Planet Money Turned Everyday Annoyances Into an Economics Book

20:17Tracy Alloway:onerous but they have um the tests that people have to take the certification tests and finra and like certain of these like bodies that regulate who can get in and so forth like they play a similar like coordinating also rules like on insider trading rules on yeah it's also that i was just thinking while you were talking about al roth like the the guy the kidney guy i feel like the way that he sees the world is like you actually have markets everywhere and you are choosing to see them or not by what you regulate so like it is always a coordination problem and you're just like if you aren't regulating it and allowing this market legally then you're allowing it in the black market and that's also a choice and you're accepting whatever negative externalities come with that like in prohibition it was like well you have to buy your liquor from a gangster and maybe get shot like is that a good social structure do we like that and we didn't like that and it also led to the over proliferation of speakeasy bars in we didn't like that wealthy cities around the world yeah you know you mentioned society earlier and one topic that i think we've both done podcasts on before, and it's a big chapter in your book, is childcare.

21:25Yes. Which is a sort of great demonstration in the overall economy of how the prices of goods keep going down, like TVs are cheaper than ever and bigger than ever. Meanwhile, childcare just seems to be this like basket case of a service and the cost keeps going up. What did you learn from that chapter? That's one of my favorites for obvious reasons. I think it's such a problem that we have across our society that like is a problem that came of good things. Like economic progress means that like everybody's got jobs, everybody's wages are going up. The prices for a lot of these goods as we have technological advancements and improvements and efficiencies, the prices go down and that's fantastic.

22:04Our phones get smarter. No one buys cameras separately anymore unless you're literally a photographer. And then that means that like all these tech salaries are going up and, you know, labor is getting more and more expensive. And so meanwhile, across the economy, there are all these jobs that are not scalable. There are just like people jobs where you have to do them with your hands and they're kind of like bespoke and they're just not you can't make these same kind of technological advancements and make the cost go down. And so there's this like weird inelasticity there. But those people doing those jobs are like, I'm making 20 bucks an hour doing childcare or singing on Broadway.

22:39And like, great. But I could be over here, like thinking more about chips and, you know, making these technological advancements and like feed my family and then some. So what am I doing? And so they migrate over, which makes the labor supply harder in the childcare sector. And you just get this like, it's just like kind of a broken system. And so daycares, child care centers have to operate at like razor thin margins just to be able to get, even though it's so expensive, like it's crazy. Wait, say more on that because I've never understood this. So like everyone is paying insane amounts for child care.

23:11Literally insane. And the child care centers don't seem to actually make that much money off of it. That's correct. So you just like, it's such an empirical question. You just go and you stack up each thing and it's like, okay, you got to pay for the real estate. You got to pay for the insurance. You got to pay for the labor so that like the people are there. And then you're just out of money. even though there are wait lists for longer than the duration of childhood, right? Like you get on a wait list and like, I think I'm still on wait lists for my five and a half year old who's now in like kindergarten.

23:35I'm like, I just didn't get in, I guess. I know. And like, but that's because they have to keep these wait lists in order to say like, okay, to keep their spots filled so that they can kind of operate. Like they're basically offering their services at a discount, which is wild because it's so in demand and they should be able to raise prices. But there's also another thing where like because the family making the choice to put their kid in daycare they have an out they could just one of them could drop out of the labor force so that ends up putting a cap on how much you can actually charge so it's like broken on a few different in a few different ways and what ends up happening is like you just need intervention like if you want this to be a

24:13Tracy Alloway:service you need intervention that's interesting i actually had not thought about that element that if you hit a certain price then one of the parents usually the mother will just drop out of the workforce and do it, which is not the same case with health care. Right. So, you know, like, you know, you keep raising the price of some heart transplant, et cetera. It's like, OK, you know what? Not going to do. I'm just going to get into heart surgery myself and do this my own. And like, that's never going to happen. But I haven't. That's an interesting dynamic in terms of like what puts a lid on the potential for, I guess, margin expansion.

24:51Yeah. And our brilliant colleague sarah gonzalez calls this like baby's first market failure right because you have like everyone's like i'm willing to pay so much money and yet there are lines everywhere why are there lines that's a market failure it is the fact that there is this kind of cap on the price and therefore because people have the alternative that may not buy deal of dropping out the workforce you know one member of the couple and so you know that's why we're in this place like really long

25:14Tracy Alloway:lines a market failure the thing that i think about all the time or one thing that i think about a lot is, you know, I went to like an elite university and, you know, I would, um, thank you. And, you know, I've like, oh, in my career, I've been around like a lot of people well educated, et cetera. It's like the number of people who I would call like peers who like ever went into education, setting aside just childcare, but like became a teacher. I know like one like it's really extraordinary you know like one person I'm friends with who like became like a public school teacher yeah and it's just extraordinary to me the degree to which this career which many people think is like really vital and important to society and of course like public school teachers an element of their job is child care is that's people, like how disconnected that is from people who've had like the privileges of like myself and all these people I know just like never like think about going into that as a career option.

26:21Tracy Alloway:I mean, do you know many like public school teachers that like you went to college with or anything? No. And I absolutely have a friend who like works on the tech side of finance and you were like, he would be such a good teacher. He probably would do it. But I think, you know, this kind of dynamic we've been talking about, it's commonly known as cost disease. It's kind of the name for it this way that like these parts of the economy that look very similar, they're very labor intensive. They look very similar to the way they did 50 years ago, maybe even a hundred years ago. They don't have those kind of crazy productivity gains of factories, of software.

26:51It's a very simple idea, but it can explain so much. And I think one kind of implication of it is that a lot of labor intensive services are things provided by the public, by the government. So, you know, public schools, policing, firefighting. There are technological improvements there and gains to be made for sure, but they're still, they're very labor intensive. And I think part of the reason why teacher salaries are low and budget squeeze there is because of cost disease. And it's, you know, I've absolutely like spoken with people in firefighting where this is a big problem that like their labor costs keep going up and lots of places have not therefore also increased.

27:28You know, we're not all thinking about cost disease all the time and being like, of course, my taxes need to go up X percent a year to account for cost disease. But like, if you don't, yeah, like I think we should be talking about it. Like if you want to make sure that like people can go into firefighting, go into teaching, you know, make a solid wage, afford to live in, especially the really successful cities where there is a lot of growth that is great, but also makes cost disease even worse. Like it is important to think about that's a very, very strong argument for public subsidies or, you know, the government providing the service and, you know, increasing taxes potentially to pay and fund for these things.

28:02That line at the end of the chapter is basically just like, it's a good thing. The sign of your economy doing well is that your taxes go up forever. It's like, whoa. That's definitely an optimistic way of looking at it for sure. Well, one thought experiment question I had on this was, does AI start to change this equation at all in the sense that, okay, the problem here is that you have a bunch of childcare workers who see other industries that are making big productivity gains and higher salaries and they can leave. And then if we have AI come in to all these sectors that typically see a lot of productivity gains like software or other white collar jobs, does some of that leakage start to stop?

28:46I love this. It's like a reverse backlash.

28:49Tracy Alloway:It's like a bunch of people are going to have to get into home health care because they lose their white collar job. Yeah, which we kind of already see, right? Like most new job creation in the U.S. has been in the health care sector. But is it going to be like, oh, yeah. But I think that's not wrong. Like, because all the AI disruption, yeah, collapses a sector of the economy, of the labor market, and then those people need jobs. And so they go into the things that are bespoke human hand jobs, like child care and home. I love it. I love it. This has been my joke idea for a website I want to vibe code, which is, and I'll just say it because it's not actually.

29:19Just say it. I feel like you've already said it. Was it on a podcast or just to me?

29:24Tracy Alloway:It was basically a website and you like enter and it's like, what is your career? What is your education level? And how many years have you worked? And then it's like, okay, what will your job be post-AGI? And you click it and everyone just gets returned the same answer, home health care aid. Like that sort of – Add child care worker, but yeah, that's good. It doesn't matter what it is. Yeah. That is the – It's going to make one joke, one economic point and do it well. Maybe I'll make it. Maybe I'll – You should. You should. That's really good. I think I kind of have a pitch here. So whoever will be like the overlords in our AI future, like, please consider my pitch.

29:57But like, you know, I think it was kind of required in like the aughts, the early 2010s, that whenever someone wrote about a four day work week or basic universal income, you would talk about how John Maynard Keynes made this prediction about, you know, I don't remember exactly how far out, but, you know, in X number of decades, we'll be living, we'll be so much richer. This will kind of be our living standards. And therefore, we'll be working way fewer hours. And famously, he underestimated how much wealthier Britain would get, as well as other countries like the United States. But of course, he greatly overestimated the idea that he thought we'd be working like 20 hours a week, 10 hours a week.

30:33But of course, like working hours have stayed quite high. And I think a point I've seen, and I'm sorry, I forget who made this point first, but I thought was really smart, was like, well, yeah, we're not all working 10 hours a week. But now like children in the vast majority of the world don't work and retirees retire. So like we made choices so that, you know, some people could work less and could get an education or have a secure retirement. And I do think like if we are going to, I don't know if it's coming, but if we are contemplating the potential of a world that has so much, you know, intelligence on demand, so much automation and so much abundance that we like in theory don't know what to do with ourselves, like perhaps allowing parents to not be like, man, I could barely afford childcare.

31:13Do I drop out? And it feels like a terrible choice. and instead be in a place where it's like, it's a social norm that like we are wealthy enough that people can drop out to take care of your children during formative years. Like that's a vision I would love to see people express with excitement more.

31:26Tracy Alloway:Can I push back just a little bit, which is - As a person with children, I don't want it. That sounds so nice, but I care too. No, no, I mean, I agree. Let me work. But like in defense of Keynes, because I've thought about this a lot, which was like, you know, think about like what quote work meant when he was writing that. Yeah. And now think about that. Like there are those of us who have like jobs, literally like writing books and talking and stuff like that. He's like, that's fun, bro. I'm just saying like, does it really compare to like what Keynes had in mind when he talked about work and labor and toil versus what so many people do in the knowledge?

32:01Tracy Alloway:Does that even like count as work? I love that. This is leisure. A lot of people really like their jobs these days in a way that I suspect was not the case when Keynes was writing. And so it's like, are you even are people who like their jobs even, quote, working 15 hours a week? I never have to go into a coal mine. I never have to lose a finger on a sewing machine. This is what he was talking about when he was talking about work. Yeah. And now there are a lot of people that literally never have to do any hours, let alone 15, but any hours of work. Now, I understand that's not everyone. But those are the jobs that are most likely to be disrupted.

32:36Sure.

32:37Tracy Alloway:I'm just saying that. It's an aberration. Multi-decade aberration. Might have been more right. Yeah. I think these are two good defenses of canes. But the point that like there's a lot of, you know, there's a lot more leisure time, which is now people actually retire and they're not toiling in fields because they're insecure. And the fact that a lot of people, yes, are getting like self-actualization from their job. And that feels like a story of progress as well. Well, actually, on this note, I mean, there's a lot in the book that is framed like very optimistically and you make a lot about human advancement and the idea there's the famous chart in there of like how much you would have to work in order to afford like a certain amount of light over time.

33:15I'm like, there's a lot of human progress in this book. But if you look around in 2026, certainly in America, it doesn't feel like that's necessarily translating into the general vibes. There's this sort of like nihilistic sense of wealth building and economic advancement and people just sort of giving up and thinking that the system's rigged against them and that they're never going to be able to afford a house or whatever. In your view, as the authors of a whole book on, you know, a guide to economic life, is that a failure of like storytelling about how the economy works? Or is that is that sense, that vibe shift, an actual reflection of like secular stagnation in the way the economy works?

33:59My bias would be the latter, but I didn't write the book. So I want to I do want to let you answer first. I think my inclination is like, yes, like both. You know, I think there's both. I think we see in surveys that people often think that the average American is working more than ever. When in fact, you know, we have seen not huge, but modest decreases in the amount of time that the average American works. there's often a lot of sense that American, the average American or median American has become much worse off that does not match up with statistics. So I think there is absolutely some, whether it's built in or not, there's, there's pessimism there.

34:31That's perhaps, you know, maybe it's something about human nature. Maybe it's something about storytelling and maybe this book can help, you know, be a positive force in that respect. But I also think like, you know, this book is absolutely, you know, has chapters talking about big challenges and places where, you know, we have housing shortages and that's often from people making selfish choices, ones that are rational and understandable, but that lead to, you know, this problem of housing shortages, high rents, people not being able to afford home ownership. There are other examples. And I think also, yeah, like we have the hockey stick chart growth of like the global economy over the last 200 years and it's incredible.

35:07But at the same time, like I feel that way. I feel anxiety, anxiousness. I don't feel fully secure and optimistic about everything. You're not happy that you can like flip on a light switch and get hours and hours. I mean, I do, but the hedonic treadmill and then I forget about it. But I also think it's, you know, it's maybe that way where it's like you can be somewhat comforted by the incredible story of progress we are part of. But probably if we all took that for granted, you know, would the progress continue? And it feels kind of similar. I don't know if you've had experiences, right? Like you're working on a project and you're nervous about it and you're tense.

35:40And OK, well, I'll just put this in first person because it's true. You can tell me this trivia, but like you're working on a project, you're tense, you're nervous, you're stressed about it. And as many times as I tell myself, you've done similar projects like this before, you figured it out. It went really well. It probably will this time too. I'm absolutely going to be anxious and stressed for quite a bit of that time. You know, some good moments too, but I will be, I will have those, you know, that anxiety and whatnot. And like, maybe I could get to a place where I'm just blissful the entire project, but probably some amount of that stress and anxiety is required.

36:08And if it wasn't there, I wouldn't actually get to the good outcome.

36:11Tracy Alloway:I feel in my head, it's like, oh, I'm so blessed. I can turn on a light switch and I get light and I can afford raisins and all this stuff. Always saying that. And you hear people say like, oh, you know, you can get penicillin and like, you know, the king of England 200 years ago would have died from this infection, whatever. I understand that in my head, it does nothing for me on my gut. Yeah, yeah, yeah. Like, it's like, I get that. And I appreciate it great. I love living on it. This is the cost of free donut. But like, it does not do it. It does not actually like on any like real emotional level make me happy.

36:44Tracy Alloway:Just sort of like, I like intellectualize. We have a planet money episode for this. This is the cost of free donuts. Once you start getting something for free, you will not pay for it. So it's not the exact, but like you have these things already. You do not delight in their arrival every time. Although I do delight in the arrival of amoxicillin. Like I feel like actually. It's just this whole thing. Oh, be so appreciative because think about how like the king would have been so jealous Most of you is like, great, but that's still like I'm exhausted at the end of the day and all this stuff. It only goes so far.

37:14And I think there is a disconnect between like, you know, we've had life expectancy like peak in this country. And things are there is there does seem to be some kind of sea change in how our trajectory is going. I think we yes, we can accept that we're way better off than we were 100 years ago. We're not all dying in the mines. Children aren't working like this is all great. but i think that there in the past five ten years there is this sort of i don't know there's a hollowing there the inequality stuff that like the rise of ai and the like future that we all know is going to be very different that we're in the middle of this enormous transition i mean i think we all can accept like the disconnect between consumer sentiment and this the data so just that the data need updating so just that like we're not quite collecting in the way that we need to be there's something missing yeah and i mean not to get derrick thompson but i do think a lot of it is societal glue and we lost the habit, but like what else and how do you measure those things?

38:07And I think also, you know, we talked before about how often people's survey responses suggest that they think, you know, wages have gone way down when in fact it's gone up, but also like that almost maybe captures a more fundamental truth that like people are right that like the average worker is not benefiting as much from economic growth in the U S as it, as they used to. And so if the sentiment that like things have just gotten worse and worse and worse is not quite true it's absolutely true that like gains are no longer as broadly shared and yeah there's a lot yeah i actually i think this is key like i think humans have a innate tendency to look at relative gains versus yeah yeah definitely yeah and so you see that like come to the fore right now all right i think that's a great place to leave it maybe what i thought we were just getting into it um thank you so much for coming on odd boss thank you for having me congratulations on the The book, again, is Planet Money, a guide to the economic forces that shape your life.

39:01Thank you for having me, too.

39:15Joe, that was really fun.

39:16Tracy Alloway:Yeah, I love catching up with them. That was great. And it is genuinely like I haven't read the full book cover to cover, but I have been flipping through it. And like just the number of interesting things that you can pick out, like the oranges. Yeah. Fascinating. I forgot to ask Alex this, but like one of the few people I found that actually shares my like obsession with insurance as a potent force in not just the economy, but in society. Yeah. I find these kind of conversations really interesting and helpful because like it's like sort of like pretty core ideas. Like, OK, like, what is the issue with child care or what do agricultural cooperatives slash cartels like what problems they actually solve?

39:57Tracy Alloway:How much are we actually working and why have we gotten so much richer? But, you know, people are still like workaholics. But we feel bad about it. Yeah, et cetera. Like these are like pretty big questions. Like they sort of like if you think about them, you can get to like some interesting places. And so it's good to sort of just like zoom back and like think about some of these things for a while. Also, to your point, it kind of illustrates once again, like all the decisions that go into the economy in the sense that like the economy is often pitched, at least in America, as this free market thing.

40:31Yeah, yeah, yeah. It just kind of exists and like is automatic in many ways and just does its own thing. But actually, there are all these active decisions and policies that go into it.

40:40Tracy Alloway:choices about market structure you know what i was thinking about was one of the things that we've talked about a lot on the podcast is that after the great financial crisis the housing industry got hollowed out all these home builders went out of business etc and now we're like faced with a big housing shortage etc what if there had been more coordination among home builders to curb both the upside and the downside, et cetera, would that be more sustainable? Now, like people like would get really anxious about the idea of like any sort of like, you know, home builder coordination, et cetera. But when you look at the cost that we pay for boom bust cycles, you'll understand why some of these mechanisms get developed and blessed, at least for certain periods of time by the law, et cetera, because there is a price that you pay for boom busts over time.

41:33Tracy Alloway:And so I think like these are actually like pretty interesting questions. It is phenomenal that like we haven't done much for housing in that sense, but we have for raisins, right? There's a cartel or cooperative that exists in order to smooth the boom bust cycle in raisins. It's funny, like the things that we pick as socially important. All right. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Jill Weisenthal. You can follow me at the stalwart. Check out the book, Planet Money, A Guide to the Economic Forces that Shape Your Life by Alex Mayasi.

42:10Tracy Alloway:Follow our producers, Carmen Rodriguez at CarmenArmond, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. And for more OddLots content, go to Bloomberg.com slash OddLots. We have a daily newsletter and all of our episodes. And you can chat about all these topics 24-7 in our Discord, discord.gg slash OddLots. And if you enjoy OddLots, if you like it when we have conversations about the economic forces shaping our lives, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free.

42:42All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

43:13We'll see you next time.

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