Make Me Smart July 20, 2022 transcript

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Kai Ryssdal: Must be Juan Carlos, because he’s the only guy who does it. Anyway, everybody, I’m Kai Ryssdal, welcome back to Make Me Smart, where we make today makes sense.

Kimberly Adams: And I’m Kimberly Adams, thank you for joining us for Whaddya Wanna Know Wednesday. And that means it’s time to answer the questions that you – thank you very much, do send us. And so yeah, we’re ready to get to it.

Kai Ryssdal: If you have questions about the economy, or business, or technology, email us makemesmart@marketplace.org. Or leave us a voicemail, our number is 508-U-B-SMART, lots of ways to get ahold of us. So here we go.

Kimberly Adams: Yeah. First up is a question from Liz in Colorado. She writes, I’ve been hearing for years that the American consumer is responsible for 70% of the economy. But what about other countries, developed or otherwise? How much of their economies are dependent on how much their citizens consume? Are we number one? And Kai, since you love the statistic, Why don’t you take this one?

Kai Ryssdal: I do. So yes, first of all, we are number one, generally speaking, but here’s the deal. So that 70% figure that you hear all the time, including sometimes on Marketplace, although when it comes out of my mouth that always carries this caveat, which is that consumer spending or spending on behalf of consumers is approximately three quarters of this economy. That is to say government expenditures, private company expenditures, whatever on behalf of consumers, also counts in that. So it’s not like just spending dollars out of your pocket book is 70% of the economy, right? It’s spending by or on behalf of consumers. So that’s item number one. Item number two is yes, we are in fact, number one, generally speaking, among developed economies, according to some data from CEIC, which is a data company now owned – it should be noted here – by a couple of Chinese companies. But it’s reliable data. In the UK, it’s about 63% of GDP for consumers and spending on behalf of, 52% for the European Union writ large, which kind of makes sense as you go from the richer countries in the north of Europe to the less well off countries in the south of Europe, 38% for China, which obviously makes sense over there, too, because there’s a whole lot of government spending over there on behalf of consumers. Also, interestingly, and this one’s from CNBC, and thanks to Marissa for pointing this out, Chinese consumer spending is expected to grow by almost 8% a year over the next decade. That’s a lot. 8% a year for 10 years. So a whole bunch, which would get them sort of, you know, generally close to kind of where we are. So yes, we’re the biggest. Yes, it’s bigger than other countries. And you got to take this caveat away. It’s not just you and me and the guy down the road spending money, it’s spending on behalf of consumers as well. That’s important.

Kimberly Adams: But what spending is not either directly or indirectly on behalf of consumers?

Kai Ryssdal: Depending on spending, just for the biggest most egregious example, right?

Kimberly Adams: Okay so, government spending?

Kai Ryssdal: Yeah, but government spending on behalf of consumers. So security payments, Medicare, Medicaid payments, right? Social network – not social network, social safety net payments, right? That’s all on behalf of consumers. A huge amount of this economy is on behalf of consumers.

Kimberly Adams: Okay, so yeah, so what’s left, I guess, is spending on behalf of the government? Because doesn’t it all coming back to consumers?

Kai Ryssdal: Well, I mean, yes, in theory, the government spends money in our name, right. But spending on a, on a, you know, $35 billion plane or something is not direct consumer spending, on behalf of consumers. Yeah. Anyway, there you go. All right. Ethanol today. Here you go.

Clayton: Hey, guys, this is Clayton calling from Dallas, Texas. I wonder if you can make me smart about ethanol. Is it the subsidies that make the ethanol cheaper or is it actually economically cheaper to grow corn and turn it into fuel? Thanks for your help.

Kimberly Adams: You know, I was looking at this before the show, and I thought this was gonna be such an easy question to answer. And it’s really not. And thanks, Marissa, for sending me down like one of the deeper rabbit holes I’ve been down lately. But anyway, this is in the news right now, because President Biden is starting to allow the sale of E-15 – which is a certain type of ethanol, basically, I think it’s what 15% instead of 10% – to be sold in the summer months, as opposed to just in the winter, in order to help with high gas prices at the pump. So, most gasoline sold in the US already contains some ethanol. It’s produced from corn, and usually it’s like 10% ethanol or less. Although, in Texas where Clayton is from, you can actually buy gas without any ethanol, which is called pure gas, or zero ethanol fuel. And that doesn’t have any ethanol in it, because you want, I guess, that pure petroleum product. Anyway, in terms of why ethanol is cheaper than regular gas, at least to buy, we spoke with one expert. Colin Murphy of the Policy Institute for Energy, Environment and the Economy at UC Davis. And he said, it’s actually really tough to calculate the real prices, because there are lots of subsidies involved that can conceal the actual costs from researchers. And there’s also a lot of other things to sort of keep in mind, but we’re gonna get to that in a minute. At the pump, a gallon of ethanol does tend to be cheaper than a gallon of gas. Although when you break it down per mile, it’s slightly more expensive, because ethanol can burn faster, so you may get fewer miles per gallon. And so whether it’s better for the environment, that is where the question gets a lot more challenging. And researchers are trying to figure that out. There’s this really interesting piece from Vox that talked about how, you know, yes, it’s better to maybe grow an acre of corn that gets turned into ethanol, and then you don’t use that much of fossil fuels. However, if you using that acre of corn for ethanol mean someone has to, you know, cut down trees somewhere else to grow that same acre of corn for food, for humans or livestock, or, you know, someone’s growing soybeans or something else to offset that corn being diverted for fuel, then those environmental impacts get a lot squishier. And so it’s hard to tell but at the same time, adding ethanol to gasoline makes it higher octane. And you know, you need to get to that 87 octane at least that you see on the pump. And gas companies would have to add something into petroleum-based gasoline to raise that octane level anyway, so it kind of may as well be ethanol, since it’s a little bit better. But it’s really complicated actually.

Kai Ryssdal: It’s so complicated. It’s so complicated. Yeah. And people just don’t want to think about it. They just want to pull up and not have to pay six bucks a gallon. That’s the deal.

Kimberly Adams: Yeah, drive less, how about that. Again. All right. Here’s our next voice memo of the day.

Mara: This is Mara from Maryland, I’ve been looking to buy a car for about a year now. In particular, I’m looking for one of those minivans of which Kai is so fond. The model color and trim line I’m looking for is pretty much unavailable in my part of the US. And when one does pop up, the dealer has it priced anywhere from $7,000 to $12,000 over invoice. Is this because the chip shortage is continuing? Or is there something else going on? Please make me smart.

Kimberly Adams: I know you love this one.

Kai Ryssdal: Yes, and. Yes and. So first of all, over invoice, right? That’s the, invoice is what the manufacturer basically charges the dealer and then dealer obviously has their own markup. Here’s the deal that was specifically with minivans, right, and I did an interview about this on Marketplace a number of weeks ago with a guy from the Journal who had written about this. We also called Michelle Krebs. She’s at Cox automotive. She does a lot of analysis there. Here’s the deal. minivans are crazy popular right now, right? People want to get out. They’re using minivans for travel. They’re using minivans to haul stuff. They’re using minivans to live in. They are crazy, crazy popular and thus, high demand and low inventory because of chip problems and supply problems and all of those things that we’ve been talking about are letting dealer say, I want $7,000 to $12,000 over what I paid for this. And that’s exactly what they’re doing. I should say here, just for the record, since honestly, I’ve had a couple of people contact me about my Sienna. I can’t really sell to somebody who heard about it on the podcast. I just, I can’t ethically do that. So thank you all very much for your interest. But, but, but I can’t.

Kimberly Adams: You can have such a markup, man.

Kai Ryssdal: I totally could, I totally could. But I can’t. Let’s not get APM ethics lawyers involved in this, shall we? But yeah, after years – during which I was in my prime minivan driving years, by the way – after years in which we were laughed at now we’re cool. That’s all I’m saying. That’s all I’m saying. There you go. Oh, also sorry, one more thing. And Marissa put this in the in the prep, and I should mention it. Toyota now has hybrid minivans, which are super popular, very hard to come by though. So if you want a hybrid minivan, which I would – well, I wouldn’t buy one now. But if I were getting a minivan, I would go hybrid. Super hard to come by. But anyway, they’re there.

Kimberly Adams: The very first car I ever had was actually a hybrid, when very few companies were making them. It was a Ford Escape Hybrid in 2005. Because the factory that made them was very close to where I went to school. And so it was one of the earlier ones to even like, exist. Kept that thing for years and then gave it to my cousin.

Kai Ryssdal: You know, what’s so interesting is, I mean, we’ve been messing around with de-fossil-fuelizing our car chain for 25, 30 years now. And only now in the last couple of years is really… It’s not great, not great. Yeah. Anyway, Brooke. Brooke, Brooke, Brooke, go.

Brooke: Hi, Kimberly and Kai. This is Brooke calling from Baltimore. Kimberly you specifically asked, how does everyone process the news? And I really wonder, how does this affect productivity at work? What are the implications of people being burnt out from the news in bringing it to their daily job? But no one I know is okay. And we’re still going to work. And where does it end? Thanks for answering my question.

Kimberly Adams: Thanks for giving the impossible question to answer. Oh, man, yeah, nobody’s really okay. First of all, if you are struggling, please do get help. Like, a lot is happening. And I’m not going to sit here and diminish everything that’s in the news lately has not been a lot. And sure, you can always dig into the news and find the horrors of the world. But it seems that many of the horrors are kind of at the surface at the moment? So just take care of yourselves. But to actually get to the question, there is a lot in there, so we’re going to parse it out in pieces. First of all, people do experience the news at all sorts of level. For some people, you know, are experiencing it at the macro level, maybe you’re distracted at work, because you’re watching the January 6 hearings, I wouldn’t know anything about that at all. And in that you can look at research into worker productivity during other big news events. So for example, after the November 2016 election, the software company “Better Works” surveyed 500 full-time American workers. 29% said they’d been less productive at work since the election. 87% of them said they read political social media posts during the day. And 50% reported seeing a political conversation turning into an argument at work. And so this was after Donald Trump was elected. So that’s one part of it. Oh, also, during the Brett Kavanaugh confirmation hearings, Challenger, Gray & Christmas researchers calculated that testimony could cost US employers as much as $1.76 billion in lost productivity. And that number came from the story in The Guardian. It sounds like a lot of money. But that actual costs, individual companies may not be all that much. It’s just sort of a big number in total. And there’s always going to be some kind of distractions at work. And part of that just factors into the cost of doing business. However, that’s if you get to experience it at the macro level. On the other hand, if you’re someone who might be experiencing it more closely, if you are, you know, a person who lives in a community where there has been a mass shooting, or if you are a black person in America and another black person is shot by police under controversial settings or if you are someone who experiences pregnancy and you see this Roe v. Wade decision, or the overturning of Roe v. Wade and that kind of hits you personally, all of those can have a much more significant impact. And whether or not we should be framing it in terms of worker productivity is a little meh. Because, you know, some of this is about how we live our lives, and work is only part of our lives. We asked Marketplace’s workplace culture reporter, Meghan McCarty Carino, about this topic in particular, when we are preparing this answer. She’s been thinking about it quite a bit too, and told us that she’s got plans for more coverage. So you should stay tuned for that. Megan always brings a lot of really good context to this stuff.

Kai Ryssdal: Yeah. And that was a great question, right? Because absorbing the news and not burning out on the news, it’s all real stuff. Tell you what, let’s leave it there. Because that’s a good end. And we’ll save the next one for another day. And meanwhile, thanks for listening. Back tomorrow with more news and other things that struck our fancy, and we’ll make you smart on all the things. All of them, that’s what we do.

Kimberly Adams: We will try. In the meantime, keep sending your questions. Our email is makemesmart@marketplace.org. Or you can leave us a voicemail at 508-U-B-SMART.

Kai Ryssdal: Make Me Smart is produced by Marissa Cabrera. Olivia Zhao is our intern. Ellen Rolfes writes our newsletters.

Kimberly Adams: Today’s show was engineered by Juan Carlos Torrado. Ben Tolliday and Daniel Ramirez composed our theme music. And our Senior Producer is Bridget Bodnar. Oh, my goodness, Kai. What happened to you?

Kai Ryssdal: Oh, I was running. It was Monday morning, like 7:15, I got a great run. And I was kind of spacing out as I usually do when I run, because that’s why I run, right. And all of a sudden, I swear to God, this is what happened. All of a sudden, my face was hitting rocks. I did not even have – my hands are completely scar free, I didn’t even have the chance to get my hands up. I literally hit – the worst one was. I know that my chin looks bad, but the worst one was right on the cheekbones. Yeah, my cheekbone was really bad. Honestly, I kind of got lucky, to be honest.

Kimberly Adams: Yeah, that could have been a really bad head wound. Geez, I’m glad you’re okay.