← Slate Money
Slate Money
Is Capital One’s Discover Deal Doomed?
00:38:53
The Money crew discusses the potential Capital One/Discovery merger, the 800-pound Nvidia gorilla, and America’s car wash epidemic.
Loading summary
Transcript117 lines
- [00:00]
A
Foreign. Hello, welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I am now writing the daily Axios Markets newsletter with Emily Peck.
- [00:27]
B
Hello. Hello, Hello.
- [00:29]
A
Hello. We're now proper colleagues, Emily. It's not like we've been recording this podcast together every week for the past five years.
- [00:35]
B
Nope. Now we're really working together.
- [00:37]
A
So make sure you're subscribed to Axios Markets. But yes, we are also here with Elizabeth Spires.
- [00:43]
B
Hello.
- [00:44]
A
And we're going to talk about the big credit card merger, what got announced at the end of last week. We are going to also look at Nvidia, which is the avatar of the AI bubble or the AI boom, depending on how you're looking at it. We are going to look at car washes and the whole new economics of car washes. We have an awesome slate plus segment about KitchenAids and other kitchen gadgets that last forever. It's all coming up on Slate Money. This is the dawn, the dawn of.
- [01:20]
B
Discover, the Discover car.
- [01:23]
A
Now you have a brighter day in store. This world, you're always reaching for something better. You work a little harder. Do you aim a little higher? Credit cards, they are ubiquitous in America, way more so than in many other countries. And now there is a mega credit card merger. Capital One has announced that it has agreed to buy Discover. If and when these two companies merge, they will be the biggest credit card issuer in the country with a 19% market share, overtaking JP Morgan Chase, which is the current number one, with 16%. And what's more, Capital One will, in buying Discover, acquire not only a massive card issuer, but also a card network. Because there are four card networks. There is Visa and MasterCard, there's American Express, and there's also Discovery. Perennial also ran. So, Elizabeth, what's going on here?
- [02:27]
C
So this is the entire reason for Capital One buying Discover is that they want the network so that they can increase their total customer base, but also have an additional revenue stream and more flexibility to issue cards to consumers from multiple networks. And they aren't as tied into Visa and MasterCard, which account for 80% of the market right now.
- [02:49]
A
So, okay, so this is really, really interesting. You say it's the whole reason why they're doing it. And I think network is a nice to have that isn't such a big deal. So let's unpack this a little bit. Discover definitely issues a lot of cards. And as a card issuer, as a bank, and Discover is a bank, as a Card issuer. And as a lender, it will give capital one extra market share. And we talk a lot about three sided markets on this show. Like something like Uber, right? Uber is someone that sits in between the buyer of the taxi services, if you're calling an Uber, and the seller of the taxi services if you're driving the car. And Uber doesn't, you know, provide any taxi services itself. It's just a sort of technology company that, that matches the two, the middleman and Visa and mastercard are basically the middleman for credit card transactions. It doesn't lend you money if you are the buyer, if you're using your credit card and you're effectively borrowing money from the bank to buy something to buy your cup of coffee. When you pay with a Visa card, Visa is not lending money. It is not the merchant, it is not receiving the money. It is just the middleman connecting the two. MasterCard works exactly the same way and American Express works a little bit differently because it is both the bank that's lending the money and the sort of third party intermediary. And this is one of the reasons why you will not see any other bank using the American Express network. Only American Express uses the American Express network. And it's a little bit, and Discover is a little bit like that. Only Discover uses the Discover network. And if Capital One were to buy Discover, then they have said that they're going to move their debit cards, note this, their debit cards over to the Discover network. But they haven't said anything about moving their credit cards over to the Discover network.
- [04:44]
B
And why that having a network is valuable to Visa and MasterCard and maybe to Capital One is because of the fees that they charge to be the middleman they tack on. What is it like 1 to 2% every time you buy something, pay for something with your credit card. MasterCard or Visa takes a little, a little insy percentage of that. And that's a huge, huge business that's growing and growing because more people use cards now than they used to.
- [05:09]
A
Even and to be clear, the merchant fees, like when if you're a merchant and you pay 2.75% of the credit card transaction to the person you buy your point of sale terminal from, not all of that is going to Visa or MasterCard, right? That gets split up among a whole bunch of different places. A bunch of it goes to the people you're buying your point of sale service terminal from. A bunch of it goes to Visa and MasterCard. A bunch of it goes to the bank and the bulk of it, weirdly just comes back to you in the form of kickbacks, in the form of points. Like, Americans in particular have these very high credit card fees and they wind up getting lots of miles and points and cashback and stuff like that. So a lot of that is just like a straight kickback to the consumer. But yeah, Visa and MasterCard do get a small cut of that, and that's why they are very valuable. They're both worth more than $400 billion. You know, to, to put this in perspective, Capital One has agreed to pay 35 billion for Discover, and most of that 35 billion is just for its card issuing business, not for its network.
- [06:17]
B
Also explains why when I get pizza, they give me a discount when I pay with cash.
- [06:23]
A
There used to be a rule that the credit card companies would force merchants to sign onto saying that they wouldn't give cash discounts. But then that was made illegal as part of Dodd Frank, I think, or somewhere around there. So now it's legal for merchants to say, listen, you know, our credit card fees are ludicrously high and if you pay cash, we'll give you a discount. And I honestly, I think that should happen more often because they are ludicrously high and it's a crazy inefficiency in the market. And in most countries they're regulated. And in the United States, debit card fees are regulated under something called the Durbin Amendment, but credit card fees are not. And they only ever seem to go up and up and up and up, and it doesn't do any good to anyone.
- [07:07]
C
You know, there are some obvious synergies between Capital One and Discover and that, you know, their customer base is very similar. You know, they carry a lot of subprime debt. And if you're trying to consolidate that, that makes sense. But I do think the network was a key part of the acquisition. No.
- [07:23]
A
So I think the network is weird. This is, this is a super sort of weird, cunning thing. I know I can feel the antitrust train coming down the tracks towards me at high speed. So let's just like get this out of the way right now. This is a hugely anti competitive merger, right? It is one of those classic horizontal mergers where you take two issuers who are very big in a certain market and you tie them together and so they're no longer competing with each other. And it is almost by definition anti competitive. Right. And there is interesting research that just came out last week or week before from the Consumer Financial Protection Bureau, which shows that the biggest card issuers, which is Capital One, JP Morgan, Discover, Amex, they charge much higher interest rates, much higher APRs than smaller card issuers for a whole bunch of reasons that we don't need to go into, but we can if you want. And so like, basically, there is a very strong reason to believe that the rates that Capital One will be able to charge will go up. The interest rates they will be able to charge to borrowers will go up if they merge with Discover, and they will make more money that way. And that is clearly bad for consumers. And so the antitrust people are not going to like that. But it's obviously clearly good for Capital One. So that's part of the reason why they want to buy Discovery, is they'll have more power to raise their APRs. Now the question then becomes, given that this is so obviously anti competitive, given that the first thing that we saw in Congress when this was announced was not only Elizabeth Warren saying this is crazy, it has to be banned, but also Josh Hawley saying this is crazy, it has to be banned. There's a bipartisan congressional consensus this is crazy and it has to be banned. So what Capital One needs is some hope, some vague hope that somehow they have an argument that this is not anti competitive and it's going to be good for consumers. And that's where the card network comes in. Because right now you have this duopoly of Visa and MasterCard. And what capital One has been trying to say with a straight face is, well, Discover has been struggling, but if we buy it, we're going to invest in it and it's going to become much bigger and it's going to be able to compete with Visa and MasterCard card. And if it competes successfully with Visa and MasterCard, then that will help reduce the existing duopoly and that will be good for consumers.
- [09:48]
B
Yeah, there was a piece in the Journal that basically made that argument. It was a regular news piece, but it was very much like liberals are going to say, this is violation of antitrust. But actually this will make Discover's network more powerful and they'll be able to lower interchange fees on the network. Now, to be competitive with MasterCard and Visa, there'll be more price competition on the networks and that'll be really good.
- [10:16]
A
Yeah, and I mean, I saw that argument in Axios Closer as well. And I have yet to find a human being who will present this argument to me with a straight face and actually believe it. For one thing, lower interchange fees are not directly and obviously good for consumers. Right. Because they Just basically wind up going to higher profits for merchants. Or I can see a little bit of argument that it might be good for merchants if there's a little bit of competition bringing Interchange down. But the fact is, as I say, no one is going to be using this Discover Network except for Capital One. It's not like a whole bunch of banks are going to suddenly go, oh, now Discovery is offering lower interchange fees, so we're going to move all of our Visa cards to become Discover cards when they are direct competitors with Capital One. Like, of course they're not going to do that. That's one of the reasons why Visa and MasterCard aren't card issuers, because they don't want to compete with their customers.
- [11:17]
B
Yeah. And then meanwhile, I mean, Felix, you wrote about that CFPB study and this one thing was really striking, was that it just, it just showed the big difference between credit cards you get from the big banks.
- [11:29]
C
Right.
- [11:30]
B
Versus the small banks. And people with poor credit who get a credit card from a small bank pay less interest, a lower interest rate than people with excellent credit who carry a card from Discover, Capital One or other big banks. They pay higher interest rates. Like that's like more powerful. Yeah, that's more powerful than any, you know, argument about interchange fees going down, fees that you, you get as kickbacks. Like you just said, you get your cash back every month.
- [12:01]
A
The other thing we should mention about big bank credit cards is not only do they charge way higher interest rates, but they also charge way higher annual fees. So if you are one of those people who pays off your credit card in full every month, guess what? They're still making a shit ton of money off you because, you know, number one, because of the interchange, but also because they're just literally charging you to have the card in the first place.
- [12:25]
B
Do you guys pay a fee on your credit card? I don't think I have a fee.
- [12:28]
A
I will admit to paying a fee for my credit card. Do not ask me why. I've, I've. We've discussed this on Slate Money in the past, I have racked up a gazillion AMEX points I never know what to do with. And as part of the weird bargain I made with Amex, I pay them a fee every year for having an AMEX card. And in return I get all of these AMEX points I never use. It's, it's one of the worst financial decisions I've ever made.
- [12:54]
C
It's also, there's some prestige in holding a high end AMEX card. And I think that's maybe a little bit of what people are paying for.
- [13:00]
A
Oh, yeah, 100% on doing it for the prestige of having an Amex. I mean, maybe I'm that shallow. Possibly I am. Maybe.
- [13:07]
C
I know. Maybe that's that shallow.
- [13:09]
A
Maybe that's it.
- [13:10]
B
So what's going to happen? Do you think this, this is going to pass the smell test? I mean, the antitrust environment right now is pretty. It's pretty tough under the Biden administration.
- [13:18]
A
Yeah. I'm just going to come out and say that there's no way this deal is going to happen. And this isn't just me sort of, you know, looking at the antitrust environment and going, the DOJ is just not going to allow it. Although it's partly that it's also built into the merger agreement between Capital One and Discover. Get this, Emily, if the DOJ blocks the merger of Capital One and Discover, what is the breakup fee that Capital One has to pay Discover in order to make up for going through all of this and then not getting bought in the first place?
- [13:57]
B
Well, Felix, the breakup fee is $0. Although if you put it on a credit card, you might have to pay a fee.
- [14:04]
A
Yeah, the interest on $0, even at 100% interest is $0. Yeah. They have negotiated a zero breakup fee. And clearly the only way you negotiate a clear zero breakup fee is if you have that this thing is going to go through. It's a good. It's an interesting question, right? Like, why are they even going through this? There's a huge amount of money being spent on lawyers and bankers and all the rest of it to try and make this deal happen. The way I look at it is that, you know, it's a game of percentages. If Capital one has a 10% chance of this deal going through, it's probably worth giving it a shot because the higher you aim, the bigger the payoff should be. It should be. And it is. With the Discover cut, Let's move on to Nvidia, which had earnings. Elizabeth, knock me over with a feather. They made a lot of money.
- [15:01]
C
Company is now worth $2 trillion.
- [15:04]
B
It is, Felix. Nvidia is now the most important stock on planet Earth, according to Goldman Sachs. The fine folks at Goldman Sachs. The business press is in an absolute meltdown frenzy over Nvidia stock. And I mean, it has gone up a really, really lot. I talked about it on an episode of what Next TBD in June, and at the time, the stock price was $389. And in the interview, I Asked, I think it was Don Byer I was speaking to. He's like a chips journalist, basically. I was like, is this a bubble? Is the price too high? And he was like, I don't know. And since then, since it was 389, it's now risen. I mean, I looked yesterday and it was $785 and I think it's gone up even more today. So, I mean, it's just been crazy.
- [15:55]
A
I want to come out and say, like, that bit is not so crazy. Like, I think. I think the secondary market, speculative, like, number go up stuff is so compelling. People love to talk about market caps that they are missing the real story, which is Nvidia is just printing money right now at an astonishing rate. There is a very good reason why the share price is going up. It's because its profits are going up. Its PE ratio, its valuation as a ratio rather than just as a number. It's actually kind of flat. It's basically the same as it was a year ago. Like, it has gone up a lot in price just because its profits have gone up a lot. And its profits have gone up a lot because it is the only game in town when it comes to making the kind of AI chips that everyone wants. And it is literally, you know, it's like a artisanal winemaker in Burgundy. It is allocating its chips to try and make sure that it's fair. Because, you know, Mark Zuckerberg is out there going, I will literally buy every single H100 chip you make, and I am stockpiling them. And like, these H100 chips, which Nvidia sells for $30,000 each, by the way, these H100 chips are like the only thing that anyone wants right now. They've become the sort of 2020 toilet paper of tech. Everyone is just hoarding them and everyone wants more and no one can ever get enough. And so Nvidia, because no one else is really competing with this H100 chip, no one else. And it's got an H200 coming down the line. It's. Everyone else is just like two steps behind. And it's going to be a long time before anyone who isn't Nvidia is going to be in a position to be able to compete with them for the kind of chips that everyone wants to power their AI applications. And up until now, it's just been like the big tech companies. You know, it's been OpenAI and Facebook and Apple and that kind of thing. But, like, the thing that Jensen Huang said on the earnings call. And he's the CEO and founder of Nvidia is. Yeah, that's changing now. It's just every single company in the world wants and needs AI chips to power their business.
- [18:07]
C
I think it's also important context that Nvidia has such a big head start when it comes to selling graphic processing units. Specifically, 10 years you would have bought a graphics card from Nvidia, but probably to play an immersive VR game or something where you really can't have anything lower end and have the software function. But now that people are very interested in generative AI, they make some of the only chips that can really handle the amount of processing power that you need to even run something like OpenAI. And there's just, you know, they have so much research and IP already under their belt that it's going to take a lot of the other chip makers quite a while to even catch up to where they are right now.
- [18:52]
A
I mean, it's a question of architecture. So, like, as you say, on one level, Nvidia was just kind of lucky that it turns out that the kind of architecture that lends itself to GPUs is also the kind of architecture that lends itself to LLMs, to large language models, and that you want to be like doing a bunch of little calculations at once in parallel rather than. Anyway, it doesn't really matter. The important thing is that because it was good at GPUs, it had a head start. But then, to his credit, Jensen Huang made a massive investment in AI like seven, eight years ago and was like, we are going to totally start making very, very bespoke AI chips like the H100. No one's putting an H100 in their Sony PlayStation. You know, like, these chips are $30,000 each. They're very, very bespoke AI chips. And they use that architecture. But also Nvidia has then been listening to its customers and they're like, what kind of AI chips do you need? What kind of architecture do you need? And they've been creating an entire ecosystem of ways in which people can customize and build the kind of compute that they need. And it's just basically the world in which every AI researcher has grown up in. And moving away from that architecture to anyone else's architecture would be so hard just in terms of, you know, people would have to sort of retrain themselves to do something completely new that no one wants to do it. And everyone's just like, let's just stick with Nvidia. So Nvidia kind of has a monopoly on this right now, and it's making much less money than tsmc, which is the biggest chip maker in the world. But it is worth like four times as much because its margins are just so much bigger.
- [20:40]
C
Well, they also have a little bit of an existing moat because they introduce their own proprietary programming language, and it's very quickly becoming industry standard for everybody. And so it'd be very difficult to take them out of the equation even if other chip companies develop similar technology.
- [20:59]
A
The only question is, are they going to have this complete monopoly that they have right now for the foreseeable future where there's no one else making AI chips that anyone wants? Or is TSMC and Intel and maybe a couple of other people and possibly even Sam Altman, who's out there talking about making his own chip maker, is, is someone else going to be able to come along and, and compete with him?
- [21:24]
B
And this is the classic. I mean, this is just, I think Jensen Huang, famous for wearing a black leather jacket and founding Nvidia in a Denny's in 1993. And they did just put a plaque in the Denny's. Just fun facts. This is just the beginning of something. Jensen Huang called this, like, the AI tipping point. And this is how these, like, tech shifts and bubbles kind of start. They start with the firms. Sometimes they start with the firms that make the skeleton, the architecture, the, like, your Intels, your. Your Cisco's, the. The firms that make the stuff that allow those other companies to innovate and invent and do new things with the technology. Because, like, AI. And this is what Don said when I asked him, like, if it was a bubble or whatever, he was like, AI is not a bubble. Like AI chips, it's going to be in everything. Everything tech is going to be AI. So now it's like just a question of how long is that going to take and, like, what's going to get done and what are, what are the new big inventions and innovations that are going to come? And I feel like that's where, like, Nvidia has room to run, because the market for their stuff is just going to get bigger.
- [22:31]
A
Exactly. Like, it's not just tech anymore. This is the point, is that, you know, if you are JP Morgan, you want a bunch of H1 hundreds. If you are General Motors, you want a bunch of H1 hundreds. You know, if you are literally any company in the world, if you're McKinsey, you want a bunch of H100, whatever, whoever you are, if you're a big company, you want to be on top of this AI thing and you don't want to be beholden to Microsoft or OpenAI or whoever. You want to be able to build your own applications and do it all in house. And honestly for like 30 grand for an AI chip, like that's the cheap bit, you know, the expensive bit is paying 750 grand for someone who knows how to program a thing.
- [23:16]
B
Yeah. And just to bring it back to the stock market. And because I think, Felix, you made this point earlier this week. Like for a while in the high rate environment, everyone was like, well, stocks aren't going to start really going up again until the Fed cuts rates. And. But because of Nvidia, because of AI, the stock market's now at a new record high.
- [23:37]
A
And.
- [23:37]
B
And it's like we have a bull market basically. It's kind of astounding.
- [23:40]
A
Yeah, we, yeah. Thanks to the AI rerating, thanks to the extra profits that are coming from AI and the hope of extra profits that people have, you know, placed into Facebook and Microsoft and people like that, the big tech stocks have gone up, gone up a lot. Meta in particular has just like it had this huge downdraft, it went down like 70% and now it's back at all time highs again. So the top 10 stocks in the stock market account for way more of the stock market than historically is normal. So if those top 10 stocks are all tech stocks and they're all trading at crazy valuations because of AI, that alone is enough to bring the stock market to record highs, even if the median stock hasn't moved anywhere at all. Anyway, enough of AI because I really want to talk about car washes.
- [24:37]
D
Holland has come up with the best automatic car wash in Europe. And where is the motorist who doesn't loathe doing the job himself or being without the car for a day? Here you just drive onto the conveyor and leave it to them. Then you have five minutes for a quick coffee because that's all the time this new example of automation takes.
- [24:55]
A
Elizabeth, do you have a car?
- [24:57]
C
We do.
- [24:58]
A
Okay, so how often do you wash said car?
- [25:01]
C
Almost never. Because said car is kind of a piece of shit and we bought it to basically just take the kid back and forth to school. So.
- [25:09]
A
And you're like, I don't care if I drive my kid to school in a dirty car.
- [25:14]
C
No, the kid doesn't care either. So.
- [25:18]
A
All right, Emily, how about you?
- [25:20]
B
I have a car and I wash it.
- [25:22]
A
How often?
- [25:25]
B
Probably every other month. But I want to do it more. I want to go every month.
- [25:31]
A
And what is the reason for feeling sheepish about doing it only every other month? What is the reason why you would want it to be cleaner than that? Just because it's nice to be clean. Cleanliness is next to godliness.
- [25:43]
B
Well, yeah, it's nice to be clean. It's a little embarrassing because it gets very dirty. Where I live, there's, like a lot of dirt roads and stuff. And also, you know, in the winter, there's salt and stuff that gets on the car that you want to rinse off because it's not good for the car long term.
- [25:56]
A
So the big move that has happened in the car wash industry, and we love this Bloomberg story, it's so amazing from CityLab. So, in fact, that's not a big move. There are two big moves. The first big move is that no one is washing their own car anymore. Like, Emily, when was the last time you went out into your driveway with a sponge and washed your car?
- [26:16]
B
Well, okay, that's literally never happened. Where do you even get that big sponge? Like, I wouldn't even know how to begin. Do you know what I mean? I don't have a bucket. I don't have a big sponge. I don't know where to get Turtle Wax.
- [26:27]
A
But, yeah, the. The idea that this was just something that one would do if one was. If one was proud of the car. And this is one of the most expensive things you own, and you look after it and you go out there and you buff it and you wash it and you get your soap and all. People don't do that anymore. So that was. That was the first big move, is that we moved from a society where it was expected that people would wash their own cars or at least, you know, pay a local teenager to wash their cars to a society where they just drive it through an automatic car wash, which does a much better job and it takes a fraction of the time. But then there was a second move, which is amazing, which is that the automatic car washes started becoming these big chains, and they decided that they didn't want people to come every other month and wash their car. They wanted people to come all the time and wash their car. And they started selling subscriptions. And the subscriptions were based on this idea that if you buy an unlimited subscription to this car wash, you'll wash your car much, much more frequently. This is obviously higher cost for the car wash because they have to wash your car many more times per month. But you keep on coming back just to that car wash. And overall, your value to the car wash goes up. Your lifetime value to the car wash goes up a little bit, not a lot, so. Because obviously their expenses go up as well. But that big change of trying to push everyone into subscriptions has meant the demand for car washes seems to have gone through the roof. And so now everyone wants to build new car washes because demand has gone up so much.
- [28:05]
B
Yes. And private equity has gotten involved.
- [28:07]
A
Of course.
- [28:08]
B
Of course. And there's this situation where they'll be like. Like, you know, when you. You're driving and you see gas station, and there's another gas station across the street, and sometimes it's on all four corners, or like a CVS and a Rite Aid and Walgreens are all. See them all. They're all together in the same place. The same thing is happening now with car washes, but this is starting to really annoy some towns and cities, and they're trying to ban more car washes from coming. And I just would like to say I read about this in car wash magazine, and Car wash magazine is where I learned about hoteling's model of spatial competition.
- [28:43]
A
Oh, hoteling law is. Hotelling's law is fantastic. Like, hoteling law explains, of course, Felix.
- [28:48]
B
Is like, oh, yeah.
- [28:49]
A
No, I mean, it explains why, you know, like, do you remember back in the day when all of the shoe stores were on 8th street in Manhattan? Or, you know, like. Or why all of the flower stores were on 26th street or something like that. It's like, hoteling's law explains the intuition that these things would be spread out so that they're as convenient as possible to as many people as possible is actually. It doesn't work that way. And you wind up getting all of the competitors being right next to each other.
- [29:15]
B
Yes. Because they all want to be in the. There's an optimal spot to be in if you're a car wash or gas station or a pharmacy, and everyone wants to be in the optimal spot. So they all crowd in and somehow it works, which I'm surprised by. That seems insane, but it works.
- [29:31]
A
But from. From the point of view of, like, urban quality of life, it's terrible because car washes are just. They don't provide a lot of employment. They're all very automated. They take up a lot of space. They use a lot of nasty chemicals. They don't look very nice. They're not obviously walkable. They're designed to be driven through.
- [29:52]
B
You know, you need a car to use.
- [29:54]
A
You need a car Exactly. Like they, they increase traffic because people drive to them for no other reason than they want to get their car washed. Like they, they are just like a terrible thing for any kind of urban fabric. And so that's also one of the reasons why you tend to find them in these kind of soulless excerpts.
- [30:11]
B
Well, you may remember a song by Rose Royce called Car Wash. It was written for a movie and the lyrics are all about washing the car by hand. Anyway, that's not how the car wash works anymore. It's very automated. You go through. Sometimes there's like no one at the.
- [30:41]
C
Car wash. Not a party anymore.
- [30:43]
B
Yeah, there's no party with the big sponges. I'm obsessed with those, I guess. But yeah, it's all automated, which I feel like is not a bad thing because those jobs never struck me as very good anyway. Like, they're pretty low paying, kind of hard jobs. I mean, despite how much fun it looked in the movie.
- [31:00]
A
Yeah, like it's fine in the middle of the summer, but like in the winter you don't want to be working in a, you know, sponge.
- [31:06]
B
And the automation and the subscriptions are really good for the business because I guess it used to be a very seasonal business. Like if it rains, you don't make any money. But because you have a subscription customer base, if it rains, it doesn't matter. You make more money because no one's coming. You don't have to use any resources.
- [31:23]
A
And so the solution to this problem is zoning. Basically it's local authorities and villages and towns basically passing rules saying, no more car washes. Buster, we've had enough.
- [31:37]
B
I don't know, let the car washes be. What's the big deal? You don't care. You don't wash your car.
- [31:41]
C
Well, I think they, they certainly make sense for a certain kind of customer. If you're a Lyft driver or an Uber driver, this kind of subscription model really works for you. Although I do think there's anytime you have a pricing model that allows for unlimited anything, I think it switches consumer behavior into doing something more often than you would rationally do it. So in terms of maybe ecological costs and stuff like that, it's probably bad.
- [32:06]
A
Yeah. Wasn't that just a headline about some like fast food restaurant chain had unlimited shrimps or something and lost a bunch of money as a result.
- [32:16]
B
Red Lobster, it was a big disaster.
- [32:18]
A
Yeah.
- [32:18]
B
Yes, they, they lost a lot of money because they. But that's their fault. They price their all you can eat shrimp at too low a price point. And they fail to understand how much people want to eat shrimp, which you would think they would understand because they're Red Lobster.
- [32:32]
C
The automated car washes do use a lot less water than if you're, you know, hand washing. It's, it's, you know, 50 gallons versus 150. But if you go from washing your car once every two months to washing it three times a week, you know, that certainly nets out the opposite direction.
- [32:48]
A
But also to the point, to Emily's point, no one's hand washing anyway. The question isn't, you know, would you use 150 otherwise? The question is, would you use 50 every other month? Would you use 53 times a week? And that's obviously worse.
- [33:04]
B
At my car wash, they have a guy dressed in like this. I think it's like a monkey costume or an ape costume who stands at the front of the automated drive thru and like, gets excited when you come up. And it is, it's like heartbreaking a little bit to me. Like, I don't understand who that's for.
- [33:21]
C
You're trying to replicate the party aspect of it. There are some car washes, you know, that have things like disco lights and they try to make it an entertaining experience to just drive through the car.
- [33:33]
A
Wash. Yeah, kids like going through car washes and, you know, not all dogs, but certainly there are many dogs who just love going through car washes.
- [33:42]
B
Yeah, it's kind of fun. I always like, just kind of zone out in the car. And then I think, like, what else could be washed? Like, I wish my house could be. There could be like a way to like, drive your house through a wash or something so you don't have to.
- [33:55]
C
I sometimes wish my child could be washed that way.
- [33:57]
A
That would be great. But no, I feel like there's definitely a subset of the car wash subscriber community who are not washing their car, you know, every day because they want their car to be clean. They're washing their car every day because they want to entertain their dog.
- [34:16]
D
Some motorists, of course, have wives who take a pride in washing the car. But for the rest of the of us, this is just the job.
- [34:26]
A
Should we have a numbers round, people? Yes, Elizabeth.
- [34:29]
C
Okay, my number is 46 and that's percent. And based on an Economist YouGov poll of American reading habits, only 46% of Americans or 46% of Americans finished exactly zero books last year. An additional 5% only read one.
- [34:50]
A
Is this up or down? I feel like this is one of those questions where the first thing I always ask Is what's the time series? Is that number higher than it used to be or lower than it used to be?
- [34:58]
C
Didn't say.
- [34:59]
A
Because I feel like in order to understand this number, you need to be able to put it in perspective. Like, what was it in 1975 before we were all distracted by TikTok? But I feel like.
- [35:09]
C
But also, if you want to be.
- [35:10]
A
Bad at reading books, I don't think this is anything new.
- [35:13]
B
What if it's 46% who've read zero? That means a majority of Americans have read a book in the past year, Right?
- [35:20]
A
A book, a books.
- [35:21]
C
Okay. If you read more than 50 books in the last year, you are in the top 1% of readers.
- [35:28]
A
That is definitely not me. I have not read more than 50 books in the last year.
- [35:32]
B
I think I read close to that.
- [35:34]
C
If you read five, you're in the top 33%. Ooh.
- [35:37]
A
Yeah. I think this is actually one of the interesting things that's happened in recent years is that that top 1% has actually increased their reading. There's a pretty significant group of people who are reading books, like more than a book a week. And that is a lot easier now in the world, you know, in the. And that is a lot easier now that ebooks are a thing. And people just download a shit ton of books to their Kindle and read book after book after book. And this is particularly a thing in the romance reading public, but it's also in other places, too. And the number of power readers who just read all the time is going up.
- [36:23]
B
Well, do audiobooks count?
- [36:25]
A
Yes, audiobooks count. Well, I mean. I mean, I don't know if they count. I don't know if they count for Elizabeth's statistics.
- [36:31]
C
Oh, I don't know if audiobooks.
- [36:34]
A
My number is 40, which is the new bag check fee on American Airlines for the first bag that you check on American airlines is now $40, which of course is only going to make life more miserable in the cabin because everyone's like, I don't want to pay $40 to check my bag. So they're going to bring on the world's largest carry on and try and squeeze it into the space above the seats. And everyone's going to line up. They're called gate lice, the people who line up in front of the gate long before their group is called because they want to be at the front of the thing with their bag so they get space for their bag. It's just horrible. And I have always been a proponent of, like, it should be the other way around. You should have to pay for carry ons, not for check bags. But no one does that. And yeah, it's now 40 bucks on American.
- [37:24]
B
What was it before?
- [37:25]
A
30, 35, I think it's just. It only ever goes up. It's a little bit like credit card interchange. It only ever goes up, never goes down. Emily, what's your number?
- [37:35]
B
Well, My number is 546. That is the number of English language words that mean drunkenness.
- [37:46]
A
I'm getting absolutely oystered.
- [37:48]
B
Exactly. I think that might be on the list. It's according to a new paper in the journal yearbook of the German Cognitive Linguistics Association. I read about it in Walt Hickey's delightful newsletter. And apparently, according to one other paper, drunk is the concept with the largest number of synonyms in the English language. There's. It's the one. I thought like sex would be the number one, but I guess maybe drunk is. And this paper is awesome. We maybe can post it in our show notes. The. The Appendix lists all 546 words, including like, sozzled cabbage, canned, fuddled, hammered honkers, owley eyed, and on and on and on. It's just delightful.
- [38:30]
A
I feel like I need to go out and get shit faced. Thank you, Emily. And thank you all for writing in on slatemoneylate.com thanks to Jared Downing and to Shayna Roth for producing the show. And we will be back next week with even more Slate money.