Banana Prices Stay Sane

0:09Hello, and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg. I'm here with Elizabeth Spiers of Blue Sky.

0:23Elizabeth Spiers: Not my employer, but I'm there often. She's there a lot, and we are going to talk about that later on in the show. And of course, I'm with Emily Peck of Axios.

0:32Felix Salmon: Hello. And we are going to talk about Emily's favorite subject, which is inflash, and why it doesn't seem to be affecting banana prices, even though it should be. We are going to talk about Facebook's new agentic AI fluffy mascot named Muse, which is very cute. We are going to talk about Callie Clarkson, because of course we are. We have a Slate Plus segment on whether you need to have passed the bar exam to be a lawyer. It's all kind of fun this week. So I would recommend that you stay tuned because all of that is coming up on Slate Money.

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3:34So, Emily, I want to talk to you about your favorite subject.

3:37Felix Salmon: Cheese? Inflash. Oh, inflation. I thought cheese. I do really like cheese. Can we talk about a different type of yellow food? Yes. Oh, my gosh. It's not one of my favorite foods, but it is one of my favorite topics. And I am talking about bananas. So bananas are fascinating. You managed to find this in-depth investigation into banana pricing in the New York Times, which basically said, and correct me if I'm wrong here, that everything about bananas is becoming more expensive in terms of like the diesel cost of moving them across the planet, the cost of refrigerating them, the cost of providing fertilizer to grow them, because that comes from natural gas, of course.

4:21Like basically all of the cost inputs when it comes to bananas have been going up. Meanwhile, the real cost of bananas is down like 50 % in the past sort of 10, 20 years or so.

4:33Elizabeth Spiers: Everything about bananas is bananas. Well, so this is really fascinating to me that somehow the nominal price of bananas has stayed very constant, even as inflation has raged for however long. And so the bananas have literally never been cheaper in the history of America. And amazingly, with all of these incredible inflationary pressures coming from every angle, they remain the cheapest they've ever been. It seems to be like this, like where everyone else complains about inflation everywhere. Bananas are the one thing where they really ought to be skyrocketing in price. They ought to be doing what coffee is doing.

5:10And they're not.

5:11Felix Salmon: Nope. Nope. Bananas. I feel like such a rube when I say, when I pronounce bananas after Felix has said elegantly bananas. And I didn't realize this, although perhaps it should have been obvious all along because bananas are so cheap. I think Anna Swanson's piece in the Times reports 65 cents a pound on average or something in the store. Between sort of 15 cents and a quarter each, which you can't buy anything for a quarter. No, apparently for a long time, they've been a loss leader for supermarkets. Their markets are expected to have cheap bananas and they have them and they, I guess, get people into the store, which is what a loss leader is supposed to do.

5:54But like gasoline is a loss leader for convenience stores as well. And that isn't cheap.

5:59Felix Salmon: Yeah, and that the price of gasoline, as we well know, fluctuates quite a bit up and down. But bananas are, I mean, they're just like the steady Eddie. But she has quotes in this piece where the people in the industry from Del Monte saying like, we're in a crisis. I don't know how much longer we could tow the banana line. Like, things are getting really, really bad. And it seems like not so much of a crisis. The worst thing that happens is they go up in price a little for the first time in 40 years. And that doesn't seem like the end of the world. They're still dirt cheap.

6:31Elizabeth Spiers: This is why I don't really understand why they're so universally a loss leader. I've never gone into a grocery store because I thought they had cheap bananas, you know? Right. But is it more like a cultural thing where Costco can't raise the price of their hot dogs? I don't think so. Arizona iced tea has to stay at a dollar? Is this just something that American grocery stores have just decided collectively we cannot raise this price? Well, no, I think the answer to that is, I mean, like empirically, yes, but conceptually, no. Because the thing about the Costco hot dog or the Arizona iced tea bottle or can rather is that they have a fixed nominal price.

7:06It's$1 or$1.50 and like it will never go, it will never move. And then when a fixed nominal price hits inflation, then that's just like this constant deflationary sort of trend. But with bananas, there's no like fixed nominal price that people are used to paying for a banana. It's always like so many cents per pound. And the banana is a different number of pounds depending on how big it is and how big the bunch is. And so it's not like there's some headline banana cost that everyone is anchoring to.

7:33Felix Salmon: It's just that people want to just they expect bananas to be cheap and supermarkets, for whatever reason, oblige. And the whole industry obliges. Even though when you read about sort of the banana supply chain, it's really complicated. It's a marvel of our free trade world, one that seems increasingly in peril, which is one of the reasons I wanted to talk about it. Because, you know, it's like this very complicated system to get the... It's a very complicated system, but it's also one of the few areas in... One of the things I've been thinking about a lot is the way in which most consumers free ride on bargain hunters.

8:12that because there are bargain hunters out there who are very price sensitive and who will only buy things when they're cheap, that brings price tags down and that lowers prices for all of us. And that is increasingly not the case for reasons that we can go into in some other week. But the real bargain hunters out there who are really, really caring every minute of every day about trying to spend as little as possible are the supermarkets, are the retailers themselves. and the supermarkets have seven different banana producers that they play off against each other and they're like well del monte if you won't sell me your bananas for 15 cents each i'll get them for 15 cents each from fife's and so there's this very strong very high level of competition in the banana world for goods which are ultimately completely fungible you know you can only get most goods are branded in the supermarket but bananas they kind of try occasionally it's random but literally no one is loyal to a particular brand of banana.

9:10Elizabeth Spiers: Well, I've never seen a like a branded banana. Is there like Dole is a big... Yes, that little sticker. Well, I mean, like a sort of boutique kind of banana, like Dole has the pink bananas. Yeah, yeah, no, no, I'm not talking. I'm saying like just a Dole banana versus a Fife's banana, like the little sticker that you see on the banana saying where it comes from. Yeah, no, I mean like a premium banana. Yeah, no, no, I'm not talking about premium. I'm just saying like that that's my whole point, that bananas are fungible commodities, and no one cares who the producer is. And so they can't compete on that front.

9:40Felix Salmon: I think you're onto something, Felix, because the piece also dives into, and I think we've talked about it before, the whole Cavendish monopoly on the United States banana. We eat only one kind of banana, and that's been in place for decades, centuries, the Cavendish banana, because the last kind of banana that Americans used to eat, which apparently was sweeter and its taste lives on in candy. I found that all very intriguing. but the point being the fungibility of the banana there's only one kind i think big banana needs to take a lesson from big apple because apples you know when i was growing up they were red delicious apples and macintosh and green three kinds granny smith granny smith yeah and now there's like a bajillion bajillion kinds of apples and they've gotten a lot more expensive your fuchi apple is more expensive that's true but i think on the one hand you're right but on the other hand so long as the Cavendish is around and is 15 cents if you try to charge like a dollar 50 which is how much it would cost because like the Cavendish has been bred to be able to go thousands of miles and ripen at exactly the right point in time and they're all transported when they're green and then you do this like clever thing with the ethylene gas and they ripen exactly when you want you can ripen them to order basically after they've been plucked from the tree and they are designed to be able to transport very easily.

11:04And so all of this makes selling the bananas in bulk at a low cost feasible in the way that when you said there's only one type of banana in the United States, I'll be like in 49 of the 50 states, you're right. In Hawaii, you get like amazing bananas and you can find these just astonishingly delicious bananas. And you're like, why have I never had a banana like this in my entire life? But you're only going to be able to find it in Hawaii be precisely because they don't travel. And so, so long as the Cavendish is around, no one is going to pay 10x a Cavendish for some Hawaiian banana.

11:36Elizabeth Spiers: I think they might. I mean, there are people who pay insane amounts of money for like five Japanese strawberries.

11:41Felix Salmon: Yes. I think there's an untapped, ready market. Yeah, it would be like a tiny little luxury niche thing. You wouldn't find it in your local Kroger's.

11:51Elizabeth Spiers: I feel like you would be the customer, though. I would. I love those Hawaiian bananas. But the interesting thing is that while the bananas are stubbornly refusing to go up in price, everything else is going up in price. The producer price index was up more than 6 % year on year. The consumer price index is up and to the right. My favorite one, domestic airfares are up 21 % year on year. So the inflation is kind of everywhere right now and people are feeling it.

12:21Felix Salmon: Fuel oil, I'm here in the Northeast with my oil tank. Fuel oil is up 70 % year over year. I have locked in a contract for this winter, so I'm like really dodged a bullet. But people's heating oil bills are up. I think some people double what they were last year. And it's become like an election issue in Maine, for example, where they're all relying on heating oil and it's cold as heck up there. It's really bad.

12:47Elizabeth Spiers: There's a stat in some of the prep that we were reading that says it's actually more expensive to ship a head of lettuce from California to other parts of the domestic U.S. than it is to buy the head of lettuce.

12:59Felix Salmon: Yes.

12:59Elizabeth Spiers: Which, by the way, if you're watching East of Eden, there's a whole lettuce shipping plot, subplot that everyone should do. Which, I mean, isn't that intuitive? I need to know what that means. Like, I kind of would have expected that. It almost surprises me that that didn't used to be the case. I think per unit, it's not usually more expensive to pay the shipping. Not for most things, but for lettuce. Lettuce is a very bulky thing to have to ship. I guess the question I have is, given how all of these things that we're talking about, lettuce shipping, bananas, fuel oil, domestic airfares, all of that stuff, it's all different flavors of it's the Iran war, stupid, oil prices are up.

13:40And then that feeds through into all of these other things. Like when energy prices go up, all of these other prices are downstream of that and they go up. So that makes for an interesting dilemma at the Fed because they can go, ooh, inflation, that's bad, we should raise rates. But raising rates does not bring oil prices down. And the only thing that is going to really affect this particular type of inflation is if oil prices come down.

14:05Elizabeth Spiers: Although I think we should note that there are other things affecting bananas, like climate change. There's a big disease problem with Cavendish bananas, El Nino. Yeah, exactly. There's a disease in the El Nino and all of these things which should be making bananas more expensive and aren't. Like all of these things, like if there was banana inflation, there were like a million reasons why we would be seeing a banana inflation, but there isn't.

14:29Felix Salmon: I wish that everything was like, I wish everything was bananas. Because then we wouldn't have any inflation. I was reading a report from Evercore this morning, I haven't read the whole thing yet, that says part of the reason we have inflation now is just profit margins have gotten bigger. And this is a debate from 2022, 2023, where... Greedflation. Yeah, what? Remember greedflation? Yes, greedflation. Exactly. So and this was from just macro research firm. They're not they're not a bunch of liberal commies. This is like profit margins are at record highs. So not everyone is like the humble banana retailer and they're they're raising prices.

15:06Felix Salmon: I also wanted to add, Felix, regards to oil prices going up because of the war, energy prices, that one thing that's happening now is oil prices have gone up not as much as anyone thought, but what has gone up more than anyone thought are diesel prices. Cracks, threads. We've talked about it. Yeah. And that's like a little more complicated because it involves the Russia-Ukraine war as well and has led Trump to make all these concessions to Vladimir Putin. So that's also playing a role in inflation. And I agree that, well, actually, let's talk about it more. Can the Fed do anything about it? About crack spreads?

15:44Felix Salmon: They can't do anything about crack spreads. But another part of inflation right now is AI and AI spending. So could the Fed raising rates do anything to slow that down? No, because the whole point about the AI spending is that it's completely price insensitive and they'll pay whatever the price is. Again, like all of the mechanisms where higher interest rates feed through into lower growth and lower inflation kind of don't apply. And by the way, a lot of that AI spending and AI related inflation is also energy. Like it's all just different types of energy. But wait, but wait. Higher interest rates do affect the AI build out.

16:24Felix Salmon: I actually covered this this week. I forgot. I cover so much, you guys. When interest rates were rising and the benchmark treasury yields went up a lot, that was really difficult for a lot of the companies in the AI build out. These like neoclouds that build data centers and they're not like the big tech companies. They have like kind of crappy credit scores. They have to borrow at higher rates than like Meta and Microsoft do. CoreWeave is trading at junk levels. CoreWeave is trading at junk levels. So there are these tremors. There's a tremor.

16:57Elizabeth Spiers: Also data center build outs. That's a real estate and construction business too. So that business is entirely interest rate dependent.

17:04Felix Salmon: So there are these tremors, Felix. They're not doing anything really to dislodge anything yet. But no, what I'm saying is that it's not much of a tremor. if all that happens is the spreads widen out on core weave debt and core weave keeps on spending just as much money as it always was. Like, it still... But it takes time for the tremors to erupt. Right? Are we mixing our metaphors here? Of course. I remember talking about, like, mortgages and stuff in 2006. I remember reading stories where people were like, huh, these borrowers, They don't seem like they should be the kind of people borrowing a lot of money to buy houses and like reading stories by people at the Journal or at the Times about people are getting mortgages who they don't even say what their job is.

17:54Felix Salmon: And everyone was like, it's fine.

17:56Elizabeth Spiers: And then Treasury yields are down in the last week because of activity in the AI market. Yes, they are. They were still high. I mean, like. But they were reacting to confidence levels in AI. Treasury yields are definitely way more volatile now than they used to be. And we're seeing volatility in the treasury market at really extraordinarily high levels. But I would hesitate to start saying that this is a decline in treasury yields, which we can extrapolate. That's not what I said. I said they were reacting this week to lack of confidence in the AI sector. It was a reaction. Flight to safety. Flight to safety, Felix.

18:34Everyone said. Everyone said. flight to safety.

18:36Felix Salmon: Everyone said. And you could see it in the yields because they surprisingly went down after the tremors erupted. Right. But that's so what happened was that Treasury yields went down. Surprisingly, everyone was surprised. And then a whole bunch of journalists went around saying, why did this happen? And no one can come up with a single reason. So everyone just said flight to safety because that was the only thing they could think of.

18:57Elizabeth Spiers: Analysts said that. Yeah. Yeah. That's what analysts, analysts and journalists basically say, this is my standard hobby horse when it comes to market reporting, the number one true thing that everyone can always say about the market every day is the market moved and we don't know why. No one ever really, there is no simple narrative explanation for why the market moved, almost never. Once in a blue moon, there's an obvious reason why the market moved. 99 % of the time, there is not an obvious reason why the market moved, but everyone kind of has this human need for a simple narrative explanation.

19:29And so they rack their brains for like what could conceivably have caused this decline in yields. And the one thing they glom onto as well, maybe there was nervousness about data center interest rates and that caused a flight to safety. And you're like, you know what? It's a narrative. It has explanatory power.

19:45Elizabeth Spiers: I don't think that the fact that it's multifactorial means that everything is simplified down to a single cause. I think you can state with some confidence that it was at least partially a reaction to that without saying it's the only mover. No, I don't think you can say that with any confidence at all, because there's no way of demonstrating. You can never prove that. It's just an explanation. And normally you find these explanations in the stock market where like the stock moves and people try and come up with some random reason why it would have moved. And now we're seeing such extraordinary moves in the bond market that people are coming up with stupid explanations for the bond market, too.

20:19Doesn't make them any less stupid.

20:20Elizabeth Spiers: I don't think it was stupid. I think there are ways to prove causality, but now we're getting existential.

20:27Felix Salmon: I challenge either of you, so we can move beyond your squabbles, I challenge either of you to tell me how this relates to bananas.

20:36Elizabeth Spiers: Well, you're talking about energy. Well, no, I mean, I think I will answer that question because I think it's a really good question. The New York Times story that we're talking about, about bananas, is a prime example of what I'm talking about. As Elizabeth was saying, it's not just energy prices. It's also disease. It's also El Nino. It's also climate change. It's also random political upheaval in Ecuador or whatever. Like there's so many reasons why the price of bananas is soaring, except for the price of bananas isn't soaring, right? You can have all of these causality narrative explanations for an event.

21:13But if the event isn't happening, then all of them are kind of worthless as explanatory explanations, you know? So if there was a rise in banana prices, then obviously we would be sitting here with great certainty pointing to all of these reasons why the price of banana went up. And we would say, well, obviously it was caused by this and by this and by this. And we know that that isn't the case because you can have all of those things and the price hasn't gone up.

21:38Elizabeth Spiers: Isn't it artificial price suppression, though? Because the retailers and the distributors are refusing to raise the prices. but it is hurting suppliers because they're already in a really tight margin business. And there are some smaller suppliers that are in danger of going out of business because of all of these things. Yes, another reason why the price should be going up. Yeah, but it's being artificially suppressed is what I'm saying. There's nothing artificial. That's natural suppression. Like the end user in capitalism always wants to pay the lowest price they can and is going to try and bargain for the lowest price possible.

22:10That is a standard constant in the way capitalism works.

22:13Elizabeth Spiers: Yes, if you're selling a basket of goods. But if you were literally running a banana stand, a la Arrested Development. How much could a banana cost? Yeah, and you can't sell those bananas at a loss. You would have to raise the prices, right? But that's the whole point.

22:26Felix Salmon: How much could a banana cost? Only so much. Yeah, exactly. We know it could cost a lot more. We know it hasn't. And no one really has a good explanation for why it doesn't. And yet, that is the truth. The explanation is no one wants it to cost more. Well, except the people with the power to set the price don't want to raise it. So basically what we're saying is if we want inflation to come down, we shouldn't be asking the Fed. We should be asking Safeway. Yeah. If we want inflation to come down, it actually turns out it's easy. People who set prices should not raise them. And we'd be done. Thank you, Emily.

23:08Felix Salmon: And seen. And seen. You're welcome.

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25:57Let's talk about Muse, which is very furry and cuddly, and therefore no one should be concerned about it. This is the new AI assistant from Facebook, and it will insert itself in a furry and cuddly and friendly way into your entire life if you give it half a chance. And it will do all manner of lovely things for you in terms of checking your emails and making sure you pay your bills and canceling your subscriptions and making phone calls to your insurance company to get through on the phone to a human and then pass off the call to you. And it's just this lovely, all-knowing, 24-7 assistant that works in the background.

26:37And this is the AI future that we all want. And we all now have a tireless personal assistant. And welcome to Utopia, folks.

26:46Elizabeth Spiers: Yeah, not all of us want it. It reminds me of the killer bunny rabbit in Bonnie Python's Holy Grail. It seems kind of innocuous at first, and it's adorable. And then you sort of re-understand what it can potentially do, and then it's very kind of scary.

27:01Felix Salmon: I downloaded it. I haven't given it access to any of my – well, I guess just by downloading it, I probably did something terrible, actually. Oh, now I feel bad. Anyways, I am thinking of its voice the same as – have either of you seen Squid Games by any chance? That woman's voice who does red light, green light? To me, that's what Muse sounds like.

27:21Elizabeth Spiers: Does it make you automatically anxious because that's the association you have? Yes.

27:25Felix Salmon: I'm like, who's going to shoot me? One of the interesting things, and this thing has been downloaded 7 million times. It's immediately very popular. And it's kind of interesting to me to read a whole bunch of journalists writing about it. Because journalists are way off to one side of the spectrum when it comes to caring about privacy and being skeptical of meta and Facebook. and all of these kind of higher order concerns. I'm not saying that no one else has these concerns, but I'm just saying normies care about this kind of thing in general, much less than say like a wired journalist does. Most of the stuff that I've read about Muse in the press is like, it's kind of amazing.

28:04It does all of these amazing things, but I should be worried about this. And I think the actual like normal normie reaction to it is kind of amazing. It does these amazing things. And like my privacy is an illusion and probably it's not going to delete all my emails. So what's to worry about?

28:17Elizabeth Spiers: I think it's too early to kind of tell because agentic AI does not have wide adoption right now. So you don't really see the downstream effects that might be negative unless you've already had some experience with agentic AI. But one thing that I think about is the people who are adopting it really quickly are mostly WhatsApp users. And I think those people tend to be a little bit more sophisticated about technology. But if they are mostly coming from Facebook proper, I wonder if we'd be seeing more about the... I can tell you that if I look at all of my WhatsApp group chats, sophisticated about technology is not the first thing that springs to mind.

28:53Elizabeth Spiers: Well, relative to Facebook, though, in the U.S. Yeah, but most WhatsApp users are not in the U.S., right? That's true, but I think they've only rolled it out in the U.S., right? Oh, I see. This is the first AI that is really leading with, I am your personal assistant slash agent who is going to be doing things in the background for you rather than with I am a chatbot. And I think that while obviously the chatbots were very popular, here we are like less than a month from the release of Muse and already Muse seems to be at least as popular as the chatbots. And I think this is finally an AI that can be helpful.

29:35And it has come out at the same time as the new AI Siri, which I think you need some, it's rolling out slowly and you need to be sort of very embedded in the Apple ecosystem to properly use. But the new Siri seems to do almost everything that Muse can do and does the same kind of like working in the background, read all your emails, have access to your finances and that kind of thing. And that whole like personal assistant, always on, always available, personal assistant thing is obviously where consumer AI has moved to from the ChatGPT and Claude era.

30:13Felix Salmon: I think that's right. And I think the fact that Facebook is the first mover on it would indicate that it once again will be some kind of ad driven innovation that will destroy other ad driven things.

30:26Elizabeth Spiers: You know, I think they're choosing to be the first mover on it because the other companies are already, you know, they've been working on agentic AI for a long time and their use case is primarily enterprise. And Meta is an entire business that's almost, well, no, that business obviously is not consumer facing, but they do rely a lot on consumer adoption to market their other products. And also their models are open weight, which Anthropic and OpenAI are not. Part of the business, too, is just the models they're developing, not just Muse. Muse is kind of like great consumer marketing for them, especially if it gets people to adopt agentic AI as a kind of normal thing that normies can use, to Felix's point.

31:06Felix Salmon: I've been using agentic AI in my work life, you guys. On a retreat months ago at Axios, they sort of like walked us through how to create, they called it a chief of staff agent or something in ChatGPT. So I created one called Emily's BB. I don't know. That was just the name. And over the past few weeks and months, I've been using it a little more. I connected it to my work email and calendar and Slack. And I'm here to tell you that it's been helpful to my life. It surfaces email because I have, I get, I think, like a thousand or more emails a day or something at this point. And you guys probably get even more.

31:40Felix Salmon: I don't know. So it'll like read them and be like, this one's important. This one's interesting. Or you miss this reply and stuff like that. That is super useful because the important section of Gmail, like somehow Google has not kept up with like being able to.

31:55Elizabeth Spiers: Well, they do have an AI tab now if you activate it. You know, it will give you summaries of different categories of things. Like you need to pay this bill. You need to follow up with this. Yeah, which I find doesn't work very well. I haven't used that.

32:08Felix Salmon: But my agent, my BB. One of the things that's super interesting to me is like the number one low-hanging fruit use case that everyone loves to, you know how like in payments, the one thing everyone always talks about, because it's like the obvious thing that's really easy is splitting the bill when you go out to the restaurant. And you've heard this example like 8 million times. When it comes to agentic AI, the one use case that everyone always rolls out first, because it's so obvious and easy is canceling subscriptions. And you know, I will cancel a whole bunch of subscriptions for you and save you money that way.

32:41And what that does is it sets up a couple of interesting things. One is it sets up this idea that the AI will not cost you money, but will actually save you money. It's going to be like a profit center for you. And then the other thing is that it sets up this idea that it can save you money, not only in subscriptions, but just in general. So you can go up to it and say, like, I am running out of toothpaste. Can you buy some toothpaste for me? And it will, like, very few of us have time and willingness to comparison shop toothpaste prices. You know, like, who the fuck has time for that? we go in and we buy the fucking toothpaste because yeah come on but an ai can actually go in comparison shop and say oh this toothpaste is both bigger and cheaper i'll buy the one that's bigger and cheaper and so that could be a force bringing prices down that could be like the bargain hunter that all of the rest of us can can freeload on but the big big asterisk is that that if you look at the experiments that have been done with various agentic AI, so if you tell them to go out and buy whatever the cheapest thing is, what they often do is they kind of look at your emails and understand who you are and they get an idea of who you are.

33:52And invariably, if you are like a richer, more middle-class person, they wind up coming back with more expensive stuff, even if you said, find me a cheapster.

34:02Elizabeth Spiers: Well, another thing is, and this is kind of a second-order consequence, is that one of the concerns people have is that the more data that the agents have on you and the more they understand your ecosystem, there are vendors who could ostensibly pay Facebook to only show you their products. A good example is that right now, Muse cannot work with Amazon. Where do we get a lot of our cheap shit? From Amazon. If you're asking it to buy the cheapest thing in the ecosystem, it doesn't even have access to some of that stuff. But the other thing, I interviewed Corey Doctorow a few days ago about his use of agentic AI, among other things.

34:38Elizabeth Spiers: And he talked about when you see this in a corporate setting, people develop what's called automation blindness, where they end up trusting the agent so much that they just kind of say yes to everything because they start policing it in the beginning. And then they just start saying yes, and that has deleterious downstream consequences, especially if the AI start making mistakes. So I don't think these things are inevitable, but I do think that's part of the reason why, well, you know, for me personally, at least, I'm very cautious about using them. No, I do think that you are going to be a late adopter, Elizabeth, but I also think they are inevitable.

35:10Whether or not Elizabeth uses them, I think millions and millions of Americans.

35:14Elizabeth Spiers: Well, I'm a data privacy nerd. Exactly. So there will be some like EFF types who don't use it, but I think, yeah, the normies will use it.

35:22Felix Salmon: I think it's hilarious that in the previous segment, we were like, AI is making everything more expensive. And now in this segment, Felix is like, AI can make toothpaste cheaper. Like, come on.

35:32Elizabeth Spiers: See, I think that's a marketing ploy because I think for the most part, AI will end up, especially if Facebook run AI that's directed toward consumers. Well, the sort of macro project is to get you to spend more money. Yeah, it's hard to believe that. So saying like, well, cancel your subscriptions to things that are not us. Maybe, but I don't know. I think it's going to be a long time until we find out for sure. Do I believe that Muse is on my side rather than on Facebook's side? I don't know. I genuinely, genuinely do not know. Come on, Felix. Felix. No, I mean, you're like Facebook all it ever wants is to turn everything into advertising.

36:09Like, how many years has it owned WhatsApp? And have you ever seen an ad on WhatsApp?

36:15Elizabeth Spiers: Whoa, I don't use WhatsApp. I have seen ads on WhatsApp. Like, I don't use it that often. I use WhatsApp every day and I've never seen an ad on WhatsApp.

36:24Felix Salmon: Well, that's an exception because Instagram is essentially one humongous ad. I wanted to point out one more thing with AI, which is because I've been thinking about it for weeks now. But we've been talking about AI in this podcast for the past, I don't know, since ChatGPT came out probably. And it's been interesting to sort of sit back and like watch us discuss it over the weeks and months and years as it's become a bigger and bigger business story. and we have come to accept it, maybe not so much Elizabeth, but Felix and me, have come to accept it in our work lives, in our personal lives. Like it's just become part of the fabric and it's happened really quickly compared to what we live through with the internet, I think.

37:05Felix Salmon: And that's just been really interesting to live through. My colleague Matt Levine made this point this week as well. He was talking about a piece about how Blackstone has this massive AI strategy and it's all in on a million different types of AI. And he's like, well, of course they do because they're Blackstone. They're enormous. And AI is an enormous part of the economy. And like Blackstone is an enormous part of the economy. And you can't not be in AI if you're Blackstone. Like if you're some weird contrarian hedge fund, you can be like, I'm going to make the out of consensus bet that AI is a nothing burger.

37:38But if you're Blackstone, you can't make that bet. Like you basically have to be in AI. And it is the absolute base case thing. And there will always be Elizabeths who are like, I'm skeptical. I don't want to.

37:49Elizabeth Spiers: I use AI. I'm saying I don't for consumer AI. I would maybe use an agent if I had the time to install it locally using an open-weight model, blah, blah, blah. I feel like it's my job here to point out the risks of early adopting if you don't understand how the technology works.

38:18Felix Salmon: Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab, to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and regulatory affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market.

39:00Felix Salmon: Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and follow at schwab.com slash Washington Wise or wherever you listen. Late Money is sponsored this week by Cash App, which allows you to buy and sell and spend Bitcoin. Bitcoin runs on a global network. It's not a bank. And as a result, you can access, move or withdraw your Bitcoin 24-7. There are no bank holidays. There are no Sundays. With Cash App, every Bitcoin you buy is held one-to-one. No lending it out, no IOUs, and if you want to take full custody, you can withdraw it at any time.

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40:24Bitcoin services provided by Block Inc. Bitcoin services are not licensable activity in all U.S. states and territories. Block Inc. operates in New York as Block of Delaware and is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Bitcoin is a non-deposit, non-bank product that is not FDIC-insured and involves risk, including monetary loss. For additional information, see the Bitcoin disclosures, roundups feature provided by Cash App, a Block Inc. brand. We are going to talk about birds.

40:57Elizabeth Spiers: The most important story of the week. We should have led with this, you guys. The art of play in Brooklyn is this cute little very, very Brooklyn shop. It is the most Brooklyn shop to ever Brooklyn. And you go in there and it's tiny and it sells little physical puzzles where you have to get like a ball out of a chain or something. and it has playing cards and it has optical illusions and it's all out to play with. So you walk in there and the shop assistant's always like, pick it up, play with this, play with that. Let me show you this. Let me show you this magic trick. And everything is way more expensive than you ever feel comfortable paying, but it doesn't matter because it's Brooklyn.

41:43And in any case, it's all literally just basically a front for the real business of the store, which is that they have a magic theater in the back, which they always sell out every magic show, and they have all of these wonderful close-up magic shows. But one of the things you know if you've been to these magic shows, which I have, is that they get everyone to sort of arrive in the store before they usher you into the theater. And you go around, you're lingering there, and you're playing with all the things that you play with. And then there's an announcement, and they're like, Hello, everyone.

42:17Welcome to 69 Atlantic. and then they're like let me demonstrate our little in-house mascot called molly and it's this wonderful automaton bird which is all handmade there's no like electronics or anything like that in there and you turn a little turny thing i'm very good at explaining this this is a term of art the turny thing the turny thing and the bird does amazing things it dips it moves around it tweets it flaps its wings and it's all mechanical and it's very impressive and you're like oh that's very clever and then on with the show and and they always explain during this little demonstration that this is their mascot it's not for sale but this is all it's just a lovely little introduction to what friend of the pod shane ferro would call tqe the quaint experience you know oh look how look how quaint and handmade and non-socially media intervention this is.

43:14And this whole thing has now become the subject of the mother of all social media interventions. And this has remained in the news for way more news cycles than you could possibly have imagined.

43:27Felix Salmon: It's a wonderful, wonderful story. The stakes are incredibly low. No one has been harmed in the making of this story. Perhaps Kelly Clarkson's ego. We should mention her name. Kelly Clarkson drove all the way to Brooklyn last weekend. Which is a long way from Los Angeles. I think she was driving from Central Park South, where she lives, on Pond for their investigation. But it's unclear. It's unclear. She went to the Art of Play. She was there for only five minutes. That's according to the security footage obtained by one of our best investigative reporters right now, Pablo Torre. He got security footage from Kelly Clarkson's visit to this shop.

44:09Felix Salmon: She went in for five minutes. She apparently wanted to buy Molly. As Felix and all the people that know knew Molly was not for sale, she got offended 15 minutes after she left the store, according to the Pablo Torre timeline. She put out her tweet, and the internet was forever changed.

44:29Elizabeth Spiers: So I think we have to explain what her complaint was. Yes. She says that she saw the bird, and she wanted the bird. and she says that there was a price tag next to it that said$15 ,000. And so she asked a store clerk if she could buy the bird. And the clerk said, well, no, but let me show you this$2 ,000 automated bird you might like instead. And so she assumed that the clerk was telling her that because he thought she wasn't rich enough to buy the$15 ,000 bird. And so she went on this kind of Twitter rant about how judgy the people at the store were. and it turns out there is one other version of the bird because it's a specific artist in San Francisco that makes it.

45:10And so you could buy the other bird for$15 ,000,

45:14Elizabeth Spiers: but they were not selling their bird. They were like, this is the store model. You know, you can commission a bird from this other guy. It'll probably take a year or whatever. But the crazy thing is, correct me if I'm wrong, Emily, but she didn't see the bird in action. She didn't see it tweeting and flapping its wings. and like the astonishingness of the bird and the whole reason why you'd want to buy it she never even experienced that she she just kind of pointed at the bird and yeah like she like and so like then it's kind of natural for shop assistant to be like no wait hang on if you just want a bird here's a but yeah you're right elizabeth she got very offended at this idea that she thought that this was like a bird that cost$15 ,000 and someone thought that she wasn't rich enough to buy it.

46:03And that was extremely offensive to her. And so she sicked her 8 million followers on the store, which then just was the recipient of much internet hate.

46:15Felix Salmon: She wrote, wow, dude, you're an idiot and just lost a huge sale. But you all should go check Check out Art of Play in Brooklyn if you enjoy being treated like Julia Roberts' character in Pretty Woman.

46:28Elizabeth Spiers: Did she get slut shamed in the store?

46:31Felix Salmon: Yeah, remember they wouldn't help her and then Julia Roberts gets all her fancy clothes and she has all these shopping bags. She comes back to the store and she says, big mistake, huge. It's a pretty iconic moment in movie history.

46:45Elizabeth Spiers: But the idea that no one got harmed, the store's gotten like all kinds of threats. And even people who went in there to support it got some threats. There was some guy who lives in the neighborhood who said he went in there and people started like found his social media and started calling him horrific things. One person told him they wished that his cat got terminal cancer. I mean, the sort of reaction to all of this, you know, it's why it pushes everyone's buttons is beyond me.

47:11Felix Salmon: But is it beyond you? I mean, you said in the planning call, Elizabeth, like there are, because you're someone with a big Twitter following or X following or Blue, who knows what the followings are, but we know Elizabeth has a big one. She's on the socials. She's active on the socials. She's on socials. Follow her everywhere. Eastbury's a blues guy. And you said there are some companies or people that it's okay to sort of tag and complain about on social media. And some you sort of instinctively, I imagine, know that you can't.

47:44Elizabeth Spiers: Yeah, that's true. I do think that the issue of punching up or punching down is probably why it's resonating. Because if you have like huge following, punching down at a small business like that, that can really destroy them. You know, putting Delta or Verizon on blast is a completely different animal. And I think she, well, I don't think she thought about it very much before she hit the tweet button. One of the interesting things going on here is that Kelly Clarkson and most of her followers, and indeed most of the people reading and many of the people writing this story, just, there was just like a sort of category error in what was going on.

48:17I remember, Elizabeth, when we were first talking about this, you were like, this is like when Hermes makes people buy other things before allowing them to buy a Birkin bag you know that it was like some like high prestige expensive thing that they want you to sort of like work your way up to which if you don't know anything about the store like that that would make perfect sense that's not actually what was going on but like people just jump to conclusions

48:41Felix Salmon: and obviously Kelly Clarkson did yeah and it's not clear from the security footage I mean she says that she was judged as someone who like couldn't afford a$15 ,000 animatronic bird. But if you look at the security footage, she looks exactly like everyone else in the store, like Pablo Torre and his co-host point this out over and over again. Like she was wearing like baggy jeans and a t-shirt and a hat. And literally everyone in the store is wearing like a t-shirt and a hat. So it's not clear why she would think she was sort of being discriminated against, or maybe she already had some sort of like chip on her shoulder or maybe as a celebrity you expect to be treated in a certain way.

49:19Felix Salmon: I think she just got stuck in traffic on the way and she was just a bit, you know. Having a bad day. She was having a bad day. The other thing that was fun that Refugee Sir Jessamine shared was this idea that New Yorkers just love a bird. They do. A fancy bird. We do. They just love a fancy bird and there have been so many throughout. There was like a sexy duck at one point, an owl. Oh, I love that sexy duck. And then there were all of the hawks. Yeah, exactly. Like, sexy birds, man. The hot duck. Flacco the owl. Flacco the owl, yeah. Pale male, a red-tailed hawk. Right.

49:58Elizabeth Spiers: We get the birds' names and we get very attached to them and then somebody inevitably sets up like a surveillance camera and then we watch them all day.

50:05Felix Salmon: I think actually this is a good point to make. I think that New Yorkers and maybe people outside of New York too are interested in birds because they are free, free from the constraints of traffic that might put you in a bad mood whilst driving from Manhattan to Brooklyn, free from all constraints. They don't have to worry about real estate prices. They don't have to worry about crowds on the sidewalk. They are literally free as birds. And I think that did play a role here. I also think what's playing a role is that we are in, as discussed, the AI era where nothing is real. Everything is virtual, but like Molly the bird is a real physical object that's sort of like fun and old timey.

50:48Felix Salmon: And I think also that makes this, that gives the story more texture.

50:53Elizabeth Spiers: I also love that the co-owner of the store is this guy, Adam Rubin, who is most famous for a children's book called Dragons Love Tacos. Which is true. Which is funny because it's true. Dragons do love tacos. This is true. I will say that the store, with hindsight, did make one mistake. Every time I've been in the store, it was clearly marked as not being for sale. At some point, for I think understandable but clearly misguided reasons, they changed the not for sale sign to a thing saying that it was$15 ,000. Well, not that it was$15 ,000, But, you know, for$15 ,000, you might be able to commission something similar.

51:32And if that change had not been made and if they just kept the not for sale sign, like none of this would have happened.

51:39Felix Salmon: Yeah. Yeah. There's no clear winner, loser, like right and wrong party, I feel. Or maybe you disagree. I think there are a lot of overreactions. It does remind me a little bit of the debate about whether art galleries should put price tags on the art which is for sale, which under New York law, they have to do, but none of them do. Like sometimes having price tags on things is just more trouble than it's worth. Yeah, I don't like when there's not a price. Like when you go to the restaurant and it says on request, you're like, oh, that means expensive. Yeah, exactly. It's just I'm not buying that.

52:24Anyway, talking about prices, does anyone have a price for their number in the numbers round?

52:29Elizabeth Spiers: I do. All right, Elizabeth, what's your number? My number is 37, and that's dollars. And that's how much you would pay for one Grosse Michel banana, which is the kind of banana. That's the pre-Cavendish banana. Yes, and you can get them from a company called Miami Fruit. And if you want a small box of them, it's$137. Oh, my God. Yeah, exactly. You are making my point for me here. But now I want to try one so bad, I might pay$37 for a banana, which is three times what Lucille Booth thought bananas went for in the banana stand. How about you, Emily? What's your number?

53:02Felix Salmon: I want to try one of those bananas too, but I'm not paying that money. Next time you're in Hawaii, just get a banana out the front garden and that will be a lot cheaper. My number is$10 million. That's how much Google paid for Spirit Airlines data in a recent bankruptcy auction. And Google wanted the data not because it's going to start an airplane company, but it wants the data to train its AI. And the data included like 100 million emails, 500 million Microsoft team messages. And I came across this little data point in an interesting story in Business Insider from Aki Ito, who's a really good workplace reporter there.

53:40Felix Salmon: And it was about how remote work has sort of reshaped things culturally and work-wise. And she had this sort of intriguing theory that remote work has helped enable and drive the AI boom. And she pointed to this Google purchase of Spirit Airlines data because they want the data to train the AIs. And there's all kinds of data now being used to train the AIs that was like simply not commonplace, you know, in 2019. Like we didn't record all our meetings, right? Like that would have been seen as super creepy if I came into a meeting, recorded it and took notes and things like that automatically. But now it's like everyone's doing it.

54:18Felix Salmon: There's all this data and it's getting fed into all these models. And this is actually why I'm not jumping on the idea that Facebook is wanting to monetize Muse by selling ads is because Facebook is an AI company. Now it has a frontier model. just this week released a frontier version of Muse called Muse Code. And the reason why SpaceX has a frontier model or frontier-ish model in Grok is because it has access to this astonishing trove of information that is Twitter. And Facebook is clearly trying to use Muse as a way of hoovering up vast amounts of information about what's in people's emails, how are they communicating and all of this kind of stuff wasn't in their finances it's it's i think much more than an ad sales move i think it's just a way of ingesting huge amounts of data and separating it from open ai and antropic that still don't have that data but yes it's all about maximizing the data you have my number is 0.59 which is the number of seconds that it takes the rocket version of the new Tesla Roadster to go from 0 to 60.

55:33There are three versions. Now, this is all according to Tesla. No one has actually tested this, but there are three versions of the Roadster. There's the performance one, which is the basic one, which goes from 0 to 60 in 1.6 seconds, which is already just completely impossible and mind-blowing, and no one has ever seen anything like it. Then there's the thrust version, which adds rear cold gas thrusters and that can do 0-60 in 0.9 seconds. And then there's the rocket version which has a full perimeter cold gas thruster array which can do it in 0.6 seconds. And I don't know if you guys saw the video of like Roadster doing a backflip and like landing, basically flying.

56:18Like Elon Musk people has somehow managed to invent a flying car. I mean, what a time to be alive.

56:25Felix Salmon: But it's not really a flying car. It can't be used or they haven't released anything. It's just like a party trick at a press conference. It's a party trick at a press conference. I don't think it's road legal, but it's a flying car. It's kind of amazing. You should read Joanne's story on Axios. My colleague Joanne Muller wrote a really good piece, I thought, on the flying car. All right. Thank you for listening to the show. Thank you for sending us emails on sleepmoneyatsleep.com. Thank you to Jessamyn Molly of Seaplane Armada for producing. And thank you especially if you are a Slate Plus member.

57:04If you are, then we have a special treat for you. Otherwise, we'll be back next week with more Slate money.

57:20Felix Salmon: Hi, this is Brooke DeVard from Naked Beauty.

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