WEBVTT - Odd Lots Talks Beak Capitalism on Money Stuff Talking Chicken 0:00:00.200 --> 0:00:04.080 Hello ablots listeners, we have something very special for you. 0:00:04.280 --> 0:00:07.840 Joe and I appeared on an episode of Bloomberg's latest podcast. 0:00:07.920 --> 0:00:11.600 It's called money Stuff, and it is hosted by two 0:00:11.640 --> 0:00:14.240 people that I think you will recognize from aud Blots, 0:00:14.480 --> 0:00:20.599 Matt Levine, the esteemed financial columnist and chronicler of capitalism, 0:00:20.680 --> 0:00:24.279 as well as Katie Greifeld, who knows all things ETFs 0:00:24.360 --> 0:00:27.440 and horses as well. And Joe and I were there 0:00:27.520 --> 0:00:28.800 to talk about chicken. 0:00:29.320 --> 0:00:29.760 That's right. 0:00:29.840 --> 0:00:33.280 So if you recall back in November, Tracy and I 0:00:33.400 --> 0:00:36.199 released a three part series called squawk Lots where we 0:00:36.240 --> 0:00:39.479 explained how the US economy can be understood through the 0:00:39.600 --> 0:00:44.040 lens of chicken, basically basically taking the entire industry from 0:00:44.120 --> 0:00:47.000 a egg to sandwich, so to speak. And so we 0:00:47.040 --> 0:00:49.720 were delighted to go on with Madd and Katie and 0:00:49.800 --> 0:00:50.560 talk about our work. 0:00:50.840 --> 0:00:54.760 Technically it was called beat Capitalism, but squawk Loots was 0:00:54.760 --> 0:00:58.560 our code name. It's for long time, all right, A 0:00:58.600 --> 0:01:01.280 long time, yes, it has okay, So we hope you 0:01:01.400 --> 0:01:05.160 enjoy this special episode of money Stuff and definitely give 0:01:05.160 --> 0:01:15.720 it a listen. Bloomberg Audio Studios, Podcasts, Radio News. 0:01:16.720 --> 0:01:19.720 Hello and welcome to a very special crossover episode of 0:01:19.760 --> 0:01:24.880 The Money Stuff slash Odd Lots Podcasts. I'm Matt Levien 0:01:24.959 --> 0:01:27.040 and I write The Moneystuff Colm for Bloomberg Opinion. 0:01:27.440 --> 0:01:29.840 And I'm Katie Greefeld, a reporter for Bloomberg News and 0:01:29.880 --> 0:01:31.320 an anchor for Bloomberg Television. 0:01:31.880 --> 0:01:34.199 And we have two very special guests in the studio 0:01:34.280 --> 0:01:35.440 with us today, Katie. 0:01:35.720 --> 0:01:40.319 Their names are Joe Wisenthal and Tracy Alloway. Wow, this 0:01:40.480 --> 0:01:41.440 is very exciting. 0:01:42.680 --> 0:01:45.039 I like the pause to build suspense, Kate. 0:01:45.160 --> 0:01:48.160 I've been told to pause and then say names slowly 0:01:48.200 --> 0:01:51.320 for gravitas, so trying to working it worked. 0:01:51.520 --> 0:01:52.920 It worked, It worked, all right? 0:01:53.120 --> 0:01:54.720 We establishing gravitas. 0:02:00.080 --> 0:02:00.760 From what it's worth. 0:02:00.840 --> 0:02:03.440 Tracy and I like spent three years of Odd Lots 0:02:03.840 --> 0:02:06.520 workshopping ways to introduce guests. And I know we're early 0:02:06.600 --> 0:02:09.720 the second time you've had external guests. So don't feel any. 0:02:09.680 --> 0:02:10.519 My heart is calended. 0:02:10.600 --> 0:02:12.840 Don't feel any anxiety about the guest. Do you remember 0:02:12.880 --> 0:02:13.360 how we used to. 0:02:13.360 --> 0:02:13.880 Do it, Tracy? 0:02:14.040 --> 0:02:14.239 Yeah. 0:02:14.280 --> 0:02:16.680 We used to pretend that neither of us or one 0:02:16.720 --> 0:02:18.560 of us didn't know what we were going to talk about, 0:02:18.720 --> 0:02:20.760 and it was like, guess what we're going to talk about, 0:02:20.919 --> 0:02:23.400 but it didn't make any sense because, like we clearly 0:02:23.480 --> 0:02:25.000 knew what we were going to talk about. 0:02:24.800 --> 0:02:25.679 So it took us a while. 0:02:25.760 --> 0:02:27.839 And how are we doing so far? Because I feel 0:02:27.840 --> 0:02:29.960 like it's not going super well, it's going fine. 0:02:30.440 --> 0:02:31.520 What are we going to talk about? 0:02:32.360 --> 0:02:34.080 What someone should make a cluck? 0:02:34.120 --> 0:02:35.040 You brought us here. 0:02:36.040 --> 0:02:38.560 Let's talk about chickens. You guys obviously have a lot 0:02:38.600 --> 0:02:42.480 to say. You did a three part series on chickens recently, 0:02:42.600 --> 0:02:45.320 which was pretty cool because I feel like this was 0:02:45.320 --> 0:02:46.760 something different for you guys. 0:02:47.000 --> 0:02:49.280 Yeah, every once in a while we like to shake 0:02:49.360 --> 0:02:52.080 things up and do something slightly different. Last year, we 0:02:52.120 --> 0:02:55.000 actually did a three part series on the rollout of 0:02:55.040 --> 0:02:59.680 New York's legal marijuana ooh market called pot Lots. This 0:02:59.720 --> 0:03:02.600 one was a three part series about chicken, and the 0:03:02.639 --> 0:03:05.360 code name for it was squaw Clots, but the actual 0:03:05.440 --> 0:03:09.359 name was beat Capitalism, and the idea was you can 0:03:09.400 --> 0:03:12.840 actually explain a lot of really interesting themes in the 0:03:12.880 --> 0:03:15.960 American economy through the medium of chicken. 0:03:16.160 --> 0:03:19.840 Yeah, you just think from like egg to chicken sandwich, 0:03:20.200 --> 0:03:24.040 or egg to chicken tender, or egg to McNugget. 0:03:23.680 --> 0:03:24.800 And me speak for yourself. 0:03:25.040 --> 0:03:27.120 There are just so many interesting Like the sort of 0:03:27.160 --> 0:03:30.040 premise is there are just so many really interesting things 0:03:30.560 --> 0:03:31.480 that can be. 0:03:31.440 --> 0:03:33.959 Discussed along that entire supply chain. 0:03:34.120 --> 0:03:37.280 So whether it's avian flu and how to keep the 0:03:37.320 --> 0:03:41.640 flock of the birds, whether it's concentration in the poultry market, 0:03:41.680 --> 0:03:43.920 whether it's the nature of the labor market, how the 0:03:43.960 --> 0:03:48.800 big poultry companies contract with independent growers and so forth 0:03:48.840 --> 0:03:52.320 who raise the chickens themselves, which is interesting. Then there's 0:03:52.400 --> 0:03:55.000 questions about pricing and so forth, and then commodity prices, 0:03:55.040 --> 0:03:58.000 and then the chicken sandwich wars and the consumer experience 0:03:58.040 --> 0:04:01.880 of why Papa is versus Panda express first Whoever, there's 0:04:01.920 --> 0:04:05.240 a million different things even within all these things where 0:04:05.240 --> 0:04:07.200 it's like we can learn a little something about how 0:04:07.200 --> 0:04:08.920 the economy works through that trajectory. 0:04:09.280 --> 0:04:11.800 How did you decide on that? Was that like you're like, 0:04:11.840 --> 0:04:13.480 we want to talk about chicken first, and then later 0:04:13.520 --> 0:04:15.200 you realize there are a lot of rinses, or you're like, 0:04:15.280 --> 0:04:18.760 we need to talk about anti trust is chick. 0:04:19.480 --> 0:04:22.960 I actually I'm struggling to remember what the exact. 0:04:23.320 --> 0:04:25.239 That chickens in your backyard. 0:04:25.360 --> 0:04:28.520 Yeah, yeah, I have a long term love of chickens 0:04:28.560 --> 0:04:31.120 and my great ambition in life is to one day 0:04:31.160 --> 0:04:34.240 have backyard chickens. And I'm inching closer. 0:04:34.600 --> 0:04:38.200 Actually love of chickens a live chickens to hang out with, 0:04:38.400 --> 0:04:43.040 or dead chickens to eat, or totally different, both like 0:04:43.960 --> 0:04:44.760 one then the other. 0:04:45.360 --> 0:04:47.640 Well, I would raise chickens and I would have eggs, 0:04:47.720 --> 0:04:50.240 and that way I would be immune to egg inflation. 0:04:50.520 --> 0:04:53.560 But I know some people who raise meat chickens, and 0:04:53.760 --> 0:04:55.760 I don't think I would do that so hard. It's 0:04:55.800 --> 0:04:59.839 depressing because meat chickens are very different to egg laying chickens. 0:05:00.120 --> 0:05:02.560 They look different, they don't really do anything. They kind 0:05:02.560 --> 0:05:04.880 of just like waddle around and flop over there. 0:05:04.960 --> 0:05:05.760 One day you kill them. 0:05:05.880 --> 0:05:07.160 Yeah, it's sad. 0:05:07.320 --> 0:05:08.200 The other thing too. 0:05:08.440 --> 0:05:12.440 In additioned to Tracy's affinity for chickens, we've done a 0:05:12.480 --> 0:05:14.040 lot of chicken episodes in the past. 0:05:14.200 --> 0:05:14.880 So there's this. 0:05:14.800 --> 0:05:17.159 Guy, Glenn Hickman that we talked to. We've talked to 0:05:17.200 --> 0:05:19.320 him twice on the show. He has a big egg 0:05:19.440 --> 0:05:22.800 operation in Arizona, and so we talked about when egg 0:05:22.800 --> 0:05:25.680 prices were surging. We talked to him when Avian flew, 0:05:26.040 --> 0:05:28.799 which unfortunately, like is getting headlines again. 0:05:28.960 --> 0:05:29.719 We talked to him. 0:05:30.000 --> 0:05:32.480 We've talked to Samuel Ryans and analysts who thought that 0:05:32.560 --> 0:05:34.920 Wings stopped the country's biggest chicken chain and the biggest 0:05:34.920 --> 0:05:38.479 single buyer. And there are certain lessons about pricing power 0:05:38.520 --> 0:05:40.760 that we learned because you know, as wholesale Wings went up, 0:05:40.920 --> 0:05:44.240 they raised their prices aggressively. When wholesale Wing prices went down, 0:05:44.360 --> 0:05:46.800 they did not cut their prices. So we've done a 0:05:46.839 --> 0:05:50.359 lot of chicken related content in the past. It's like, oh, 0:05:50.360 --> 0:05:51.599 why don't we like put some of this together. 0:05:51.720 --> 0:05:54.400 This was the surprising thing when we were putting together 0:05:54.600 --> 0:05:56.320 you know, the list of people that we wanted to 0:05:56.320 --> 0:05:59.360 speak to for this series, like eighty percent of them 0:05:59.560 --> 0:06:03.200 had actually spoken to before, so unknowingly we were already 0:06:03.240 --> 0:06:04.120 a chicken podcast. 0:06:04.120 --> 0:06:06.160 Wow, it's like it found you guys. 0:06:06.279 --> 0:06:09.000 Yes, when you were putting together that list, where was 0:06:09.120 --> 0:06:09.640 Ray Dahali? 0:06:11.320 --> 0:06:11.520 Wait? 0:06:14.000 --> 0:06:15.000 Are you pretending to not know? 0:06:15.160 --> 0:06:17.640 Now? I feel really dumb because. 0:06:17.400 --> 0:06:21.560 It's like, does he have that huge chicken coop London guy? 0:06:22.000 --> 0:06:22.279 Oh? 0:06:22.520 --> 0:06:22.719 What? 0:06:22.880 --> 0:06:23.240 No? 0:06:23.520 --> 0:06:25.200 I feel like this is too good to be true. 0:06:25.320 --> 0:06:27.760 It's too good to be true. 0:06:30.920 --> 0:06:32.520 So what is what's the urban legend? 0:06:34.360 --> 0:06:37.479 This comes from Ray Dahalia, Like including on podcasts, and 0:06:37.520 --> 0:06:40.640 I think on like the Bridgewater website, when he was 0:06:40.800 --> 0:06:43.200 working on Wall Street before I started Bridgewater, he was 0:06:43.200 --> 0:06:46.520 like doing commodity stuff and one of his clients was McDonald's, 0:06:46.600 --> 0:06:50.120 and McDonald's were I think this is like according to 0:06:50.160 --> 0:06:52.080 your history, Like this is a few years after they 0:06:52.120 --> 0:06:54.760 had like introduced the chicken dugget, but before they rolled 0:06:54.760 --> 0:07:00.000 it out nashally, and they were worried apparently about volatile 0:07:00.320 --> 0:07:02.160 of chicken prices because they're like, wow, we can't put 0:07:02.240 --> 0:07:05.040 chicken nuggets on the menu if the price is going 0:07:05.040 --> 0:07:06.280 to go up and down because they have to pull 0:07:06.279 --> 0:07:08.200 it off the menu raise the prices. It would be terrible. 0:07:08.480 --> 0:07:11.840 We need to take the volatility out of chicken prices. 0:07:12.200 --> 0:07:14.800 And they came to Ray Dalio allegedly and they're like, 0:07:15.000 --> 0:07:18.760 can you sell us as And Ray Dalio is like, wow, 0:07:18.800 --> 0:07:21.840 there's not like a liquid chicken market at the time. 0:07:22.400 --> 0:07:26.200 This is I think from the Bridgewater website. You argued 0:07:26.240 --> 0:07:28.200 that since a full grown chicken was nothing more than 0:07:28.240 --> 0:07:30.880 a baby chick plus corn and soy mail, the price 0:07:30.920 --> 0:07:33.120 of the grains or the volatile costs, and they could 0:07:33.120 --> 0:07:36.840 hedge corn and soybean prices and they and so he 0:07:36.920 --> 0:07:39.760 sold McDonald's bunch of cord and s derivatives and they 0:07:39.760 --> 0:07:41.440 were able to roll out the chicken McNuggets. 0:07:41.480 --> 0:07:41.680 Yeah. 0:07:41.720 --> 0:07:44.400 First of all, I love that Ray Dalio's like chosen 0:07:44.480 --> 0:07:49.200 creationist story for himself. His background legend is I helped 0:07:49.240 --> 0:07:50.600 invent chicken McNuggets. 0:07:50.800 --> 0:07:51.400 That's a good one. 0:07:51.680 --> 0:07:55.640 Secondly, McDonald's did not invent chicken McNuggets, which is something 0:07:55.680 --> 0:07:57.120 that we learned from the podcast. 0:07:57.320 --> 0:08:00.720 McDonald's did not invent the chicken nugget, but Ray Dalio 0:08:01.000 --> 0:08:03.960 shepherded well chicken nugget as a menu adavan. 0:08:04.200 --> 0:08:06.840 Sure, okay, fine, we'll let him have that one. But 0:08:06.880 --> 0:08:10.320 the interesting thing is we did learn about volatility in pricing, 0:08:10.360 --> 0:08:13.800 because this is something that the Wingstop CEO actually brings up. 0:08:13.880 --> 0:08:17.200 One of the reasons we saw chicken wing prices specifically 0:08:17.240 --> 0:08:19.760 go up so much in the aftermath of the pandemic 0:08:19.880 --> 0:08:22.520 was that it turns out they're the most volatile like 0:08:22.640 --> 0:08:23.800 part of the chicken. 0:08:24.360 --> 0:08:27.040 Can I say I have a carcharian opinion. I think 0:08:27.120 --> 0:08:30.400 Ray Dalio did invent the chicken McNugget. Anyone could invent 0:08:30.520 --> 0:08:33.280 a fried lump of chicken. It takes a true genius 0:08:33.320 --> 0:08:36.120 to invent the financial hedging instruments that allows it to 0:08:36.160 --> 0:08:39.760 be commercialable. So I now accept the premise that actually 0:08:39.840 --> 0:08:42.880 he and not the person who like put the chicken 0:08:43.040 --> 0:08:45.680 meat in batter, should get actually be the true father. 0:08:46.400 --> 0:08:49.680 I think that financial engineering underrated moving forwards in like 0:08:49.720 --> 0:08:52.080 the real economy, like this he did the financial engineering 0:08:52.120 --> 0:08:54.319 behind the chicken. Tracey is shaking her head. 0:08:54.520 --> 0:08:57.080 Well, you're right. It gets to an interesting question about 0:08:57.120 --> 0:09:00.960 what drives progress. Is there underlying technology or is it. 0:09:00.880 --> 0:09:07.600 The first which came first, the nugget or the financial 0:09:07.679 --> 0:09:10.520 engineer and get to bad rap And it turns out 0:09:10.520 --> 0:09:11.320 if you need that. 0:09:11.440 --> 0:09:13.959 Commercials easy to consume proteins. 0:09:13.640 --> 0:09:15.760 Yeah, I take it. I I I now give the 0:09:15.800 --> 0:09:16.360 crown direct. 0:09:16.400 --> 0:09:18.760 Do you think that right? Like every every like major innovation, 0:09:18.920 --> 0:09:21.000 like there's the stepe of physical intention, and then there's 0:09:21.000 --> 0:09:23.719 the stepe of like working out the financing, and like 0:09:23.760 --> 0:09:32.040 the financing people are generally unheralded but well paid. 0:09:26.240 --> 0:09:26.320 And. 0:09:29.040 --> 0:09:32.560 I think Dahlia is managing. Yeah, but this is Joe's 0:09:32.559 --> 0:09:34.720 pitch to try to get right on the podcast. I 0:09:34.720 --> 0:09:36.880 think to talk about chicken, you. 0:09:36.880 --> 0:09:39.080 Should have on our podcast to talk about you know 0:09:39.920 --> 0:09:42.480 who is the New York Mets manager who claimed to 0:09:42.480 --> 0:09:43.880 invent the rap Do you remember that? 0:09:44.400 --> 0:09:46.080 Who is it? You know, the rap sandwich? 0:09:46.360 --> 0:09:47.040 I've heard of it. 0:09:47.200 --> 0:09:50.440 The New York Mets manager in the nineties claim to 0:09:50.480 --> 0:09:53.200 have invented the wrap sandwich. I can't remember his name 0:09:53.400 --> 0:09:55.000 right now. Anyway, it sort of reminds. 0:09:54.800 --> 0:09:57.520 Me of that, like claiming to invent the apple pie. Like, 0:09:57.559 --> 0:10:00.240 if you just say it loudly enough, it's probably true. 0:10:00.480 --> 0:10:02.400 Can we talk about why wings are the most futile 0:10:02.440 --> 0:10:04.679 part of the chicken? I did not know that. I 0:10:04.720 --> 0:10:07.640 would have thought it was, I guess any other part 0:10:07.640 --> 0:10:09.200 of the chicken from your podcast. 0:10:09.240 --> 0:10:13.000 I thought it was that the supply of chickens is 0:10:13.040 --> 0:10:16.160 set by the demand for chicken breasts, and so for 0:10:16.240 --> 0:10:18.880 chicken breast goes down, the supply of chickens goes down, 0:10:19.240 --> 0:10:22.679 and wings do not drive the supply of chicken. So 0:10:23.400 --> 0:10:25.080 the wing price is just like thank. 0:10:24.960 --> 0:10:25.600 You for listening. 0:10:25.800 --> 0:10:28.480 That's exactly it. You learn something the chicken. 0:10:29.160 --> 0:10:31.520 The chicken breast is like the benchmark from which all 0:10:31.559 --> 0:10:31.960 the other. 0:10:31.880 --> 0:10:34.680 Parts part, and it's like the thing that's most used, 0:10:34.720 --> 0:10:37.319 and so like, essentially, if your wings not you're buying 0:10:37.360 --> 0:10:38.000 like a sort of. 0:10:38.000 --> 0:10:41.320 Like, yeah, I like thie. 0:10:41.440 --> 0:10:44.600 By the way, it's more than the breast. I think 0:10:44.640 --> 0:10:46.600 it's like a better it's like the best cut. 0:10:46.679 --> 0:10:50.720 Have you guys had chicken feet? They're really good and 0:10:50.800 --> 0:10:53.120 in Asia people always say they're a really good source 0:10:53.120 --> 0:10:55.959 of collagen. So like a lot of young women or 0:10:56.240 --> 0:10:58.560 women will eat them for skiitcare purposes. 0:10:59.080 --> 0:11:01.000 You didn't do you just sort of slather it on 0:11:01.040 --> 0:11:01.439 your face. 0:11:01.520 --> 0:11:03.440 No, no, you eat it, you like nibble on it. 0:11:03.480 --> 0:11:04.600 Oh man, you can. 0:11:04.440 --> 0:11:07.200 Get it at most dim some places in Chinatown here, 0:11:07.280 --> 0:11:09.680 So if we ever want to take a trip and 0:11:10.000 --> 0:11:12.080 it's actually I really find them delius. 0:11:12.080 --> 0:11:14.360 I would love to watch you guys eat that. I'm 0:11:14.360 --> 0:11:19.079 not very adventurous myself, but boy do I like being included. 0:11:20.160 --> 0:11:22.160 Have a new puppy, and I get served a lot 0:11:22.160 --> 0:11:24.840 of ads for a lot of food products. And there's 0:11:24.880 --> 0:11:29.280 definitely like an extremely foot looking chicken foot. 0:11:29.080 --> 0:11:32.679 My hat dried chicken hearts, Like that's a little crunch. 0:11:34.160 --> 0:11:35.320 I figured you've had some. 0:11:37.200 --> 0:11:39.880 Yeah I have? Or chicken liver? Is that something? 0:11:40.800 --> 0:11:41.000 Yeah? 0:11:42.800 --> 0:11:45.280 Make a Thanksgiving stuffing out of chicken liver. 0:11:45.360 --> 0:11:46.040 It's really good. 0:11:46.240 --> 0:11:46.640 Timely. 0:11:46.920 --> 0:11:50.800 Yeah, we'll provide our recipe for chicken liver Thanksgiving stuffing 0:11:50.880 --> 0:11:52.560 after this podcast, can I say so? 0:11:52.600 --> 0:11:55.959 This is a three part series. The part that caught 0:11:56.000 --> 0:11:58.439 my ears the most was just like the physicality of 0:11:58.480 --> 0:12:01.679 the chicken and how it changed that the idea that 0:12:01.720 --> 0:12:04.880 like a chicken in the nineteen twenties, yeah, looks so 0:12:05.040 --> 0:12:07.679 much different than a chicken in the twenty twenties. Like 0:12:07.720 --> 0:12:09.079 I feel like I knew that somewhere in the back 0:12:09.120 --> 0:12:12.160 of my mind, but this really brought it into stark 0:12:12.240 --> 0:12:15.360 focus for me, just how much we've changed chickens. 0:12:15.480 --> 0:12:18.400 Yeah. So chickens, like a lot of domesticated animals, are 0:12:18.440 --> 0:12:22.359 like the products of you know, centuries and certainly decades 0:12:22.440 --> 0:12:25.480 of evolution. Chickens, in case you're wondering, I think they 0:12:25.520 --> 0:12:29.640 originally came from forests of Indonesia, and back then they 0:12:29.679 --> 0:12:32.760 were like skinny little jungle birds, and I think they 0:12:32.800 --> 0:12:36.440 were mostly like black. Anyway, they spread around the world. 0:12:36.480 --> 0:12:40.000 It turns out everyone loves chicken. One of the most 0:12:40.160 --> 0:12:43.520 fascinating parts of chicken history and I don't know why 0:12:43.559 --> 0:12:45.520 I know this, but for some reason I do, is 0:12:45.640 --> 0:12:50.480 in the eighteen fifties there was a chicken bubble. So 0:12:50.520 --> 0:12:54.679 what happened was Queen Victoria got really into chickens, like 0:12:54.800 --> 0:12:58.880 breeding chickens, exotic chickens, and because she was the queen, 0:12:59.160 --> 0:13:00.920 a bunch of other people got into it, and it 0:13:01.000 --> 0:13:04.000 sort of became this fad where people were paying like 0:13:04.280 --> 0:13:07.280 lots and lots of money to get really exotic chicken, 0:13:07.400 --> 0:13:09.480 eating them or just breeding. They were just breeding them, 0:13:09.520 --> 0:13:12.840 they were game selling them to other people. The bubble 0:13:12.880 --> 0:13:17.560 eventually burst, by the way, and the really interesting probably 0:13:18.200 --> 0:13:23.080 but the really interesting thing is because exotic chickens became cheap, 0:13:23.880 --> 0:13:27.280 Charles Darwin started doing research with all these different chickens 0:13:27.280 --> 0:13:31.000 from around the world on evolutions. So the Victorian chicken 0:13:31.040 --> 0:13:34.160 bubble indirectly influenced our understanding of evolution. 0:13:34.320 --> 0:13:37.480 This is like how the telecom bubble and then. 0:13:38.920 --> 0:13:41.960 And then yeah, then because of the we had the 0:13:42.040 --> 0:13:44.320 evolutionary theories of Darwin. I didn't know that this didn't 0:13:44.320 --> 0:13:45.640 come up to it on the podcast. 0:13:45.800 --> 0:13:47.480 No, I kind of figure out where to put it. 0:13:47.679 --> 0:13:51.160 I saved it for this podcast specifically. There's a really 0:13:51.200 --> 0:13:55.000 funny book that was written sort of contemporaneously with the 0:13:55.040 --> 0:13:57.920 eighteen fifties, all about It's called hen Fever, and it's 0:13:57.960 --> 0:14:01.439 about the chicken bubble, and it has the most amazing illustrations, 0:14:01.480 --> 0:14:03.960 including it has this picture of a guy blowing a 0:14:03.960 --> 0:14:06.040 bunch of different bubbles, and some of them are like 0:14:06.120 --> 0:14:09.600 what you would expect, like the south Sea expeditions and 0:14:09.720 --> 0:14:12.080 railway stocks and things like that. But then some of 0:14:12.080 --> 0:14:15.720 them are shang his and coachins, which are types of chickens. 0:14:15.760 --> 0:14:18.760 And then there's one that's labeled female novelists. So I 0:14:18.760 --> 0:14:21.760 guess in the eighteen fifties they thought female novelists were 0:14:21.880 --> 0:14:23.119 fat too many. 0:14:24.960 --> 0:14:26.960 Pipe down, by the way, that was my favorite of 0:14:27.000 --> 0:14:29.720 the three. Like, I really like the consumer angle. Obviously, 0:14:29.720 --> 0:14:32.520 it's fun to talk about the chicken sandwich wars. It's interesting, 0:14:32.600 --> 0:14:34.880 like the market structure and some of the anti trust 0:14:34.920 --> 0:14:37.840 questions and the power. But like I do think like 0:14:37.960 --> 0:14:42.280 one of the great sources of wealth in modern society 0:14:42.440 --> 0:14:46.480 is abundant access to fairly and expensive protein. Yeah, And 0:14:46.560 --> 0:14:50.200 the story of the chicken getting plumper and plumper, the 0:14:50.240 --> 0:14:53.120 antibiotics that are used to keep them alive and keep 0:14:53.200 --> 0:14:56.840 them growing and avoid sickness, the sort of feeding mechanisms 0:14:56.840 --> 0:14:58.520 and so forth that have turned the sort of scrawny 0:14:58.520 --> 0:15:00.920 bird the trace he was talking to and very tasty 0:15:00.920 --> 0:15:04.120 bird like to me, that's like, that's riveting, that's exciting, 0:15:04.160 --> 0:15:05.280 that's progress. 0:15:04.920 --> 0:15:07.640 Right, futures to make it more. 0:15:07.680 --> 0:15:10.200 Yeah, right, and the soybet futures, which of course are crucial, 0:15:10.320 --> 0:15:12.680 which we really like. That's the thing we could have done, Like, 0:15:12.720 --> 0:15:16.200 because chicken is so good, we could have done episodes 0:15:16.240 --> 0:15:19.680 on feed futures. Because chicken is just so inherently connected 0:15:19.720 --> 0:15:20.520 to everything else, this. 0:15:20.480 --> 0:15:23.000 Could have been like a twelve part series easily. 0:15:23.160 --> 0:15:24.760 I think I was gonna say, you've got to get 0:15:24.800 --> 0:15:25.480 raydally on. 0:15:25.640 --> 0:15:26.360 But yeah, well. 0:15:27.920 --> 0:15:38.680 Victorian chicken bubble, the grain market that underpins chicken nuggets. 0:15:47.880 --> 0:15:50.200 Wait that one time in the market structure. Yeah, there's 0:15:50.240 --> 0:15:52.600 an episode and essentially like how chicken is like uber 0:15:52.720 --> 0:15:56.320 where Yeah, like the farmers who farm the chickens don't 0:15:56.320 --> 0:16:00.920 own the chickens. They're outsourced from like the big they 0:16:00.960 --> 0:16:03.600 call them integrators like Tyson and Perdue, where they like 0:16:04.120 --> 0:16:08.360 the integrators deliver hours old chicks to the farmers. The 0:16:08.360 --> 0:16:10.840 farmers take care of them for a couple of weeks, 0:16:11.080 --> 0:16:13.560 and then the integrators take them back and turn them 0:16:13.600 --> 0:16:16.640 into chicken nuggets. Why is it like that? 0:16:16.640 --> 0:16:18.720 That's a really good question. I think it's just like 0:16:18.880 --> 0:16:22.520 an outcrop of the way the chicken industry evolved. By 0:16:22.520 --> 0:16:25.040 the way, I have an interesting fact if you don't know, 0:16:25.280 --> 0:16:28.400 chickens can still be sent live through the US mail, 0:16:28.520 --> 0:16:31.400 so you can live order baby chige on that. No, 0:16:31.800 --> 0:16:33.960 but I don't really want to. I would rather go 0:16:34.040 --> 0:16:38.680 to like a local agriculture tractor. Yeah, exactly. But anyway, 0:16:38.800 --> 0:16:40.800 so the way it worked is in the sort of 0:16:40.920 --> 0:16:45.560 nineteen twenties nineteen thirties, we started getting these big broiler houses. 0:16:45.600 --> 0:16:49.040 So people discovered. This is actually one of Joe's favorite stories, 0:16:49.440 --> 0:16:50.560 the woman in Delaware. 0:16:50.680 --> 0:16:52.600 Well, yeah, there was a woman in Delaware who had 0:16:52.600 --> 0:16:55.880 a great name, it's to Seal Long Steel. And she 0:16:56.080 --> 0:16:58.560 ordered what she ordered one hundred chickens in it. 0:16:58.560 --> 0:17:00.400 It was like ten chicks, like. 0:17:00.360 --> 0:17:03.120 Ten chicks in the mail, and accidentally ordered a thousand. 0:17:03.280 --> 0:17:04.800 So she's like, all right, I guess I'm gonna become a. 0:17:04.800 --> 0:17:06.199 Farm what it never happens to me. 0:17:06.600 --> 0:17:07.960 No, it doesn't happen to me either. 0:17:08.320 --> 0:17:10.640 The point about uber and so then people get into 0:17:10.680 --> 0:17:12.480 the farming pit is they're like, oh, I like the 0:17:12.520 --> 0:17:14.760 idea of farming, and it doesn't seem that bad to 0:17:14.800 --> 0:17:18.400 be a chicken farmer, but like they're extremely highly constrained. 0:17:18.800 --> 0:17:22.360 The integrators they deliver them the chickens, They tell them 0:17:22.400 --> 0:17:26.000 the exact specifications of the barn, the temperature, the feed, 0:17:26.600 --> 0:17:29.560 how much feed, and so forth, and then they compete 0:17:29.560 --> 0:17:31.800 against each other in what's called the tournament system. 0:17:31.920 --> 0:17:34.840 Yeah, so you as the farmer, are actually responsible for 0:17:35.000 --> 0:17:37.919 a lot of the capital investments that are needed to 0:17:38.200 --> 0:17:43.719 raise chickens. Meanwhile, the big integrators like a Tyson or Purdue, 0:17:43.960 --> 0:17:46.920 they provide a lot of the inputs. So the baby 0:17:47.000 --> 0:17:49.960 chicks themselves. They'll tell you like what medicines to use, 0:17:50.040 --> 0:17:52.639 what kind of food, and so in the eyes of 0:17:52.680 --> 0:17:55.680 the farmers, they feel like they are absorbing a lot 0:17:55.720 --> 0:17:58.040 of the big risks here while not really having a 0:17:58.119 --> 0:18:02.400 lot of control over stuff that ultimately affects the end product. 0:18:02.640 --> 0:18:05.520 And then the tournament is you have this pool of 0:18:05.520 --> 0:18:09.400 farmers in an area, and your pay for some period 0:18:09.720 --> 0:18:14.000 is how far above or below the average of that pool. 0:18:14.200 --> 0:18:15.679 Yeah, you're pitted against each other. 0:18:15.720 --> 0:18:18.160 You're pitted against each other. There's like a fixed pot. 0:18:18.400 --> 0:18:21.480 And then each round, you know, some people had the 0:18:21.520 --> 0:18:24.119 best chickens or the heaviest chickens or whatever it is, 0:18:24.480 --> 0:18:26.520 and some had the worst and so forth, and so 0:18:26.840 --> 0:18:30.920 it's very constrained type of farming. If you imagine farming 0:18:30.960 --> 0:18:34.320 in Iowa in some idyllic sense, which I think some 0:18:34.359 --> 0:18:36.240 people still do, but I think we also know it's 0:18:36.280 --> 0:18:38.760 big in dust show business, it's not that vision. 0:18:39.000 --> 0:18:42.200 Yeah, it's sort of like retailers like not owning they're 0:18:42.280 --> 0:18:44.639 real estate. It's like it's like weird that, like the 0:18:45.080 --> 0:18:48.480 capital requirement comes from the you know, individual small farmers 0:18:48.480 --> 0:18:51.639 and like these big companies are making the capital investments. 0:18:51.720 --> 0:18:55.320 It seems to be a super beneficial way of structuring 0:18:55.359 --> 0:18:58.200 their business for the big companies, right, you could see 0:18:58.200 --> 0:19:01.600 why they like it. And by the way, like light, yeah, 0:19:01.760 --> 0:19:04.600 that's exactly it. And they will argue that like actually 0:19:05.000 --> 0:19:08.080 providing the initial round of chicks and the food and 0:19:08.119 --> 0:19:11.120