Answering Your Questions On Stocks, Bagged Milk, Shrinkflation, and Wealthy Tech : Planet Money : NPR




UNIDENTIFIED PEOPLE: (Singing) PLANET MONEY listeners’ questions.



Hello, and welcome to all you PLANET MONEY listeners, wherever you are tonight. It’s that time again. We’re opening up our hearts and our phone lines to hear the economic quandaries that are keeping you up at night. We know it’s a big, confusing economy out there. And tonight on the show, we want to know, what economic mystery is ailing you?

I’m your host, Alexi Horowitz-Ghazi. And we have a bunch of callers lined up just waiting to ask their questions. Why do many Canadians drink their milk from plastic bags? Is it just you, or are your cereal boxes getting smaller? And what in financial tarnation is going to happen with all those meme stocks? All that and more coming up on PLANET MONEY listener questions. Pour yourself a glass of wine, maybe light up some candles, and keep that podcast app dialed.


UNIDENTIFIED PEOPLE: (Singing) PLANET MONEY listeners’ questions.


HOROWITZ-GHAZI: Welcome back to PLANET MONEY, the only late-night podcast for all you lonely wonks out there.

Hello, caller. You’re on the line.

JOSH CHENCH: Hi, PLANET MONEY. This is Josh Chench (ph) from Los Angeles. And I was hearing all of these stories about people buying the GameStop stock. And I was just thinking, when stocks go up, what happens with that money as far as the company is concerned? Do they make money off of that? These meme stocks are so out of the ordinary that it just brings questions to light that I realized I’d never thought to ask.


HOROWITZ-GHAZI: OK, to help answer this question, I’m joined now by PLANET MONEY’s newest host, Erika Beras. Hi, Erika.


HOROWITZ-GHAZI: And so what Josh is talking about here – he’s talking about GameStop in particular. But GameStop is part of this kind of category of companies that – we’ve been calling it meme stocks recently. So maybe just to start, if you could give us kind of a little backstory or primer on what is a meme stock.

BERAS: So a meme stock’s a stock that goes viral among individual investors, not institutional investors.

HOROWITZ-GHAZI: Right, OK. So these aren’t, like, hedge funds or investment bankers. These are just regular people kind of buying stocks piecemeal on apps on their phones.

BERAS: Right. And they’re buying shares in companies like GameStop, Bed, Bath & Beyond, AMC. The more people are buying them, the more the stock is worth and the more popular they become. And next thing you know, the stock is, like, pushed to values that don’t seem to be justified by the company’s profits alone.

I decided to look at AMC. That’s the movie theater chain. I spoke with this woman, Kimberly Brooks (ph). She’s 54. She lives in Indiana. She’s worked at a steel mill for decades. She’s never bought individual stocks before, but she bought a hundred shares of AMC back in January because she loves to go to the movies.

KIMBERLY BROOKS: Some movies you just have to experience in the movie theater, having your popcorn, and just your whole concentration is on the movie. And the only way you can get that is to go to the movie theater.

HOROWITZ-GHAZI: OK, so it sounds like Kimberly is all-in on the AMC meme stock bandwagon. How did she end up doing?

BERAS: Well, she bought her first hundred shares when one share cost just over $7. Now one share is worth around $50, which is a pretty wild return on that investment – about a 600% return.

HOROWITZ-GHAZI: All right, so it’s working out for Kimberly OK at the moment. But to get back to our listener question, like, what does this actually mean for AMC and these other companies that become meme stocks?

BERAS: So both AMC and GameStop used the meme stock momentum to raise money. For a while, AMC was watching Kimberly and other people like her get rich off their stock. Typically, when someone buys a stock, they’re buying it from another investor, not from the company itself. But AMC wanted to get in on the action, so they did this thing that companies sometimes do. They decided to create millions of new shares and sell them to enthusiastic investors like Kimberly.

That’s what GameStop did – and AMC. They each raised over a billion dollars. With that money, they can pay off debts or buy other companies. And to keep those small meme stock investors holding the stock, AMC’s giving them free popcorn when they go to the movies. Kimberly Brooks, that AMC stockholder, for her first big post-vaccination outing with her kids, she went to – where else? – an AMC movie theater, and she went right up to the manager.

BROOKS: I walked into that movie theater like a boss (laughter). I told them, you know, I was a stockholder and, you know, you got to listen to me ’cause I’m your boss now. And we just had so much fun going back-and-forth on the AMC stock. And he walked me to the counter to get my popcorn.

HOROWITZ-GHAZI: OK, so it sounds like Kimberly is having a lot of fun with her new stockholder status. But at the end of the day, was becoming a meme stock, like, a good deal for the company?

BERAS: Sort of. Except Kimberly says the reason the manager was able to personally walk her to her popcorn was because no one else was there.

HOROWITZ-GHAZI: Womp womp (ph).

BERAS: And that’s the main thing. Even with high stock prices, people aren’t going to the movies the way they used to. And we don’t actually know if it’s a good long-term deal for AMC. The company can use this valuation to keep raising money, but only as long as shares stay high. And actually, this week, AMC said it was abandoning plans to issue 25 million more shares because shareholders were split on the decision, some of them fearing that flooding the market with new AMC shares could tank the price.

HOROWITZ-GHAZI: OK, so these companies have made money off of their meme stock status, but that doesn’t mean that success is here to stay.

BERAS: That’s right.

HOROWITZ-GHAZI: Erika Beras, thank you so much.

BERAS: Sure. Thank you.


HOROWITZ-GHAZI: You’re listening to PLANET MONEY listener questions. Next caller, what’s on your mind?

NATHAN SMITH: Hi, PLANET MONEY. I’m Nathan Smith (ph) from California, and I’ve got a burning question I got to ask you.

HOROWITZ-GHAZI: Those are our favorite questions, Nathan. Hopefully we will have a scorching-hot answer for you.

SMITH: I’ve always joked with a friend who lives in Canada about how they drink their milk from a bag. And at one point he told me, well, you don’t understand. It’s because of how, economically speaking, it just makes more sense for milk to be in a bag. And I was like, is that really true? So why is it that Canada bags their milk? Please, PLANET MONEY, you’re the only one I can count on for this. Can you help me out?

HOROWITZ-GHAZI: Wow. Worry not, Nathan Smith. You’ve come to the right place. Nathan is right. In parts of Canada, milk does not come in the hard plastic jugs we know and love here in the U.S., but in a thin, jiggly plastic bag. So for this, we have brought in our resident milk sleuth, Sarah Gonzalez.

SARAH GONZALEZ, BYLINE: (Laughter) Am I the resident milk sleuth? OK.

HOROWITZ-GHAZI: But I understand you spoke to an official – a more official milk expert, Andrew Novakovic at Cornell University.

GONZALEZ: Yeah, and milk expert is not exactly how Andrew would introduce himself. That’s a little narrow for Andrew. He is a whole dairy economist.

And do you have a favorite dairy product – milk, cheese, butter?

ANDREW NOVAKOVIC: (Laughter) I grew up in Wisconsin.

GONZALEZ: So you got to say cheese.

NOVAKOVIC: Yeah, yeah, yeah.

GONZALEZ: OK. Makes sense.

All right, Andrew is going to tell us how Canada ended up selling milk in bags. But first, I just had to ask him, like, how do you even pour milk out of a flimsy bag? And here’s how it works. First, Andrew says milk is really only sold in bags in eastern Canada. So when you walk into a grocery store there, in the refrigerator section, you see these jiggly, wobbly bags of milk stacked on top of each other. And inside each bag is, like, three smaller bags of milk.

HOROWITZ-GHAZI: OK, so it’s like a milk inception, like bags of milk within bags of milk. One bag of milk, three bags inside.

GONZALEZ: Yeah, one bag of milk with three bags inside. And when you get home, Andrew says you take out one of the smaller milk bags, you put it in some kind of pitcher, then you cut off one of the edges of the plastic bag while the bag is in the pitcher. And then you just pour your milk out from the pitcher from then on. Bag in a pitcher, pitcher in the fridge. There’s scissors involved. That’s the process.

HOROWITZ-GHAZI: They really make you work for your milk in eastern Canada.

GONZALEZ: I mean, there’s just a lot of extra steps. Americans would never do this.

HOROWITZ-GHAZI: But why does Canada do it this way?

GONZALEZ: All right, before I tell you how Canada ended up on, like, team milk bags, Andrew says we should know why in the U.S. the hard plastic milk jug became so popular. The milk jug came out in, like, the 1970s, and it became really popular immediately for a few reasons, Andrew says. It had a built-in handle, unlike, say, a milk carton. It had a tight screw top so the milk felt safe inside. And the jug was clear so you could see if you were running low, which was apparently very important to Americans – all about convenience.

NOVAKOVIC: In the case of Canada, the plastic bag became popular for a slightly different set of reasons. The one that they talk about the most is this conversion to the metric system.

GONZALEZ: The metric system. In the 1970s, Justin Trudeau’s dad – so the current prime minister of Canada, his dad, Pierre Trudeau – he led the conversion to the metric system in Canada. So Canada had to switch every container and package in the country that said gallons or pounds to liters or kilograms.

NOVAKOVIC: This is metrification, right? And as you might imagine, not everybody in Canada was crazy about this idea.

GONZALEZ: This, I imagine, is a pretty expensive transition to make new packages for everything that’s sold in a grocery store.

NOVAKOVIC: Yeah, it is. And in fact, that’s always one of the top reasons that are given for why the United States doesn’t go to the metric system – that the cost of conversion would be enormous.

GONZALEZ: Milk could no longer say 1 gallon. It had to say 3.78 liters or some other round number, like 4 liters. So the story goes that in Canada, when milk processors had to create these new milk jugs and cartons, they would’ve had to create, like, these new molds at the factory. And it was just easier to cut up a plastic bag to the right measurement and print a new label. So that is apparently when milk bags became a thing in Canada.

HOROWITZ-GHAZI: OK, so now the kind of big, looming economic question at the heart of this – is milk cheaper in Canada because it’s sold in these bags?

GONZALEZ: So in Canada, milk is actually more expensive than it is in the United States.

HOROWITZ-GHAZI: What? Come on.

GONZALEZ: I know, but it has nothing to do with milk bags versus milk jugs. Andrew says packaging milk in a thin plastic bag is a few cents cheaper than using a thicker plastic jug, but milk is still more expensive in Canada for these totally unrelated reasons. There are these complicated price guarantees and production limits on milk in Canada, which drive up costs.

HOROWITZ-GHAZI: OK, so eastern Canadians drink milk out of bags because of the metric system. And, yes, milk there is more expensive, but it’s the milk itself. Don’t blame the bag. Sarah, thank you for your milk reportage.

GONZALEZ: Any time.


HOROWITZ-GHAZI: All right, listeners, we’re going to take a quick break, but when we come back, more economic puzzles to mend your broken heart. We hear about a stealthy kind of inflation you probably haven’t noticed yet and get a glimpse into the technologies of the future.


UNIDENTIFIED PEOPLE: (Singing) PLANET MONEY listeners’ questions.


HOROWITZ-GHAZI: Hello, and welcome to PLANET MONEY, where all your economic anxieties are welcome. What seems to be troubling you, caller?

GREG ROSALSKY, BYLINE: Hey, PLANET MONEY. Longtime listener, first-time caller. I’m just wondering – and this totally isn’t for me; I’m just asking for a friend – is there a way you can have inflation without raising prices?

HOROWITZ-GHAZI: Greg, is that you – Greg Rosalsky, PLANET MONEY newsletter reporter?

ROSALSKY: OK, yes, Alexi, it’s me, Greg. Subscribe to the newsletter – yada, yada, yada.


ROSALSKY: I just wanted to answer this question.

HOROWITZ-GHAZI: There’s no way I wouldn’t recognize that voice.

ROSALSKY: To be fair, Alexi, we have been getting a lot of questions from listeners lately about inflation – whether it’s happening, whether it’s as bad as it sounds. Are, you know, higher prices, just like a temporary blip, or are they here to stay? Honestly, I don’t really know. I don’t think really anybody does. But I wanted to sneak onto the show because I found this really interesting form of inflation. Nobody’s really been asking about it yet, but maybe they should be.

HOROWITZ-GHAZI: OK, but we are definitely seeing inflation right now, right? Like, lumber’s more expensive than usual. Gas prices are up.

ROSALSKY: Oh, for sure. So, like, normally when you think about inflation – right? – like, you think about, you know, the price of products going up. But this type of inflation is different. It’s like its bizarro twin. It’s not when, you know, the price inflates; it’s when the size of the product deflates – you know, when it shrinks. And it’s called shrinkflation.

HOROWITZ-GHAZI: Shrinkflation.

ROSALSKY: Shrinkflation.

HOROWITZ-GHAZI: So the idea is you’re paying the same price for a little bit less of whatever it is you’re buying.

ROSALSKY: You got it, Alexi. You might not have noticed this, but there’s this guy, Edgar Dworsky, who’s definitely noticed it. He’s a longtime consumer advocate. He’s been tracking shrinkflation for years. And he says as prices have been rising around the economy, he’s seen this uptick in shrinkflation.

EDGAR DWORSKY: So I went to my local Stop & Shop, and I looked in the cereal aisle.

ROSALSKY: And he found two different boxes of Cocoa Puffs, both of them family size, but one was 19.3 ounces and the other was 18.1 ounces.

DWORSKY: I actually took them up to the scanner, and they were all on sale for the same price.

ROSALSKY: Edgar has spent decades tracking examples of companies shrinking their products on his website And he says companies have been doing this forever, but the term shrinkflation is actually somewhat new. It was coined about a decade ago. Edgar prefers referring to the practice by the older name, downsizing. But it means the same thing.

DWORSKY: If manufacturers are faced with increased raw material prices, let’s say, or increased transportation costs, they have a couple of options. They can raise the price, but they know consumers will catch if the orange juice, which was always 2.99, all of a sudden was 3.19, or they could take out a few ounces from the carton. It is a sneaky way to pass on a price increase.

ROSALSKY: Edgar says that shrinkflation often comes in waves. And it tends to track inflation, which is why when the government started reporting an uptick in inflation a few months ago, he was on the lookout for its devious cousin. Sure enough, it seems to be here not just in the cereal aisle, but, you know, with products like Tillamook ice cream, Royal Canin cat food and Charmin toilet paper. And, Alexi, to add insult to injury, Charmin recently shrank the size of their toilet sheets – so not just less sheets per roll, but smaller physical squares. I mean, talk about a crappy deal. Am I right?

HOROWITZ-GHAZI: Never one to resist a poop pun, Rosalsky. So does this mean we’re just, like, stuck with tiny toilet paper squares on smaller and smaller rolls from now on?

ROSALSKY: Sadly, yes, Alexi. Edgar Dworsky says that shrinkflation is often a one-way street. I mean, once stuff shrinks, it often stays shrunk. We may never get back those couple of ounces of, you know, Cocoa Puffs or Tillamook ice cream now that they’ve been shrinkflated away.

HOROWITZ-GHAZI: All right, Greg Rosalsky, thanks for the question I didn’t know I had and, I guess, for changing the way I go around the grocery store.

ROSALSKY: You’re welcome, Alexi. I’m glad I could be of small service.

HOROWITZ-GHAZI: Small and getting smaller, Greg. And if listeners want to know even more about shrinkflation, Greg did an even deeper dive into all of this for our daily podcast, The Indicator.


HOROWITZ-GHAZI: Here’s our next listener. Hello, and welcome to PLANET MONEY.

PASTA: Hello, PLANET MONEY. This is Pasta (ph). I’m from Portland, Ore.

HOROWITZ-GHAZI: Thanks for your call, Pasta. What’s on your mind?

PASTA: I was on a road trip with my mom, and my mom was telling me about how when she was young, nobody had cellphones, but rich people had, like, remote control-looking cellphones, and now we have these super light cellphones – most people have them. But what gadgets do rich people have today that we might all have in the future that might become less expensive and more accessible?

HOROWITZ-GHAZI: OK, Pasta, you may not have heard of this, but what you’re talking about fits into this classic theory in marketing and communications called the diffusion of innovation. The basic idea is that new technologies take a while to take off. They start out inefficient and expensive, and only a handful of early adopters with disposable income can afford to try them. But after a while, the technology becomes more efficient. Prices drop and, suddenly, uptake starts skyrocketing faster and faster until eventually the vast majority of possible consumers have adopted it. This pattern has played out over and over again in economic history.

But in order to find out which specific technologies are in their infancy nowadays that might take off and become household staples, I put the question to consumer tech analyst Carolina Milanesi.

CAROLINA MILANESI: From a gadget perspective, I think about things like, you know, Peloton that are over a couple of thousand dollars and help you stay fit. You know, those are still expensive for your average consumer thinking about an investment from a health perspective. But it only takes one vendor, like Amazon, to get into this space to change the price points and the business model.

HOROWITZ-GHAZI: You know, private space travel seems like it’s having a moment. Is that something that you’ve been (laughter) hearing about?

MILANESI: Funny enough, that’s exactly what my teenager mentioned when I was chatting about this question.

HOROWITZ-GHAZI: This month, not just one, but two billionaires are scheduled to fly into space to test out their private space companies – Amazon founder Jeff Bezos and Virgin Galactic founder Richard Branson. Seats aboard his company’s Unity rocket currently go for around $250,000 apiece. But on NPR earlier this week, he seemed certain that space travel would get more affordable.


RICHARD BRANSON: Air travel in the 1920s was only for rich people. Decade by decade, the price came down, so many people can now afford to fly on airplanes. Exactly the same will happen with space travel. In time, we will be able to bring the price down.

HOROWITZ-GHAZI: Carolina Milanesi says space travel could come down dramatically in price. But first you need something like a colony on Mars and business travelers desperate to get there.

MILANESI: ‘Cause space is recreational, at least right now, right? There’s no – really have a reason…


MILANESI: …To go to space versus, you know, transportation. And so the plane was just a way to get where you needed to go faster.

HOROWITZ-GHAZI: So there needs to be some large-scale practical use for the technology before the prices come down to that degree.

MILANESI: Yes, that is what, at the end of the day, is going to increase volume and decrease prices.

HOROWITZ-GHAZI: In the nearer term, Carolina says one of the most significant technological diffusions over the next couple decades may not come from the billionaire jet-setter class at all, but in expanding access to something that many of us already have.

MILANESI: So the only thing I really hope will become ubiquitous is true fast broadband that right now, even in the U.S., either because of cost or because of lack of infrastructure, is limited to people that can afford, you know, to pay more for it.

HOROWITZ-GHAZI: So in answer to our listener Pasta’s question, think about it this way. In Carolina’s view, if you currently have fast broadband internet, you just might already be leading the way to our technological future.


HOROWITZ-GHAZI: Huge thank you today to all of our listeners who sent us questions. We read every single one of them. They help us pick which shows to do. Please keep them coming. You can email us at [email protected] That’s [email protected]

Today’s episode was produced by Darius Rafieyan and edited by Sara Sarasohn. Special thanks to Diego Comin and Lars Perner. This is NPR. Thanks for listening.


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