Is it our turn to try tariffs? January 23, 2026

[Music] A list-snap production. [Music] Cheers, Marka. The S&P, the ISEX stocks. This is Motley Fool Money. Welcome to Motley Fool Money, the podcast that has decided to put tariffs on imported podcasts. I'm Scott Phillips from the Motley Fool. He is, has always been and will always be. The man, notice Andrew, ram a page, the sion of straw man. Mr. Page, I can't quite say happy new year because technically we've been here the whole time. But this is the first time you're actually chatting in 26, so I will say, I'm related and maybe confusing, happy new year. Happy new year to you, mates. Good to be back. Did you have a nice break? I had a lovely break. I only took the time off from Christmas and New Year and I went, went beach side. But I think we all know that the first few weeks of January are pretty slow and quiet anyway. So it's actually been a really nice time to kind of do some of the stuff, but hopefully in the weekends. But also during the week, some of the stuff you don't often get to work wise. Because it's just so much coming through the, and look where, you know, days away from an incision. But it's been quite lovely. It's a nice break. How about you? Yeah, yeah, really nice, really chill, really relaxed. Back at the desk now, but as I think you said off air, it's like the official end of the, the unofficial end of the holidays is Australia day. So even everyone who's sort of technically back, it's still, you know, it's not full steam ahead until really after that point in time. But yeah, no, it's been great. You know what I just, I just did a bunch of super old man stuff. I just, I just, I'm kidding. It's not a gardening and listening to podcasts and reading and just really relaxes really. That's really lovely. That's awesome. I think I told you, I don't know, I told you I listened to a must have. I built a workbench for my young life and I was standing. Yes, happily and certainly. I put some good, but some castes on it. So I can actually push it around the garage. It was kind of cool. And I've over capitalized it recently yesterday. I've over capitalized dramatically. I bought a table saw and a routing table. Second hand, our Facebook marketplace just kind of is. It was a fun thing to do. So they haven't, haven't used that for too much just yet, but that's, that's the latest. Some of all man stuff and you know, trying to find other things to do. If I'm not pull out weeds or mowing the lawn, I'm now cutting up its wood. So badly and you couldn't sell it, but it's just fun. It's not even about the end product. It's about the process, right? That's what you say when the end product is no good. Put that one on your pocket, save that one for when you need it. Sorry about the end product. I don't know, I'm expecting much. It's not the destination. It's just doing something. The amount of money I spend on would I could have bought a workbench for it. The usual, the usual plumber that was fun anyway. The monetary value of that inflated sense of self-worth is off the charts. Some would say we already have two inflated sense of self-worth, but I'll leave that to us. It's good to be back. It's nice to be back on the airways you and I haven't chatted for a while. So our respective wives will be very, very happy that we have someone else to rent too or something else about rather than them, which will be lovely. It was funny too when we were doing all the prerequisites. We said, "Oh well, we've done this and hopefully the world doesn't spin out of control too much while we're away." We're just chatting before and it's like, "Well, that happened and then that happened." And then that happened and it's like, "My goodness, it wasn't like we took a six-month hiatus." It's like two minutes later. Chris Coles, at the beginning of the year, video. Chris Coles, great stuff on YouTube or Insta or probably TikTok, I imagine. I'm not there surprisingly, but it's always great. I've got to throw two more things in the agenda. You know, I haven't talked about that actually. Firstly, I want to ask you or observe and maybe I've missed it. We're recording this in the 22nd of January. By the time this goes out, we'll be at the beginning of a long weekend. So by the time business goes back, it'll be the 27th of January. Three, four days away from the earnings season starting. I just, as I said that took about February. I mentioned to you as we did the intro here. It occurs to me I haven't seen a lot of earnings updates from companies. Until you just said that, me, because it's sort of unofficially known as confession season. Right. You have the earnings season. And then it's like, as the bean counter sort of starts to look at the books, you know, you're not going to look on the bus or the door. You know, you sort of promised the market this and we're just, like there was always hope, hope springs eternal. We're at the point where we're not going to end that target. So you run a bean counter on the market. So you usually get a lot of updates around this time of year, sort of like revising or tempering expectations. But you're right. You're right. I haven't noticed much. I mean, you get the occasional upgrade too, by the way, in confession season. Sometimes it's all the moment. I think it's okay. But not much of either. Which, yeah. I don't know. It's either a false and security or maybe things are kind of, you know, in the second half of last year did tick along kind of about what was expected, which is probably given you a lot of last few years. That's not such a bad result. I mean, you know, I like volatility, right? Because it's a chance to go and take advantage of other people's freaking out in either direction. So this is part of me is like, well, shame because they could have been some opportunities. For those of us who have opportunities. Right. Right. But for those of you who are like our portfolios, you know, not going down massively. I just, I just, I just, I just, I hadn't even thought about either until I went hang on, earning season starts in a week. And we've heard very, very little, very little. Capacup is, I can think of, but yeah, it just seems to be a real lack of, I don't know, outside the ordinary for most of the ASX. Yeah. And it's the guy, I very much expect the same kind of flavor as what we've had recently, which is if there is anything that's maybe it's not a shortfall enough, which warrants a pre-results announcement, announcement, but just, just sort of like, oh, you're a little bit off. And then the, and stocks, like, 18 billion dollar stocks for like 12% in a day. Right. I still feel that, that thematic is still in play in the, in the sense that we are so, we are so, to hack need phrase, but price for perfection that any sort of slight miss will not be handled well. I expect that. I expect some big moves. I think that's true. Yeah, I've come into this before. We're going over all ground, but I still reckon the moves are bigger now. Not even because I was a now, I don't mean this early, because I mean last five years. Yeah. And they work on a billion out careers. And so it's not just prosper, I mean, probably is this time around. The share price is pretty high, waiting records in the US and must be pretty close here. So there is, that is the case. That being said, we are marking, we're marking off here zero and Commonwealth Bank. Just as two in this, how about some really, really big share price faults? These are microcaps. Right. Right. And CBA. So let's, again, I'm going way off script, because just one or, can we talk about both of those for a second? Because I think they're interesting. They're interesting. They're in 10 others, right? Right. I'm not going to play this one, I'm bashing the banks for dearest reasons, but when we weren't bashing the banks just for the fun of it, we've pretty consistently said that price earnings ratio, that valuation can't be justified by any reasonable maths. Yes, so is the most expensive listed bank in the world, or at least in the Western world. Yeah. Yeah. You know, for a, for a bank that is like, it's got all the market share, it's ever going to get more. Yes, right. It's absolutely a mature business, and I'm not even talking about any of the negative stuff that I usually go on about. It's just like, even if you just assume things just muddle forward as the way that they have, it's like, how do you get price to book multiples that are that high? You know? Yep. So it's down 27% from a 52-week high. That is a, that is a big drop in a market that's overall been rising, right? Correct, correct. I was asked yesterday of Wednesday now, because we were doing this, we were going some Thursday mornings as we do, about the perceived dollar claim rotation from financials into resources. And I made the point that, I think there's, there may be some who are doing that for macro trading risk, because macro-trose juice, stupid stuff. I think there's a, I'll come back to it. Well, there's an element to that. Well, what I was going to say though is I think there's actually a fundamental opinion at the same time. Right. So there was the trading strategy of the great rotation, because somehow this is going to make money, that's going to make money. I'm predicting by Christmas, this will happen. Oh, that's a nonsense. Right. Yeah. But to be said, there is a rotation as a effect rather than a cause. That is, people didn't decide, we had to rotate. But I think they went and looked at the banks and went, 28 times for see, is that even grow? No, okay, that's same, okay. And then looked at BHP and RIO went, hmm, he said that doesn't, I mean, you know, there's some, there's some, copper is growing. Oh, and it was pretty good. BHP having issue with China right now on price. But, you know, I don't know that I wouldn't have done that just the one-to-one rotation as they like to say. But you're right, that's kind of exactly what we're going to say, there's, there's, there's some who are. And there's others who I think are just saying, well, I am selling CBA because it's expensive. And B, I'm buying BHP because I think it's worth buying because the future looks bright. Independently of any sort of macro call, just literally on valuation and, and outlook alone. Yeah. Yeah, I mean, I just put it, again, we've got this, I think it's always a valuable exercise as an investor, is to distinguish between the actual thing that you're buying and the price that it trades at a market. Yes, yes. And, and, and, and even without going into set of sort of any sort of like hyper negative view on the banks, it's just the reality is that, I mean, Commonwealth Bank, you go to pre-COVID to today, it's dividend year, which is really, like dividends are really for a very mature, large business that's sort of known and takes a lot of pride in its dividends. And, and especially with banks where there's a lot of non-cash accounting and the rest of it, it's a nice metric to look at. And I'm just eyeballing it, but I think dividends on average have grown by about 2% per year over that period. Actually, 28, 28 times. That's a lot of money. Exactly. Yeah, I think of all my freaking credits, like, yeah, it's still pretty, yeah, it doesn't. It doesn't make any sense to me. So it's not that I'm celebrating in the misfortune and misery of bank shareholders, but it is a little bit comforting from a psyche. But if you're like, I think God the world does at least make a little bit of sense. Because you sort of stare at these prices for a while and go, "How? What am I missing? How does this make, what world does this make sense?" And let alone for a business that is hyper, hyper leveraged to pretty much a single asset class that itself is hyper, hyper leveraged. And at the top end of any kind of valuation metric or process that you want to look at. So it's really wild. Resources stocks are interesting. We should probably put gold to one side because that's God its whole other thing. Or also given that it's kind of run by a cartel. So you kind of, we don't resources, but oil has never been a properly functioning market where it hasn't been for 50 years and your gold is, I don't think, just say. Yeah. Do you want me to the rest there? To me, you can get quite philosophical on it all because it gets to the heart of what where value comes from and what really is value. And it's like when you get rid of a lot of the financialization of various assets and at the end of the day, everything gets down stream of commodities. Like every single thing around you has been dug up or grown and then refined. Right? And when the world is going upside down, as it very much is at the moment, I think it does realign or at least sharpen the focus on what matters. Is it a corporation which is really just a bunch of intangible kind of assets on a balance sheet? Nothing wrong with that. But in a world where it's sort of like there is all kinds of uncertainties in the rest. And they just purely by the grace of a smoothly functioning, not too, in economy, not too much uncertainty in the rest of it, when things get real, give me the stuff. I want the land. I want the land. I want the iron. I want the copper. I want the stuff because that's where the buck really kind of, so that's what I want. Where value derives from there? Maybe I'm running a bit too far with that. But there does seem to be that sort of macro kind of play or it's just every, and on top of that, like people are dumping treasuries in Japanese bonds and the rest of it and they're buying stuff, like physical, tangible, real stuff, all the things that are very much exposed to that. Now that might, like often in markets, you get these sort of thematics that sort of get their moment in the sun and then they peter out. So it could well be one of those things, but it is interesting. It is interesting. Really is. So yeah, I think that's fascinating. The other one is about zero for a second. And I want to zero actually not so much for evaluation, but feel free to. But rather what seems to be something of thematics. So I mean, there's driving a lot of tech stocks at the moment. And I'm no futurist and you'll know futurist, but what you'd like to have our views and you and I are both like our techs from time to time. But the kind of dominant explanation, and you never know where that by the way, the case is a causal, whether it's explanatory or whether just complete garbage, someone makes up the trying to explain a squiggly line. So let's get those three things and I head at the same time. But it has been the case that over the past six months, probably. We have seen tech companies generally really on the nose and particular tech companies where, and this is where we get the automatic AI is the fear that do you need a cloud accounting software? You're on your own cloud accounting software using AI customer relationship management, Salesforce in the US, the granddaddy of software is a service and a recurring revenue and kind of the birthplace. So a lot of the way we think about these sort of businesses, they've absolutely been hammered as well. And so I think it's interesting just to observe that half a nominate to mention that it's being asserted that AI is to blame. And I think it's probable given the trend across multiple countries and multiple tech businesses and maybe other reasons, which we completely unrelated. But I just thought it was interesting that that's happening and you and I talked a lot about AI will talk about AI this year next year, like in the episode of other stuff just because it's one of the really significant dominant influences on the economy on our life. It's a real theme, the juror of our time, right? So my question is, is AI going to wreck zero on Salesforce? No, I don't think so. Tell me more. But well, well, I don't know. Did you see the news of Salesforce over the break? So they leaned heavily into AI because the promise there was it could handle a lot of the technical support, customer support kind of stuff. And they've since found that, nah, it's not that good yet. And they're walking back on that. So I think there's again, you can have two things that are true at the same time. I'm actually, I'm always reminded of my experience. This is where I sort of got started in this industry during the tech boom, the late 90s and the early 2000s. I mean, I always say that everything that everyone, not everything, but most things that people were saying back then turned out to be true. Yes. Yeah, we saw one of the biggest market crashes in history is that we'll have, how is it that the internet could revolutionize literally everything and investors like experience a big crash? It's just because we got too carried away. So I very much think that AI is a thing. And yeah, it's not, it's not perfect. It's far from it. It's actually there's a lot of sort of failures. But this is as bad as it will ever be. Yeah, yeah. It's only getting better from, from here. And maybe it, it plateaus out much earlier than, than, than people think. But anyone who's used it knows that it's, it's special, right? Like it's, it's not, it's not this godlike thing in a box that will do everything for you and just do it perfectly first time. But it is, it is a, it is a genuine game changer. And I think as the technology refines and optimizes and we get better use cases for it, people figure out how to integrate it. It's just still so, yeah, it's like, you know, it's only a few years in, really since this latest generation is sort of, you know, the latest sort of AI spring sort of as, as, been resurgent that, that we're, we're into this experiment. So it will, it will be a big deal. But to, to, to think that that happens overnight across the board in every, I think that's where things got a little bit carried away. So, so, and then on top of that, you're also looking at, at, at a situation where these text docs, particularly in Australia, we talk about the Mag 7, but that, it's so tame when you look at in the Australian context here. It's like, they were just priced stupidly and it, we had no, there's no argument there to be a sort of, yeah, but they're really great companies with a lot of growth, but essentially like, you have not that great and not that much growth. Prometicus, even prometicus is down close to 50%. Yeah. Since August. Yeah. Why is text down 50% technology ones down about 40%. Zero's down 50%. Like, it's like, you know, there's idiosyncratic sort of reasons for all of these kinds of things, but I think a big, I'm, I'm all over the place here with my answer mate. Sorry. I got it. Let me try and, let me try and focus down. I think you've got a combination of just valuations, just not making any, any, any sense, an overinflated, you know, sort of, and now we're, so so Mark got carried away on that. I think Mark it now, maybe now getting a bit too carried away on, on the AI disruption. And where I think my, I think the initial take with AI was that it was going to just sort of replace everything. Yeah. I'm more of the view that what actually you will see will just be integrated into everything. So, it's an idlo. Yep. Zero is going to be a thing. Yep. You know, why is text going to be a thing? Salesforce is going to be a thing. Canva is going to be a thing. It's just that they'll have that little AI button at the top there that you click and it just helps, helps you do it. It's not going to be a chat GPT subscription, which does it for you. It's going to be a some API plugin and customized bot as derived from that integrated into these other products. And I think we're just in this phase at the moment where the, where business is trying to really figure that out. It'll happen. It, it, it, it always does. We're still so, we're still so early into the journey. So, I don't know where I was going all over the shop there. I, I'm at the end to sort of say, I think it's healthy that these prices have come back down. They didn't make any sense. I think it's healthy that people are starting. A lot of that has been driven by fears over AI, but now I think the pendulum sort of swinging too far the other way is sort of like, oh, it's going to destroy everything. I don't know. But here's the other thing. I think even with these very, very significant faults, a lot of those names to me still look pretty expensive. Yeah, Premiere because it's plummeted 50% to our P of only 134 times. Right. I, um, so yeah, I think that's right. I think that's right. I can go back to the AI thing and then we'll come back to the, the valuation. Sorry, man. I know a verbal diarrhea. That was perfect, man. You just, there's two points I want to touch each and I, I wanted to do a bit full evaluation of the three finish. So just find why I'm going to move away and then come back to it, rather than leave hanging on it. Um, I am of a similar view. The one of the great lines, it's funny how things, how quick things come memes and cliches, right? Because just the speed of internet and everything else. But, uh, I can't remember who said it. It was, I always not going to take your job. Someone using AI is going to take your job. Yeah. Yeah. I think that's just really, really, really true. It's just, it's just fundamentally, I think, um, I think, um, I think that's just very, very, very likely. Because, as you said, the AI is going to do everything for you, but if you can use it to make yourself faster, more efficient, cut, yeah. cheap, but well that kind of stuff, that's the issue. I can imagine I, I, doing a lot of stuff that is low level software or low level value ad. I wouldn't want to be running the mill consultant right now. - Yeah. - Oh, 'cause it's fun, they'll use that. You know, the person who says, I'll put you in the business case for you. - Right, yes. - Or you know, filling your professional services blank yet. - Right. But some of us know our consults he's dead. - No, we're big. 'Cause you're what someone to take the insights and help you with them, that's the point, right? So I expect that's sort of things what I'm thinking about. They're about zero, for example, first I don't own shares, but to imagine AI is gonna be zero. You can, you know, there's some of them coming spin up their own solutions, right? So who is going to try and create their own cloud accounting system and put all the rules in it, all the changes and make sure it's all correct? 'Cause it's not just a case of arts, AI, it's roughly right. It makes them say, that's okay. It's like, no, no, no, this is a system of account. - Gotta be right. - Yeah. - When I get that choice, right? - I get the question, man. I even thought we did it well, but actually, we lost all the phone numbers. So, well, I feel bad there. And I think that, you know, there's absolutely stuff that will be done into what you don't think the big risk is for zero and so, our source now that is, is the possible bulkingization of the inputs to that process. So, I can imagine, sorry, I'm not gonna, this is no prediction, although if it happens our climate, take zero, right? What does zero do? Okay, well, it's got the, firstly, it's regulatory kind of, you know, the data in it is normally required by regulators, tax officials like that. So, that's kind of a big deal. It needs to, if it's payroll system, get the award, pay the award settings right, and it's got tax settings right, tax collection settings right, there's a whole lot of stuff that it has to do that it businesses rely on. And so, you're not gonna just go, hey, Jack, let's just spin one up ourselves, we'll save ourselves 10 bucks a month. So, no, no, no, no, I was doing that. I could imagine that our scenario where, the building blocks of that are made independently. So, right, zero, zero said, we got some really clever accountants and we got some really clever code as let's put them together. I wouldn't be at all surprised, you know, in some future world where the subject matter expertise that goes into zero is really at the end of the day where it's competitive advantage. It's just a white, can't be beaten by AI. But if you, you and two mates got, you know, say, hey, well, I'm gonna count, well, I'm a tax expert, well, I'm a whatever. Let's actually put together a database. Let's build the software, that's just our own the database. And we will maintain it. And people can subscribe to that database and use that plug that into the API you talked about. API, is it something program interface that stands for? Social one API is what I'm at the company. - Oh, good one. - Pretend I knew. - There you go. - Application programming interface. - Yeah, basically, I asked the programs to talk to each other. So, I could imagine in some future world that the subject matter expertise being bulk and ice into that little bit. So, I pay, so if I'm paying 100 bucks a month for zero, I pay five bucks a month for the tax and accounting database that I can just point to. And I, I just clever enough to work out how to put that API together, what the point to. So, I could imagine that some sort of slow erosion of that, but it's also more likely that it just retains that function and does it for other people, 'cause why would you reinvent the wheel? And I think that's, I'm not worried about companies doing it for themselves. But like I said about, you know, I just like to take your job, someone that using AI is gonna take your job. Same as I think is probably true of business. AI is like a kill your business, but another business using AI to compete with you, that's where you were, it's it, they'll use AI in their own purposes. But that I think is that that's the arms race I reckon. And it's the equivalent of Amazon and Walmart back in the day, right? Walmart could have adopted the internet, blockbuster could have adopted video delivery and then streaming. They chose not to take advantage of that stuff and that I think where they were, I know it's where they fell down. I suspect as long as companies continue to use to reap the benefits themselves, and this is kind of, it's kind of capital of 101, it's creative destruction. - Who's got you beat me too? - Sorry. - There they go. - But is it that idea of like, well, okay, someone do it better than me. If I don't keep up, there's an ongoing arms race, right? And that's the winner. - Well, I can assume I hope, right? - The consumers of the winner. - For some, probably, yeah. - Yeah, as long as they don't have artificial regulatory issues that stop. - Yeah, high-pitched. - Yeah, absolutely mate. I mean, and this is, 'cause it's sort of like the framing, I want intentional framing up to now is like, "Oh, this is bad," or it's a challenge. It's like, "No, this is just, "weather, AI's just the latest tool." I mean, it was electricity at one point that disrupted everything, you know? And then it was telecommunications and then it was like, there's always something, right? And we just, as a species, get better and better and better doing stuff. We get more with less. And then companies fight it out in the arena. And those that win are those that win by virtue of being able to best satisfy consumer demands. And we, over our own free will and volition, go, "Oh, that's a really good, "I want that one." - Yep, yep. - Yeah, why? 'Cause I want it, that's why. - You don't need to know why. I just want it. - I'm sorry. - And it's like enough people to do that. It is a thing of beauty. And even from an investor's standpoint, this is wonderful. This is where, look, there are lots of different ways to make money in on markets and in investing. But I can tell you, there's a student of history, the big money. The really big money is always made when you see big structural shifts. The internet being one, smartphones being another, probably puts sass in there as well. At the moment, it's sort of AI. And so while it does, I mean, I interviewed one of our strongman members earlier this week. He's celebrating 40 years as an investor, he's a big managed fund there. - Right. - And he was just talking about some of the lessons over that four decade investing career. And he just made the point that when he started, there was an article in the Australian or the AFI, it was about, you know, the top 100 companies in the world. Right? And it's like how you wouldn't recognize, like 90% of them are gone. - Yep. - Right? And so what I'm saying is that I don't know who the future will hold, but it's a pretty good bet that all of the biggest names that you, or put it another way, the biggest company in the world in the year 2040 might not have even been incorporated yet. And so this is why I say it's like, yes, that feels like a risk to incumbents, but to other investors, you know, it is an opportunity. I guess is what I'm saying. Change always represents opportunity. And you can make money by investing in a company that just manages to grind away by, you know, eking out a bit more of an efficiency or maybe successfully expanding into new markets. That's great. You can do really well though. You can run a long way with that. You know, the big money is made is when Microsoft gets incorporated, you know? Apple turns up, right? When open AI turns up or whatever it is, it's when you have that structural shift from the old world to the new world. And you have literal hundred baggers over a decade or two. So it's sort of like, I feel as though, and I'm not saying that, you know, I'm everyone should do it the way that they think is appropriate. And it, but there is, there is, from an investing lens, I think there's two things. It's like if you do have part ownership and a lot of these big established players, you want to hope that they are adapting to the new world, not in a radical kind of way with their throwing a baby out with the bath water. And also keeping your eye always on the horizon, not to jump at every sort of new shiny thing that's sort of out there, but when the world is legitimately changing, you can ignore that or you can laugh at that. But I just think that there's, there is, your regrets as an investor in 10 years' time won't be the stocks that didn't underperformed it a little bit as that you didn't buy X. We'll be the regret that you have. Yeah, exactly. I don't know what that is, by the way, but I'm just saying, you know, you've got to stay open-minded and alert to this. You have to balance the optimism and the positivity of a lot of these technologies with a bit of, you know, cold water and reality, because both sides of the spectrum are wrong. The bar humbug people are just always get left in the dirt. And the people who think, oh, this is the new normal, you know, just always get over their skis and do themselves in. But somewhere in between those two ends is something where you can probably do very, very, very well. Yeah, nice. I, you're absolutely right, man. I just pulled up a YouTube video. I just muted it and paused it in the background. So, and this is not a ranking chart, it's the name of the channel. 1980, the 10 largest companies in the world by market cap. Just for fun. IBM was the biggest company in the world. IBM, right? Still around. X1 Mobile, number two. Number three, AT&T, US Telecommunications Company. Number four, Slumberj, the construction business. Amaco, number five, Shell, the only non-US company on the list, then Chevron, another oil company, General Electric, Mobile, and some more called Atlantic Richfield, which I'm not thinking I've never even heard of, I don't know if they've been bought or renamed or did something else. So that was back in 1980. I'm gonna pull this forward just for again, for the fun of it's not easy to do. By the time we kept to 1990, and this is funny just because it's again, it's been your changes, dominated by Japanese companies. So think about where the Japanese stock market got to. So NTT, industrial bank of Japan, Sumitomo Bank, Fuji Bank, Daichi Kangio Bank, then X1 Mobile, MUFG Bank out of Japan, IBM, Toyota, and General Electric. This is 1990. For fast-ward now to 2000, 2000, and you start to actually do, I'll do 1990, I'll do 1999, because it's fun. GE, then Microsoft, turns up, number two, by then, Cisco Systems, X1, Walmart, Intel, Pfizer, the drug company, City Group, Vodafone, and what is then by then Royal Dutch Shell, having merged with, Shell having merged with everyone's gonna merge with. Couple of years later, by 2001, GE, Microsoft, Xon, Walmart, City Group, Pfizer, J&J, BP, Royal Dutch Shell, Intel, come forward now to 2000 just for the fun of it, 2020, I'll stop then, 'cause it's not much fun after this. By 2020, Saudi Aramco, the Saudi Aramco, probably an oil company, it's now a listed company, so it kind of drops in. Apple, Microsoft, Amazon, Google, Alibaba, Facebook, Berkshire, Tencent, and Visa. - Some Japanese names in there, right? - No telecommunications companies. No GE's not there, IBM's disappeared from, a view entirely. - Because they were in there, I mean, my post-mortem of that is that you have these new technologies, which require a huge amount of infrastructure build out and integration, and it is a good time to be in that space. But eventually you reach commodification status. It's just like you, I mean, those services, and we still need wires, we still need those kinds of things that are out, that we still need switches and all of that kind of stuff. But they've just become so commodified because we've become so good at making them, because the industrial base, the capital stock has just been built out, it's like we can do it. And I think the Japanese lesson is, I think it's very interesting. It doesn't get talked about enough. I think we are in real time witnessing the same thing with China. China was dirt poor, they industrialized. And the first part of that was they just made a lot of stuff, but it was all cheap and nasty. And it's like, have you seen the Chinese cars? Like, they're brilliant. Like they're really good. - And a lot of the-- - They're being outsels Tesla globally. Despite the fact that no BWD cars are allowed to be imported to the US because of private tariffs. - And my very strong view is we will see the same thing with China that we saw with Japan is that it is wrong to assume that it is just all about cheap and nasty stuff. And it's the inevitable outcome of massive investment in capital stock. We have got so much stuff, right, that can make other stuff. And again, market dynamics are going to do their thing where people are just going to get-- It's easier to make a thing when all of the various components that go into making the sub components are getting better and better. So someone will figure out how you put them together better. And it just evolves and evolves and it gets better and it better. And again, ideally, the consumer is the ultimate winner out of all of this kind of stuff. But it strikes me as this is why it is not a hot take or a new take, but why I think it's a-- I'm convinced of as ever that the 21st century belongs to the Chinese primarily because they can just out manufacture everyone else. And the implications of that are a messy-- can I get a little tension here, mate? - Get on. - Did you ever play Warcraft or Starcraft as a kid? - No. - Does anyone know what I'm talking about? Maybe some old gamers out there. - Someone was obsessed with this as a younger person. As a game called Starcraft, it's a real-time strategy game. So you'd start with your base. You'd have these little CVs. You'd go and collect some crystals. You get some resources. And then you would ultimately try and build up an army and crush your opponent. - Fantastic. Unbelievable fight, right? And what occurred to me over the holidays was that it was such a great metaphor for the economy at large. There's a lot of economic lessons in that. And the point that I'm getting at here and what's reminded me of it and speaking with China is that usually if you're playing a single player campaign against the computer, you started off very, very minimally with what resources you had. And there would be some AI army out there. They had lots of stuff, a lot of units, right? But that was dumb. It was dumb AI back at the day. They'd just sit there and wait for you to attack. And what you'd figure out as a very worthwhile strategy, by the way, there's still tournaments on this. It was such a big thing and still is to some degree. Is that real wealth, real power, real strength, didn't actually come from the units that I had. It actually came from all of the buildings and the resource collection infrastructure that you'd built up. - Right, okay. - So the strategy to win was to invest very heavily in production. So at any point in time, if you had some God view, where you could look at all the players on the map and you would take a snapshot of what was going on, you would be mistaken for thinking, oh, the AI's gonna win. They're just gonna have so many more units. But they don't have it. They don't have much production capacity. And they're not focusing too much on mining. You've got some other player over here who doesn't at this point in time have a lot of units, but they have invested very heavily in resource collection and manufacture. And eventually you pass this tipping point, whereas the best strategy is you just, I mean, it's a bit like a meek grinder. You put the ethics aside for your little units, right? You're just, you're just, you're just, you're just, you're really right. What you would do is you would create a bunch of unit and you just send them off into the end. You know they're not gonna be successful, but they're gonna chip away, right? They're gonna, you're gonna lose 100% of units in that skirmish, they're gonna lose 10%. The difference was is that by the time they rebuild up their 10%, I've now tripled my production capacity and I can just walk all over you. So where I'm getting it here is that, look at the US today and look at China today. So you've got, if I think you take a snapshot, well, let's look at the military hardware, right? The US's army and infrastructure is massive. And much bigger than China's, the difference is that China can float in aircraft carrier in six months. The US can maybe do it in 10 years. So if there was ever a skirmish here, right? You're gonna see, you're gonna see the US win a lot of battles, but they're just gonna get smaller and smaller and smaller while the Chinese just like out, out, pace you. Put the military stuff to one side. It's the same on the economy as well. It's just sort of like, you just can't, it's such a force of nature when that investment is brought to bear, right? It is, it is, the US doesn't stand a chance. Even if you put someone who, I regard as a great economic manager and far-sighted leader in charge today, they're still kind of screwed because it just, as China and as Japan before and as many other civilizations through history have shown, these investments take decades. So it's gonna be the races one. So like at this point, in the same way that I can look at a Starcraft map and go, "Oh, that player is gonna win." Not by looking at who's got the biggest army, but who's got the biggest production capacity there. And even if the AI was to finally, you know, you know, see reason and go, "Oh, I need to expand." And that's gonna divert resources to that. It's gonna take a while to catch up. And I feel as though when you look at all of this kind of stuff, I don't know how we got into this topic. (laughing) You can go do what we started. But there's something, there is something in all of that. And that's why I'm not a momentum investor by any stretch, which just sort of talks about share price momentum, but I think there is definitely business momentum and there is industrial momentum and all of that kind of stuff. - Do you, what do you make of the view that the Chinese population will peak and start falling? - I think it's actually fall with the last three or four years. - That's the biggest problem. - I think you're saying that I think is a really, perfectly good point with the exception of the economy growth is gonna be constrained in aggregate sense. And we're talking about GDP per capita. So I don't really care. Other than in the context you're talking about, which is that kind of race for global dominance, that does require a pure scale. I'd rather Australia be have fewer people, but Richard Per capita than have more people and less Per capita. And I feel the Chinese would feel the same individually. But nationally, the argument is that Chinese economy will never quite catch the US because the US continues to grow its population. China is a shrinking. I don't have a view on that. I just thought I'd give what you just said and how I might think about that differently. - There's two sort of ways out of that problem. You can handicap the likelihood as you see fit. Why is robotics, frankly? I don't know if you've seen the latest Boston Dynamics. Not the back flipping one. - They are. - They are. But the new electronic ones, they are fully electric ones. They are insanely good. And the thing about a humanoid form function is that a form factor is that it's very versatile, can do anything, right? Like in the same way that a human can do any. So if, and I don't know, I'm not saying this is inevitable on its next year. - Yeah. - If progress continues a pace there, I think that changes that dynamic. The other one is which I don't think is likely, but immigration, right? Like there is, most of the world, we forget it because we live in our little comfortable Aussie bubble. Like in most of the world, we would, in a heartbeat, go somewhere else which offered prosperity and opportunity and higher living standards. I don't think it's gonna happen because there's certain, what's the word for it? Political, maybe even cultural kind of issues at play there. But could you imagine that if China was just a, send us your smartest and your best, your brainiest and your hardest work, and they could fix that there is a whole world of hardworking smart people that would love to go there for a better life and opportunity. Whether they're not, they're able to do that, probably not. - I guess I'm wondering, but in answer to your question, I think that, they have to do one of those two things, 'cause otherwise they are going to miss out. But I would also say that the thematic you're talking about, where it starts to really get prickly, is still a good decade or two away. So a lock-in happen in that time. - I think it's right. I do, I think your automation question though, is it contours almost ironically population on its head from exactly that reason. If you don't actually be done anywhere, then it changes the benefits of the advantage of low wage countries have, on a per capita, a per capita per dollar basis. It may be, I don't know, a growing consumer base is always useful, a growing population base for lots of other things, including military and other things is kind of useful. But at some point when a near-fortimation becomes the answer, those, I mean, even the US or China, they're the biggest, they've got the best chance of staying the biggest, just because you've got the resources of a mentor, as you said. But at some point it may actually be, well, hang on, the robot could be in Beijing, but the robot could be in Sydney or it could be in Auckland or it could be in Vietnam or it could be wherever. The difference is in Sydney, there's no factories to work at for the robot, right? You can send them at that point. You can do, you can have a real estate agent robot because that's what we do. You're not making anything, right? What's that point? I mean, towns, well, you could do it anywhere that has decent, if it's an export, product, decent shipping, or if it's a local, it doesn't need to be. I say Sydney, just to pick a, I see the, you know, in a country really rather than Sydney per se. But yeah, you put it in Guberbeade, you know, or wherever it, wherever it, well, I mean, you've got, blend it out there if they still work as close as, all of a sudden you've got a situation where the current benefits that, I've always said China's got three key benefits over us in most countries too. First is labour cost. Second is scale and third is proximity to markets. And roughly in that order, right? And so you think, well, hang on, if, if labour cost becomes less of an input because it's more or is being automated, then that's one lego, that stool that starts to titter a little bit. You never really get over, but at some level, if the robot's doing the work and it's relatively able to be scaled from one robot to a million robots, the economy's a scale, the unit economics almost isn't a robot level rather than a factory level. So scale starts to drop by a little bit. For example, you can have a fixed short, telling Australia, you know, further north. But I don't know, I don't know. I'm not saying Australia's got some sort of robotic resurgence, but I do think potentially, I'm again, no futurist. Potentially those things start to change the implied or current momentum because the things that are driving it are just less relevant, less important. And again, the other thing I'd say frankly is we're going to be careful at your wish for because we're a service economy, which is a higher wage economy than a manufacturing economy anyway. And so we're kind of already, you know, got some of those benefits of being able to do that in the first place. Yep. I mean, it's still the things that I would mention before, still a bigger advantage for China in that in that in that world because they they can be able to produce the actual robots. Yes, they've got the steel manufacturing and they've got the electronics manufacturing. Like, air all of the inputs into that robot and then what the robot can be tasked to do. So that we couldn't catch up. Absolutely, we could. We don't. We're too busy doing, you know, populist politics and like, you know, performative politics to actually do anything of substance in this country. So so I just I do feel as though. You're getting a lot of things dovetailing all together. You've got an empire in decline. You've got a rising power in the east. You've got new technologies in AI and robotics. You know, there's this is a whole thing that I think is just very much. It's the century is that is for the Chinese to lose, you know, that's absolutely right. Yes, yes, yes. Yeah, no. And I feel as though again, it is the lose if I were able to get them so it's the X to lose for the next 10, 15 years. Yeah, yeah. I get it in their own way, the biggest economy, they've got the yeah, the, the, the, it's still Americans to lose, but getting very close. Once you've passed a tipping point, they're angry. It's the China's to lose their own. So they've done the opposite of China. So while China has been industrializing, they've been deindustrializing. You look at the structure of the US economy, it, you know, talk about us being a services basically, you know, they just outsource everything. Yeah. And the finance sector is one of the largest sectors, which I've rented on during the break, you know, it's a sort of like it's not that, you know, capital allocation and distribution is very important for a functioning economy. But when, when, when, when that sector metastasizes to the state that it does, there's nothing, there's no substance to it. There's a lot of, there's a lot of middleman and speculation and stuff. But I was, by the way, yeah. Like, take that, take that layer out. Yeah. I mean, here's the, the pity of it all is, is that, and if we were to sort of structure things properly, we really should be going, I mean, Musk talks about this, you know, we should be going into a period of prosperity that's just unimaginable. Really, it's like, if, again, because everything's downstream of the commodities and stuff, and there's plenty of that kind of stuff around if you're prepared to go get it, right? Like, we should be insanely rich and hardly ever working. That was the fit. You will remember, they, well, you won't remember directly, but you will, I'm sure you've re, you've heard it. But this, you're back in, you know, Kane's time. They would, they were worried that, oh my gosh, we are getting so good at doing stuff. Not everyone going to do. Right, I work with stuff, yeah, exactly. Yeah. And, and it wasn't, oh, that's a whole other deep dive conversation, but it, it wasn't realized, but the short answer being just for a very, I think, a very poor political and economic system that, you know, but, but probably realized that is something that we should be super, super excited about. Not something that we should necessarily fear, as long as we can, as long as we can, like, making stuff is always good, right? As long as we can do it in a way where we incentivize that properly and we share in the rewards properly, then that's, that's something we should be absolutely striving for. Motley full money. For more, subscribe to the free newsletter at full.com.au/listener. And, and we're talking about tariffs a lot last year and I probably did it during the prerecords, too, I suspect, because that's what we did. But, um, I am, I hate tariffs as, as I listen to, I'll know. And I, the less optimistic side of me thinks that the populism of the politics of tariffs is just too strong for our leaders to resist, because why the hell wouldn't you? You got some propeller here that economists saying, yeah, tariffs are no good. And through course, popularized saying, almost to your point, the extension of that, not was what you were saying. But there's a group of people listening or who, otherwise, would have been listening. You were saying, yeah, it was right. We should make all the things here. We should stop the China's making the things cheaper. We should make them here instead and we should have tariffs so we can make more of them. And that's, I agree. I agree with the first part. I disagree with the second part. Right. We should make stuff here, but you know, as you said many times, because that's how the market generates. Because what? Right. Yeah. Yeah. You know, because you're leaning into the stuff that you're good at doing and that you established the foundation that enables you to do that and gives you the higher order capacity as well. Exactly. Yeah. At this time around though, the steel Institute of Australia, surprise, has called for tariffs on Chinese steel into Australia. Apparently, the forewords are paying more for everything that's got steel in it. Right. Well, they're doing cherry generous. We currently apparently import 700,000 tons of Chinese steel. By the way, maybe the Australian iron ore, so let's be careful what we wish for because, you know, what they want us to do is, the first 400 or 450,000 tons of generous should be tariff free, according to the steel Institute of Australia, who are the longer group for steel. I guess they are after Chinese steel should be tariffed at 50% is there is their suggestion. And much to my chagrin, but unfortunately not surprised, the treasurer has said, yeah, good point. I'll get the productivity commission to look into that and see if we should put tariffs on Chinese steel. And I just, by the way, anyone who said you are just any tariffs because Trump's doing it, you know, what do you say about the tariffs? I've said Chinese tariffs are bad. I'm now saying Australian tariffs. We would be added to their putting price for exactly the same reason we talked about before, which the op-ot ram is, I'm looking forward to paying more for steel. I said no one ever. And this is what this is where that was. I am going forward to a lower quality of life. Right. Yes. That would be great. I'm going to buy fewer things. I'm going to pay more for steel. I'm actually, so that costs me more money. I'm actually going to take some of that money I would have spent on steel. I'd actually be in a steel, sorry. I would have actually bought another coffee down the street. So I'm not going to do that. So the bristle is out of a job. And look, I'm not going to replace the car. Sure, it's made in China, but the bloke selling the car yard, he's going to lose his job. And some of that money, unfortunately, I'm going to get renovated in the house. So the local chip is now out of work. The stupidity of the role on effect of this, the first order effect is, would there be more Australian steel jobs or avoiding having less Australian steel jobs? Yes. Yes, yes, yes, by definition. Absolutely. That's true. The impact of that, we are going to, if we do this, be inefficient and produce steel for too much. Meaning the people who are doing it, aren't as efficient as they could be if they'll do the other jobs. The business capital, money invested in the steel industry could have been doing better returns elsewhere. The people who are buying the steel could have been buying more stuff elsewhere. But we've said, we don't want any of those things. We just want to make stuff so we can say we make stuff. And it is just maddening. And I know I'm repeating myself and so be it. And apologies, that's kind of what we do on the podcast in general. But more to the point of saying, you know what? I've been accused by everybody everywhere. But everywhere. You just hate tariffs because Trump's saying them or you're any Trump or no, no, I hate tariffs because tariffs make things worse. They make people poorer. They make economies less productive. They make businesses less efficient. They are just the absolute antithesis. I'm not going to say they're worse than socialism or communism, but it's kind of, it's kind of worse. They're borrowing from those philosophies, really, aren't they? Because it is a market. Yeah. It is an interference in the market process, which is kind of what communism is all about. But you know what's worse is we do it and still pretend it's capitalism. That's why it's more insidious right? Because if someone said, let's be communist, we'll grow, oh, be nice idea, but we know it doesn't work, so let's do that. I like bread lines and being cripplingly poor. It's it this time we say, no, no, it's capitalism with tariffs. So and by the way, I hate with a passion, people who hold social communism up and as some sort of criticism of like, you know, are you a socialist or if you want any government intervention, you're a socialist or this little slew of communism. No, no, no. said before, those runs don't even mean different things. They're different things. I don't even use the rather than rather than use the objective. I think communism is a terrible system. But calling your communist as an insults a stupidity. You might be misguided and you might be wrong and saying that some of your socialists just because not pure capitalism is also stupid because again, you should say the labels that matter. But I think the risk here is we say, no, no, I don't want to do communism. I'm also a cuss after that. We're doing capitalism because that's better. We're just doing with tariffs and subsidies and trade protections. I'm not saying you're not doing socialism either. But my point is it's more acceptable and somehow people don't notice or wave it away or allow it because somehow it's capitalism with a straight flag on top so it's still capitalism or something like that. It's an nonsense and we know that. But I hope it's worth making the point. I, for those Trumpists who call me names, but just generally, to be honest, it's not about the US or China or the EU. If we have tariffs on China's steel, we will pay more for steel. We'll pay more for products that produce with steel. We'll have less money to spend elsewhere. The economy will be worse off. We'll be less efficient, less productive. We're talking about productivity. Productivity is anywhere you grow GDP over the long term. This is literally the opposite of that. This is an anti-productivity measure. If the Treasury says we should be more productive and we should have tariffs on steel, you can happily side Treasury. You're talking rubbish. So yeah, and look, we actually had a, I'm trying to Google it. The Keele Institute recently released a report looking at the impact of US tariffs. Okay. And, the subheading was something about the biggest own goal for the US economy. I mean, you don't need to read the 500 pages to realize it's just basically, it didn't really hurt the people it was targeted to hurt and it very much hurt US citizens. And I totally, you're right. And everything you say there, talking about productivity and efficiencies and that I think though, but you also said in there, poorer. And I think that's the language I prefer because I think when a lot of people, you hear about we talk about these economic arguments and it's like, I don't really give a crap. But, you know, some efficiency measures for the economy because I like everyone. I really just care about my life, my opportunity, my level of comfort, you know, all of these kinds of things. But when you get past all of the quirky economic stuff, that's what it means. It just means we're not getting as much as we otherwise would. Not for some base materialistic, you know, consumption for the sake of consumption or conspicuous consumption means. It's like, no, I just, I have to work longer to get the things that I, I, I need and want. And I don't, how do you, how do you sell that, right? But, but they do sell it. Yep. They do sell it because, because at, at, at first, I mean, I do genuinely think, I mean, for the vast majority of case, there's no grand conspiracy or just very, very, very, well-meaning people wanting to make a positive change to the world. That's, that's what it is, right? I've got a lot of friends like that. They're, God bless them. And it's just sort of like they don't, they don't think beyond that, that first order impact in that area. They're not able to answer a lot of the prickly sort of questions. And it's sort of like, it's all good and well to say, everyone should have everything. And we should do this. And that we're blowing like, okay, how? Well, we're just, the government will just do it. Well, how? We'll just do it like, and it just, you get very quickly tied up. And when all of these, again, well-meaning kind of initiatives get, get put out there, we've always got to come back to, to, at this point, very well established economic principles to say, okay, but there are trade-offs there. If we as a country want to create another 200 steelworking jobs, and as a consequence of that, be materially, you know, worse off across the board, then we can make that decision. But let's go into it with eyes wide open here, right? And again, it's not for trying to maximize GDP or other, some nonsense kind of metric. It's about us having the highest level of prosperity and opportunity that we possibly can for ourselves and our children. So I'm so passionate about all of this kind of stuff. Economics is ultimately, I mean, it feels really crazy to me that the people who making most of the policy decisions are largely economically illiterate, you know? You can be alliterating quantum electrodynamics because that dairy doesn't, doesn't impact on most policy-making decisions. Economics impacts all policy-making decisions. And how can you possibly make an effective policy if you don't understand basic immutable laws of economics? Right? Quite simply. Well, you understand me, Gordon, is my concern. My real concern here is if you're a, if you're a treasure of Australia or somewhere else, even if you understand me, if you don't understand, but I mean, the thing is treasure tells you, I hear what you're saying, Matt, and I wish I was this before. I wish that was the excuse. I wish we could just blame their ignorance because that would at least be like, all right, well, they don't know any better at sucks. They should because they're running in the place, but they don't. So I guess that is what it is. This is, I may or may not know any better. I have a team of thousands in the public service, any of which, and the head of which, well, say to me, treasure it, he's actually the answer. This is, this is my knowledge going on. Mm-hmm. And so they don't have the excuse of that they're illiterate or they don't know, they're not going to understand. It's the worst thing. It's right. That's what I'm saying. It's when you look at it. And so I get, I'm like, I'm like, you know, slam Jim Charmers. I said, I don't know what's going through. He's here to hopefully the product of the commission says treasure, no, that's stupid. What Charmers himself says, I asked, they said, was I a cab, and I'm not going to do it because I know it's the wrong thing to do. And I'm going to leave those open without deciding because he hasn't decided yet what he's going to do. But if you like, if you want, I'm planning it, it's the warrior now for it, right? So, and that's again, is he kind of planning it for economic reasons or is it just the flag up the flag, Paul, see, I'm a nationalist too, like Donald Trump and like, Eugene Ping and like, you know, I mean, I'll do tariffs too if that's what we have to, you know, because I care about Australian jobs and I care about Australian workers. I'll show you because you'll vote for me, not because not, not I'll show you because it's the right thing to do, but I'll show you because you'll vote for me. And we see, we see that. And by the way, again, if you think I'm lacking labor, Andrew Hasty, with the we should make cars here again, video before Christmas. I mean, it's just nonsense and it's populist, nationalist nonsense that has no base in economics. It's good politics. And so knock yourself out if that's what you want to do, but let's call Spada Blady Shovel and say, this is just rank politics done for those reasons. Ironically, maybe Donald Trump's got mixed skills because probably no, he's not asking anyone for advice. So, if anything is good, yeah, at least you can say, well, actually, he is that ignorant, right? Maybe that's the case. It's not some pretty good, you know, pretty well, pretty experienced and well educated economic advisors. I don't think that's even true there. But given the structure of the public service, you blame Jackie Lamby or Clive Palmer for getting wrong if they just went off on one themselves and did the work, I guess that might be ignorance. If you're running the country, you have treasure at your disposal. It is, it is just an absolute nonsense. So, I don't know what they'll do, mate, but like, like you, I hope they won't. The only thing I wanted to say quickly too on the economic stuff is that's all true if it stops there. When it gets worse is we do all that. So, it's where poorer, as you say, and I will throw in less productive and less efficient because I just want to on economics nerd. That's bad enough. What's next is when China goes, huh, really? All right. Here's your tariff back when you're wine and your barley and your seafood and your coal. How about, how do you like the Annapolis? So, not only have we made Australia still more expensive or important Chinese, still more expensive for Australians, we've then gone to destroy export jobs by poking China in the eye and having them retaliate. So, it would be bad enough if they just said, you guys who are not retaliating, we'd still be worse off. Then we say, we're going to make Australians poorer and then Chinese are going to make us poorer again by losing the export related jobs. It's just it's the gift that keeps on giving, right? It's just stupid all the way down and the further you go down this path, the higher the broader, the longer the tariff falls erected around the world. It's just layer upon layer upon layer of making things worse and worse and worse and worse. And it's just it's evidently true. Now, if you're listening to the only thinking, yeah, but yeah, but yeah, but I get it, I get the, I've said to you before, man, I'm sure on here, it is the one topic where people really respond quite. I'll say emotion, I don't mean that is a pejorative way, although it sounds like it, the deep seated urge to make things here. That somehow we should just be able to do it if we can, that we should make sure we can because making things is good. We should make more things and someone should make sure we can do that. It's just it's just it's in the, I'm sure it's in the day now because I don't get a response to any other topic anywhere else, right? Lots of disagree on lots of things, but the overwhelming like, no, you don't have to say we need to make things here because because because and a lot of the becausees are just kind of that they are, they are rational justifications for the emotional view of I just need to make stuff here. That's what such political care is. And I always think too, it's like great. Do it. Yeah. Do it. Yeah. So I don't business and do it. Yeah. Oh, I can't because of this exactly. Yeah. And so I'm not opposed to these kinds of things to make it here. But, but I'm a close close close close to Australia's doables voluntarily. Do you think entrepreneurs don't like money? Like, do you think capitalist don't like money? Do you think we're not making a car because like, like there's some business out there that just hates Australia? They would, if there was an opportunity to make a competitive car and make money, people would do it. Even a foreign national company would do it here. So it's, it's too surface level. You're missing and you're not digging down deep. And I definitely think we should be doing everything we can structurally to create a environment where, where we give anyone who wants to create a business, the opportunity to do so. And again, if they're successful, it's because they, they, they have created something of value to the market. They're like, do it. That's exactly what it is. Right. Yep. But just to say, we should have a, I mean, what, what, we should have a Australian smartphone. Should we? Okay. So do it. Oh, I can't because of the, you know, once you start and once it's a very, again, it's a very no, I get it. It's noble. they would be if we could do it, viably we create a lot of jobs, we create a lot of wealth, the creator of prosperity, all these great things are like great. But go one layer, at least one layer deep. If you can go 10 layers deep and ask yourself why isn't that the case? I tell you, can you allow me a very quick detail here 'cause it gets to the exact point that you're talking to. Just before Christmas I caught up with a strong man member. Shout out to John, if you're listening, he's based in Singapore and it would have been, and it just made me, it prompted me to read up on Singapore. Do you know much about Singapore's history? No, no, I'm a part of the history, but I couldn't do justice, so go for it. I'm gonna try and do it as quickly as I can. In 1965 Singapore was dirt poor, like dirt poor third world in poverish poor. Is that Lee Kwan Yu? I think I've probably just, so I've got the name wrong. Very interesting guy. The short version was, you know, they got incorporated into Malaysia, Malaysians kicked them out and they said, right, we're doing it ourselves. Now look at Singapore, it's a swamp. There's no natural resources there, right? And it's a huge pod of different cultures and ethnicities. We're just nothing other than a really good port and pretty well located. So what they did was they slashed red tape. Even today you can incorporate a business in 15 minutes online. They cut corporate tax, I'll come back to this, right? 'Cause it's gonna sound like, this is gonna trigger a lot of people, right? They cut corporate, they cut red tape, they cut regulations, they cut corporate tax rates and all his other interesting thing they did, they paid their politicians extremely well. Andrew, there's a lot of, I'm gonna be triggering a whole bunch of people here, but let me fast forward a little bit. What they did, and I think this is where there's so many lessons here or so many lessons from Singapore, is that rather than sort of regulate the hell out of everything because they don't want to have the bad stuff, they basically said, "No, go on, 'cause most people do good things most of the time, if you do something bad, as a business person or as a politician, we're gonna hang you." Now, there's a human, - So you're triggering people, right? We got so far. - He's often sort of talked about it sort of, the benevolent dictator there. - So he's not going to be a politician? - Yes. - I don't want to paint this as some utopia, but the lessons in it was this, corruption plummeted because people don't like being hung. It's like, you get banned to be corrupt here, it's like you just lose your pension and off you go, right? Or you get kicked off the board or something like that. Or you're one of the major banks that screw over the population every second day and then it's like, "Oh, there's a $25 million fine." They did, it's just like, "Well, I'm not gonna regulate you too tightly, 'cause they understood that business and markets are the basis for all prosperity." And so the short version is that Singapore today is one of the richest nations on earth. It has one of the highest levels of social cohesion on earth. And you might say, "Oh, you know, they've got one of the strongest militaries in the region." Even though Indonesia, they're between Indonesia and Malaysia, population's 10 times the size. And they were, Singapore, we're crushed them in a second because they built the industrial base. They allowed business to function really well. And before you go, "Oh, yes." But there's all these other kind of issues. This isn't a clean picture of just laissez faire capitalism or public housing. Most housing is public. You buy it from a 99 year lease. So they ensure that everyone had a house, right? There's a really good health care. There's also, this is why terms like ideology and social just useless now, 'cause everyone means different things. But what they did was they took, they understood the basis for prosperity and they did everything that they could to do that. And while corporate tax rates are quite low, they still raised plenty of tax for all these public things, right? Because it was a lower tax rate, but a much bigger economy as a result of all of that. Now, if you're not a Singapore citizen and you're working there on a foreign visa, you're gonna be treated pretty badly. I don't wanna paint this as some utopia, which is absolutely no issues that what's so ever. But there are a huge amount of lessons in all of that. Now, contrast that with Australia. We've got really, we've got, we've actually got a ton of resources, right? They had none. (laughing) And we've got a far bigger population. They've got, they're like, you can fit this population of Singapore into Sydney, right? Like it's like seven million people, I think the overall population. And it was, and no one there said, we should have a car industry. It's like, if one evolves from the structure that we've created, we will let it evolve. And a lot of businesses were started and a lot of businesses failed. But the ones that succeeded did so because they were creating a lot of value for the government, for the people, right? And that was taxed. And everyone was like, everyone lifted out of the dirt there. And it's also a really great example of multiculturalism as well as there's so many great things that you draw from all of that. And that's just one example, right? You can take the counter-faction, you can look at Cuba and North Korea, and you can go to Venezuela, other places sort of really lean much further to the economic left. It was like, oh, absolute disaster. And we've seen it in other parts of the world too. It's just sort of like when you allow people, the freedom to create. You know, you got ev'rules obviously, and public service needed people, obviously. But we're all better off as a result. And no one planned it. No one planned it. I guess that's the key point that I'm trying to make you with people who say we should build cars here. It's like no one planned for half of the things that happen in Singapore. They just allowed that process to unfold and for the market to find its own way. And it just sits there as a very, very recent example of how these things kind of work. And when you hear it, so just to tie it back, when you start talking about command control stuff, like tariffs and interventions and regulatory nonsense, it just handicaps us all and it makes us all poorer. And it's unfortunately, when you start advocating for this, it just always comes back to, well, OK, but all the poorer going to suffer. It's like, look at the rates of poverty and Singapore, man. Like, it's, you know, it's far, the world's far more complex than that. And I bang on about it because it's not some stupid little, you know, economic ideology that just appeals for some, you know, intellectual kind of level. It makes us safer. More comfortable. Yes, yes. It gives us more opportunity. All of the things that you want as a person, as a human being, it makes things better. And unfortunately, Europe is lurching and really in the wrong direction. Australia, we're going in the wrong direction. The US is going in the wrong direction. The home of free market capital is going in the wrong direction. And we only accelerate our demise. And so this is the long rant, mate. Sorry about that. But I would encourage people to read up on Singapore because of the example it offers. So when you start seeing some of these policy things being discussed, just remember that, you know, this isn't, we've tried this stuff. Many, many, many, it's not like, well, works half the time. It never works. It never, ever, ever, ever works. Can we stop talking about this stuff? It isn't an absolute nonsense. Sorry, mate. No, not so important. But I have to add too, mate, just because, you know, I like my sovereign wealth funds. Not only that, Singapore having no natural resources. No natural resources has built itself two sovereign wealth funds. Temasek Holdings, where do people know which is kind of run as a-- So it's a monster. Right, right, it's kind of run as a prime company. It's a strange structure. But yeah, Temasek is one business, $484 billion worth of money. And it has its own sovereign wealth fund directly called GIC Private, which has another trillion US-- I see a foreign dollar. I mentioned that. I mentioned that. US $744 billion. And they built that from no resource. They just-- As you said, we could do that. Plus have all the resources we've got capture all that, save that, build something. And that's-- Yep. I think everything-- I mean, you said investment. They tracked a capital. They attracted entrepreneurs. They did everything right, sorry. Everything you said is true. And the end is-- you mentioned the benefit of dictatorship at the beginning. That was the difference. Was we are building a national project. As opposed to we are trying to intellectual elections, or we're trying to give some handouts this year, or whatever games we're trying to play. And I'm not for dictatorships necessarily. And as always, if you have a dictatorship, you have to be careful who gets chosen as a dictator. So democracy is still the best option. But yeah, a little tiny bit. And maybe if you're very generous, maybe it's easy to start from nothing and build something. And have that long term view. Because I won't expect anything. Maybe it's harder for a politician in a developed country, like Australia or the US or the UK, to take that approach. Because there's too much people to lose, maybe. If it goes wrong, if they don't get the money, because we put it aside. But again, I don't want to make it just about that. But all things you said plus, it has two sovereign funds, which is funded from proceeds of running a booming country, which we have all those opportunities plus the resources. And we still have nothing to show for other than the trillion dollars of debt. It is just minor. And we get myad in these stupid ideological debates. The genie kind of coefficient, right? It talks about wealth distribution and that. So Singapore's got a super low one. So in other words, there's not this massive wealth divide there. There's very low levels of problem. Things that you feel, and unfortunately, we feel today is like the only solution for that is direct intervention. I'm not saying there's no room for intervention. They do a lot of public social projects over there. So it's a complex kind of picture here. But it's really, you know, you can only redistribute stuff that you have. You're gonna have the stuff before you can redistribute it in the first place, right? And that is the lesson that I just wish more people would pay attention to because a lot of this stuff is just on the chalkboard. It's hard to do controlled experiments in economics. But we're pounding the desk and it's, I'm sure we sound like ideologues here, but it's just sort of like, I just think any objective, but you leave your baggage at the door, objectively look at the historical example and ask yourself this, what are the societies that have offered the most fairness, the most equality, the most prosperity? They're all ones that make use of the market mechanism. And what you think about is really just saying, you know what, you're allowed to own stuff, Scott. I don't think anyone in Australia would be against. You mean I'm allowed to have my house and I'm allowed to own money and I'm allowed to do so? Yes, yes you are. And you're allowed to trade with one another. That's it. That's it. Now, yes, people focus on various edge cases in arguments for that, there's, there are lots of edge cases, but as a general rule, I just, I find it a really bizarre thing that it's such, some of this stuff is so controversial. I think how can you be against that, especially when we can look at that historical record and go, wow, that is like, we're talking 50 years from third world country to one of the richest nations on earth and not in a, Saudi kind of way with this is very rich upper kind of this massive working poor. No, no, like it's like, I would rather be poor in Singapore than anywhere else, right? You know, on a relative basis. I think it's sort of a bit of gold or a thing, a kick kick kick their boot throw a bit of red dust and realize those eye and their, they've built it from the ground up by letting humanity flourish. I think that's, you know, it's why we mentioned the labels before, why this is so problematic, right? Because the idea that you can't, you need to have all or nothing. It's either pure capitalism and, and screw the poor, or it's, everyone has to have the same amount of everything. And that, that's kind of what, that's exactly what we break down. It's like, there is too. See, Singapore is incredibly prosperous. It also has massive amounts of subsidies and transfers. As you already mentioned in public housing, or private housing, there's rebates and vouchers and all sorts of stuff. So it's, it does, it does all the things. The one is not, you know, incompatible with the other. It's a question of how would you put this together? Give everyone the opportunity to thrive and generate wealth and value and make sure that value is shared reasonably across society. And you look after those who can't have it and you do things like, hey, shelter is probably, housing is probably shelter, not an investment class. Oh, okay, well, we'll chose that and that would be different. And yeah, does that mean, does that mean housing is not a free market? Yeah, it does. But are we free marketers? Yeah, but only when it makes sense to do so. If it doesn't make sense, you don't do it. That's the, the government's there to do things that private sector won't do well or properly or, or, or, or, or, sufficiently. So guess what? If housing is actually shelter and a human right, rather than just an asset class, it doesn't need to be a free market. Now, I'm not saying government should control or housing an Australia. I'm just saying, you, you don't say, I am this, I, I, I am an absolute, this, or absolute that. That's why communism doesn't work. And that's why, you know, free market capitalism, it, it, it's extreme. If seen as a social policy rather than economic one, leads to enormous, you know, I mean, look at America, the number working poor. The, the, the, the, the, see up where he is a perfect example, not of perfection, because again, you've made the point, it's a lot, that's wrong and, you know, I don't, I don't, I don't, I don't people, I'm either. There's a, there's, you know, but conceptually, taking the things that work and saying replicate those things, that's not a difficult thing to do unless you don't want to see it. That's unfortunate when most people start and start. Well, unfortunately, a lot of the things that you might rail against, it's sort of like, a wrong, but if you put, that there are, there are people who benefit from the currency system. You're not going to advocate for change. I was like, I'm very comfortable with the current system if I'm on the right side of the fence, right? So that's part of why it's so hard to do. Yeah. What else I'm going to say? I guess it's just, again, you look at Australia and we started off with tariffs here, but our response, what are we doing as a country? You know, we're, we're very blessed with our resources, which we're literally giving away, you know, not literally. Virtually, we're giving them. Yeah, I don't know slightly, not literally. We're giving them away, right? The biggest industry is just like that. Look, that's it for a minute. Like, think about that. Yeah. You know, we are, we have a huge finance sector, which is large and all our major banking institutions are the biggest institutions, you know, that we have a raw gear around just giving loans to people to buy houses, which are unproductive assets, right? So, so we do houses and we do holes and, and we regulate the bugery out of everything. And all that does is just limit competition and stuff and all it does is in trench, in trench the lazy incumbent, incumbents who aren't really delivering that much value. And, and I've said it, I've probably every single podcast since we first started recording, which is that great Charlie Mungaline has shown me the incentive, show me the outcome. You know, when I want to fix corporate malfeasance, they're like, make it sting when you do stuff. I would, I would much rather say, look, we're going to get rid of a lot of this red tape because it's just, it's just hamstringing. It's like, it doesn't, it, it, not only does it prevent a lot of job creation and wealth creation and the rest of it, it actually doesn't solve the problem it seeks to solve, right? But if you were to sort of say to a bank, like, hey, next time you rig the FX market, you're going to lose your banking license and all the scene, all the C suite's going to get fired. And they're going to spend two years in jail. You fix that problem literally overnight. What should I do? Now, who's arguing against that? Yep. Exactly. Like, maybe, maybe the people who, who, who seek to lose some advantage, but it's like, well, don't, don't break the law, do. How about don't break the law and you got nothing to worry about? Yeah, right? I'm not talking about hanging on. And then I'm going to be lost to breaking it. You're not, you're not talking here about it as some sort of judge's interpretation of something. It's like, no, you literally did that thing you're not allowed to do. That black for. For the twelfth time in 10 years. Yeah, yeah. Now, we have, and think about the cost of, think about the infrastructure that you need and the systems and process and bureaucracies that you need to run these regulatory things. Which again, they're there, like, ostensibly, they're there for a good reason because people do bad breaking news. People are selfish and self-obsessed, right? Like, they just, and a lot of, and a lot of people aren't very nice, right? So I incentivized to break the law too. I mean, the, yeah, the, the bankers that are breaking the law are breaking the law because they just are awful people who decided just to be malevolent. They went, hey guys, we can make a fortune as a bonus here. And so it's, so it's in both ways. The C sort of incentivized to not do it, like, you know, lose their jobs, go to jail, whatever, lose your license. But the workers themselves, if you put those incentives in place, you are willingly saying, I want you, no, no, say this out loud. Maybe you're not even saying it consciously though, I think it's a long bow. You're saying, I want you to take a lot of risks. Because you can make a lot of money. So style is close to, and you can get away with it if we can make some money out of it. And if it doesn't work, you get a slap on the risk. Exactly. It's a bit of wet lettuce across the face. Oh, yeah. And to administer that whole wet lettuce process, we're going to spend $10 billion a year on this ineffective, you know, limpristed bureaucracy that can't actually do anything and doesn't stop any of the things that bad things that we want to stop in the first place. I guess it's just a madness. And again, I have just completely stopped watching the news because it is just a formative politics. Just like the most stupid things. And like I feel as though we as a country have the world as our oyster, even with our small population, given our natural and down. You know, if you really wanted a visionary leader out there, you would just sort of say, hey, this is what we're going to do. We're going to make it super easy to start a business. We're not going to punish the hell out of you if you fail. We're not going to put regulatory barriers around the incumbents to protect them and their ineffectiveness. You know, we're going to do all of the lessons that we've just sort of talked about here. And if a car industry evolves out of that, then great. Yeah. You know, but something will evolve out of it because you can't help. Humans are very clever. Humans are very, very, very clever. And people will think of all kinds of different products and things that we can do. Australians are really smart, right? Like humans. I hate saying it because there's nothing exceptional about us. There's a lot of things that are exceptional about being human. And we are very, very creative. You know, and there'll be all kinds of people who take a lot of risks. A lot of it won't work, but the things that do will have ripple effects that just go down the generations. You know, and we started off a much more like that in our earlier days, right? And unfortunately, unfortunately, I think it's a bit of a symptom of wealth and comfort. You know, it's sort of like you get to this point where it's sort of like you forget what engineered the very prosperity that you enjoy. And therefore you don't see it as significant and therefore you don't nurture it. And therefore it starts to erode. And you know, the pendulum swings back the other way. And so, I don't know, mate. I just, I, I, this all started with you wanting to talk about the steel tariff. It's just, it's just, it's just, it's just very, it just exemplifies our far, far broader problem. Yeah, yeah, for sure. At least this will be very pleased to know that we had five things on our agenda. And we got through one of them plus two that we didn't intend to talk about. It's been an hour and 20 minutes. So, guess what? 2020 is six is exactly like 2025. Let me go to talk about stockraft as well. So that was fine. I'll leave you guys see. Yeah, I'm going to see you poor and all sorts of stuff. I'm not sure what to make of that. Other than if you're still here, thank you for listening. We will see you on the show. I'm Gareth. We haven't formally set our calendars for 2026, but can I rely on you to deliver a malback episode once a week on a Sunday morning? You know you can. I do indeed. Until then, enjoy the first half of your weekend and full on. Have a new year, cheers. The Motley Fool and people appearing in this program may have positions in the company's mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at full.com.au/listner. The Motley Fool operates under financial services license 4.00691.