UNIDENTIFIED PERSON: This is PLANET MONEY from NPR.
(SOUNDBITE OF MUSIC)
JACOB GOLDSTEIN, HOST:
Bryant Urstadt.
BRYANT URSTADT, BYLINE: Hi, Jacob.
GOLDSTEIN: Bryant Urstadt, welcome to the PLANET MONEY Valentine's Day show 2020, the show where we send our love to the books and ideas and things we love.
URSTADT: I am so glad to be here because I'm so excited about my valentine.
GOLDSTEIN: To whom is your Valentine?
URSTADT: It is to Adam Minter, who covers recycling and trash, and he's been doing it basically for his whole career. And I called him up and told him that he was my special someone.
So happy Valentine's Day to you from me. (Laughter) I'm your fan.
ADAM MINTER: Thank you.
URSTADT: And I just...
MINTER: Thank you so much.
(LAUGHTER)
GOLDSTEIN: Sweet - a little awkward, but sweet.
URSTADT: It was awkward, but nicely. And I wanted to call Adam because he does something that I've always found very interesting; he covers basically only recycling and trash, and he grew up in this world that he covers. He is a third-generation scrapper, basically. His father ran a scrap yard. He worked at it when he was a kid growing up in Minnesota. Some of his first pieces were for Scrap Magazine.
GOLDSTEIN: Of course.
URSTADT: Of course. He just wrote a book called "Secondhand: Travels In The New Global Garage Sale." And a lot of it takes place at Goodwill, the chain of thrift shops. And like a lot of things he writes about, it really comes out of a very personal place.
MINTER: After my mother passed away, my sister and I were left with the responsibility of cleaning out her small apartment. And so we drove to the Goodwill in Hopkins, Minn., which is a drive-through. You literally drive through and drop your stuff off. You don't even need to get out of the car. And as we were behind a car and I was looking at the drive-through, it suddenly occurred to me that I'm the guy - my career is about following your waste, the things you don't want, around the world. And so I suddenly thought, I need to write a book about this.
URSTADT: And he embedded in a goodwill in Tucson, Ariz., for months, which to me sounds like an amazing dream vacation because I love Goodwills. Whenever I see a Goodwill, I basically go in, if possible.
GOLDSTEIN: What's, like, one of your all-time great Goodwill purchases?
URSTADT: Well, I don't like to rank them, but I will tell you the last thing I bought, which was a lamp that's about 4 feet tall with an enormous white shade. And it is on my bureau right now, and it lights my bedroom up amazingly well.
GOLDSTEIN: How much?
URSTADT: Four dollars.
GOLDSTEIN: I love it.
URSTADT: So I've been shopping at all these Goodwills, but I never really knew what Goodwill actually was. There are actually a lot of rumors out there that it's actually a for-profit business run by some evil genius. But that is not true.
MINTER: Goodwill is a charity. It's a nonprofit. It's about 100 years old. And it started out as a religious organization - it's not one now - to help the poor of Boston, basically give them job skills.
URSTADT: There are more than 3,000 Goodwill stores all across the country. It is a $6 billion business, according to Adam Minter, which is enormous. It is way larger than I thought it was. And it's not really the store I always thought it was; it's not just a thrift store. It's really an international commodities wholesaler moving clothes all over the planet.
MINTER: You know, I spent time with the guy at Goodwill of Southern Arizona who markets stuff around the world, and he showed me his Rolodex. It was people from everywhere. There were names and numbers from Pakistan and from Malaysia and from, you know, India and Africa. So it's really a global business that moves as much as any global business, and it's where the markets are hottest.
GOLDSTEIN: I love the idea that, like, just at this one Goodwill in Tucson, Ariz., not even by a port - right? - this guy is, like, doing deals with buyers all around the world.
URSTADT: And this is true for Goodwills in general. Like, the majority of the stuff that we drop off at a Goodwill - like, more than two-thirds actually - doesn't end up at the thrift store in the front. The majority of it gets sold to bulk wholesalers who take it in container ships to other continents, to other countries, where it gets sold piece by piece by local dealers. So your Metallica T-shirt is probably not going to be on display in Brooklyn like you want it to be; it's probably going to get lumped up in a giant container...
GOLDSTEIN: And sent across the world.
URSTADT: ...And sent across the ocean.
GOLDSTEIN: I'm kind of into that. I'm OK with that.
URSTADT: I think it's a good ending.
(SOUNDBITE OF MARK DUVAL AND HIS MUSIC'S "STARRY EYES")
GOLDSTEIN: Mary Childs.
MARY CHILDS, BYLINE: Hi.
GOLDSTEIN: Happy Valentine's Day.
CHILDS: Happy Valentine's Day to you.
GOLDSTEIN: What do you got?
CHILDS: I would like to send a big valentine to the barbell strategy.
GOLDSTEIN: OK. You covered finance for a long time.
CHILDS: I sure did.
GOLDSTEIN: This is, like, a finance thing.
CHILDS: It is. So envision a barbell.
GOLDSTEIN: OK.
CHILDS: It is...
GOLDSTEIN: Like, a big, heavy weight on one end.
CHILDS: Yes.
GOLDSTEIN: And then just a bar.
CHILDS: Nothing in the middle.
GOLDSTEIN: And then a big, heavy weight on the other end.
CHILDS: That's exactly right.
GOLDSTEIN: OK. So what does it mean in finance?
CHILDS: So in finance, if you have money to invest, you look at one end of a spectrum, which, say, is risk, and you say, I'm going to do the least risky thing humanly possible here and invest my money in Treasury bills or whatever.
GOLDSTEIN: OK.
CHILDS: And then I'm going to look at the very far end of the spectrum on the other side, and you put your remainder in the most risky thing that you can possibly find.
GOLDSTEIN: And nothing in the middle?
CHILDS: Nothing in the middle. So I can't tell you if it's great investing advice necessarily, but what I can tell you is that it's great life advice.
GOLDSTEIN: So it's basically like, financial ideas turned into one minute of self-help.
CHILDS: That's correct. I've just, like, internalized this and incorporated it into my everyday life - for example, in my breakfast.
GOLDSTEIN: Go on.
CHILDS: One morning, you might wake up and you're like, I need a billionaire's breakfast; I need to go to Bluestone Lane, one of the best and most prestigious coffee shops in New York, and buy the avocado toast with egg and crushed red peppers that comes in its own little cardboard house. And you're like, this is really going to work for me.
GOLDSTEIN: And costs? And costs?
CHILDS: Oh, like $15.
GOLDSTEIN: Oh, my God.
CHILDS: It's fine. It's good.
GOLDSTEIN: OK.
CHILDS: And then so that's an indulgence, right?
GOLDSTEIN: So that's one end of the barbell.
CHILDS: Yes. And then other days, you might wake up and you're like, ugh, and you eat saltines.
GOLDSTEIN: And you do actually eat both of those. I've seen you eating both of those in the office in the last couple days.
CHILDS: That's correct.
GOLDSTEIN: OK, so that's the barbell strategy for breakfast. What else?
CHILDS: I tend to do this socially, actually. I will hibernate for a few weeks, and then I'll go on, like, a weekend trip with 50 strangers or something.
GOLDSTEIN: Huh. How does that one work for you?
CHILDS: Really well.
GOLDSTEIN: OK.
CHILDS: Yeah.
GOLDSTEIN: I love it. Thanks, Mary.
CHILDS: Thank you.
(SOUNDBITE OF MARK DUVAL AND HIS MUSIC'S "THE SOFT LOOK")
GOLDSTEIN: It's the PLANET MONEY Valentine's show. We've got lots more valentines to come. We've got cash flows, bananas and, if we ever get there, Zeno's paradox.
(SOUNDBITE OF MARK DUVAL AND HIS MUSIC'S "THE SOFT LOOK")
GOLDSTEIN: Robert Smith, you have a scroll in your hand.
ROBERT SMITH, BYLINE: I have brought in my valentine because I think you need to see this rather than just have me describe it.
GOLDSTEIN: (Laughter).
SMITH: What I have done here is I have printed out the world's largest spreadsheet.
GOLDSTEIN: Wait, you've just unrolled across the desk a piece of paper that's actually, like, the joke in the movie when it's like, just a small contract, and they unroll it, and it goes down to the floor - it's that.
SMITH: Filled with numbers.
GOLDSTEIN: Wow. I should say here, you have been out on a fellowship for much of the past - well, I don't know - year and a half or so getting an MBA.
SMITH: From Columbia Business School. The MBA is in the mail. And one of the things I really loved about business school, so much so that I'm going to do a valentine to it right here, is this thing right here. It is called a discounted cash flow analysis.
GOLDSTEIN: Valentine to a discounted cash flow analysis. Obviously, I am super in.
SMITH: This is the biggest thing in the world of business and finance that I knew nothing about before I went to business school. You know how you hear about some big company is buying some other big company for some huge pot of money? You read it in the news, $17 billion. Or somebody is buying a famous skyscraper for $273 million. Almost always, someone has run a giant spreadsheet like this, a discounted cash flow analysis, to come up with a number to answer the fundamental question - how much is this thing, this building, this company? How much is it worth?
GOLDSTEIN: OK, so you got this spreadsheet that gets you this one all-important number, how much is a company worth. How do you do it? What is a discounted cash flow analysis?
SMITH: OK, let's start with the cash flow. If you want to figure out how much a company is worth, the first thing you want to know is, how much profit did the company make this year? How much do you estimate it's going to make next year, 10 years from now, 20 years from now?
GOLDSTEIN: OK, so that's the cash flow and the discounted cash flow.
SMITH: But whatever you do, don't just add up all those numbers.
GOLDSTEIN: And pay that much.
SMITH: No, that would be too much money to pay for the company because, and this is huge, a dollar of profit a year from now is worth less than a dollar today. And a dollar profit ten years from now, it's worth pennies.
GOLDSTEIN: So that's the discount part, right? This is what the idea of discounting is. It means that money in the future is worth less than money today. But, like, the hard question is, how much less? How much do you discount that money in the future?
SMITH: And that's a pretty complicated question. We talked about this a lot in class. There is inflation to factor in. There's what else you could do with the money. And for weeks and weeks, we're going down and down into mathematics here, like, bearing into this equation until we get to this one little number, which is basically, how much would you expect to make on a typical investment? And when you figure out this number, it has huge effects on the entire spreadsheet and the amount that you'll pay for a company.
And so we get to class. And the professor turns to us, and he says, for this number, let's say 5%. It's just five - just put 5% in there. And it was like, whoa. Well, I raised my hand, and I said, are you telling me - like, we've done math now for six, seven weeks straight - excel spreadsheets, so many calculations - and at the center of all valuations of companies is some MBA student going, eh, 5%? And he turns to me, and he comes close to me, looks me in the eye, and he says, exactly. That is exactly it. There is an art, a guess at the very center of all valuations.
GOLDSTEIN: I don't know how to feel about the discounted cash flow model now based on what you've told me.
SMITH: Well, I mean, you know, you could think that every time you hear in the news that some company is buying another company for $12.6 billion, you could think, well, that number is just made up.
GOLDSTEIN: I feel like that's what you just told me.
SMITH: It's totally fake. But I don't know. It felt like this had a sort of an amazing power to it, which is the entire world is guesses. We make all these guesses about the future, and it can be paralyzing, really, right? Like, why take a risk? I don't know what's going to happen. If you could take all of the risks of the future and the benefits of the future and boil it down to one number, I think it actually makes it easier to take chances in life. I think it makes it easier...
GOLDSTEIN: OK.
SMITH: ...To move forward and create new businesses and to take - and to buy things and to live in the world.
GOLDSTEIN: That's nice. So it's like, we're not quite fooling ourselves. Like, you know there's some uncertainty in it. You're not dumb about it, but still, you're doing your best. Like, you're taking a lot of intelligence that is sort of built into this discounted cashflow model and doing your best to figure it out, to get an actual answer about the uncertain world.
SMITH: Discounted cashflow analysis - it's a beautiful thing.
GOLDSTEIN: I'll take it.
(SOUNDBITE OF MUSIC)
GOLDSTEIN: Amanda Aronczyk, what are you holding?
AMANDA ARONCZYK, BYLINE: I brought in the thing that I am going to give my PLANET MONEY valentine to this year, my Banana Saver.
GOLDSTEIN: You brought a - it's, like, a plastic - I'm taking it. I'm going to rattle it. It's made of plastic.
ARONCZYK: It is made out of plastic.
GOLDSTEIN: It's yellow like a banana. It's the shape of a banana but much bigger - like, maybe a plantain size. And you can open it, and it's hollow on the inside.
ARONCZYK: Don't break my latch.
GOLDSTEIN: I almost broke your latch.
ARONCZYK: I know.
GOLDSTEIN: We can expense it.
ARONCZYK: (Laughter).
GOLDSTEIN: It's a banana carrier, sort of like a very specialized Tupperware that you put one banana in.
ARONCZYK: It's like a little banana suitcase. It's a suitcase for bananas.
GOLDSTEIN: It's a suitcase for a banana.
ARONCZYK: For a single banana. Correct.
GOLDSTEIN: And it solves a real problem. I will say my family is a - we're a big banana family.
ARONCZYK: OK.
GOLDSTEIN: But as anybody who's ever put a banana in a backpack knows...
ARONCZYK: Can't do that.
GOLDSTEIN: Disaster.
ARONCZYK: Disaster.
GOLDSTEIN: Banana-splosion (ph).
ARONCZYK: (Laughter).
GOLDSTEIN: I want to know everything about this.
ARONCZYK: OK. I'm going to tell you everything I could find out. I found the inventor...
GOLDSTEIN: No.
ARONCZYK: ...Of the Banana Saver. Yeah.
GOLDSTEIN: The Thomas Edison of the banana.
ARONCZYK: That's right. Her name is Mary Harris. She lives in Ohio. And she used to have the same kind of, like, banana catastrophes...
GOLDSTEIN: Banana-splosion (ph) problem - yeah.
ARONCZYK: Yeah - that you have and that I have. But she - unlike us, she works in manufacturing. So she had an idea for how to fix the problem, so she makes a few prototypes, and then she launches. She's in business with the Banana Saver.
MARY HARRIS: I think I started with 1,000, and that took a while to sell.
ARONCZYK: OK, so you have you have boxes of plastic bananas - like, holders in your home.
HARRIS: (Laughter) Correct.
ARONCZYK: Is that what's going on?
HARRIS: Correct. That's exactly what's going on.
ARONCZYK: In your garage? Where did you keep them?
HARRIS: I had it in my basement.
ARONCZYK: Your basement.
HARRIS: So we would form an assembly line to get them down the basement, and then I'd bring them back up when I was selling them.
ARONCZYK: So that was 10 years ago that she got started, and since then, she has sold 150,000 Banana Savers for a few bucks apiece.
HARRIS: So this is, like - she's not getting rich off of this.
ARONCZYK: No, this is more like a side hustle. I think what she does like about it, though, is there are people out there like me who are, like, devoted fans who love the Banana Saver.
HARRIS: I tell you, I get such amazing feedback from Banana Saver customers. They're the nicest people, and they take the time to email me and send me pictures and...
ARONCZYK: They send you pictures?
HARRIS: They send me pictures...
ARONCZYK: What do they send?
HARRIS: ...Of themselves posing with the product.
ARONCZYK: Really? Like, in unusual places?
HARRIS: Yes. I have gotten pictures from tree climbers, hikers, military members, people traveling in scenic places. I had one person who posed in the Dead Sea.
ARONCZYK: With their Banana Saver.
HARRIS: With their Banana Saver, yes. They're just sitting in the water with it in their hand.
ARONCZYK: (Laughter).
GOLDSTEIN: Thanks, Amanda. Happy Valentine's Day.
ARONCZYK: Happy Valentine's Day.
(SOUNDBITE OF MUSIC)
GOLDSTEIN: Still to come on the show, what will almost certainly be the best valentine to a labor market indicator that you will hear this year - also, a valentine about a paradox.
(SOUNDBITE OF MUSIC)
GOLDSTEIN: Cardiff Garcia, co-host of The Indicator, PLANET MONEY'S daily show...
CARDIFF GARCIA, BYLINE: That's right.
GOLDSTEIN: ...Thank you for coming in.
GARCIA: My pleasure, man.
GOLDSTEIN: Just this morning, I asked you, as host of The Indicator, is there an economic indicator that you want to send a valentine to? And you came right back at me with...
GARCIA: The prime-age employment-to-population ratio. That is my single favorite economic indicator about the labor market, so happy Valentine's Day to it.
GOLDSTEIN: Great. So, OK, let's talk through it - prime employment-to-population - no - prime-age...
GARCIA: (Laughter).
GOLDSTEIN: ...Employment-to-population ratio.
GARCIA: Yes. And what's great about it is you can go word-by-word, right? So...
GOLDSTEIN: OK.
GARCIA: Prime-age means that it's referring to people between the ages of 25 and 54. And the reason we look at them is that these are the people who are old enough that they're probably out of college by then...
GOLDSTEIN: OK.
GARCIA: ...Right? But they're still young enough that they probably haven't started retiring in big numbers.
GOLDSTEIN: Oh, so prime age means prime working age.
GARCIA: Exactly. These are the people who are likeliest to be working.
GOLDSTEIN: So that's prime working age.
GARCIA: Correct.
GOLDSTEIN: And then employment-to-population ratio for those people means?
GARCIA: It means, how many of those people have a job?
GOLDSTEIN: What percentage of them.
GARCIA: What percentage of those people are employed?
GOLDSTEIN: So this would be like a sort of alternative way to think about unemployment.
GARCIA: Yeah, so here's why I like this indicator so much, why I'm sending it a valentine. There's all kinds of things you can look at to measure the labor market. And so economists look at the unemployment rate, for example, and they say...
GOLDSTEIN: It's the one we hear about probably the most in the news, right?
GARCIA: Yeah. And they say, hey, it's at almost a 50-year low. Isn't that great?
GOLDSTEIN: But I know, you know, a sort of knock that a lot of people have on the unemployment rate is it only includes people who are working or looking for work, and it doesn't include people who have basically given up - right? - who have given up on finding a job. And this figure would capture that. So, I mean, I imagine is that one of the reasons this is a useful number?
GARCIA: It's a very big reason. Essentially, it just looks at a population of people who should be working, and it says, how many of those people have a job? And so in that sense, it's very clarifying. It's very direct.
GOLDSTEIN: So, OK, great. What's it telling us?
GARCIA: So to get precise, right now, the employment-to-population ratio is 80.6%
GOLDSTEIN: OK.
GARCIA: In other words...
GOLDSTEIN: So of all people between 25 and 54 in America...
GARCIA: Slightly less than 81% of those people have a job.
GOLDSTEIN: Have a job.
GARCIA: That's correct.
GOLDSTEIN: OK.
GARCIA: OK.
GOLDSTEIN: Now, and what does that mean? I mean, not everybody wants a job. Some people retire early or want to take care of the kids or whatever. So is that good, or...
GARCIA: So I think it's pretty good right now. It is certainly a ratio that has been going up throughout roughly the last 10 years. But here's a story that it tells you, that this indicator tells you that the unemployment rate does not tell you, OK? The employment-to-population ratio for the prime age group is still lower than it was when the labor market was super strong back in the year 2000. And so it seems to me like a lot of the triumphalism that has greeted the economy in recent months about how the unemployment rate is super low and how it looks like the labor market is very strong, that all seems very premature to me, right? And it's because of what this indicator is telling me, that actually, the economy has been in a stronger place in the past.
And, in fact, if this ratio got back to the place it was in the year 2000 when it was super strong, more than a million and a half more people in America would be employed. That's a big number, you know? And we might get there. Maybe another year of a strong labor market would get us there, but we're not there yet. And that's why I like this indicator so much because it kind of tells you, hey, we need to put a pause on the idea that the economy or the labor market is as strong as it can be. There's actually still some room for it to improve.
GOLDSTEIN: A million more people could be working.
GARCIA: A million and a half. More than a million and half more people could have a job, yes.
GOLDSTEIN: Prime age employment-to-population ratio.
GARCIA: Happy Valentine's Day...
GOLDSTEIN: Prime age EPOP.
GARCIA: ...To the prime age EPOP, right.
GOLDSTEIN: Thanks, man.
GARCIA: You got it.
(SOUNDBITE OF MUSIC)
GOLDSTEIN: Kenny Malone, what do you want to give a valentine to?
KENNY MALONE, BYLINE: I want to give a valentine to a paradox.
GOLDSTEIN: Can you even do that?
MALONE: I don't know.
GOLDSTEIN: OK. Go on.
MALONE: It's in the episode, I guess we've done it.
GOLDSTEIN: Go on.
MALONE: Do you know Zeno's paradox, or the most famous of Zeno's paradoxes?
GOLDSTEIN: That's where, like, you're walking across the room, but you never get to the end of the room.
MALONE: Yeah. If you want to walk from here to the wall, you have to walk halfway and then halfway from that and then halfway from that. And it's a paradox because there's infinite halfways, and you'll never get to the wall. But I love his paradox, not just because I love all paradoxes...
GOLDSTEIN: Paradoxes.
MALONE: ...But because I use Zeno's paradox on a daily basis in real life.
GOLDSTEIN: Really?
MALONE: You don't believe me?
GOLDSTEIN: I'm skeptical.
MALONE: I've a cup of coffee here in front of me.
GOLDSTEIN: You do.
MALONE: I drink coffee all the time, but I don't want to drink infinite coffee.
GOLDSTEIN: OK.
MALONE: So what I've trained myself to do is to never drink more than half of the amount of coffee in the cup. You may have noticed this in meetings. I will just keep sipping a cup of coffee even though there's barely any left. I will just keep drinking half and then half of that.
GOLDSTEIN: Oh, you mean at a given sip, at a given sip?
MALONE: Uh-huh. And that way, I'm not drinking more than a cup of coffee, but it is lasting me.
GOLDSTEIN: How long does a cup of coffee last?
MALONE: I mean, I could make this cup of coffee last, Jacob, two to three hours. And at that point, I don't want anymore even though there is some left.
GOLDSTEIN: Kenny Malone making random paradoxes work for him.
MALONE: I'm going to just walk out of this room. But first, I'll go halfway out, and then halfway out...
GOLDSTEIN: You're going to want to take off those headphones.
MALONE: ...And then halfway out. I don't need to 'cause I'll never get to the door.
GOLDSTEIN: (Laughter).
MALONE: And then halfway out.
(SOUNDBITE OF MUSIC)
GOLDSTEIN: If you are in love with some form of financial analysis or with a fruit-protection device, please get in touch with us. You can find us on social media - we're @PlanetMoney - or via email at planetmoney@npr.org.
Our show today was produced by Alexi Horowitz-Ghazi and Liza Yeager. Bryant Urstadt is our editor. Alex Goldmark is our supervising producer. I'm Jacob Goldstein. This is NPR. And I have one last Valentine. It's to my favorite Valentine's Day song, which is called "Valentine's Day." It's by Steve Earle.
(SOUNDBITE OF SONG, "VALENTINE'S DAY")
STEVE EARLE: (Singing) I ain't got a card to sign. Roses have been hard to find. I only hope that you'll be mine for Valentine's Day.
(APPLAUSE)
Copyright © 2020 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 an NPR contractor. 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.