Episode 604: Hey Big Spender : Planet Money Today, one man at the center of a high stakes negotiation, a group of poker players try to give their money away and that thing everyone loves to hate: airplane baggage fees.
NPR logo

Episode 604: Hey Big Spender

  • Download
  • <iframe src="https://www.npr.org/player/embed/387239084/387330910" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Episode 604: Hey Big Spender

Episode 604: Hey Big Spender

  • Download
  • <iframe src="https://www.npr.org/player/embed/387239084/387330910" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

STACEY VANEK SMITH, HOST:

Hey, NPR recommends the All Songs Considered podcast. Each week, Bob Boilen, Robin Hilton and NPR's music team share their favorite new songs and artists. Find All Songs on iTunes, Stitcher or however you listen to your podcasts.

DAVID KESTENBAUM, HOST:

Hello, and welcome to PLANET MONEY. I'm David Kestenbaum.

SMITH: And I'm Stacey Vanek Smith. Today, we have three short stories for you, gathered into one podcast for your listening pleasure.

KESTENBAUM: The first story is about a guy right now at the center of a very high-stakes international negotiation.

SMITH: Another one about poker players trying not to win money, but to give money away.

KESTENBAUM: And the last story, about that thing that everyone loves to hate, but maybe we should actually love - airplane baggage fees.

(SOUNDBITE OF SONG, "HEARTBEATS")

THE KNIFE: (Singing) One night to be confused. One night to speed up truth. We had a promise made. Four hands and then away.

UNIDENTIFIED WOMAN: This episode of PLANET MONEY is supported by Trunk Club, a men's outfitting service. Trunk Club is designed for guys who don't have the time or desire to go shopping. After signing up, you will be matched with your own personal stylist, who, after getting to know your preferences, will hand-pick a selection of premium clothing, pack it in a trunk and ship it all straight to your door. You'll have 10 days to try everything on, keep what you love and send the rest back. You only pay for what you keep and shipping is free both ways. Get started at trunkclub.com/planetmoney.

SMITH: There is this high-stakes international battle going on right now.

KESTENBAUM: I know.

SMITH: On one side is Greece.

KESTENBAUM: Poor Greece.

SMITH: Poor Greece. They're kind of broke, but they're really tired of bailouts and austerity. And on the other side is basically the entire rest of Europe.

KESTENBAUM: Greece is trying to - they're trying to renegotiate some parts of the bailout. And Europe, so far, is saying, no way, you know, you agreed to these terms. You took this money. This the way it is. You can't change things now.

SMITH: And at the center of all of this is this one guy, the finance minister of Greece.

KESTENBAUM: Yeah, and when I read his name in the paper, I thought, wait, him? I know that name. I know him. He's been on our show a couple times. Though, I'd say I never imagined that he would become the finance minister. His name is Yanis Varoufakis. And you know how often people who end up being finance minister - like they've been kind of planning for it since they were in high school. You know, they've always been very careful about and diplomatic about what they say. Varoufakis is not like that at all. He has been out there tweeting and blogging and talking to journalists for years and saying things that most politicians just do not say. Like, he famously called the bailout, fiscal waterboarding.

SMITH: That is definitely not political speak.

KESTENBAUM: No, and so I thought, you know, just today, since we have talked to him before and he is now this super powerful guy at the center of all of this, we'd take a little time today and just give you a little sketch so that the next time you read his name in the paper, you see a picture of him, you'll know little bit about him.

SMITH: I remember hearing about Varoufakis a couple years ago on PLANET MONEY, David, because you and Chana Joffe-Walt were doing a piece about a Greek couple and what was going on in the economy there, and it was really sad. This couple, they were going to work, they were trying to move forward with their lives and the country, the economy, was basically falling down around them.

KESTENBAUM: Katerina (ph), the woman, said she was going to work, but she wasn't getting paid. And the guy, Elias Telegadas (ph), he told us he had a kind of economic hero that helped him get through all this, a guy, he said, who understood the misery of the ordinary Greek people, who understood how messed up the austerity plan and the bailout was. He'd seen the guy on the news, though he couldn't remember his name initially.

(SOUNDBITE OF ARCHIVED BROADCAST)

ELIAS TELEGADAS: Oh, that half-baldy guy, the economist. Varoufakis, the half-baldy one. Yeah, about 40 years old - 45 years old, right?

CHANA JOFFE-WALT, BYLINE: Wait, what are you calling him? Half-baldy?

TELEGADAS: Half-baldy - has a receding hairline.

JOFFE-WALT: (Laughter).

KESTENBAUM: I think he's actually kind of handsome.

SMITH: Yeah, you know, he's a very striking-looking guy. He's got a lot of swagger.

KESTENBAUM: One of the news reports said he was like a Bruce Willis-action-hero-kind-of-material.

SMITH: Yeah, I can see that.

KESTENBAUM: So we called Yanis Varoufakis up back then and at the time, he was actually here in the United States in Seattle doing some work with a video game company. He was studying virtual economies. We started out by asking him to do a mic check - say, Peter Piper picked - that's how we do it 'cause Ps are sometimes a problem with microphones.

(SOUNDBITE OF ARCHIVED RECORDING)

YANIS VAROUFAKIS: Peter Piper picked a pickle and - I don't know what else.

KESTENBAUM: Is there a Greek tongue twister you can do?

VAROUFAKIS: OK. (Speaking Greek). Try that one.

KESTENBAUM: (Laughter) Is that she sells seashells...

VAROUFAKIS: Something like that. It's a white stone which is whiter than the sun.

KESTENBAUM: As economists go, Yanis Varoufakis is pretty unusual. He calls himself an erratic Marxist. I don't really know what that means, but he was very clear in that interview about Greece. The bailout and the imposed austerity, he said, they were just a disaster.

(SOUNDBITE OF ARCHIVED BROADCAST)

VAROUFAKIS: We are experiencing in Greece not just a recession, not just a downturn but a complete economic and social implosion. This is a long, long winter of discontent. It's our Great Depression.

SMITH: And you heard this a lot coming out of Greece at the time. And the European community's answer to this was, look, this is rough, but the problem is the Greek government is broke. You guys don't have any money. You have to make these cuts to fix things.

KESTENBAUM: Varoufakis, you know, at the time agreed that the government was a mess, but he said, look, austerity is just creating this downward spiral. Government cuts, higher taxes mean people have less money to spend, which just slows the whole economy down more. And there's this moment, listening back to this interview, where he actually lays out what he would do if he were in charge of negotiating things, which, of course, he now is. Here's what he said.

(SOUNDBITE OF ARCHIVED BROADCAST)

VAROUFAKIS: I would say to them - I would look at them in the eye and say - I say to the German taxpayers who are effectively backstopping that loan, it is immoral, it is economically irrational for me to take your money again when I know that firstly, I cannot repay it under the present course of events. And secondly, I cannot use it to stimulate my economy so as to revive it, so as to produce income from which I'm going to repay you.

KESTENBAUM: At the time, of course, Varoufakis was just an economist, you know, with a blog and he'd written a couple of books. He didn't have any power. But a few weeks ago, a new political party came into power in Greece. They'd been elected on a end-austerity platform. And they picked the new finance minister, and their new finance minister was Mr. Half-baldy, Yanis Varoufakis.

(SOUNDBITE OF MUSIC)

SMITH: (Laughter).

KESTENBAUM: This music is from an Australian public radio show called Late Night Live. It turns out, Varoufakis had lived in Australia for a while and just after he was appointed, he made time for an interview with them.

(SOUNDBITE OF RADIO SHOW, "LATE NIGHT LIVE")

PHILLIP ADAMS: But it is extraordinary, you're from comparative obscurity. You're now one of the most influential politicians on the bloody planet.

VAROUFAKIS: Just goes to show what the kind of topsy world that we are in.

ADAMS: (Laughter).

VAROUFAKIS: Doesn't it? I mean, this is what happens when you have an implosion. When you have an implosion of the economic sphere, then suddenly the political sphere follows suit. And then all sorts of riffraff, like me, come out to play.

KESTENBAUM: Varoufakis is now out there meeting with some very powerful people. You can pick him out pretty easily in the photographs. Not only does he look like Bruce Willis, but he's the only guy not wearing a tie. He's meeting with all of these finance ministers. They're all in, like, suits and ties, and he has taken to wearing an open-collared shirt.

SMITH: He is making some concessions to his new position though. He hasn't used the term fiscal waterboarding in recent history (laughter).

KESTENBAUM: I don't think so.

SMITH: He's trying to be a little bit diplomatic. But, you know, there is a lot of pressure on this guy. Time is running out. Greece needs to extend its big loan. The country's basically about to run out of money.

KESTENBAUM: It's unclear right now what's going to happen. So far, Varoufakis doesn't seem to be making much progress. The countries on the other side are basically saying, sorry, austerity, as painful as it is, is probably the best course for it. I sent Yanis Varoufakis an email yesterday asking if he had, you know, five minutes to talk about his new gig. I haven't heard back. I get it, he's busy.

(SOUNDBITE OF SONG, "HEARBEATS")

THE KNIFE: (Singing) To call for hands of above to lean on wouldn't be good enough for me, no.

KESTENBAUM: The next story is about a slightly lower-stakes game, but one that is a lot more fun to watch - the World Series of Poker. Here is the final moment from the final hand in the most recent competition.

(SOUNDBITE OF ESPN BROADCAST)

UNIDENTIFIED MAN: And a king will finish it. Martin Jacobson has his breakthrough win. He has climbed the mountain and is poker's 2014 World Champion.

SMITH: That sounds like a rugby match. It's actually from a broadcast from ESPN. And you can see the poker champ, Martin Jacobson - beard, thick-rimmed glasses, plain black shirt and one unusual detail - a patch on his left sleeve with three big letters, R-E-G.

KESTENBAUM: Our colleague Jacob Goldstein here looked into what is up with that patch. Turns out, the patch meant that Martin Jacobson was going to donate hundreds of thousands of dollars of his winnings to charity, but not just any charity. Here's Jacob.

JACOB GOLDSTEIN, BYLINE: The story of that patch starts a long way from a Vegas poker table.

ADRIANO MANNINO: My name's Adriano Mannino. I'm a philosopher from Switzerland.

GOLDSTEIN: Mannino studies ethics. He's a proponent of what's called effective giving, the idea that people in the rich world should give away a chunk of their income to the charities that do the most to reduce suffering. When Mannino started pitching this idea to the public, he had a problem. When you say some charities are especially effective, you are also saying that other charities are less effective. Essentially, you're ranking charities. You're saying some are better, some are worse. And for lots of people, that sounds cold-hearted. Isn't any kind of charitable work good?

MANNINO: Some newspaper articles were critical of this idea of ranking and said, you know, no, we should sort of uniformly praise all altruist efforts.

GOLDSTEIN: Mannino disagreed. He wanted to find people in the real world who would actually give away money based on rankings. So he needed to find people who had money, who were a little bit cold-hearted and who understood ranking, who understood that, say, three of a kind always beats two pair.

LIV BOEREE: I'm in Las Vegas, and I'm out here for a few poker tournaments.

GOLDSTEIN: This is Liv Boeree, a professional poker player whose winnings include a $1.6 million prize a few years back. A while after she won that prize, Boeree and a few of her fellow poker pros started chatting at tournaments. It seemed like they were living the dream, and yet they kept asking themselves...

BOEREE: What are we really contributing to the world? We're just going to be known as, oh, that person that's really good at this game and made some money for themselves and that's it.

GOLDSTEIN: Through mutual friends, she got hooked up with Mannino - actually went to Switzerland, had dinner with him.

BOEREE: They completely sold me. I was like of course, like, that's what we should be doing.

GOLDSTEIN: So earlier this year, the poker player and the philosopher, along with a few other people, launched Raising for Effective Giving. And a bunch of poker players put that REG patch on their sleeve. REG lists a handful of charities it deems especially effective. One key criterion - how much money it takes for a charity to save one life. The list includes charities that provide deworming medicine and that give out bed nets to reduce the risk of malaria. The list does not include the biggest, most well-known charities. And Liv Boeree is fine with that.

BOEREE: When people go, oh, well, it's not fair to say, you know, we can't apply effectiveness to lives. You can't apply mathematics to lives. Well, actually, yes, you can. The whole world is governed by mathematics, and you can either use it to your advantage to help people, or you can ignore it and stick your head in the sand and make bad decisions.

GOLDSTEIN: The poker players who wear the REG patch promise to donate at least 2 percent of their winnings. Boeree says since founding REG earlier this year, she personally has not had poker winnings to give away. It's been a rough few months at the poker table.

(SOUNDBITE OF THE KNIFE SONG, "HEARTBEATS")

SMITH: And now for something that everyone loves to hate, airplane baggage fees.

KESTENBAUM: I don't hate them, you know.

SMITH: How is that possible, David?

KESTENBAUM: I mean, I hate paying them. But I get the economic idea - right? - which is that it costs money and fuel to fly a bag. So if you're going to bring a bag, you pay extra. And if you're not going to bring a bag, you don't pay extra. It allows me to fly cheaper if I'm not bringing one. So I do kind of feel good about the system.

SMITH: Well, now you can feel good about it in another way, David, because if you look at how much you pay per pound for your bag, it turns out you're getting a pretty good deal.

KESTENBAUM: This is the story you did, Stacy. Here it is.

SMITH: Let's just get this out of the way. Everybody hates baggage fees. But what you don't realize when you're sitting in the cabin is that there's this intense competition for space in the belly of the plane. There are only so many pounds a plane can carry. So your 40-pound bag means the airline can take 40 pounds less in cargo.

What kinds of things are in the cargo space of an airline?

MARISA GARCIA: Practically everything that you can imagine.

SMITH: Marisa Garcia writes about airlines.

GARCIA: Things that are going to end up in our stores, electronics or clothes or livestock and...

SMITH: Livestock, like, they ship cows in a cargo hold?

GARCIA: I don't know about cows. But I do know that they ship sheep. There's a lot of shipping of sheep between New Zealand and Australia and the continents.

SMITH: That's right. Your hair dryer, hiking boots and balled-up sweaters are competing for space with sheep - or, if your plane is headed to New York City, a whole lot of shellfish.

SANDY INGBER: This is our oyster bar. You have Island Creek, which is from Massachusetts. These are Shigoku from Washington State.

SMITH: Sandy Ingber is the executive chef at the Grand Central Oyster Bar in Manhattan.

INGBER: OK, we're the largest seafood restaurant in New York City - not the fanciest, but definitely the freshest.

SMITH: Every day, 1,000 oysters fly here from all over the world to be shucked and iced and slurped down with mignonette sauce.

Where is the farthest that you've ever flown an oyster from?

INGBER: Tasmania.

SMITH: No way.

INGBER: Yeah, (shucking and eating an oyster) amazing.

SMITH: Your suitcase is competing with his oysters. If you pack too much, his bivalves get bumped.

INGBER: People go first. Freight goes last, even fresh food.

SMITH: Is that, like, if people check too many bags, then there's not room? Or...

INGBER: Yeah.

SMITH: Ingber pays about a nickel per oyster to put his freight on your flight. On average, it works out to about a dollar a pound for cargo - a dollar a pound for cargo. So take a look at your luggage, and do the math. The average checked bag is 35 pounds. Most baggage fees are $25. So if you're just going by cargo prices, most travelers are getting a deal. You could argue that we should be paying more to check our bags.

BILL COY: No, I wouldn't want to.

SMITH: Bill Coy (ph) is on his way to Washington, D.C. with a suitcase he has to check.

Do you know how much your bag weighs?

COY: I have no idea. I'm going to guess about - this one's about 30 pounds.

SMITH: Do you mind if we way it?

I brought a scale.

Let's see. There we go. So it's about 38 pounds.

Would Coy pay $38 to check his bag?

COY: You have to change clothes and that sort of thing, you know. If I didn't have to, I wouldn't (laughter).

SMITH: Now, there is an argument that Bill Coy did just spend a couple hundred dollars on a plane ticket. Couldn't that make up for the 13 pounds he's not paying for? Our airline expert Marisa Garcia says it's not that simple. Airlines have a very slim profit margin. And people like Bill, sitting in a seat, cost a lot of money. They need flight attendants and safety videos and soft drinks.

GARCIA: When you sell the ticket, the average profit margin for that ticket is $6.

SMITH: Six dollars, whereas cargo doesn't demand free pretzels - much higher profit margin.

So why do they carry people at all?

GARCIA: Airlines are meant to carry passengers. And they get benefit out of carrying passengers. For one thing, they get to exist.

SMITH: Even with the tiny profit margin, airlines always have the hope that they can get passengers to spend more - more cocktails, more in-flight movies and when they dream them up, more fees.

KESTENBAUM: Stacey, you know what I took away from that? I should always bring a bag. But I should sell out the space in that bag to companies that need to ship stuff. I could make money.

SMITH: That doesn't really surprise me that much at all, David. That's a great takeaway (laughter).

(SOUNDBITE OF SONG, "HEARTBEATS")

THE KNIFE: (Singing) And you kept us awake with wolf teeth, sharing different heartbeats in one night.

KESTENBAUM: Today's show was produced by Jess Jiang and Ryan Kailath - Kai, like Keira's doll, lath, like the planet Hoth.

SMITH: From "Star Wars."

(LAUGHTER)

KESTENBAUM: If you have questions or comments, send us email. We're planetmoney@npr.org. And if you're looking for something else to listen to, check out the All Songs Considered podcast. Bob Boilen, Robin Hilton and the NPR Music team share their favorite new songs and artists with you. You can find All Songs Considered on iTunes, Stitcher or wherever you get your podcasts. I'm David Kestenbaum.

SMITH: And I'm Stacey Vanek Smith. Thanks for listening.

(SOUNDBITE OF SONG, "HEARTBEATS")

THE KNIFE: (Singing) To call for hands of above to lean on wouldn't be good enough for me, oh. To call for hands of above to lean on wouldn't be good enough for me, oh.

Copyright © 2015 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

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.