Transcript

236:

My Two Cents
Transcript

Originally aired 04.11.2003

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Full audio: http://tal.fm/236

Prologue.

Ira Glass

If you think your life is confusing, consider for a moment what happened to Congressman Ernest Istook last year. He's a Republican from Oklahoma. He believes that the Federal budget needs to be balanced. He believes it so fiercely that last year he formally proposed an amendment to the Constitution that would require a balanced Federal budget.

And then, just a few weeks later, he voted, along with the majority of the House of Representatives, for a Federal budget that would create the largest deficit in American history: $347 billion. Even without the money that we were spending on the war in Iraq, it would have been the largest in history. I talked to him about it at the time.

Ernest Istook

Certainly a majority of the American people and a majority of the people in Congress, on principle, say that they support a balanced budget amendment. That's great. But it's just like the Scarlet O'Hara syndrome, I'll worry about that tomorrow. Well, tomorrow never comes.

Ira Glass

Right. But if you and so many other people in Congress believe that we should not have a deficit, why not just vote against this budget with this deficit?

Ernest Istook

Yeah. I voted for the budget not because I support the level of spending in the budget, but because I understand in the process that we go through in Washington DC, if we did not adopt this budget resolution, we would end up with higher spending levels. Those are the political dynamics that are afoot.

Ira Glass

And this doesn't really seem like an answer to the question. It is all that he would say. We went around and around on it, me asking why not just vote for less money, him saying this was the lowest amount Congress could agree on.

For our program this week, all of us who work on the radio show wanted to do a program that would give a sense of what the hell is going on in the economy, because everything that we read about it or hear about it seems so contradictory. You've got deficit hawks, like Congressman Istook, supporting a tax cut from President Bush that could boost the deficit by a third. You've got the economy growing steadily for over two years now. In fact, last summer, it was growing really fast, 8.2% growth, which should have created jobs, but somehow it didn't and nobody exactly understands why. Then, two months ago, the economy finally started creating jobs. And again, nobody really understands why it happened then.

And then there's this. At the same time the job picture's been so bleak over the last few years because of low interest rates and cheap mortgages, lots of middle-class people had money in their pockets. And so, even during the recession, people bought homes and cars in record numbers which is not what a recession used to mean.

Welcome to WBEZ Chicago. It's This American Life distributed by Public Radio International. I'm Ira Glass. Today on our radio program, a show that we call My Two Cents in which we try to get a grip on what is happening in this weird, contradictory economy with stories from three different people in three different places in the economy.

Act One of our show, Dave Knows, the story of a man who might have a better grip on what is going on in the economy of middle-class America, what is going on in your personal finances, than all of the experts you ever read about in the paper or see on TV. And chances are, you have never heard his name.

Act Two, Stock Making Sense, in that act somebody who lost money in the stock market during the collapse of the internet economy heads off on a quest. Perhaps an even more futile quest than his original stock purchase. And he puts together a report, a stockumentary if you will.

Act Three, A View From The Mop. A janitor has written a book about what it is like to work for over a decade for under $6 an hour at the same job. Stay with us.

Act One. Dave Knows.

Ira Glass

Act One: Dave Knows. We wanted to begin today with this story about what is happening with middle-class Americans and their place in the economy. There are lots of different ways that you can measure how they're doing. You could examine unemployment statistics or consumer spending. You could take a poll. Or you could have a, more or less, random group of adults with all sorts of jobs call into a radio show to talk about their money situation. It turns out that somebody already does this, and he does it really, really well. His name is Dave Ramsey. His show is on over 160 stations, mostly in the south and west. The show comes out of Nashville. From Tennessee, Susan Drury put together this report.

Susan Drury

To me, a daily show about personal finance is, by definition, boring. And this program is not boring, it pulls you in. Here's Lynne, a typical caller. She and her husband sold their carpet store business and they don't agree on how to handle the money from the sale.

Lynne

He is disabled, and he kind of likes to gamble a little bit. And he says it's all his to do what he wants to. I said, no, I'm not working. We need to take it and budget it out for us to live on because we have two little children. What should I do?

Susan Drury

Let's just stop this right here. On any other financial show you wouldn't even hear this question because it's not about money. Her real problem is her husband. Let's hear some more.

Dave Ramsey

When you got married, the preacher said, and now you are one. It's our money. It's our kids. It's our stuff. It's our bills. It's our stuff. We work together, so no, it's not his, it's ours. And if he's a real man, what he'll do is sit down and the two of you, together, decide what this is going to be used for, for the good of the family.

Susan Drury

And this seems like just answer she wants to hear. But then the conversation takes a turn as it often does on this show. Dave knows that the money is never just about the money. So why is the husband holding on to the money? Well, that can't just be about the money either. Dave runs another theory by her. Maybe she's part of the problem.

Dave Ramsey

You may be kind of a tightwad and you've got the thing turned down too tight.

Lynne

I am.

[LAUGHS]

Lynne

That's definitely.

Dave Ramsey

And his reaction to that is rebellion. You need to loosen up a little and he needs to come to the table and be a grown-up. Is there disability income coming in?

Lynne

Yes. Uh-huh. Now there is.

Dave Ramsey

OK. Are we sharing that?

Lynne

Well, it comes to me, and so I just budget it for each week.

Dave Ramsey

OK. What you need to do, though, is it doesn't need to be I budget anymore. It needs to be we're budgeting because part of the rebellion from him is coming from the fact he doesn't feel like he's getting control. The only control he has is over that carpet store money, and he's grasping at trying to have some sense of dignity and control.

Lynne

I understand.

Susan Drury

This call takes just 10 minutes out of the three-hour Dave Ramsey Show. It's on Monday through Friday. It has 1.8 million listeners each week. He gets a lot of calls you'd expect to hear on a personal finance show: questions about 401-Ks, bankruptcies and mortgage rates. But then there is the classic call, the one he gets all the time.

Scott

I need your advice on a credit situation that my wife and I have gotten ourselves into.

Dave Ramsey

OK.

Susan Drury

This is Scott. He and his wife have student loans and debts from a failed business. And when they lost their jobs last year, they started living off their credit cards. Scott just got another job, but he owes almost as much in debt as he'll make in a year.

Dave Ramsey

OK. So you're at 55K and you owe 45K?

Scott

Oh, yeah.

Dave Ramsey

All right. First, get $1,000 cash for miniature emergencies. Cut up your credit cards, and never again are you going to do this.

Scott

OK.

Dave Ramsey

It has to be a healthy level of anger, and I am getting out of this mess, and I'm never going to live like this again. And we're going to build up some savings. And it's going to take you about three years of sacrifice and living on a budget. And no vacation, and no new anything, and very little eating out, and rice and beans, and beans and rice. And on 55K, you can be debt-free in about three years.

Scott

OK.

Susan Drury

This is what Dave tells everybody every time, the same thing over and over. Live on a budget. Cut up the cards. Work extra. Pay it off and save. Rice and beans, beans and rice, this is his sermon.

In the world of The Dave Ramsey Show there's one specter that haunts the US economy, and that is debt, personal debt. It's at record levels these days, $8 trillion nationwide. And for the first time ever, if you added up everyone's debt in this country, it would be greater than our annual disposable income. And Dave's got a story that makes people trust him on this subject, a story he tells often on the radio, and which he told me when we sat down for an interview.

Dave Ramsey

The way we ended up teaching this stuff was that we went broke. Sharon and I started with nothing in our 20s, early 20s, and started buying and selling real estate. And by the time we were 26 years old, we had a little over $4 million worth, a little over $1 million net worth. I was making, the best year I ever had in the real estate business, I made $250 thousand taxable cash income that year. That's a lot of money for a kid from Antioch, Tennessee.

Susan Drury

He bought a Jaguar. They went to Hawaii a couple of times. They bought a house, and then a bigger house. He was taking out a lot of short-term real estate loans. He would use the loans to buy property, fix it up, and re-sell it all within 90 days. Then the bank got sold, and they called all his loans in it once, and he couldn't pay back the money.

Dave Ramsey

And we fought for two and a half years. We fought against the process of going broke by selling things and working hard, and it didn't work. And we were sued, and sued, and sued, and sued. And we were foreclosed on repeatedly. And finally, at the bottom of that, with a brand new baby and a toddler, we were bankrupt. And so there I sat, with all these letters and licenses after my name that said I knew something about money, broke.

[LAUGHS]

It doesn't work. And I started trying to figure out how money really works, not what someone's theory was.

Susan Drury

This story of how he went broke and how it changed him has all the ingredients that make a great morality tale. And that is how he sees it: the sin of overspending, the dark night of the soul, and the redemption in wealth and success.

Dave's not the first person to say you shouldn't spend more than you make, but he is on a mission to change you and how you deal with money. And he is very, very specific about exactly what you should do in exactly what order. Then he's there every day to answer questions, to goad you, to push you, to harass you into following his rules.

Announcer

Now, here's your host, best-selling author and financial counselor, Dave Ramsey.

Dave Ramsey

Welcome to new millennium where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.

Susan Drury

Every Friday on the show, they do this thing called Debt-Free Friday. People who have followed Dave's rules call in to give their testimony of how they got into debt, how much debt they were in, how they got out, and what it feels like to be free of it. This is everyone's favorite part of the show.

Dave Ramsey

Becky, what's up with you?

Becky

Hi, Dave. I just wanted to let you know that, after four long years, I'm finally down to the first mortgage, and I just got that refinanced on a 15-year.

Dave Ramsey

Good for you. Four years, you've been working on this.

Becky

Yeah. A single working mom, and I work three jobs, seven days a week.

Dave Ramsey

Whoa!

Susan Drury

In four years, Becky paid off $21,000 in debt. She's got a daughter in college and makes $34,000 from her three jobs, combined. She tells Dave she took extra jobs that let her stay at home at night with her family.

Dave Ramsey

How'd you find this job?

Becky

One of my friends suggested. We were trying to think of things for me to do a few years ago that never closed, and she said something about a nursing home. And I called. I made a list of the ones close to my house, and the second one I called, which is five minutes away, had an opening.

Dave Ramsey

So you guys had a brainstorming session. I mean, we got together and said how could I work? You know, you're just awesome.

Becky

Thank you.

Dave Ramsey

It's a great place to go when you're broke, to work, and you figured that out. I'm proud of you. That's awesome.

Becky

And I just want to give anybody out there that thinks they can't do it, if I can do it, anybody can do it.

Dave Ramsey

I'll tell you. No, I'll tell you anybody can't. They've got to have the work ethic and they've got to have the character that you've got. And if they have that, they can do it. Becky, I'm proud of you. Yell at the top your lungs with all your friends.

Becky

OK. Are you all ready?

Woman

Yes.

Becky

OK. I'm debt-free!

Becky's Friends

Debt-free!

Dave Ramsey

[LAUGHS]

It's a party, baby! Hey!

Susan Drury

To Dave, it's all about individual initiative, and Becky has it. And if you don't have it, he's pretty rough. Here's Tina.

Tina

I have a car payment, and I am upside down. I've heard a couple of your shows before. I want to get out of this debt, so what can I do?

Dave Ramsey

How much do you owe on the car?

Tina

10,000 and something.

Dave Ramsey

And what do you think it's worth?

Tina

5,000 and something.

Dave Ramsey

Oh, my goodness. What a mess.

Susan Drury

She makes $800 to $900 a month, and she's paying a $368 car payment. Dave is trying to figure out how she came to owe twice as much as the car is now worth. It turns out she was in a car accident.

Dave Ramsey

You wrecked it. Has it been fixed?

Tina

No.

Dave Ramsey

Oh, crap. And you didn't have insurance?

Tina

I did. They sent me the money, but I spent it.

Dave Ramsey

OK. Ah.

Tina

Yeah.

Dave Ramsey

I'm afraid what you're looking at is, probably, a really good part-time job, about six or eight months of 80-hour weeks.

Tina

80-hour weeks?

Dave Ramsey

Yeah.

Tina

That's too much work.

Dave Ramsey

I can't help you, Tina.

Tina

OK. Thanks, Dave.

Dave Ramsey

Thanks for the call.

Tina

Bye-bye.

Dave Ramsey

I'm Dave Ramsey, your host. See, the bottom line is, you've got the obligation. You've got a mess, and you can't work your way out of it. You're not willing to work? I don't know anything to call that but lazy. That's all you can call that, and I can't help you.

Susan Drury

Dave says the financial problems we have are because we are too much like Tina and not enough like Becky. His view of the bigger economic picture is that we are all screwing up, each of us individually guilty in the same way. And this, he says, has nothing to do with the stock market, or the tech bubble, or even rising unemployment.

Susan Drury

How have the calls that you get changed since the boom ended?

Dave Ramsey

They haven't because the boom hasn't ended for the consumer. It was never there. Because the consumer in the '90s, the only thing that has changed for Joe and Susie is their 401K balance is lower. But they weren't using it, anyway, to live on. So day to day has not changed a bit. They're still borrowing up to their eyeballs in credit card debt. They're still buying cars they can't afford. And they're still living without a plan and no savings. And so the boom, when it was here, didn't affect them positively, except it gave them a false sense of confidence to go even crazier. And credit card debt got worse in the '90s. Now that doesn't make any sense. I mean, if there was this boom, why don't we have money to buy stuff?

Susan Drury

Dave's message is that you are not at the mercy of the economy. It might feel like you are, but you're not. He believes this, and he gets other people to believe it. And I have to say, people, all sorts of people, like his answer. They flock to him to hear what he has to say. He tells them that there is a very simple but very difficult solution to their money problems, and it's a solution that has no room for excuses and nothing outside your control. And maybe that's what people want.

It's a Saturday morning and I'm at a Pentecostal church north of Nashville. I'm an hour early and the parking lot is nearly full by the time I get here. The lobby and the halls are filled with Dave Ramsey merchandise and the 2,500 people who are here to see Dave's five-hour, live event. He has a warm-up act, a comedian, and then he comes on.

Announcer

Ladies and gentlemen, will you please welcome Dave Ramsey.

[APPLAUSE]

[SHOUTS]

Dave Ramsey

Yeah! Thank you. Thanks. Well, thank you for being here today. We are going to have some fun today. I found out something about money. Money's fun if you've got some.

[LAUGHTER]

Susan Drury

Dave Ramsey is a brand. Not only does he do the radio show, but he writes books, holds these live events, and does curricula, and classes, and counseling sessions. It takes only four people to run the radio show, but he's got 75 more employees doing all the other stuff.

Jane Henkle

We don't get it locally.

Susan Drury

Jane Henkle drove five hours from her home in Indiana to see Dave live. She and her husband have been following Dave's plan for five months.

Jane Henkle

Oh, it's changed our life. I've been married 28 years and, until we met with Dave, my husband and I had never done a budget together. We had never. He did the finances, or I did the finances at different parts. We'd never done it together. We fell into the credit card trap.

Susan Drury

They started with $30,000 in credit card debt, and they've got about $20,000 left to pay off. It was a lot different before they started Dave's plan.

Jane Henkle

A lot of stress. A lot of stress. Like, I would hide from him the credit card bills when they would come in. We're weren't totally honest with each other in our spending. We didn't have a budget to see where everything went at the end of the month, or even the end of the week. We were like, whoa! What's going on here? Oh, I'm going to the grocery store. Sorry, no money left. You know? And it's changed things around completely.

Susan Drury

This sense of excitement is all over this place. Like a roomful of people who are all losing lots of weight doing the exact same thing and succeeding in a world where everybody else is getting fatter. You hardly ever hear people talk about money in this way with this sense of control. And these are not rich people.

Bobbi Hargrove

I'm Bobbi Hargrove.

Phillip Hargrove

I'm Phillip Hargrove. I've been listening, probably, about five years now. I drive a truck, so I'm up this way a lot. So I get to hear him on-- I wondered what the people on the radio was saying, that they was getting out of debt and all this. And I was like how's this work? So I love it, you know?

Susan Drury

I was going to say you're just glowing.

Phillip Hargrove

My kids, they come in, I've got the tape on the TV or I've got a CD in and everything. I live and breath this stuff, you know? It's changing everything that I've ever been taught, you know?

Susan Drury

In a way, it's sort of a simple thing to have a plan on how to spend and save your money. But here we are in the richest country in the world, an economic superpower, and few of us have ever really learned how to do that.

When I tell my friends here in Tennessee that I'm doing a story on Dave Ramsey, one person after another tells me how he changed their lives. I hear this from a teacher, a professional musician, a reporter, a lawyer, and some farmers. Kim Turner and her husband have done Dave's plan for several years.

Kim Turner

You know, listening to that keeps you on the straight and narrow so that you don't stray, kind of like you go to church. Even though you already know what he's going to say, but it's just, I guess, you need to hear that every day.

Susan Drury

A lot of people I met made this connection between going to church and listening to Dave's show, and it's not accidental. Dave's a Christian, and he doesn't shy away from quoting Scripture or talking about God on the show. As he tells callers, the Bible doesn't contain any positive references to debt. His 13-week course, Financial Peace University, is held in hundreds of churches, and he works with ministers to publicize his live events. For lots of folks, the religious angle on money is the way in. Sometimes people call in to thank Dave for his show. They call it his ministry. And he's OK with that term, although he says he doesn't want to be pigeonholed as the Christian financial guy.

Dave Ramsey

Talk radio is one of the last intimate mediums where people can have their emotions touched along with their information. And so, in that sense, it does become a very large accountability group. And you can name it Promise Keepers, you could name it AA, you could name it therapy, it just depends on your belief system on how you would approach it and what vernacular you might put with it. Certainly, from a Christian viewpoint, what we do is minister. From a therapy viewpoint, what we do is do therapy.

Dave Ramsey

888-825-5225. We're going to start this segment off with Kerry in Kankakee, Illinois, WKAN 1320. Hi, Kerry. How are you?

Kerry

Hi. How are you?

Dave Ramsey

Good. How can I help?

Susan Drury

Kerry lives with two teenage sons from an earlier marriage and with a boyfriend.

Kerry

OK. And we both work. OK? He makes almost $1,000 a week, where I make $300 a week. I'm a factory worker. OK. The thing is, he's like very, to a point, controlling. We share expenses. I have to give up half of my paycheck to pay for the bills, to help pay for the bills. When I'm done doing that, then I have hardly any money left to do for my kids, or for myself, or to try and put money back. OK. He says that I can't leave because I would never be able to make it on my own. I will admit, I'm not very good at handling money. I don't know how.

Dave Ramsey

Well, let me ask you something. If you were sitting down with a cup of coffee-- how old are you?

Kerry

I'm 41.

Dave Ramsey

OK. If you were to sit down over a cup of coffee with a 27-year-old, single, young lady that was living with a guy, and she told you what you just told me, what would you tell her?

Kerry

To get out. You can make it on your own.

Dave Ramsey

Mm-hmm. Good advice.

Kerry

OK, but how do I start on my income?

Dave Ramsey

Well, I'm not positive. You don't make a lot of money, I agree with that. But let me tell you what, you're in a really unhealthy relationship. You're dealing with a guy who-- he's not hitting you, is he?

Kerry

No.

Dave Ramsey

You sure?

Kerry

Yeah.

Dave Ramsey

I'm not sure I believe you.

Kerry

Yeah. It's fine.

Dave Ramsey

I'm sorry?

Kerry

It's OK. I need to--

Dave Ramsey

You've got to get out of there, girl. You've got to get out of there now. OK?

Kerry

He says, you know, that it's me. It's because--

Dave Ramsey

No. It's not you, darling. This guy's sick.

Kerry

OK.

Dave Ramsey

You've got to get away from him.

Kerry

OK.

Dave Ramsey

OK?

Kerry

And you think I can survive on--

Dave Ramsey

Well, I can tell you this. If nothing else, you can start by going to a domestic violence shelter right now and checking in with your kids. And they will help you put together a budget, and get back on your feet, and get other employment. And you may have to take a part-time job. You may have to move into subsidized housing of some kind. I don't know exactly what the short-term, the next six months, is going to look like, but I can tell you this Kerry, you were not designed by God for this man.

Kerry

OK.

Susan Drury

Dave gives her the phone number for a women's shelter. And then, after Kerry's call, one person after another called in to tell Kerry to leave. Women who had quit abusive relationships years earlier, men and women who had grown up in violent homes, women who had felt they had been controlled by a lack of money or a fear of not being able to make it on their own, most of the calls didn't mention money at all.

Ira Glass

Susan Drury lives in Tennessee. To find out where to hear the talented Dave Ramsey on the radio every single day, go to daveramsey.com. Coming up, mild-mannered radio reporter seeks vigilante justice from the entire internet-level economy, sort of. That's in a minute from Chicago Public Radio and Public Radio International when our program continues.

[MUSIC - "PENNIES FROM HEAVEN"]

With This American Life, I'm Ira Glass. Today on our program, a show we call My Two Cents in which we visit three people in three different places in the economy to try to understand this weird non-recovery recovery we're supposed to be in right now. We've arrived at Act Two of our show.

Act Two. Stock Making Sense.

Ira Glass

Act Two: Stock Making Sense. Right now, half of all American households own stock either through retirement plans, or through mutual funds, or that they bought themselves. But during the internet bubble, all sorts of people got into the stock market that probably never should have. Like, for instance, one of the producers of this is very radio program, Mr Alex Blumberg.

Alex Blumberg

If I were rich, your life would be different. I know this for sure. I know this because the source of my wealth would have an invention that changed the way you shop. This invention that would have made my fortune would also have revolutionized the distribution of carbonated beverages and would have been displayed in every supermarket, convenience store, and Walmart in America. Instead, what happened is this.

I bought stock in a company on a tip in 1997. By 1998, the stock was worthless. I've spent the intervening years trying to forget that it ever happened. It was the only investment I ever made. I was the only person I know to go zero for the '90s, to have a perfect losing record for the greatest peacetime economic boom in history.

Now I find myself wondering, probably with everyone else who lost money in the stock market collapse, what happened? Was it mass-delusion destined to crumble from the beginning? Or could things have turned out differently? What was going on inside all those factories and online boutiques we bought pieces of at the end of the last century?

Shane

All right. Well, I'm putting on a head lamp because I have to go look for stuff that might be in the basement.

Alex Blumberg

What's in the basement?

Shane

Monsters. Financial monsters.

Alex Blumberg

It was my best friend, Shane, who gave me the stock tip in 1997. And all the records are his basement where, symbolically enough, there are no lights.

Shane had never invested in anything either. He knew nothing about stocks, but he saw other people making money and he wanted in on the action. He called a good friend who he thought knew about this stuff, got a tip, and promptly called me.

Shane

A Dirt Devil, a couple of bikes.

Alex Blumberg

I remember the phone call, but I was always fuzzy on what the company actually did. It was some kind of in-store, self-service beverage dispenser. Customers put an empty bottle under a nozzle, chose a flavor, and seconds later they had a full two-liter of off-brand juice or soda for a fraction of what it would cost in the soft drink aisle. Plus, it was organic or healthy or something. Frankly, I wan't paying all that much attention.

They were going to be in stores all over the place. Shane said he was putting in 5,000. My total income that year, according to my '97 taxes, was $17,529, but I'd just gotten a big freelance check. I said put me down for 1,000. Finally, I thought, some of the boom will spill over onto me.

Shane

Taxes, '94, '99. That's going to be in there.

Alex Blumberg

Beneath some old dog beds, Shane finds a promising looking shoe box.

Shane

Oh, yeah.

Alex Blumberg

Well, this is the mother lode.

Shane

That'd survive an audit.

Alex Blumberg

OK. This is the end of your statement. And this is on 7, 29, '97, we bought 1,400 shares of Fountain Fresh International, symbol FTFR, at $4.12-1/2 cents.

To help us sort through what happened to Fountain Fresh International, we've brought along our most financially astute friend, Mike Quattrocki, who does something involving lots of money and words like hedge funds, derivatives, and options, with the Chicago Board of Trade. Standing with his drink in stocking feet on Shane's unheated cellar floor, he's surrounded by old bicycles, rusty toolboxes, garbage bags filled with magazines, and Shane's financial records. He gets right to mockery.

Mike Quattrocki

Was this a high-technology play?

Shane

No, no, no, no. No, no, no. No.

Alex Blumberg

It was not a technology play?

Shane

Well, the beverage center was high-tech, but it was not internet.

Mike Quattrocki

So, at the birth of the internet, you were buying beverage stocks?

Shane

Yeah.

[LAUGHTER]

Alex Blumberg

I'd like to point out here that I've never even made enough money to lose as much as Mike did in the stock market. Plenty of his tech stocks went to zero too. He's mocking us not because we lost money, but because we lost it in a slightly different way than he and all his friends did.

Mike Quattrocki

What's in there?

Alex Blumberg

We bring the box back upstairs and begin to reconstruct what happened to the stock. With hindsight, there's a few things in the purchase certificate itself that don't bode well. Like the name of the brokerage house, Olde Discount: O- L- D- E. Mike has never heard of it. Shane chose it on the advice of the same friend who gave him the tip.

Shane

I said, "Well, how do you buy a stock?" And he goes, "Well, you have to open a brokerage account, and you probably want to go to one of these discount places where the fees aren't high."

Alex Blumberg

So you got this tip. And then the next thing you had to figure out was, I know the stock I want to buy, how do I actually buy it?

Shane

Exactly. And I look in the phone book, and there's a discount one, called Olde, and it's downtown.

Mike Quattrocki

That sounds really suspicious. Why didn't you just go to Fidelity? Why didn't you just-- what?

Shane

Because it was low fees.

Mike Quattrocki

Schwab or anything with a little name recognition.

Shane

I know.

Mike Quattrocki

I mean, Olde? I mean, did you actually write the check out to Olde when you bought the stock?

Shane

I don't know. No. It was like a national chain. It was like the poor man's Schwab. It's easy that it doesn't exist. I'm betting money it's gone.

Alex Blumberg

We look. Olde's not in the phone book, but we do find something about it on the internet.

Shane

--go down. That's the regulation press release in '98. What happened there? Oh. Today fined Olde Discount--

Alex Blumberg

1.35 million and censured it in connection with the firm's sales practices.

Shane

Sales practices.

Mike Quattrocki

What?

Shane

Founder, Ernest Olde, also fined 500,000 and suspended.

[LAUGHTER]

Alex Blumberg

It turns out that Olde Discount Corporation had been engaging in a fairly common brokerage scam in the '90s. They'd quote the customer one price, buy the stock at a lower price, and pocket the difference. Mike shakes his head.

Mike Quattrocki

Did anyone advise you when you went in there and said to alert you to the risks associated?

Shane

Yeah. Yeah. He said they're going to make you fill out a form. What is your tolerance for risk? Blah, blah, blah.

Mike Quattrocki

$5,000, at the time, to you, was a lot of money.

Shane

A lot of money.

Mike Quattrocki

When you come in to a discount brokerage house, and you walk in off the sheet, I don't know what you looked like. I don't know how you were dressed, but you clearly were clutching your 5,000 and Alex's 1,000, and you came in with a very specific stock in mind. And you came in, and you queried about a stock that he had, surely, never heard of. And then you decided that you wanted to buy that stock. I'm sure alarm bells were clanging in his head, for sure.

[LAUGHS]

Alex Blumberg

It was shocking to hear Mike lay out the broker's perspective on this. Shane and I had never stopped to consider how we might have looked to someone who actually knew about this stuff. We knew we didn't know anything, but we had no idea just how clearly everyone else could see that.

Mike Quattrocki

And if you walked in off the street with this $6,000, I would say, "Sonny, go home and save your money."

[LAUGHS]

Mike Quattrocki

I would say, as an honorable broker, that's what an honorable-- an honorable broker should not have processed this trade. He should have just said, "Go home. Don't buy this stock I've never heard of."

Alex Blumberg

At some point during this dispiriting lesson on how not to buy a stock, it occurred to me that maybe things were worse than I'd even imagined. Maybe we hadn't just been foolish, maybe we'd been scammed. Maybe Fountain Fresh had never even existed. And so five years after the fact, and with my stock worth exactly 1/100 of a cent per share, I decided to do the research I should have done before I even bought it.

For a while, everything I learn is troubling. In the years between 1985 and 2000 it had at least eight different CEOs. Press releases from 1985 to 2000 all declare the same thing, that the company is just about to turn a profit, but not one says that the company actually has. Big new contracts with Walmart and various supermarket chains in Canada, Australia, and the Philippines, are constantly announced. But, mysteriously, revenue never goes up. I find no SEC filings on the company, no annual reports, no website. And then I find a December 2nd, 1995 article in the Modesto Bee. It says a Fountain Fresh machine was installed in the Sav Max Foods in Ceres, California.

Christine Arianne

It was in the corner of the store in the back area because a lot of tubes had to go to it. All these tubes, because you imagine every tube had to do carbonation and then flavors. You know what I'm saying?

Alex Blumberg

When I called the Sav Max store, the person who picks up the phone is Christine Arianne. I can't really tell you the relief I feel when she confirms that Fountain Fresh actually had a product. A product means that they must have had a factory to make it in, and sales people to sell it, and delivery people to deliver it. A product means that it wasn't a scam, it was an actual company that made actual things that actual people had actually seen. Christine talks to me while ringing up customers.

Christine Arianne

They had a blue ice flavor and a lemonade. They had an off-brand Coca Cola or Pepsi. I mean, it was kind of like you just put your soda underneath there and pushed the button that you wanted, and then it would just fill it up. And it filled it up cold.

Alex Blumberg

Talk about, as far as you could tell, was it popular with the customers?

Christine Arianne

Yeah.

Alex Blumberg

It was?

Christine Arianne

Very popular. I think because it wasn't very expensive. It was like $0.69 to fill a two-liter, and I want to say $0.49 to fill a one-liter. It was a lot cheaper, so I think--

Woman

[INAUDIBLE].

Christine Arianne

Oh yeah, she did. Where'd she go? She's got to come back. She just took her [UNINTELLIGIBLE]. I had a lady forget her groceries.

Alex Blumberg

OK.

Christine Arianne

Yeah. So it did good. It went really well. As a matter of fact, a lot of people were all really bummed when it went out of business.

Alex Blumberg

They were?

Christine Arianne

Yeah.

Alex Blumberg

Did people actually come up to you and talk to you about it?

Christine Arianne

Uh-huh. They were like, where'd it go? We were just getting the hang of that. Where'd it go? It just seemed like we had it and then, all of a sudden, it was gone.

Alex Blumberg

The real go-go years for Fountain Fresh were right around the time they installed the machine in Christine's store. In '94, the stock had risen to its all time high, $9 a share. And in '96, a man named Richard Maynes took over as CEO. He was charismatic, capable, everyone loved him, and he set the company on an ambitious new path. To figure out how to better sell the product, he hired Doblin Incorporated, a consulting company so fancy that they called themselves--

Peter Laundy

An innovation strategy firm.

Alex Blumberg

Peter Laundy managed the Fountain Fresh project for Doblin, and he still says that Fountain Fresh had a great product. It was cheaper than regular soda. It took up less shelf space, which grocers liked. You could re-fill the same bottle over and over again, so it had an environmental angle. But its most important advantage had to do with distribution.

Peter Laundy

It allowed you to bottle soda at the grocery store. And that was really efficient because soda is, basically, 95% water with a little sugar and flavoring added, and it's a whole lot cheaper to pipe water to a grocery store than to load it into bottles and truck it.

Alex Blumberg

This idea of the bottled soft drink that doesn't need to be shipped turns out as something of a holy grail in the beverage industry. For years, people were trying to figure out a way to do it, Fountain Fresh succeeded. I told Shane about my conversation with Peter Laundy.

Alex Blumberg

So I talked to the guy from the Doblin Group yesterday, and he explained to me what the original genius was.

Shane

Was it the natural ingredients, or the reusable? Or what was the deal?

Alex Blumberg

He said that the original genius was that it had figured out a way to make a two-liter soda without having to ship it, basically.

Shane

Right. You ship an ounce of ingredients, and then you add the water when you get there.

Alex Blumberg

Then the machine actually purifies the tap water, and then it mixes it all together. And it does it for you right there.

Shane

I've got to say I would do it all over again. It's genius. There is a genius there.

Alex Blumberg

There is genius, and we don't even know the full genius. It's cheaper, it's way cheaper. Also he said that it's free advertising because, basically, you have a machine in the store, and he said that you can cover that machine, the face of that machine, with whatever image you want. And it's, basically, a huge surface. And he said the problem with Coke and other groceries is that the only picture you can put is on a tiny, two-liter bottle.

And yet, despite the problem of the tiny two-liter bottle, Coke and Pepsi still manage to pay their stockholders more than a penny a share.

Alex Blumberg

You can really, really do some good brand forming.

I explained to Shane how Doblin's first step was to give Maynes a story to tell investors so that he could raise money to finally put Fountain Fresh over the edge. They gave him a PowerPoint presentation and a fancy, wire-bound pitch, which he could take around to rich Wall Street types.

The CEO did the typical late '90s suitcases full of cash, which Doblin went to work spending. They hired some of the fanciest industrial design firms around to redo the exterior of the machine. It was no longer going to be a non-descript, chunky box with spill stains down the front. It was going to be a sleek, beautiful box with spill stains down the front.

So, how does an innovative concept backed by lots of cash go out of business? Eric Gillette was hired as the liaison between the high-priced designers in the East and the plant in Salt Lake City. When Shane and I talked to him, he said, "For one thing, there was a culture clash. The consultants back East were used to working with huge clients."

Eric Gillette

They're heavy hitters. These are really smart people and they work for multimillion dollar contracts for big US corporations. And then the antithesis of that is this dumpy warehouse in Salt Lake, which was the headquarters for Fountain Fresh, and guys drive pickup trucks, and wear T-shirts, and have wrenches in their hand, you know? And so it's these two completely different cultures that were trying to pull this off.

Alex Blumberg

For a long time we were not even sure that Fountain Fresh ever existed as a company. So it's sort of comforting to hear you say that there actually was a warehouse with guys in T-shirts driving trucks.

Shane

And that they had wrenches.

Alex Blumberg

Yes. Exactly. Especially that they had wrenches.

Eric Gillette

No. I mean, I think it had existed for a long time on this kind of really small level with these guys, basically, tinkering with this machine.

Alex Blumberg

What happened to Fountain Fresh is what happened to the US economy as a whole in the late 90s. Fountain Fresh was a bunch of regular guys trying to take a good idea and make a little money with it. Suddenly, these suits show up saying the idea is the next big thing. They rent out ballrooms and hire event planners for shareholder meetings. Talk about fundamental shifts in economic paradigms, convince everyone that their vision is real despite evidence to the contrary.

The whole summer Fountain Fresh was preparing for their big roll out, their stock price was steadily dropping. And Shane and I knew it, we were watching, and we knew just what to do.

Shane

The one thing I had heard about investing, buy and hold. So you're not supposed to sell it, even when it goes down, especially when it goes down because that's what the suckers do.

Alex Blumberg

Well, it makes sense, though, because if you thought well, if you still had faith in it, which we both did, we were so sure. I remember, for the whole first year, thinking well, it's going to bounce back.

Shane

Well, the thing about those little investment chestnuts that they don't tell you is, for example, the buy and hold idea is premised on the theory that you've made a good decision in the first place.

Alex Blumberg

So what went wrong? I tried to reach the eight presidents of Fountain Fresh. Several, I couldn't find. Others refused to talk on tape. But here's what I was able to piece together from people inside the operation.

Explanation number one, the idea was actually bad. One of the ex-presidents in Fountain Fresh told me that they never figured out a way to do the most basic thing any business has to do, make a profit. "Even if the machines dispensed soda all day long," he said, "they still wouldn't have sold enough product to cover their costs." And even worse, everyone agreed that the wrench guys never figured out how to make the dispenser work right. They never came up with a design that could be mass-produced. Here's Eric Gillette.

Eric Gillette

When you actually looked at the guts of the machine, it kind of looked like tubes, and pipes, and parts, and it just was this jumble of technology. And there would always be dripping syrup coming out of these pipes. And it was just kind of, OK, what is this, and why is that dripping?

[LAUGHTER]

Eric Gillette

And those kinds of conversations--

Alex Blumberg

Why is that dripping is never a good question.

[LAUGHS]

Explanation number two, it wasn't supposed to succeed in the first place. One of the biggest investors in Fountain Fresh was a man whose businesses were the subject of an August, 2000 Wall Street Journal article about overseas stock scams. He also financed the business that was the exclusive distributor for Fountain Fresh products. To do this, he issued millions of dollars in stock, but a special kind that can only be sold overseas and isn't subject to the same regulations and scrutiny that normal stocks are. And the document he showed to these overseas investors told the story of Fountain Fresh.

In a sense, this guy didn't need Fountain Fresh to succeed. He'd make his money whether it did or not. He only needed it to look like it could succeed. He needed to tell a convincing story about the holy grail of the beverage industry and how these fancy consultants and designers could reach it so he could sell his $10 million in stock offerings to Australian, Filipino, and Korean versions of me and Shane. He'd make his millions on the stock, not on the off-brand cola or Dr. Pepper. I couldn't locate him or his company to comment on any of this. If this was his plan, the guys in the factory and the suits at Doblin might never have even known about it.

Explanation number three, random circumstance did it in. It turns out there are a lot of ways for a small company with a good idea to fail. Richard Maynes, the charismatic president who came on board in 1996, was, by many accounts, the glue holding Fountain Fresh together. He was from Salt Lake and could talk pipes with the guys in the shop, money with the guys on Wall Street, and theories of branding with the guys at Doblin, all with equal fluency.

He was also a devout Mormon, and sometime in the summer of 1997, right around the time Shane and I bought into his company, the Church sent him to do missionary work. Without him at the center, people say, the whole thing blew apart. I ran this notion by Shane.

Shane

God is not on our side here.

Alex Blumberg

God was not on our side.

Shane

If God is not on your side, how can you expect to make any money in the stock market?

Alex Blumberg

Right.

Shane

We had no idea what we were doing.

Alex Blumberg

We had no idea of what we were up against.

The Fountain Fresh warehouse at 2030 Redwood Road in Salt Lake City now sits empty. It's on the same lot as a window cleaning company and a small metallurgical factory, but no one at either place seems to remember what used to be in the vacant warehouse next door.

Fountain Fresh eventually got folded into another company which went quietly defunct. It still exists on paper, but all that remains, physically, are a bunch of files in a storage locker somewhere in Solana Beach, California. I imagine it doesn't look too different in there than Shane's basement.

Ira Glass

Alex Blumberg.

[MUSIC - "I GOT PLENTY OF NOTHIN", BY SAMMY DAVIS, JR.]

Ira Glass

Act Three, The View From The Mop. Well, so far on our program, we've heard from the middle-class, from the stock-owning class, and now we turn to the people making minimum wage. About seven million Americans work at minimum wage, or near to it, right this minute. Two thirds of those people are not teenagers, by the way. The Federal minimum is $5.15 per hour, which works out to under $11,000 per year.

A guy who writes under the pen name Greg Tate wrote a book, which is really nothing more than a year by year account, one vignette after another, of things that happened to him in his minimum wage job as a janitor in a fast food burger place that, in the book, he calls The Burger Store. All names in his book are changed. He worked there for 11 years. Justin Kaufman reads excerpts for us.

Justin Kaufman

It's September 7, 1985, my first day of working at The Burger Store as a janitor. The first thing I had to do was clean the stairs.

1987, during August, everybody was trying to get rid of Ward, the store manager. He played favorites. He had Janie Mulder, Candy Rackson, and Samantha Corsman wrapped around his finger because they were good-looking.

Bob Hopson was tired of the way Ward was doing things. Some time during August he sent the store office a letter. The letter said, "My co-workers and I have a problem with Ward. He has the good-looking women wrapped around his finger. He does not treat the good workers fair. Whenever the store runs out of product, we tell him right away. He says he's going to order it. Then, as time goes by, we are still out of that certain product. We tell him again, and he gets mad and says, "Why didn't you tell me?" I just feel Ward is not a good store manager. Sincerely, Concerned Employee." Bob had the letter typed, that way no one could detect his handwriting.

The first week of June, night shift was leaving trash bags beside the dumpster. Trash bags were supposed to be put inside the dumpster. Brett was pissed. He said he was going to leave a note on the dumpster. I asked him what he was going to write. He said he was going to say, "Hey, you dumb asses. Throw the trash bags in the dumpster." He never got to it, so I wrote that note. The note said, "Hey, you dumb asses. Trash bags go inside the dumpster, not beside it or behind it." The note worked for one night.

Night shift caused me one problem the third week of June. Someone punctured a carton of caramel sundae topping. It leaked onto the shelf. The puncture was caused by someone sticking a pen or a pencil into the carton. The puddle of sundae topping was about a foot and a half in diameter. Of course, I had to clean it up.

1988, during the third week of June, Dave, Jaris, and Cody were in the basement having a conversation. Cody was eating a piece of bacon. Dave saw Ward coming downstairs, so Dave went back upstairs. Ward caught Cody eating the bacon. That piece of bacon was going to be thrown away anyway, but according to Burger Store rules, eating expired food is considered stealing. Ward suspended Cody for a week.

A few days later, Ken Beaker was on break. He had ordered a cheeseburger. Actually, he was fixing himself a double cheeseburger. Brenda Wiland caught him. She told Ward Ken had paid for a cheeseburger not a double cheeseburger. Ward fired him.

Earlier that week, Ward's car got egged. At the same time, Ward was giving Kerry Mullinger a hard time. Well, the night of July 23rd Kerry worked and Ward didn't. Kerry had an idea. Kerry decided he would really get back at Ward. He put on the outside reader board, "Ward sucks." I thought that was so funny along with everybody else.

The next morning, Ward found out what Kerry did. I heard Ward say to Mike, "Your job could be at stake if you don't tell me who put that on the reader board." Well, Ward got his information from Mike. He then fired Kerry. A day later, I worked my 10th day in a row. Mark asked me how I was doing. I said, "I'm tired."

On November 30th, Kip Durkowitz quit that day. He told Ward that in his office. Ward said, "No. You can't quit. We've got some busy times ahead and we need you." Kip said, "I quit." Ward got mad and said, "You're not quitting." and pushed Kip. Kip, angry, said, "I quit." and punched Ward in the nose. Ward landed in a chair. Ward said to Kip, "You'll never work in Peddleton again." Two days later, Kip was working at the local pizza place.

1989, during the first weekend in August there was a sign in the break room that said certain employees were going to get paid vacations. Well, come to find out, The Burger Store was not going to do that. Jay was pissed and wrote bull-- [BLEEP] on the sign. The sign was taken down the next day. The next weekend, another sign appeared in the break room. This sign said employees should bow down to their managers. The next day, the sign was taken down.

During mid-December, Darby was going out Trisha Bayland. About a week later, Trisha no-showed and Darby wrote her down as a no-show. Trisha found out about it and broke up with him.

1990, in mid-June, the restrooms flooded. The drains had been stopped up. I put out of order signs on both restroom doors. Customers were still going in the restrooms. It was obvious they couldn't read English, so I put signs on both restroom doors that said, "Toilettes fermee." That means toilet closed in French. Surprisingly those signs kept the customers out of the restrooms.

1992, in late September, it was 12:45. I was supposed to get off work at 1:00. Celia Brothing comes up to me and says, "Tony said for you to do the dishes right now." That was not my job. I was so pissed off. It was almost 2:00 before I could get off work. When I got home, I grabbed my shirt and ripped it to shreds. It was OK. I had another shirt.

During the later part of the first week of April, Carlton Jebbards threw a cup of Dr. Pepper at Lisa Jillard. The next day, Carlton asked Lisa for a date. Lisa, of course, turns him down.

About two weeks after Thanksgiving, I did not go on break until 11:00. I got called off my break twice to help them out. I wound up having to get ice for the front counter. You talk about being pissed off. I went downstairs and ripped my shirt to shreds. It was OK. I had another shirt hanging in the break room.

In early September, Devon returns to The Burger Store after a year and a half absence. The moment Devon came back, he would act all crazy. Whenever we loaded truck, he would put wrestling moves on boxes. Devon would say, "Hulk Hogan off the ropes. Boot to the head." I remember, one time, Devon power bombed an empty shortening container six times.

When the truck driver threw plastic wrapping off the truck, Devon would wad the plastic wrapping up and drop back to pass. He would pass the plastic wrapping to himself, then he would run about 40 yards and say, "Touchdown!" He would sometimes take Leah's hand and start dancing with her. While he was dancing with Leah, he would sing Strangers in the Night. Devon had me laughing so hard I practically had tears in my eyes. There was never a dull moment when Devon was around.

A few days later, Dobey and I got to talking. He said he had heard of me. I told him I had been at The Burger Store for nine years too long. He said, "No, you haven't." I said, "Oh, yes, I have." He said, "No, you haven't." I, angry, said, "Oh, yes I have." He said nothing else.

1995, in May, the pipe that had been leaking since 1986 finally got fixed. Before I get to my last day, I would like to tell you all the things that happened over the years, over, and over, again.

Night shift would always wash the grill towels and the regular towels together. That was a no-no. Wayne would continue to drop things. He would make mess after mess. Sometimes he was called butter fingers. Certain people got away with certain things. A lot of times Judd would stand out at the back sidewalk. He would drink coffee and smoke a cigarette. I know he made $9 or $10 an hour. One time I said to myself I wish I had a job like that.

My last day, June 12th, was finally here. Everything went really well that day, although Eva said something to me that I didn't like. She said, "Greg, I think you're making a mistake by quitting." I told her the mistake would be for me to stay here. I was getting nowhere working at The Burger Store.

1:00pm arrived. It was the end of an era. The sad thing was, when I left, I was only making $5.85 an hour. About two weeks after I quit, The Burger Store started hiring people at $6 an hour. A few people said that my quitting had nothing to do with Mark starting people at $6 an hour. My quitting had everything to do with it. Mark would never pay me $6 an hour even after I had been there 11 years, 9 months and 5 days.

Ira Glass

The book is titled, 11 Years, 9 Months and 5 Days. Justin Kaufman read excerpts for us. The author goes under the pen name, Greg Tate. This book was self-published on xlibris.com. He now works as a janitor and maintenance worker at an elementary school. He makes almost twice as much as he did before, though he says the politics of the school are as tough as at The Burger Store.

[MUSIC - "SUPPLY & DEMAND" BY THE HIVES]

Well, our program was produced today by Wendy Dorr and myself with Alex Blumberg, Diane Cook, Dave Kestenbaum, and Starlee Kine. Senior Producer: Julie Snyder. Production help from Katie O'Donnell, Kelsey Dilts, and Todd Bachmann.

[ACKNOWLEDGEMENTS]

Our website, www.thisamericanlife.org, where you can listen to our programs for free or buy CDs of them. Or you know you can download audio of our program at audible.com/thisamericanlife, where they have public radio programs, bestselling books, even the New York Times, all at audible.com.

This American Life is distributed by Public Radio International.

[FUNDING CREDITS]

WBEZ management oversight by Torey Malatia. We all asked him if we could have this weekend off, work five days this week instead of seven. His reply.

Dave Ramsey

You're not willing to work? I don't know anything to call that but lazy.

Ira Glass

I'm Ira Glass. Back next week with more stories of This American Life.

[MUSIC - "SUPPLY & DEMAND" BY THE HIVES]

Announcer

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