here? I'm here all the time.
SMITH: You work here.
BLUMBERG: That's why I'm having a hard time. I'm like - I don't usually get thanked off in the middle of the thing.
SMITH: OK. I'll just do this - I won't even thank you then. I'll do this - ladies and gentlemen, Alex Blumberg.
BLUMBERG: Take care.
SMITH: What are you now, an anchor? Courage.
BLUMBERG: Stay classy. Stay classy, Internet.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.