Why Are Builders Going Bust into the Boom?

HOSTS Adam & Thomas|8 September, 2021

Meet your hosts

  • Adam

    Adam is the funniest and most successful comedian in his family. He broke onto the comedy scene as a RAW comedy national finalist before selling out solo shows at two Adelaide Fringe festivals. He’s performed stand-up to crowds all over Australia as well as enjoying stints on radio with SAFM and most recently as a host of the Ice Bath on Triple M. Father of two and owner of pets, he may finally be an adult… almost.
  • Thomas

    Thomas, the economist, is the brains of the outfit. He studied economics and game-theory at the University of Queensland and cut his teeth as an economist at the Reserve Bank of Australia. He now runs his own economics consultancy, with a particular focus on the property market. He lives with his wife and two kids in the hills outside Byron Bay.

The construction industry is booming, so why are builders going bust? June quarter GDP got a lift out of a bunch of vaccines nobody wanted. Are emerging market really ‘stuffed’? And why is Spain paying people not to work. All this and more on this week’s Comedian v Economist.

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Adam: [00:00:23] Hello and welcome to comedian versus economist. We demystify the world of money and help you get a handle on the bigger picture. My name is Adam and we're joined, as always, by my little older brother and real life economist, Thomas. I was [00:00:37][13.2]

Thomas: [00:00:37] good at how I [00:00:38][0.7]

Adam: [00:00:38] am doing pretty well, thanks. Although we're recording slightly earlier tonight and my kids are still awake. So if you hear screaming in the background, [00:00:46][7.6]

Adam: [00:00:46] that will just be my wife trying to get the kids to sleep. [00:00:49][2.6]

Adam: [00:00:51] So hopefully we get through this uninterrupted but big show coming up, Thomas, we're going to be asking you, why are builders going bust in the middle of a boom? Are emerging markets, to put it bluntly, stuffed or are they a bargain? We're going to find out why Spain paying people not to work. Find out what's going on over there. But first, GDP data was out. Thomas, what did we learn? [00:01:15][23.9]

Thomas: [00:01:16] Yeah, GDP. This is, uh, top shelf signature data release out of the ABS. [00:01:20][4.3]

Adam: [00:01:22] It came in at point [00:01:22][0.9]

Thomas: [00:01:23] seven percent in the quarter. So surprised to the upside that was more than people were expecting. Some people were that we're going to get a negative quarter, which would have to remember this is this is the June quarter we're getting. This is April, May, June. So it predates we're going to get this in the first two weeks of the Sydney lockdown with this data. [00:01:40][17.0]

Adam: [00:01:40] Wow. Topical. [00:01:41][0.3]

Adam: [00:01:42] So it's September. Finger on the pulse. Okay, so what happened in June? Now the GDP does [00:01:49][7.0]

Thomas: [00:01:49] very backward looking. So there was a chance it was going to be negative given we know September is going to be massively negative. People are now talking about minus four percent, which is which will be huge for the September quarter that would have given us our two quarters in a row, would give give us a recession, [00:02:03][14.0]

Adam: [00:02:04] the double dip recession. So we've avoided the double dip [00:02:06][2.8]

Thomas: [00:02:07] recession for now. We have for now. We have though that to to avoid it, we need to come back in the December quarter. And then I don't know, people seem to be banking on locking that in, locking in the vaccination rates. Vaccination rate has picked up substantially. We're on track to somewhere 80 or 90 per cent by December. [00:02:23][16.0]

Adam: [00:02:23] Well, look at the Doherty report, Thomas. The daily report tells us we're going to be out. [00:02:26][2.9]

Adam: [00:02:27] We'll be fine by then. Have a merry Christmas, everybody. [00:02:29][2.4]

Thomas: [00:02:30] I don't know. I don't think you look at the US experience. I don't think it's that clear cut. I don't think it's that you hit hit 80 percent vaccination rate and then it's all happy days. I think there's still a lot of struggle to get through, and that seems to be the US and UK experience. So, yes, it's still it's I still think it's on the cards. I think we could get that double dip recession with the negative quarter in December. But for the moment, June quarter was a to the upside positive point seven. Yep. So we dodged that bullet. That said, one of the interesting things in the data is that of that zero point seven percentage points of growth, zero point five percentage points of that came from other inventories, which is like 70 percent of that zero point three five four percentage points. And most of it came from public authorities, which is most likely the stockpiling of vaccines and other medical supplies. So that AstraZeneca that nobody wanted [00:03:24][54.4]

Adam: [00:03:25] boom for GDP growth, et cetera. [00:03:27][2.1]

Adam: [00:03:28] It's because we bought tons and tons of vaccinations. Let's take this over the line into into positive territory, [00:03:35][7.0]

Thomas: [00:03:36] giving us a bump. [00:03:36][0.5]

Adam: [00:03:37] Yeah, that's funny. Yeah, that's true. That people are talking about, you know. Oh, thank goodness the Fyssas arrived. [00:03:42][5.3]

Adam: [00:03:43] We did this deal with was it the UK. [00:03:45][1.9]

Adam: [00:03:45] We did a deal for some firms and Pfizer got out there and made a few calls and got some Pfizer hooked up. And we're literally stockpiling AstraZeneca. You know what it's like? It's like when we used to be kids and you'd say to my mom, there's nothing to eat. [00:03:57][11.5]

Adam: [00:03:58] And she's like, there's lots of fruit like now, like food. It's AstraZeneca is the fruit of the of the vaccine situation. We want vaccines. There's plenty of vaccine. No, I was vaccinated. Uh, yeah. So the public is still [00:04:21][22.8]

Thomas: [00:04:21] still a public story to a large extent, the seven point four percent surge in public infrastructure spending. So that's pretty big. Yeah. So the private sector is still going pretty well. Business investment was up two point three percent in the quarter. So that's really strong. And he had some data last week saying that company profits are up nearly 50 percent last financial year. [00:04:40][18.3]

Adam: [00:04:41] And Paiser. [00:04:41][0.3]

Thomas: [00:04:42] No, no, no, no. [00:04:43][0.6]

Adam: [00:04:43] AMP's sorry. That just resorted to reporting on how well everyone else's company profits are up 50 percent [00:04:52][9.1]

Thomas: [00:04:52] in the last financial year. Seventy five percent of companies are seeing a profit, but I don't think AMP [00:04:57][4.2]

Adam: [00:04:57] is one of the nine nine P. [00:05:00][2.8]

Thomas: [00:05:00] Yeah, but corporate sector strong. We so we knew that coming so coming into into the lockdown's that corporate Australia is doing pretty well. Public infrastructure spending is good, households also doing well. Household consumption is up one point one in the quarter, which is a strong number. Domestic tourism was up twenty eight percent in the quarter. Yeah, it's a big number. And the savings ratio fell back towards more normal levels. So did. Boom. [00:05:23][22.8]

Adam: [00:05:24] What's the savings ratio, [00:05:25][0.7]

Thomas: [00:05:25] that's how much people are talking about how much their savings compared to income right up to quite high, he started after covid sort of boomed up towards 10 per cent, now down towards five per cent, which is sort of its average level. But that was mostly due to increase in income rather than increase in savings. But if I had an article saying that consumers are now sitting on two hundred billion dollar war chest of savings that they've accumulated through covid through 2020 really means a huge amount of money that they're they're just sitting on. Everyone's wondering where they're going to go, whether it's going to go to retail spending or deposit on a new house or where that goes. [00:06:02][37.0]

Adam: [00:06:02] Well, we've started looking at we've started looking at a new kitchen that's so of what we're up to. [00:06:07][4.1]

Thomas: [00:06:07] Renovations are booming. Renovations are through the roof. [00:06:09][1.9]

Adam: [00:06:10] Well, that's where it started. We started looking at a new floor and someone said, well, we're going to do the floor. You better do the kitchen first. If you think if you're even thinking about doing the kitchen to allow everybody to the kitchen. All right, then. Now we're talking about putting some sort of an IV on the front of the house, too, which I didn't even know we needed. [00:06:23][13.4]

Adam: [00:06:24] That's how they get worked up. Sold me Eve. He was quite on a new kitchen for sure. It's looking a bit sunny out the front there, though. You're right. I've never noticed. He called his manager, said he could do a deal. And next thing you know, we've got to leave. [00:06:46][21.4]

Adam: [00:06:48] Oh, well, speaking of buildings and and renovations and and construction, what's this? I hear that builders are going bust. I thought. I thought we were booming. What's happening? [00:06:57][9.4]

Thomas: [00:06:58] Well, builders are booming, but that's not always great news for builders, apparently. So there's a couple of stories that I've seen along these lines. Business inside. I had one last week, one guy, the Russ Stephens from the Association of Professional Builders. He reckons that as many as 60 per cent of builders are already losing money. [00:07:16][18.1]

Adam: [00:07:17] Well, how they got the flat out. [00:07:18][1.8]

Thomas: [00:07:19] Yeah, well, they booked out. They flat out. They're flat out. They're booked. They've got 12 months work booked out. They're completely booked out. You can't find a builder for love or money, [00:07:25][6.7]

Adam: [00:07:26] but my age is not happening till February. [00:07:28][1.9]

Thomas: [00:07:29] Yeah, well, yeah, you see. Yes, but the interior costs are going through the roof, so there's a shortage of building supplies. We talked about timber before. Timber prices are through the roof. All of the construction times are getting blown out. So that that adds to expenses. Yeah. And so you're saying profit margins are getting crunched and many, many builders aren't actually making money on the deal and the buildings are doing right now. All right. Yes, a bit. So partly it's a it's a material shortage story sort of coming out of covid, partly sort of the nature of building. Building doesn't scale well. So, like, if you're making you know, if you're selling an app, for example, and you then demand booms, you've got you've got no extra cost. You just pump it out and it's just all profit you'd have making money. But as a builder, if demand booms, you've got to meet all the costs for building, particularly time and materials and your labour and the fencing and all of that sort of stuff. So it doesn't scale well, necessarily. An industry wide boom creates these sort of bottlenecks and these shortages, which is then squeezing the individual builders. [00:08:34][65.1]

Adam: [00:08:35] You can't copy a house. You can't you can't get on BitTorrent and pull it [00:08:40][4.2]

Adam: [00:08:40] out of your house. [00:08:41][1.4]

Adam: [00:08:41] House 2.0. Okay, cast your mind back. I want to ask you about this. Cast your mind back to Episode eight that we did of comedian versus economist from where we talked about quantitative easing. We talked about money printing. And you told me, I'm pretty sure in that episode that it was OK, money printing was OK because supply wasn't constrained. So so where we saw in the past in places like Zimbabwe, where inflation went through the roof and they stuck when they started printing money, it's because there wasn't enough product to go around, there wasn't enough bread or there wasn't enough, whatever it was. Are we now seeing supply constraint pushing these prices up? And is this the start of the inflation that people said wouldn't happen when we decided to print tons of money? [00:09:27][45.8]

Thomas: [00:09:28] Yeah, so there's a little nuance to add. It's not it's not that inflation wouldn't happen. It's that you only see inflation in sectors of the economy where supply is constrained. Right. And typically, most things that go into the CPI, the consumer price index, that basket of goods, they're not really constrained. The sort of widgets coming out of China. And the more you demand, the more you get. And this seems like almost unlimited supply, it seems. Yeah. So that's why I like a lot of the people proposing MMT proponents, they're not saying like just go for it. It's all fine. They're just saying like inflation isn't it isn't a case of just money printing creates inflation everywhere. It creates inflation in some places. And those places where it happens, those places are where supply is constrained. And this and this is what you're seeing here. This is where, you know, for for lumber and for timber, the market is constrained. It's not easy to bring new supply on line, so. All that extra demand that's coming through through the government grants and everything that is creating price pressure and that's that's forcing prices up. The thing that we're sort of worried about in in markets is sustained inflation. So we're kind of and this is this is the big debate that's going on right now. It's that we are seeing these price pressures emerge. But the question is, is it a temporary price shock or is it something more sustained? And so definitely there's a price shock here. Lumber prices are going up. There's a shortage of builders and so on. But given a year or so, does that just sort of does the market just adjust? Do we pull the trade is get pulled in from other places into the into construction. The timber producers start ramping up production, which then eases eases timber prices. [00:11:11][103.2]

Adam: [00:11:12] Timber producers. You mean trees [00:11:13][1.0]

Adam: [00:11:17] actually want to grow a tree that's going away? It's going to be an economist. We like to label the industry, produce timber producers. So what is what [00:11:27][10.6]

Adam: [00:11:27] is the what is the timber constraint? Is it is it we've got these big stockpiles of timber sitting around somewhere that can't be shipped anyway? Or is it? [00:11:36][8.3]

Thomas: [00:11:36] I think I think it is a bit of that is a lot of it's a lot of it doesn't isn't made in Australia. And it's all the shipping routes are all blocked up at the moment. It's hard to get stuff [00:11:44][8.3]

Adam: [00:11:45] because if that's the case, then you kind of you unclog that and and, you know, and it'll start flowing again and then it should go down, right? [00:11:53][7.7]

Thomas: [00:11:53] Yeah, I think that's right. I think that right. There's there's sort of a re-emergence of a theory which have went dormant for a while. And this is the idea that sustained inflation only happens when you get wage price inflation because you get these sort of temporary shocks to like a with a demand shock like this and prices pop, but then the economy adjusts and everything's fine. What you need is sort of that spiral to kick know. This is what economists what central banks worry about is a spiral where so prices, consumer prices go up and then people working go, hey, things are more expensive, I need more money. So they get it, they get a pay rise. But then that feeds through into the cost of goods. So the cost of goods go up and then people go high. Cost of goods have gone up. I need a pay rise and around and around we go. And then that's sort of like a feedback effect in a in a speaker with a microphone that sort of you get that feedback loop and it just intensifies and just keeps going and going. And that's what the sort of the dangerous inflation is, because that just spirals out of control. And so sort of the idea is that seems to be emerging, which I'm seeing is that inflation is pretty too is not a real problem if you have these sort of temporary shocks, because everything sort of adjusts. The thing to look for is when you get a wage price spiral, but that needs wages to be growing and we're not really seeing that just yet. [00:13:14][81.1]

Adam: [00:13:15] Like a monkey with a miniature symbol. [00:13:16][1.2]

Adam: [00:13:18] Exactly. Over and over and over and over. All right. We want to take a break there on that note, [00:13:25][7.7]

Adam: [00:13:26] right after this, we're going to find out our emerging markets stuffed or underpriced. Back with more after these messages from our sponsors. Welcome back here on comedian versus economists, don't forget, you can always send us an email kvi at Equity Mates dot com or head over to the website, Equity Mates dot com forward slash CVA. You can also, of course, find us on Facebook and Instagram at KVI podcast. We would love to hear from you. Thomas, what's going on with emerging markets these days? Are they, in fact staffed or are they just underpriced? [00:13:59][32.5]

Thomas: [00:14:00] Yeah, it's an interesting space right now. So we're seeing two narratives emerge around emerging markets and it's sort of polarising people. So on one hand, you have people saying that emerging markets are cheap and thereby by. So that's like Goldman Sachs, Bank of America. Jeremy Grantham. Yeah. They're saying that there's a chart or share to the Instagram, which compares emerging markets to developed markets. The share markets insane. Like the relative, relatively emerging markets have never been so cheap. They're the cheapest they've been in 20 years. [00:14:32][32.3]

Adam: [00:14:34] Before we get into too much of it, can maybe just a quick a bit of a definition of what an emerging market is. [00:14:40][5.6]

Thomas: [00:14:40] Yeah, look, there isn't there isn't a firm definition. It's a bit subjective. Like typically you sort of got the picture. It's a country that's sort of beyond developing. It's sort of got most of the hallmarks of a developed country. It's got a stable financial system, stable share market, that sort of thing. But it's not a proper developed industrialised economy just yet. But it is pretty subjective and it does tend to be these weird things like it lumps Peru and China together. Right. Even though those two economies have almost nothing in common. So it is a bit of a funny definition, perhaps. Hmm. So, yeah, if you're investing in emerging markets, you can just buy you know, MSCI has an emerging markets index so you can just buy all of that. But you are buying a very mixed bag and all the countries within that aren't going to perform the same way. [00:15:25][44.2]

Adam: [00:15:25] It sounds right up my alley, to be honest. [00:15:27][1.3]

Adam: [00:15:27] Yeah, yeah, yeah. But anyway, so this [00:15:32][4.7]

Thomas: [00:15:32] is the argument that Goldman and those guys have come out with this. Emerging markets are cheap. They've lost relative to the developed markets. They've lost 50 per cent of their relative value over the last 10 years, 17 per cent in the last year to date. So while developed economies have been on a tear away, emerging markets haven't seen that kind of growth in the in their share markets. And so they do that sort of the argument that they should be. They should be. They're set to go. As we come out of covid, we've also got elevated commodity prices, which are generally good for most emerging economies, and they're less susceptible to capital flight because they haven't had so much capital inflow through this period and they've now got larger foreign exchange reserves because they've been a bit more cautious. Yeah. So the outlook is good for emerging emerging economies. [00:16:16][44.3]

Adam: [00:16:17] I think this is a really naive question, but are they more susceptible to they're less mature. They you know, they got more things to worry about, like corruption and things like that, that maybe without the regulation of the developed economies, without a lot of those controls and maturity that comes with with with a developed economy. Hmm. Are they more exposed to it being a bit wilder? They're a bit sort of [00:16:43][26.6]

Adam: [00:16:44] a bit crazy. [00:16:45][0.9]

Thomas: [00:16:46] Yeah, that sounds a little racist. Oh, no, I think I think I mean, as a stylise fact, that's probably true. There is a bit more risk involved. Right. And generally it is seen as a little bit more is a riskier play, but you have higher growth because of that. The economies are growing strongly, the potential for four sectors to, you know, grow really strong because they're coming out of a less developed starting point. You have a higher, higher return possibility. So that's sort of [00:17:17][30.4]

Adam: [00:17:17] the I mean, are they are they printing money in the same way that the developed world is? Are they they sort of employing modern monetary theory in their economies or are they not sort of ready for that kind of stuff yet? [00:17:28][10.9]

Thomas: [00:17:28] Largely. Largely. I mean, yeah, I think some like China and the Brazil and a few of those the ones in a monetary sovereign, I think probably are. So this is sort of the key definition of being able to print money is you've got to have a free floating exchange rate and be issuing debt in your own currency. If you're not doing those things, then printing money can create real problems. But if you're doing both of those, then Nemati says, then the big risks aren't on as present. So not every emerging market economy is monetary sovereign. So they either issue debt in other countries, usually US Dollars, or they have they peg their exchange rates to other other currencies. [00:18:11][42.8]

Adam: [00:18:12] Or if you're in El Salvador, you just go Bitcoin. Yeah, yeah. [00:18:15][3.1]

Thomas: [00:18:17] Yeah, they're just keeping monetary [00:18:18][1.0]

Adam: [00:18:18] monetary sovereignty, and I'm all in El Salvador. All right. Uh, so, yeah, so that so that's [00:18:31][12.2]

Thomas: [00:18:31] that's sort of the idea. That's one. That's one. That's one camp that's set up on the other side. You have people who are saying that emerging markets are stuffed, which is what the guys from macro business are saying. Nomura is saying this as well. Victor Schmitz from Macquarie saying that there's a reason that the the emerging markets have underperformed. They've had weak growth over the past few years. They've got rising inflation. The fiscal balances are blowing out there. That's true. All true of the developed economies as well. There's no monetary policy firepower left. So interest rates have hit the floor and they're not monetary sovereign. And so, yeah, they're they're in they're in a bit of a bind. And the sort of thing there's good reasons for that underperformance because there isn't that sort of pop in the in these economies right now and going forward. [00:19:17][45.4]

Adam: [00:19:17] All right. So what do you reckon they stuffed or are they are they underpriced? Are their bargain? [00:19:21][4.1]

Thomas: [00:19:22] Oh, I think I think it's interesting. I mean, a lot of a lot of it's going to come down to what happens in America and whether the US Fed starts looking at raising rates. So on if you're you probably weren't taking an interest back in 2013, but they had to taper tantrum back then. [00:19:38][15.8]

Adam: [00:19:39] I wasn't even taking an interest in the article you sent me. [00:19:41][2.0]

Adam: [00:19:47] Fair enough. [00:19:47][0.3]

Thomas: [00:19:48] Yeah. So after the GFC, the US had Supercheap Monetary Policy that had money printing, super cheap interest rates. And then in 2013, they started they wanted to taper that back. They wanted to start unwinding that. And what happened is that that created a bit of a sudden whiplash of capital flows back to America, to the American dollar, because the American dollar strengthened and emerging currencies weakened. And that created a real headache because, you know, they're issuing debt in US dollars and that sort of thing. So that created a a real struggle for the some of the some emerging market economies. And they had [00:20:23][34.9]

Adam: [00:20:23] a tantrum [00:20:23][0.0]

Thomas: [00:20:24] that that all the markets had a tantrum. And then the so were they called the fragile five, Brazil, India, Indonesia, South Africa, the fragile five. [00:20:33][8.9]

Adam: [00:20:34] And then they now they're warning of the troubled and [00:20:37][3.0]

Thomas: [00:20:37] troubled 10 year Brazil, Colombia, Chile, Peru, Hungary, Romania, Turkey, South Africa, Indonesia. In the Philippines, it [00:20:43][6.5]

Adam: [00:20:43] could get worse. I'm hearing reports of the [00:20:45][1.9]

Adam: [00:20:45] slightly bothered 25, the mildly inconvenienced 50. So if if if [00:20:56][10.4]

Thomas: [00:20:56] the Fed starts the reverse course in America, if the US dollar starts to appreciate, that could create some real headaches for those countries. And the other thing that Nomura point out is that risk tends to move in a sort of it's a binary on off is not sort of like a general a general increase in the risk tolerance that people have for emerging markets. It's just like everyone's happy and then suddenly not everyone's out. Right. Thinks he can sort of you get the kind of kind of lurch around pretty violently. [00:21:24][27.5]

Adam: [00:21:25] So that was a really long answer to my question of what do you reckon? [00:21:27][2.7]

Adam: [00:21:28] Well, I didn't even answer that. That's that's how an economist answers the question. Classic economists, you could only be done by a politician. No, I'm going to I'm going to go I'm [00:21:39][11.0]

Thomas: [00:21:40] going to side with the the fragile five. The troubled ten. I think it is I think there's a probably good reason for I think just because they're cheap is not a good reason to buy. Now, I think they do have some struggles ahead of them. I'd be I definitely wouldn't be loading up. I don't think this is the signal to sort of load up on emerging markets. That's my that's my [00:21:58][18.7]

Adam: [00:21:58] take on Robin Hood right now. Very good. Oh, I guess [00:22:05][6.9]

Adam: [00:22:06] time will tell, as it always does. And probably a timely reminder to never take financial advice from a podcast. Make sure you do your own research if you're into emerging markets. I'm sure there's a lot more to unpack there. All right, Thomas, before we go, I just did quickly want to touch on this, apparently. Was it spying, spying on paying people not to work? [00:22:26][20.2]

Thomas: [00:22:27] What's going on? Yeah, and what the transitioning the coal sector into non-existence. I guess if you call that a transition [00:22:34][7.5]

Adam: [00:22:36] and they're doing that and they're doing [00:22:38][1.5]

Thomas: [00:22:38] that by offering co workers three thousand seven hundred dollars a month for the rest of their life in in retirement as a retirement package. [00:22:47][9.3]

Adam: [00:22:49] So just like that, just we're getting rid of the coal mine. And so instead of your job, you get three thousand seven hundred a month. [00:22:56][6.9]

Thomas: [00:22:56] Yeah, yeah, yeah, yeah, yeah. Interesting. It doesn't even seem to be an age cut off. The article also said there's one guy who's 44 is just like, I'm actually all right with this plan. It's pretty good. [00:23:07][10.7]

Adam: [00:23:07] Yeah. Jackpot. Yeah. I mean, that's good. I love [00:23:13][5.8]

Adam: [00:23:13] it. I think it's good. I think too often, you know, like. We see it, we've seen it in Australia. I remember in Adelaide, there was the government put a lot of money into into propping up, you know, Holden when it was it was failing. It was. And I don't know from from memory. I don't think it was like it was sort of heading towards any sort of turnaround or there was any talk. It was just kind of like, you know what, this we're just going to keep piling money in here to keep people in jobs. Didn't seem to make a lot of sense to me that we take, you know, government money, taxpayer money and and prop up failing private companies or failing organisations that I don't to be harsh, but from a sort of pragmatic kind of sense, like it seems like, well, if we could if we could subsidise anything, then subsidise the people, don't subsidise the business. [00:23:59][45.7]

Thomas: [00:24:00] Yeah. I mean, there's sort of this there's an idea of industry policy, which used to be this idea that government should should take a steering hand in the development of industries in the economy. And that went out of fashion with sort of Thatcher and Reagan in the 80s and sort of much more like, well, let's just take our hands off and will not try and pick winners and try to build industries, will just let the market allocate resources and come up with whatever it comes up with. And so China is sort of the other end of the spectrum. They still take a strong, strong interest in what happens within the economy, in the sectors that get up and grow. [00:24:37][37.3]

Adam: [00:24:38] But then, I mean, Spain's not precluding them from getting another job, presumably, like they're just saying he's a he's a what I call it a pension. We'll pay you as long as you as long as it takes you to sort of either find another job or I don't know what that's worth. Mind you, I don't know whether that's a good wage in Spain, is it? [00:24:55][16.8]

Thomas: [00:24:55] Yeah, I don't know. I don't even think it's conditional. But I was reading it doesn't sound like you. It's not like a welfare check. It's not like you lose it. If you get another job, you just you just got, you just keep getting it just keeps getting it. You get on the top. Yeah. Yeah. Fantastic. Yeah. But you know, like it's kind of a win win. [00:25:12][17.1]

Adam: [00:25:12] I mean it's a win for everyone. [00:25:13][0.7]

Thomas: [00:25:14] Yeah. Yeah I guess. Yeah. [00:25:15][1.5]

Adam: [00:25:16] Well yeah. The government's not propping up a coal mine. The coal mine is not doing damage to the the environment and people have got a bit of extra milk. They've got some compensation for, for losing their job. There's nothing to stop them getting another job. I mean, arguably, you know, if you've got skills in coal mining, maybe not walking into a, you know, service desk job at a call centre or something. But, yeah, [00:25:38][22.3]

Thomas: [00:25:39] to play it to play devil's advocate for a second, like it's kind of like it's kind of blackmailing. It's a bit like it's like it's kind of a they had a really strong union that was representing the miners. And in 2012 when they tried to not even not even just shut down the industry, just remove the subsidies that the government was paying to them, to the coal mines, just remove the subsidies. The unions went on strike and ended up firing rockets at the police. [00:26:04][25.0]

Adam: [00:26:06] Yeah, ten thousand miners marched on Madrid and through and fired rockets. Yeah. So that's sort of like maybe this is going to be easier. We just pay these guys for peace of mind. I have to do with it. Yeah. And it's kind [00:26:19][13.2]

Thomas: [00:26:19] of the coal mines is a little bit the same as like yeah. We were trashing the environment and we're eradicating the possibility for life on Earth. But if you pay us, we'll stop. [00:26:28][8.5]

Adam: [00:26:29] It's like. Yeah, is that a great thing. [00:26:30][1.8]

Adam: [00:26:33] Yeah, I get what you're saying. Yeah. I mean the government maybe it could be a bit harder with it and say, look, this coal mine miners needs to go and it doesn't need to be transitioned. You know what? I wish I'd do it with waste. I do it with with tennis lines. Judges like we've solved the problem during Covid Covid. [00:26:53][20.2]

Adam: [00:26:54] Here I go, hulkower in to say, look, Loren's judges and then Wimbledon, we would have brought the line judges back. And I'm like, what are you doing? We've solved the problem. It's the same sort of [00:27:04][10.6]

Adam: [00:27:04] deal, like they're redundant. And yet here we are. But I was pleased to find out that I get paid anything [00:27:10][5.4]

Adam: [00:27:11] like that right now for the love of it. I do it for the lowest. It's a privilege [00:27:15][3.9]

Adam: [00:27:15] to be Aline's judge at Wimbledon. So you get a lot of a lot of players and stuff will come out saying you need the lines judges there because it creates the the conflict and the tension. Think back to John McEnroe and his arguments with the lines. [00:27:28][12.6]

Adam: [00:27:28] People I don't know play or bringing people in to argue with John McEnroe is it should be supported either. So just pay one guy in the silence. You're a dickhead. Yeah. [00:27:42][13.5]

Adam: [00:27:44] So anyway, the US Open, I'm pleased to say it got rid of the Lords judges again. So I don't know, sound harsh again. But when you've got a solution that's better. It's unfortunate that the lines people are now out of work, but in fairness, they weren't really in work. Maybe they can find another line to watch. [00:28:00][16.0]

Thomas: [00:28:01] But I think I think this is what Spain is doing well and it is leading the way. So there's a lot of talk when industry shut down about like, I will help people transition. There'll be other jobs available. And when the when the US manufacturing sector went into decline in the 2010. And that was the argument, I like you, don't worry about it, guys, there'll be jobs for everyone. We'll all get we'll go to Silicon Valley, we'll all get jobs. But like, it just didn't happen. And people in the manufacturing communities just saw industries and jobs eroded and everyone was unemployed and societies were like torn apart and there wasn't government support for that transition. So I think this is an interesting precedent in this sense in the in the in the sense that there is money on the table and there is a direct attempt to help people transition away from a dying industry. And I think it's probably is the way forward. And I would you know, I'd like I think we probably see something in Australia like this at some point. [00:28:54][52.4]

Adam: [00:28:54] Yeah, no, I think it's good or, you know, absolutely in favour of of caring for people, you know, like because people need self-worth and maybe there's and I suspect a lot of that was involved in in any sort of manufacturing that we've seen in Australia that might have declined and then been phased out, is the government's kind of going, you know what, we need to keep that industry going while we transition. You know, it's not it's not just a financial thing. It's not just kind of saying, you know what, we're going to pay you stopwork right now. But don't worry, because we're going to pay you because it's not about the money. It's about, you know, a lot of the self-worth and all that kind of thing and, you know, very supportive of that being a priority. So, yeah, we'll be interesting to see what happens and see whether it whether it catches on. But one less coal mine can't be a bad thing. So. Yeah. All right. Why don't we leave it there. Yeah, we'll wrap it up. Thank you very much for tuning in. Don't forget, you can check out all the other great podcast from Equity Mates Media, Get Started Investing feed, Equity Mates Investing podcast. You're in good company and a brand new podcast. If you haven't heard it, it's fantastic. You've got to tune in. Talk Money to Me is now available from Equity Mates Media. Wherever you get your podcast. Take a listen and we will talk to you again next week. Thomas, thank you for joining us. [00:30:09][75.2]

Thomas: [00:30:10] Thank you. [00:30:10][0.3]

Adam: [00:30:11] And we'll see you again. Oh, don't forget to send us an email. You do it right now. Do it while you're angry. [00:30:15][4.2]

Adam: [00:30:16] C.V at Equity Mates dot com Equity Mates dot com for Severe Weather Centre. The message is the grey or [00:30:27][10.6]

Adam: [00:30:27] Facebook at CBA podcast. Hopefully you're not angry, hopefully happy and enjoying the show. And we look forward to your company next time on comedian versus economist.

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