Host Gene Tunny discusses significant economic issues from the year. He features clips from interviews with experts on various topics, including the economic consequences of Donald Trump’s re-election, the U.S. budget deficit, the gender pay gap, and environmental impact. President Reagan’s budget director David Stockman criticizes Trump’s policies for being anti-capitalist, citing a $8 trillion increase in public debt. Fiscal policy wonk Dan Mitchell argues that higher taxes are not the solution to the U.S. budget deficit, as spending is the primary issue. Leonora Risse (Assoc. Prof., University of Canberra) explains the concept of “greedy jobs” contributing to the gender pay gap. Marion Tupy of the Cato Institute discusses the long-term decline in commodity prices, and Daniel Lawse of Verdis Group emphasizes the need for sustainable, long-term thinking in business and policy. Daniel also reflects on the modest lifestyle of Warren Buffett, another Omaha resident. John August discusses the impact of immigration on Australia’s housing crisis.
If you have any questions, comments, or suggestions for Gene, please email him at contact@economicsexplored.com.
You can listen to the episode via the embedded player below or via podcasting apps including Apple Podcast and Spotify.
Timestamps for EP265
- Introduction (0:00)
- David Stockman (6:20)
- Dan Mitchell (11:20)
- Leonora Risse (23:50)
- Marian Tupy (32:15)
- Daniel Lawse (41:49)
- John August (48:06)
Links relevant to the conversation
Episodes featuring the clips:
Leonora’s review of Career and Family: Women’s Century-Long Journey toward Equity, by Claudia Goldin
Principle of Charity podcast episodes on degrowth:
https://podcasts.apple.com/au/podcast/can-degrowth-save-the-planet/id1571868650?i=1000674757240
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Transcript: Is DeFi the Future of Finance? Exploring VirtuSwap’s Vision w/ Prof. Evgeny Lyandres – EP262
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:00
Gene, welcome to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene, Tunny, I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode. Please check out the show notes for relevant information. Now on to the show. Hello. Thanks for tuning in to the show. This is the 2024 highlights episode, and this episode, I want to play some clips from some of my favorite episodes of 2024 Okay, to start off, we probably should cover one of the biggest stories of the year, if not the biggest story, which was the re election or of Donald Trump as US President. So that is going to have some very profound economic consequences. And I chatted with my friend and colleague, Darren Brady Nelson about it days after the news on the show. So that was a few episodes ago. Darren is someone who is supportive of Trump on the show, I’ve had critics of Trump and one of those prominent critics in the States is somebody by the name of David Stockman, who was Ronald Reagan’s Director of Office, of management and budget. So he was a budget official for Ronald Reagan, who is the celebrated Republican president of the 1980s and Stockman is one of the never Trumpers, and I had a very interesting conversation with him early In the year, and I wanted to play a clip from that episode, because I think Stockman is someone who deserves to be listened to, and I think, personally, I think he makes some good points. So without further ado, let’s play the first clip, and this is David Stockman on Trump’s war on capitalism. You argue that he is a clear and present danger to capitalist prosperity. Could you explain, David? How do you How can we reconcile these things? I mean, Donald Trump does seem to be the exemplar of a capitalist, but yet he’s a threat to capitalism. How do we reconcile these facts?
David Stockman 03:05
Well, those are great questions. I don’t think really he’s an exemplar of capitalism, and we can get into that. I think he’s an exemplar of getting lucky when the Fed created so much inflation and asset prices and made debt so cheap that if you were a speculator in New York City Real Estate or elsewhere, you possibly made a lot of book wealth. But I don’t think it was capitalist genius behind it. That’s the first point. The second point is that his policies were really almost anti capitalist in some common sense. Notion of conservative economics. To have a healthy capitalist economy, you need three things. One, fiscal rectitude. You can’t be running up the public debt, spending like there’s no tomorrow, and having the government grow and mushroom and impinge in every direction on the economy. You can’t have easy money and a central bank that is flooding the system with cheap credit and excess liquidity. You can’t have a government that is really anti free market, which is what trade protectionism is all about, and he’s the biggest protectionist in the White House, you know, since, I don’t know, Hoover signed smooth Holly in 1931 so all of his policies were really in the wrong direction. Now, I do concede in the book that the one abiding virtue that Donald Trump has is he’s got all the right enemies. Okay? The establishment hates him, The New York Times, The Washington Post, CNN, The Washington what I call unit party establishment, the leadership and the long standing careerist of both parties can’t stand him, but basically, it’s because he’s an outsider. Because he’s unwilling to conform, and he’s pretty obnoxious and unpredictable. That’s why they’re against him. The point of the book, though, is none of his power his policies were wrong, even if he had the right enemies, and nothing that he did help the economy or addressed the huge long term problems we have of a runaway public debt, of a government that’s way too big and too costly and too intrusive, and especially at the heart of the matter a central bank that is out it’s a rogue central bank. It’s out of control, and yet Trump was constantly on their case, demanding even easier money, lower interest rates, even more, you know, of the same that got us into, you know, the huge bubbles and troubles that came from them. So the point of my book was to say he had a chance. He’s got a four year record, we can look at it as terrible. It offers nothing in terms of remediation of our great problems and putting us in a different direction for the future. So, you know, don’t waste the opportunity. And you know, that’s about where I come out,
Gene Tunny 06:20
right? Oh, okay, so you write about what you call the Donald’s reckless fiscal and monetary policy. So we might talk about fiscal first. Now, among other things, you talk about the most grotesque act of fiscal malfeasance in American history. So that was something that Trump was associated with you argue, are you talking about the the big tax cut, the Trump tax cut in 2017 is that? Is that something you see as as reckless? That’s
David Stockman 06:51
part of it. But I’m looking at the overall picture and the data, the big top line data on spending, and borrowing on the public debt. Now let’s just take it down to the core metric, which is the public debt. I mean, if you’re running huge deficits and spending far beyond your willingness or ability to tax, it comes out in the public debt. When Trump became president in wrong terms, the public debt was about 20 trillion. When he left, it was 28 that’s 8 trillion of growth, 8 trillion of debt, public debt in four years. You let me ask the question, when did when did we get the first 8 trillion of public debt, and how long did it take us to get there? The answer is, in 203, it took us 216 years, 43 presidents, to rack up 8 trillion of debt. He did it in four years. That’s kind of the bottom line. It puts it in perspective, in terms of how big the error was. If we look at other more conventional measures, you get the same picture.
Gene Tunny 08:01
Okay, so that was David Stockman, who was President Reagan’s Director of Office of Management and Budget, and he’s certainly no fan of President Trump, certainly, I mean, Trump is going to have big consequences for the economy. There’s a lot of concern about a global trade war. There’s concerns about, I mean, really, will he be able to get the the budget into shape he has Elon Musk and Vivek Ramaswamy at the Department of government efficiency. It remains to be seen how much real influence they will have and to what extent they’ll be able to to get the budget under control. One of the challenges, of course, is the the role of the entitlement program, Social Security and Medicare, which are such big parts of the budget, and just they’re on autopilot. Really, they’re, they’re demand driven. They respond to people’s needs that the entitlements are dictated by the acts of Congress, so they’re very hard to change, right? Oh, so on the the issue of getting the budget under control, I’d like to play a clip from my interview with Dan Mitchell. So I spoke to Dan in episode 235 in April, and it was about his new book, The Greatest Ponzi scheme on Earth. So it’s about us, government debt. So Dan is one of my favorite commentators. He’s got a really great blog called International liberty. If you’re not subscribed to that, definitely check it out. I mean, Dan’s coming from a libertarian perspective, someone who’s skeptical of. Of big government. So I’m generally sympathetic with with with that. So yes, I think it’s a it’s a good, good blog. So yeah, regardless of your views. So it’s definitely worth checking out because it’s Dan has a lot of good facts and talks about empirical work, empirical studies. So definitely worth, worth checking out. Even if you’re you think you’re unlikely to to agree with Dan. Okay, so let’s, let’s play a clip from my conversation with Dan, the way I set up this. This part of it was, I asked Dan about why he thinks higher taxes aren’t the solution to the US budget deficit, this large structural budget deficit they have. I made the point that, look, you’ve got these entitlement programs that the government doesn’t want to reform, so maybe the government, I mean, I was implying that maybe the there’s no choice but to increase taxes. Not that I’d necessarily recommend that. But how are they going to repair the budget? So that’s the that was the setup. So let’s hear what Dan has to say? Well, I
Dan Mitchell 11:24
guess there are two things that are important to understand. The Congressional Budget Office, every year publishes a long run forecast. And by long run that they’re looking out 30 years, they publish this long run forecast of the US economy, and in that document, the most recent one came out just last month. I think it was maybe two months ago, but it showed that revenues are above their long run average, spending is also above the long run average. And if you look at the forecast, 30 years out, the revenue burden is going to climb to record levels because, mostly because of real bracket creep. In other words, as you know, even in a sluggish growth economy, you know, people are going to sort of, their incomes are going to increase, they’re going to go into higher tax brackets. So the government winds up getting bonus tax payments with even modest levels of economic growth. So the tax burden is heading to be at an all time high, but because government spending is projected to grow much faster than the private sector, it means that that that we’re falling farther and farther behind. So just as a matter of pure math, our problem is more than 100% on the spending side of the budget. Again, revenue is climbing as a share of GDP, but because spending is climbing much, much faster. Why on earth would we want to increase taxes on the American people for a problem that is more than 100% on the spending side of the budget? But that’s just a math argument. Now let’s look at what I call the public choice, slash economic issue, which is that if you put taxes on the table. What are politicians going to do? They’re going to increase spending. And not only that, if they get the taxes through, the economy is going to suffer. Now, I’m never one to say, Oh, you raised this tax or that tax, there’s going to be a recession. I worry more about if you raise this tax or that tax, the long run, growth rate will decline, and even if it only declines a small amount, maybe two tenths of 1% a year, that has massive long run implications because of the wedge effect over time and then. And I think that even left wing economists, the honest ones, are going to admit that higher marginal tax rates and work saving and investing are not good for growth. So as GDP gets smaller and smaller over time, at least in terms of compared to some baseline projection, that means work on tax revenue, because there’s less national income to tax. So what’s the bottom line? Politicians will spend more money because of the higher taxes, and the higher taxes won’t generate as much revenue. And you don’t want to know what the most powerful evidence for this is. I think I did the data for the for the 15 countries of the old European Union. Other words, the core Western European countries that would be most analogous to the United States, or, for that matter, Australia, you know, relatively rich by world standards, Western oriented nations, and what did I show in the European Union? You go back and I did a five year average. So nobody could accuse me of cherry picking just one year that was favorable to my analysis. I did a five year average for the last half of the 1960s and I looked at government spending as a share of GDP, taxes of the share of GDP, and government debt as a share of GDP and taxes. Between the end of the 1960s and the most recent five years, the tax burden in Western Europe increased by 10 percentage points of GDP. Now politicians in Western Europe, in these various countries, Germany, France, Belgium, Netherlands, et cetera, et cetera, they. Said, Well, we have to raise taxes, because we have red ink, we have deficits in debt. So I said, Okay, taxes went up by an enormous amount as a share of GDP between the late 60s and today. What happened to government debt? Did they use this massive increase in the tax burden to lower government debt? No government debt during that period doubled as a share of GDP. In other words, politicians spent every single penny of that new revenue, plus some. So when I debate some of my left wing friends, I tell them, show me an example anywhere in the world where we’re giving politicians more money to spend has resulted in better long run fiscal performance. It just doesn’t happen. By contrast, I’ve gone through the IMS World Economic Outlook Database, and I have found not a lot, unfortunately, but I found many examples of countries that, for multi year periods, had government spending growing at 2% a year or less. And what do you find in those cases when they’re spending restraint? And we talked about this, by the way, we have an entire chapter in the book where I cite some of these good examples. When you have spending restraint, deficits go down, the burden of government spending as a share of GDP goes down. You have success. Yeah, I couldn’t. We could have had some blank pages in the book and lift and entitled that chapter success stories of higher taxes, because there wouldn’t be anything to write.
Gene Tunny 16:33
Okay, that’s good stuff from Dan Mitchell, from Center for freedom and prosperity. I think it is He? He was, once upon a time, he was at the Cato Institute. He’s a well known commentator in the US on fiscal policy issues. He’s on CNBC, Fox Business, etc. And yep, he’s a he’s a good economist, and he’s a terrific commentator. And I’m really grateful that I’ve been able to have him on the show as frequently as he’s been on the show. So I’ll put a link in the show notes to to that episode and to the others that I play clips from. So yep, if you if you liked what you heard from Dan there, then definitely, definitely check out that episode. What I liked about that? I think he made a really good point about how politicians will, they will find a way to spend any additional revenue. I think we all know that’s that’s generally true. I mean, I suppose not always. There are times when politicians act responsibly, say, in Australia, from about the late 80s through to maybe yeah, I guess the Yeah, essentially, until the late 2000s we had very responsible Treasurers and governments, and then we seem to have abandoned that since then, unfortunately, and in the US, we had the period when you had Bill Clinton and the House GOP led by Newt Gingrich, they were cooperating on the budget and managed to repair the US budget. So there are times when politicians have been, have been, have done the right thing, but I think generally, they can find ways to spend any additional tax revenue, as as Dan Mitchell is pointing out. And I mean, they all the politicians. I mean, one thing you notice is that they love going to the openings of the the movies, hanging out with Chris Hemsworth and all of the the Hollywood stars. That’s something that we see here in Australia, where there’s very substantial subsidies to the film industry. Okay, so that was Dan Mitchell, thought that was a great clip. I think I’ve played parts of that in other episodes through the year on tax and government versus the private sector. I think I may have played a bit of Dan in that, but it’s good stuff. So it’s, it’s worth, it’s worth replaying every now and then. Right? Oh, let’s move on to another clip. And this is about another issue that I come back to every now and again on the show. It’s this issue of the gender pay gap. And, you know, this is a very, you know, it’s very political this issue. And there are a lot of people who say, Oh, well, it’s, you know, this is terrible, and it’s an example of discrimination, is exploitation. Then other people say, Well, hang on, it’s, this is a multivariate, uh, phenomenon, and it’s, it’s due to the the industries that. Women work in, or the occupations that they choose, but then you get the counter argument. Well, hang on, those industries and occupations, they were imposed upon women, in some cases, or women by the, you know, the patriarchy, or gender norms, etc. So there’s a big debate about the gender pay gap that I’ve tried to cover on the show in an objective way. So just hearing all of the arguments and just thinking critically about what the data, what the evidence tell us, and one of the people that I’ve really valued talking to about the gender pay gap, is Leonora Reese, and she is a an associate professor at University of Canberra. She’s also an expert panel member for the Fair Work Commission, and that’s the federal body that regulates industrial relations in Australia, and earlier this year, in March, I interviewed Leonora about a new gender pay gap report that the federal government released, and that generated a lot of debate within Australia. And I was just alluding, well, I was just going through what some aspects of that debate are, the the question of whether you’re comparing like with like, etc. There was a criticism of the report that was very strident by the well known economics commentator for the Australian, very good economist, Judith Sloan. And that is, that was, that was how I set up this part of the conversation with Leonora. I mentioned that that article by by Judith, which was critical of that report. So that is the context for this. This part, this clip in which Leonora and I talk about this notion of greedy jobs. So greedy jobs, this is one possible explanation for part of the gender pay gap. So let’s hear from Leonora. I want to ask about Claudia golden because Claudia golden, she won the Nobel Prize for Economics last year. Judith Sloan quoted her work in so in Judas article and Judith because Judith is saying, Well, this is all nonsense, because this is just all Yes. You’re not comparing like with like. It’s it’s all just explained by difference, differences in composition, different choices people make, and she was interpreting Claudia golden. So this Judith is interpreting Claudia golden as saying that the gender pay gap, it’s mostly due to the fact that there’s this premium for long and unpredictable hours, and men are more likely to work those jobs, pursue that pursue those jobs because women are more likely to be carers and they don’t have the Yeah, they they’re more Yeah, they’re less likely to want to pursue those jobs like as males, pursue them so disproportionately. So what do you think about that as a theory. I mean, what? And because I only were chatted about Claudia Golden’s work before or since the Nobel Prize was announced. So would you be able to comment on that? Please?
Leonora Risse 23:51
Sure, absolutely. So Claudia Golden’s the concept that she’s coined here is greedy jobs to reflect these particular jobs in the workforce that demand a lot of you as a worker to work long hours, to be on call, on weekends, on late shifts, and to be rewarded for that. That’s the important part. So to be paid overtime rates, to be fast tracked your promotion, to get bonuses in reward for for being, I guess, more available to your employer. I think it’s partly a symptom of capitalist society as well. You know, to really, to really draw as much of the worker that you can out in terms of their time, their loyalty, their commitment. And so Claudia Golden’s work brings the gender dynamic into that. This concept brings the gender dynamic into that, because the way that society and policy is structured is that it forces couples, if we’re looking at a male and female couple, to make a choice. Services with as a household as to which of them are going to be that particular worker and be on call, and which of them are going to attend to caring responsibilities, to household tasks at home. So collectively, they’re maximizing or optimizing their total income and trying to balance, you know, both both spectrums. So the way that gender norms give rise is that it tends to be, on average, the male partner who will put their hand up for those greedy jobs, and females who who would opt to, you know, be on call at home, basically. And so the gender pay gap widens, even on an hourly basis, because this, there’s this premium attached with those types of jobs, and they’re rewarded, you know, it’s, it’s seen as a positive thing in workplace culture. And so the my, you know, the way that I interpret Claudia Golden’s work, and she articulates this, I think, pretty clearly in her book, career and family, is that unless you have gender equity at home, it’s very hard to achieve gender equity in the paid workforce. So as long as there’s some sort of gender division at home, you just don’t have that time availability in the paid workforce. So she’s actually advocating for for gender equality. She’s not saying this rationalizes or legitimizes the existence of the gender pay gap. She says it’s a an explanation that needs attention and that we should be looking at. How do we look for ways to reduce this culture of expecting workers to be working such extensive hours and to be on call? How can they be more substitutable with each other? So you know, if you’re not available, it doesn’t matter, because your colleague can step in, and she gives examples from the industry of pharmacy, the pharmacy industry, where that that is, is a change in cultural practice, and that allowed more women actually to advance in that industry. So her, you know, the action or the policies that emerge from that are ones that start to address that existing inequity in the system and steer us towards something that’s more equitable, and I would say, also healthier as well. Now, other people might interpret that differently, but I think that’s a very, very firm and widespread way of expressing Claudia Golden’s work. I did write a book review of her book, and it’s published in the economic records. Yeah, I’d be very pleased for people to have a read of that and see what, see what they think of the points that Claudia golden has expressed. And of course, yes, she did. She was awarded the Nobel Prize in Economics in recognition of decades and decades of work looking at women’s participation in in the workforce, and how that has changed over time from an historical perspective right up to contemporary time. So she is a big advocate and champion for working towards a more gender equitable economy.
Gene Tunny 28:35
Okay, so that really gives you something to think about, doesn’t it? Least, that’s what I thought. I thought that Leonora is explanation of the concept of greedy jobs and how you interpret that in a policy sense. So Leonora summary of what Claudia Golden’s position is. I thought that was, I thought that was very good. So I will put a link in the show notes to that episode. I’ll put a link to that, that book review of Golden’s book that Leonora wrote, and it was in the economic record. Hopefully it’s not pay wall, but it may well be which you would be disappointing. But anyway, I’ll look into that, right? Oh, we should move on the next two clips for this highlights episode, they relate to the theme of the environmental impact of economic activity, so we’re looking at environmental issues. And you know that if you’re a regular listener, you you’ll know that I speak with a wide variety of guests on the show, with a wide variety of opinions. I mean, often in stark COVID. Contrast in opposition, and this is certainly the case on environmental issues, or at least the issue of how much we should be concerned, how much we should sacrifice the economy, economic growth for protecting the environment. Of course, I think we all want to have a clean environment, and we want to protect the environment as much as we can. At the same time, we want to make sure we have a thriving, prosperous economy that keeps people employed, that provides high living standards. So there certainly is some trade off. So I’ve had, I had two really good conversations about this trade off, as I see it, this this year, at least two really good conversations. One of them was with Marion tupy, who’s a, he’s a senior fellow at the Cato Institute. So that’s a a leading economic think tank in the US. It’s, it’s on the well, you’d say it’s a libertarian or classically liberal. And Marion co wrote a very interesting book that came out last year called super abundance, and he has a very optimistic view regarding our impact on the planet. So I’m going to play a clip from my discussion with Marion earlier this year. Okay, so let’s listen to that. I’m very sympathetic to the argument about about super abundance. Can I ask? Is this a continuation of the work that Julian Simon has done is this because I see on your CV or your buyer, you’re part of something called the Simon project. Could you tell us what that is and whether this is continuing his work? Yes,
Marian Tupy 32:15
yes. Yes, absolutely. So Julian was a, obviously, a huge inspiration, but so he was actually a senior fellow at Cato before I joined the Cato Institute. He died in 1998 but he was senior fellow there, so we never met. But what I wanted to do back in 2017 is to look at his work and update it, you know, to the present and I found that his bet with with Ehrlich, he would still win. In other words, commodities continued to get cheaper, at least the ones that Julian looked at. But I was using the old methodology. I was just looking at real prices of commodities. And my co author, Gail Pooley, got in touch with me, and he says, well, let’s turn them into time prices. Let’s look, let’s look at the price of commodities relative to wages, how much more you can buy for an hour of work than your ancestors could. And then we published a paper in 2018 with this new methodology. And indeed, we found, once again, that Julian was right. And then we decided to turn into a book which goes back to 1850 and basically what we find is that commodities, relative to wages, are constantly getting cheaper. If it’s a long enough period, everything is getting cheaper, including gold. The only thing that continues to become more and more expensive over the centuries is human labor, essentially the human input, and we might as well talk about Simon and early quag, yes,
Gene Tunny 33:46
yes, yes, yeah, please.
Marian Tupy 33:48
So Julian Simon, since we mentioned him, he was an economist at the University of Maryland, here in the United States, and he was basically looking at the data, and he was noticing that things were getting cheaper, even though population was expanding whilst over in California, at Stanford University, Paul Ehrlich, who is still alive, he’s 93 years old now, was predicting doom and gloom. He was basically saying, you know, as population increases, we are going to run out of everything, and there’s going to be mass famine. And, you know, starvation of hundreds of millions of people. And so they had a bet between 1980 and 1990 on the price of five commodities, nickel, tungsten, tin, chromium and copper. And basically they made a futures contract for $1,000 and when the period came to an end in 1990 Ehrlich had to send a check for $576 to Simon, because commodities became 36% cheaper. Had Simon implemented our methodology, he would have won even bigger. He would have won by about 40, 42% rather than 36
Gene Tunny 34:55
very good. Okay, so. I must say, always do enjoy hearing or reading about that Simon Ehrlich wager, because it’s a reminder that we should generally be skeptical about predictions of doomsday. I mean, you know, certainly it could occur. I’m not going to be naive, but generally, I think, you know, we’ve got, you know, multiple predictions of of Doomsday, and maybe we should just think more rationally about these things than we are or than we have been. So I thought that was a very good clip. So really grateful for Marion his appearance on the show. I think Darren Brady Nelson connected me with him. So thanks to Darren. And yes, I’ll put a link in the show notes for that episode too. Also, having listened to that, I was reminded, I’ve been reminded that I did a podcast episode, or I recall I was on the principle of charity podcast, which is hosted by Emile Sherman, who is a very distinguished film producer. He produced The King’s Speech and lion. And also, I was surprised to see the other day, I was watching one of my favorite new shows, which is on Apple TV, slow horses, the show about MI, five agents in in London with Gary Oldman, love that show, and Emile is one of the executive producers I was on his podcast. So Emil hosts that and also Lloyd vogelman. They have a really interesting show. They like to have guests with opposing point of views, points of view, and the idea of the principle of charities you’re supposed to, you know, steel man, the opponent’s argument, or under try to understand where they’re coming from. So have a good, you know, think that have the go into the conversation, assuming they’re acting in good faith and give them the respect that they deserve. And so look, I think it’s a, it’s a novel concept for a podcast, given how most podcasts are, so I think it’s, it’s interesting. I’ll put a link in the show notes so that that that was a conversation on degrowth. And, yeah, that was something that, yeah, that yeah, that was an interesting experience that I had earlier in the year. So I’ll put a link in the show notes to that, right? Oh, now for someone with a different take on how we’re we’re going environmentally and going to Well, the the other guest I’m going to feature in this highlights episode is Daniel vert Daniel lossy from Vertis group. And Daniel is based in Omaha, Nebraska, and that becomes highly relevant, as you will notice in this in this clip that I play, and I really enjoyed talking to Daniel, his company does a lot of very interesting work. So they work with organizations such as Seattle Aquarium, and they’re helping to make those organizations more sustainable, helping them meet their or get on the path to meet their net zero goals? So he’s someone who’s a practitioner, and I thought he had a lot of really valuable insights. Okay, so now I will play a clip from Episode 242 helping Seattle Aquarium and others go to net zero and beyond. So that’s from May this year. I hope you enjoy this clip. Before we go, I’ve got to ask given you’re in Omaha, and this is a economic show. Do you ever see Mr. Buffett around town? Have
Daniel Lawse 39:25
I seen him? Personally, I don’t think I have, but I’ve been in one of his favorite restaurants before, where he eats pretty regularly. And you know, we host the Berkshire Hathaway every single year. So see all of the the tourists who come in for that, the shareholders who come in, and my wife owns a little tea shop, so that always gets a little bit more business during those Berkshire days. But I’ve not bumped into Warren myself. Personally, that’s
Gene Tunny 39:53
okay. I just Just thought I’d ask given when, when people hear Omaha, they’ll think that, you know, that’s often the. First thing, rightly or wrongly, people, people, people think of in their minds, particularly if they’re in economics or finance. So just sort of ask,
Daniel Lawse 40:08
well, on some levels, I think Warren’s actually a pretty sustainably minded person. We can argue lots of other things, but here’s the example. I drive past his house on a regular basis, right? He does not live in a gated community mansion. He’s lived in the same house, I think, for over 50 years, and he’s done some upgrades to it and at a few additions, but it is a very what I would call a modest house in a nice neighborhood of Omaha, but like probably hundreds of 1000s of people drive past this house and would never know it’s even his.
Gene Tunny 40:42
Wow. So the fact that
Daniel Lawse 40:44
he doesn’t go and just consume and build a big house because he has the money and he could, and I don’t, I don’t believe he owns that many homes, or second homes or third homes. He owns a couple different locations. But there are some people who have a lot of wealth, who own a lot of homes that they travel and vacation to. So in that regard, he’s making a sustainable choice by living in a in a modest house that he’s had for decades, and maintaining it and regenerating it. Perhaps we might, if we want to throw that in there, instead of tearing it down and creating something new and bigger.
Gene Tunny 41:18
Oh, it’s, that’s a good story. I mean, he’s embodying the, you know, the virtues, or the the the high point, or what’s the right word to describe it. He’s in, he’s embodied. He’s embodying those, the real great values of capitalism, or where it’s about saving and investing. So, so that’s terrific. Good last. Yeah, make it last. Good on Warren Buffett, very good. Okay. Daniel Lawson, this has been a great conversation. Any final points before we close?
Daniel Lawse 41:49
I love your questions. Gene, I think it’s so important to be aware of how we think, because it really does matter. And there are four critical shifts that I see at play, and all the sustainability work that we do, and I’ve talked about, probably all of them, but shifting our mindset from a closed system to an open system, right? We’re not alone in this world, and so let’s acknowledge the impact that other organizations and communities and businesses have on us, the shift from like this mechanistic worldview to a living and dynamic world, view like Change is the only constant thing in life, and when we recognize that I’m a living being, and organizations are made up of humans, so we’re more living. We’re more like a garden that needs nurturing and tending than a business as a machine that you just take a part out and replace it, right? Let’s, let’s humanize our organizations instead of dehumanize them. The third is the shift from really feeling like and thinking like we’re separate from everybody else, and shifting more to this interconnected way of being, recognizing that my actions have impacts on you, whether intentionally or not. When we do an organizational policy, it can shift things in good ways, unknown ways and unknown ways. And then the last one is the short term thinking, the long term thinking. I’ll end with this. The seventh generation principle comes from the Iroquois nation, the first peoples of the US or of North America. I apologize, and they said the decisions that we make for our community, we need to think about, what is the impact going to be on seven generations, which, you know, it’s about 150 years. You can’t even predict that far out, but it forced them to think about, what’s the long term impact of the decisions they made at Council. And I, I challenge your listeners to imagine a world where their elected presidents, council members, representatives, didn’t think about the next election cycle and being re elected, but thought in seven generations, what would be different? Yeah, and what would be different if our business leaders weren’t thinking about quarterly profits, short term feedback loops, and instead thought forward seven generations, what? How different would our businesses look, and how different would our communities be if we had leaders who were thinking in seven generations, changes everything in, I think, pretty good ways.
Gene Tunny 44:10
Okay, so that was Daniel lossy, who is the Chief century thinker at Virtus group in Omaha, Nebraska. So they do environmental consulting work all over the US. So yep, I’ll put a link in the show notes to that episode. I think it’s definitely worth a listen. And I think Daniel has some Yeah, really interesting. And yeah, really interesting, interesting perspectives that make me think and Yeah, certainly saying things that that are challenging to economists. Okay, final clip, this episode and this. This clip is from the episode that a. According to Spotify wrapped. So Spotify wrapped is the summary that Spotify puts out every year, and it’s actually what inspired me, in a way, to do this episode. According to Spotify rap, the most listened to episode of my show in 2024 at least on Spotify, was episode 236 the housing crisis in and immigration Australia’s tough choices with John August. So it, it may well have been the most listened to episode because John’s very good at sharing and, you know, material, and he’s got a good network. John has a radio we had a radio show in Sydney on radio Skid Row in Marrickville, and he’s heavily involved in the Pirate Party. And I’ve had John on the show several times, and if you’re a regular listener, you’ll probably appreciate that he always has very interesting and well thought out things to say. So he no longer has a radio show. He’s had to step back from that and but, but he’s will still be able to hear from him. Next year, he’s going to be putting out a podcast, and I look forward to catching up with him, either on this show or on his new podcast. So once I find out more about that, I’ll, I’ll pass on the details. Right? Oh, the clip I’m going to play is, again, it’s from this episode that on housing and immigration. And these are really big issues in Australia at the moment. I mean, we had that huge surge in immigration post COVID And there’s a lot of debate about, to what extent is immigration driving the housing crisis that we’ve had? To what extent is immigration behind the the economic challenges we face? And there’s a lot of talk about the per capita recession, the decline in household living standards. So yep, if you’re in Australia, you’ll you’ll be well aware of this debate. And I suppose it’s a debate that is occurring in in many, in many economies around the world. And certainly immigration was was one of the issues that that swung the election in Trump’s favor. That was the view that Darren expressed on my show, and I’ve heard others express that too. Okay, so let’s play the final clip, and this is from my conversation with John August on housing and immigration.
John August 48:06
Well, keep in mind, I think I’ve already said this, that I do not believe that, you know, just reducing immigration is going to be a magic one. We have to, in some sense, aggressively pay catch up on our infrastructure. And another thing I’ll point out is, I don’t know what it’s like in Brisbane, but certainly in Sydney, you’ve got the issue where you’ve got the rich suburbs, and the people who are like the nurses, the fire is the police officers, the people doing cleaning, the people doing whatever. Can’t afford to live there, so they’ve got to basically travel all the way across Sydney, and they’re putting a needless load on the road network that doesn’t really need to be there. And for the rest of us that are not in that situation, we’re obviously coping with congested roads. So you know, for me, that’s a side effect of that sort of asymmetric wealth distribution. And one of the things that may be happening in Brisbane, I know some councils in Sydney are looking at getting into public housing, not in a grand sweeping way, but key worker accommodation. This is, this is accommodation that will be there for the police officers and their families, for the nurses and their families, for the fireies and their families, and perhaps for the cleaners and their families that are actually servicing that area. And, you know, you’ll basically have to say, look, either I have a job or I will be getting a job in the area, and I’m in one of these professions, so the council will then give you some subsidized place to live. And, you know, that’s interesting, that councils are even contemplating doing that. I mean, I mean, I guess this is a, this is sort of a guess. It’s a bit of an issue around infrastructure and housing. I guess a few steps from New from your original question. But never mind. Can’t help myself.
Gene Tunny 49:49
I can understand the logic of it. So I’ve seen that in in rural towns in particular. So you’ve got a visited a potato process. Facility in one of the Riverina towns, and they actually own some houses in the local town, so that they’ve got places for the I think, you know, the migrant workers who come in to work at their processing facility, so they’ve got somewhere to live when they’re when they’re in the area. So I can see the logic of that and why it might make sense for some councils to look at that awesome. Well,
John August 50:24
I know that, you know, just traveling around country towns, it’s interesting when there’s some sort of development, and all the tradies have taken all the motels or or there’s some sort of running festival or something like that. You by golly, you know, you notice it when you, when you go to a country town thinking, Oh, this is just a quiet, sleepy country town. There’ll be lots of vacancies at the motel and, well, there aren’t anyway.
Gene Tunny 50:49
That’s very true. Okay, I want to go back to those numbers. So migration program. So there are in the permanent migration program. So remember I talked about how our net migration has been running at about 550,000 Okay, the permanent Migration Program, which is what you’re talking about, which is refugees, or the family reunions and skilled migration, that’s set at 190,000 places. So that’s just a fraction of the total net overseas migration, and a big part of it are students over foreign students come in universities. And also the, you know, students who stay on, they get an extension, so they do a degree, and then they stay here for a couple of years after that. And you know, some of them will have work rights, and they’ll be, they’ll be in our labor force. So I’ll end you know, a lot of it is that, and so we’ve got this big temporary migration number. So I’ll put a link to Leith post in the show notes, because I think it’s a nice summary of all of the relevant data. We’ve got around 700,000 student visa holders in Australia, but in terms of temporary visa holders. So that could be students, their families, people who are who did a degree, and then they’re still staying here. That’s at, is it 2.2 to 2.4 million people? So depending on whether you use the so there’s a quarterly, seasonally adjusted number, that’s about 2.3 million. It looks like. And I’ll put that in the show notes. So is
John August 52:23
that that at the moment, or per quarter, or per year, or what do we what are we saying here? Yeah,
Gene Tunny 52:28
that’d be at the moment. So that’d be the stock of them, yeah, at a point in time, yeah, yeah. And so we’re well above where we were at COVID, and you could argue that we’ve actually, you know, so some of the people will say, Oh, actually, it’s just catch up and we’re just on the same trajectory. Okay, maybe so. And this is something that Leith addresses here, and his his point is that, well, okay, this, this argument. The he refers to a tweet from a bull. Is it a bull Rizvi, who was a former immigration bureaucrat, where he was saying, Oh, look, we’re just we’re actually where we would have been if we were on the same trajectory pre pandemic. And then so Leith goes risby arguments ridiculous, because the pandemic completely constipated the supply side of the housing market by sending material costs through the roof, sending builders bus so you were talking about this before John and reducing building capacity by months of lockdowns, deliberately engineering a record immigration rebound into a supply restricted market was the height of idiocy, and is why we are suffering from the worst rental crisis in living members.
John August 53:37
Well articulated position, I suppose I’d have to think about it much more carefully to say, look, is it right or is it wrong? But it sounds very reasonable on the face of it. You know, prima faci is the legal people would say. But my broad position would be, look, we were playing catch up on infrastructure before, if we’re actually going to get some breathing space, we’ve got to have a commitment to catch up on infrastructure at the same time as we limit immigration, so we can actually get ahead of the curve. Because I think a lot of this, this silly bugger games of like, here’s a development will divert some of the benefits from that to building infrastructure that’s not getting ahead of the curve. And like, look just a bit of an anecdote from like, history of Sydney is way back when our first rail lines went out of Sydney to service the farmers, okay? And that was why they were built. So if you wanted to build a settlement, you know, 10 or 20k is out of out of the city center, or what would have then been the city center, you just build a railway station on some part of the railway track, and boom, boom, there’s the start of your community, your infrastructure has led your community, rather than the infrastructure coming sometime later, based on some deferred payment schedule, you know? So you know where, where? Yeah. I mean, Lisa van Olson may well have a good point. I’m not going to disagree with it, but my position is we were paying catch up. Four, and if we’re going to be serious about playing doing actual, proper catch up, then we can’t just do business as usual like it was however many years ago. So, but, but, yeah, he may well have a good point there.
Gene Tunny 55:13
Okay, so that was John August from my episode on housing and immigration. So yep, if you liked what John or I had to say in that clip, then Yep, and you haven’t listened to that episode, then please check it out. Okay, so as you’ll as you’ll gather. I mean, we cover some fairly controversial issues on this show, and I appreciate that you know these are issues that people may well have different views from me on, and I’m happy to hear other opinions. Happy to hear your perspectives on these issues. So yep, if you’ve got any any thoughts positive or negative, or get in touch. Let me know whether you agree, whether you disagree. What do you think about these important issues that we’ve covered today, so issues or about the environment, about housing, immigration, the gender pay gap and the US budget and what the return of President Trump means for the US and for the rest of the world. Please feel free to get in touch. You can email me at contact, at economics, explored. I’d definitely love to hear from you. I want to know what you’re interested in. I want to know how I can improve the show so I can continue this go. I can continue the show. I can make it even better and make it make it a really strong show. In 2025 so we’re, we’re getting very close to the new year, right? Oh, again. Thanks for listening. I hope you enjoy it, and I hope to catch up with you in a future episode. Thanks you.
Credits
Thanks to the show’s sponsor, Gene’s consultancy business, www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts and other podcasting platforms.
