Planet Money - You asked for coupons, Delaware, and the truth about goldfish

Episode Date: October 15, 2022

On today's show, we're answering listener questions from the Planet Money inbox. Like, who really benefits from retail coupons? And why are goldfish so cheap?Subscribe to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoneyLearn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. Maybe it's a good time to give a little behind-the-scenes tour of the Planet Money idea factory. Some days, everything is easy. We're in the middle of a story, we're following our curiosities, chasing after answers, writing or editing, living, laughing, loving. But inevitably, that story gets published. And the day after that, we get like a curiosity hangover. We start thinking, will I ever find a great story again? It is in moments like these that we pour ourselves a cup of coffee, get a greasy breakfast sandwich,

and pop open the Planet Money inbox. Because dear listeners, you are a curious bunch. You always have questions. And today, we're answering some of them. Hello and welcome to Planet Money. I'm Nick Fountain. Today on the show, you asked, we answer. How does one succeed in a secret barter economy for ice cream? Who really benefits from retail coupons? And what makes a goldfish, the cute pet for third graders, so, so cheap? It's the Planet Money listener questions show. We're back with our first listener question answerer, Dave Blanchard. Dave, hello.

Hi, Nick Fountain. All right, Dave, your question comes from Gary of Bainbridge Island, Washington, and it's about fish. He writes, My wife recently purchased a few goldfish for her fourth grade classroom. They cost 25 cents each. I was amazed that in this day and age, anything was that cheap. Dave, answer Gary's question. How can goldfish sell for just a quarter? Right. So I needed to consult an expert for this. So I headed to Kay's Aquarium,

which is a local fish store. It's in a kind of strip molly part of Portland, Oregon, where I live. which is a local fish store. It's in a kind of strip molly part of Portland, Oregon, where I live. The sound of fish tank bubblers. You love to hear it. Yes, good ears. This place is just loaded with tons of fish tanks up and down every aisle. They're full of these fancy frilly fish, and they've all got bubblers bubbling away.

And Danelle Billmeyer was at the counter when I was there. She's a co-owner of Kay's. I'm in the market for some goldfish. How much could I get a goldfish for here? They're 29 cents singly or five for one dollar. Five for a dollar? Yes. And Danelle says the wholesale price that she pays is usually about half that. But I get them in lots of a thousand.

A thousand? A thousand. How long does it take you to sell a thousand goldfish? About two weeks, two and a half weeks. She sells 2,000 goldfish? Yes. A month? Yes. Yes.

How many third graders are there in Portland, Oregon? I know. Well, so the thing is that the primary market for these goldfish, it's not elementary schoolers. Well, some people have them for fish. Some people put them in their ponds. But a lot of people, it's food for their feisty guys. Really? So most goldfish, they're snacks?

Yeah, they're food. Yes. Yes. In the store, there are three tanks just full of these little guys. And Danelle walked me over to one of them and scooped out a little goldfish with a little fish net what what's a good name for a goldfish kids have all sorts of cool names sushi fish stick cereal all all food yeah yep oh yeah no dave yeah yeah I think you see where this is going.

Yeah, so she takes little Sushi, and she puts him in a different tank, a tank that's full of bigger fish. Running around. And what does he know? That's the leaf fish. The leaf fish. Happens to the leaf fish. Okay.

Yeah, he only eats feeders. Oh, and he's eyeing that goldfish, and he's going. Oh, wow, he was hungry. Yeah. Sushi's gone. Yeah. Rest in peace, Sushi the goldfish 2022 to 2022. He will be missed. He died doing what he loved, swimming. And as we gather today to remember dear S sushi, it's important to reflect on the very nature of goldfish existence and the answer to Gary's question.

Goldfish may seem like pets. And sometimes they are. But they're mainly mass-produced food. So while 25 cents a pop is super cheap for a pet friend for your kid, it's a pretty reasonable price for dinner for your African leaf fish. Thank you, Dave. I'm not inviting you to speak at my memorial service. I only do pets. Actually, Dave, stick around for a second. You're going to tee up my listener question.

Yeah. All right. Yeah. So I know you picked a listener question about coupons. That's right. The question comes from Kevin Curry of Utah. And Kevin points out that coupons? That's right. The question comes from Kevin Curry of Utah. And Kevin points out that coupons are kind of weird. They are bringing in less revenue for the manufacturer or for the retailer. And his question is, who is benefiting? So I took this question to someone who thinks a lot about coupons. Absolutely. Can you just say who you are and what you do? My name is Yakima Deloach, and I am an extreme couponer. Before I talked with Yakima, I had no idea about the world of extreme couponing, but it's a thing. Where some people might just use coupons, extreme couponers maximize them.

They use coupons on top of coupons. They throw in a little rebate on the side, and they call this stacking. You don't know about extreme couponing. Clearly, you didn't grow up with Steve Blanchard as your father. But also, there's a whole reality show, I think, called Extreme Couponing. I first heard about the show this week. Anyways, Yakima said it wasn't the show that got her into the extreme couponing thing. She's been into extreme couponing for more than a decade.

She still remembers her first score. It was Body Wash. I was blown away. Like, hold up, wait. I just walked out of the store and this was free. I want to do it again. You were hooked. I was hooked.

I became obsessed. And for me, it brought me so much joy and it spiraled out of control. It did. All right. To be clear, extreme couponers like Yakima, they're outliers. Companies are not always happy that the Yakimas of the world are so good at stacking and finding loopholes and getting products for free. But in general, coupons are a rational strategy for companies to use. And that's what Kevin wants to understand is just why is this a good strategy? Right. So most obvious, sometimes coupons are a promotional tool, right? A way to launch a new product or get customers into the store or clear out old inventory. And in those cases, companies might

actually be losing money in the moment and hoping to make it up in the long run. But there is a more interesting strategy going on. Dave, what if I told you that a lot of the time when companies issue coupons, they are not taking in less money, but actually taking in more money? Okay. but actually taking in more money. Okay. Because think about it this way. Different people are just willing to pay different amounts for a product.

Certain brands of body wash, I wouldn't mind paying, say, a dollar for, such as Dove Body Wash. Love, love, love Dove Body Wash. And what does that normally go for? So a full price individual like yourself would probably- Oh, a full price individual. That's what you call the dormies? You're just a full price individual. I love that. That's such a wonderful term of art. Anyways, I interrupted you. No, no problem at all. So I've seen the price of Dove body wash increase to $8.99. She's totally right. I would happily pay $9 for a bottle of body wash. But remember,

Yakima, she's never going to spend $9 on body wash. She's only going to spend like a buck. And if Dove can make money off her at that price point, why not sell it to her? What coupons do is allow companies to make money off both of us at the same time by selling to us at different prices. There's a term for this that you might have heard. It's called price discrimination. Price discrimination, though, sounds so, uh... It sounds bad. It does. It does., sounds so, uh... It sounds bad. It does. It does. It sounds so bad.

I mean, it sounds good if you're a company, right? I mean, they're making money off of both of you. Yeah, but it could be good for consumers, too. Yakima gets her body wash, and so do I. So I guess, by and large, the answer to listener Kevin's question is, nobody is losing with coupons. Pretty much everyone is getting what they want. I guess now that you know sort of the economic theory behind it, does it change the way you think about couponing at all? No, actually it doesn't. Because at the

end of the day, when you walk out of a store not paying anything, do you know how good you feel? No, I don't. I am a full-priced individual. You are a full-priced individual. I keep forgetting. We're going to get you on the coupon train, okay? I'd appreciate that. Not a problem.

Full-priced fountain. Thanks for this. Thanks, Dave. See you around. All right, see ya. Just a heads up, in this next segment, there is an unfortunate-sounding acronym that may be a little much for our younger listeners. Jeff Guo, Planet Money host and actual lawyer.

Thanks for coming on. Nick Fountain. What's up? All right. So your question today, Jeff, is about sort of the law. And it comes from Nathaniel Larimore of Delaware. And his question is actually about his home state of Delaware. He told us, and it is true, that there are fewer than a million people in his home state. And there are 1.8 million companies incorporated there,

almost double, which leads us to his question. Why? Why are there so many corporations in Delaware? And Nathaniel has a guess. His guess is that it is because Delaware is a tax haven. Jeff, you've been looking into this for us. Is it true? Yeah, I love this question because there's a lot to unpack here. And to walk me through it, I called up Swantow Nguyen. She's a professor of corporate law at the University of Washington. And she walk me through it, I called up Swantow Nguyen. She's a professor of corporate law at the University of Washington. And she says, you know, Delaware is so essential to the stuff that she teaches that a few years ago, she decided she was just going to drive from one end of the state to the other. Being a law professor, I cannot teach my students about

corporate law without touching, feeling what Delaware's like. Two-thirds of the companies in the Fortune 500 are registered in Delaware. Big names like Amazon, Microsoft, Apple, all of which, by the way, are among NPR's financial supporters. Swantel went looking for them on her road trip, and she didn't find much. There's not much at all. Like I said, we drove the entire state of Delaware, and I did not see anything. Okay, but there are beaches, right?

I know that there are beaches in Delaware, allegedly. Yes, yes, yes. But the beaches, I'm sorry, President Biden. They were not that nice. I'm so sorry, President Biden. I think he has heard worse. Yeah, so Swantow says there are three main reasons that all the corporations want to be in Delaware, at least on paper. Number one, there's the legal

system. And that's a big one. Delaware's laws are really business friendly and so are the courts. So business disputes, they go through this special thing called the Delaware Chancery Court. The judges on it are called chancellors. They're experts in business law and they're known for being really efficient because they run everything. There are no juries. There's no jury trial, no ordinary American making decisions.

Who are you, ordinary American? We don't want you in the corporate laws of America. Corporate law of America is decided by judges, not ordinary America. This makes sense to me. Like corporate law is very complicated. They just want speedy trials. And if that means having their own fancy court and fancy laws, it seems like, all right, I understand that. That is a good reason to get incorporated in Delaware. Yeah. That's why all the big companies want to be in Delaware, especially the ones that have a lot of lawsuits.

But there's another reason that Delaware is the corporate capital of America. It has really strong corporate secrecy laws. Delaware's like, we'll let anyone register a company, even totally anonymously. We don't even need to put your name on it. So nobody know that you own it.

So you can essentially hide somewhere and no problem at all. All right. So there's the secrecy, meaning we can park our sketchy shell companies in Delaware. And there's also that ultra efficient court system. What about the theory of Nathaniel, our listener from Delaware, that companies come to Delaware because it's a tax haven. Did Swantel go for that one? Oh, yeah, 100%. Absolutely. There's no question about it. It's a wonderful domestic tax haven. I will not say wonderful. It is a tax haven. No question about it at all. No question. But Swantel says it's a little bit more complicated than you might think. Delaware does have a corporate tax,

and it's a pretty high tax, actually. It's higher than in most states. It's higher than in New York even. Yeah. But there is one giant loophole. Delaware does not tax intellectual property. That's like patents, trademarks, copyrights, the entire Marvel universe, your royalties on that, yeah, they don't get taxed. So Swantow says companies have taken advantage of this in a really clever way. It's called a Delaware IP holding company. Rolls off the tongue. I know.

I know. A dip pick? Dip pick? No. No, we can't say that on the radio. Sorry. Okay, let me explain to you. How does it work? We can't call it a dip pick. I think we have to.

We cannot. My mother listens to this. Okay, here's how it works. this. Okay, here's how it works. Companies stash all their valuable intellectual property in these special holding companies in Delaware, and then they funnel a lot of their profits from other states into these dip hicks, into Delaware, where the profits aren't taxed. And a lot of big companies have taken advantage of this at one point or another. Sherwin-Williams, the paint people, Victoria's Secret, the underwear people, Walmart. They all have a lot of valuable intellectual property. Fascinating. Jeff, do you know, do people know how much corporate tax is being avoided with these maneuvers?

Oh, yeah. It's probably like in the billions, but it's really hard to tell. Because remember, Delaware has that corporate secrecy law, so we don't really know. Of course. Jeff, thank you for looking into this for us. Of course. So much fun. Coming up after the break, a place where a pint of ice cream can pay for pretty much anything, including ophthalmological supplies.

Hey there, it's Greg Wazowski. A lot of popular financial advice sounds kind of the same. Save a lot for retirement when you're young. The stock market, it's a surefire long-term bet, right? Buying a home, much better than renting. I'm curious what you have. I'm a renter for life. Okay, nice.

Can't be bothered. Economist James Choi argues against some popular financial advice. Stuff that even a lot of economists might tell you. I don't think that economists have a great handle on all the risks and benefits of homeownership. That's in our next episode for Planet Money Plus subscribers. Subscribe to hear it and support NPR at the link in our episode notes. Alexi Horowitz-Gazi! Nick Fountain.

All right, your question is more of a comment, which, fine, we like those too. Send them our way. Keep them coming. It comes from listener Jared, and he told us there is this secret, shadowy barter economy in Vermont, home to Ben and Jerry's, where people are apparently paying for goods and services with ice cream. We had not heard of this. But we loved it. Alexi, you loved it so much that you traveled all the way to Vermont, and you're going to take it from here.

Yes. So to get to the bottom of this sticky mystery, I started digging around a place where a lot of great mysteries have started, at the graveyard. There's a patch of grass on a hill next to the Ben and Jerry's factory behind a kind of purple wrought iron gate and a white picket fence. This is the Flavor Graveyard. Inside are several rows of thick granite tombstones, each with the name of a former ice cream flavor along with the years they were in production.

Oh yeah, wavy gravy, Vermonty python. Oh, holy cannoli. Wow. My guide was Amy Weller. Amy has been at Ben & Jerry's since 1992 when she started as a tour guide. Long enough to see a lot of flavors come and go. How many flavors have been laid to rest here? There's about 50 stones here. Yeah, 50. We add them every now and then. What are the causes of death? They vary. Some of them were just icky and didn't taste very good. And it was not a bad idea. But then when it didn't came to fruition, it just was not the right concoction, I guess. The point is, for years, they have made a lot of different flavors here in this one factory. And that is part of the story of this shadow economy our

listener wrote in about. Before we get there, I had to get Amy on record. Can you confirm or deny the existence of a shadowy ice cream barter economy here in Vermont? I'll confirm it. It is out there. Oh, absolutely. And this ice cream-fueled barter economy, she explains, is the result of a very particular benefit offered by the company. Each Ben & Jerry's employee is allowed to take home three free pints of ice cream every single workday. It's whatever your job is, a manufacturing job or HR or design, anywhere. Usually on the job description, it says plus three pints of ice cream a day. How many pints do you think you distribute to employees every day?

Well, St. Albans has about, how many employees, like 450 employees? So here's the math. If each employee were to take full advantage of their allotment across the whole company, it would come out to over 1,500 pints of ice cream a day, which is maybe $9,000 or so if those were sold around retail prices. Over the course of a year, we're talking almost 400,000 pints of ice cream in employee benefits. Yeah, yeah. So maybe your next question is, why would you give away so much product that could easily sell? First off, believe it or not, not every employee is taking home and consuming 15,000 calories of ice cream every week. Not only would most doctors advise against that,

you can imagine freezer space might become an issue pretty quickly. A lot of people have chest freezers. At a certain point, you need to industrialize. Yeah, exactly. The second thing is that the majority of pints given to employees are what the company calls seconds, which means basically happy little factory accidents. You know, you'd maybe like a Cherry Garcia would have run into like a cookie dough. These days, the seconds are more likely to come from an accidental overfill or underfilling of ingredients, like a batch of Chunky Monkey with way too many chunks in it or a run of Cherry Garcia with not enough cherries. Now those pints, the seconds, cannot be sold to customers and are then given to employees.

And Amy says this steady supply of fungible pints has led to the shadow economy that we're talking about. First on a kind of neighborly scale, so giving ice cream to the person who plows your driveway or cuts your hair or babysits your kids as like supplemental pay. But also trading with other local businesses like the pizzeria down the road or the local movie theater or for a while the local brewery. Pints for pints. Pints for pints. Yeah. Yeah. Amy says the general exchange rate is usually five or six dollars of value per pint. So around the retail price. But then you'll have people go like, well, what about when it's on sale?

And you're like, wait a second. Got some haggling for my ice cream barter? Totally. People will haggle. Amy says one of her former colleagues actually paid for his contact lenses using ice cream. I mean, he would get his lenses and then he would slowly but surely pay it off. You know, he would deliver them X, Y, and Z day. It was like an ice cream pint installment plan. Exactly. I mean, who wouldn't want that? But Amy says as the production process has gotten more

and more efficient and fine-tuned over the years, there have generally been fewer of these delicious industrial mistakes than before, which has occasionally led to a shortage in the supply of seconds to cover employees. People get a little ornery. You know, they're kind of like, there was no pint in the freezer. It's like you're docking their pay if the pints aren't there. Absolutely. I think many people feel that way. When that has happened, Amy says, the company has sometimes gone so far as to redirect shipments of perfectly saleable pints of ice cream that would have otherwise gone to customers to make sure the employees get their fill. Alexi, thank you for that delicious sounding

dispatch from Vermont. It was my pleasure. I actually ate some ice cream as I was reporting it. The dream. All right. Do you mind helping me with the credits real quick? Let's do it. If you have any questions you want answered, you know how to reach us. Email us at planetmoneyatnpr.org, or we are on the socials media, Instagram, Twitter, and my favorite, TikTok. This episode was produced by Willow Rubin with help from Emma Peasley and James Sneed.

It was edited by Sally Helm and Keith Romer. Jess Jang is our acting executive producer. Special thanks to Anna Marie Roos. I'm Nick Fountain. And I'm Alexi Horowitz-Gazi. This is NPR. Thanks for listening. And for asking.

And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.