How should economics inform government interventions? July 3, 2026

21:21Scott:Oh, I had to come back up, Genevieve. Thank you very much. It's at the root. It's like how do you talk about, you know, physics without, I don't know, You know, Adams, there's something that are foundational to it. And I guess what we are trying to do as a civilization, as a society, is we're trying to get literally millions of people who will never, ever meet and never have anything directly to do with one another, although are all related in some way to cooperate and coordinate in a way that optimizes for the best outcomes. Now, how do you do that? Now, there is one school of thought that says, with a hyper-intelligent AGI that we can actually see every single possible outcome and then deterministically, you know, I am of a view that that's just not going to ever happen, right?

22:09So that's,

22:10Scott:yeah. Even if we could, though, it still would only give us probabilities. Yeah, exactly. You could still get probabilistically right and it would not match reality because probabilities don't, I mean, at scale over time, if the probabilities are assessed correctly, eventually maybe you're right, but it still doesn't account for the mushy reality of the world and who it happens to and where it happens and why it happens and all that stuff that goes with it. I mean, so true. And the reason I bring it up, when we can talk about supermarkets or fuel or any of the current, you know, topics du jour at the moment, and it usually starts like this.

22:39That's so expensive. Why is this child dying when there's a medication over here? And it's like, well, I had to have these opening remarks.

22:50Scott:We can throw regular disclaimers in. Don't forget to go back to the beginning. If you haven't heard of the beginning, listen again. Now, something costs the way it costs. And let's just for the moment, before some pedant comes in with this really obscure edge case, well, there is an example from 1933 where generally speaking, 99 % of the time, that cost has actually been an emergent phenomenon or it should at least be an emergent phenomenon that actually coordinates and signals the information between those that make the thing and those that want the thing. am I going to make something that I don't think I can sell at higher than the cost of production?

23:28Well, I might, but I'm going to go out of business pretty quickly. And that's not just, oh, no, what a tragedy. Someone went out of business. Like, yeah, but they're not making the drug anymore. Like, it must be viable. It must be viable or it doesn't happen. And I don't know how more clearly to say that, but I seem to really struggle to make that point on other topics. So, you know, and likewise, likewise, It cost me a million dollars to make this pill and it does all these great things. It's like, yeah, but no one wants to pay it or no one can pay it. I was like, okay. So we have these mechanisms that sort of coordinate things.

24:02And I think definitely true in healthcare and it's true everywhere is that that doesn't mean that we can't nudge things and adjust things and incentivize things. Absolutely. So I'm not going to be an extremist here. But I always think we start down a path that is very dangerous as soon as we feel as though that we can, with the flick of a wrist and a pen, we can solve that problem. Supermarket's too expensive? Let's make the price of bread now a dollar. You don't like paying, you know,$2 a litre for fuel? It's now 50 cents a litre. It sounds good, right? That person suffering from this horrible cardiac kind of issue, right, let's just make that a$1 treatment.

24:47I don't have time to connect all the dots here, But if you fast forward to the bottom line here, it's just like, yeah, we just don't, then no one gets it. We just don't have it. Or people say, well, the government should provide it.

24:57Scott:If the government tries to provide it, does it genuinely and efficiently. Yeah, true. Excellent. And then so that inefficiency flows through everyone else's cost. I don't want to add that because we don't, you and I know that. We don't often say that out loud. So 50 cents a litre, no one produces fuel. Well, that sucks. Well, the government should do it. Okay, so now the government starts producing fuel. Okay, fine. Maybe they're the most efficient fuel producer in the world. Let's say they're not, hypothetically. And let's say they're not. Hypothetically. But let's say they're only 10 % less efficient.

25:22Scott:Because the government's not going to screw it up, right? They're 10 % less efficient. So that 10 % less efficiency means 10 % of value that otherwise could be spread around the rest of the economy that's sucked into making fuel. Now do that across supermarkets, to your point. Remember, was it Queensland? They were going to have state-owned fuel at one point. The bloody... I think Labor were going to get re-elected and have state-owned petrol stations. I'm stupid. Once you add those inefficiencies together, government can still do all those things. The problem is when you end up in that position, you end up like Russia oh, you end up like North Korea.

25:50Scott:And by the way, communism then, I hate the label stuff because it's just, oh, you're a communist, then there's like, as if like, you know, slam dunk, I don't think people actually know what these words mean anymore. Well, they use it as insults because that makes them feel better because if you call someone a communist, you've won the argument. Yeah. But the reality is that it creates corruption because some people want to get it. And so literally the black market exists. And tobacco exercise. That's why I'm saying economics is a natural emergent phenomena. Yes. There is a rule of it that exists beyond us, right?

26:18Scott:Yes. Yes. And so it's kind of one of those. Black markets prove the point. Yeah. And I think that's, you've got to think that through because it's like you've said a lot of times, mate, everyone kind of goes, gee, communism would be nice. Why wouldn't we all like to have? A comfortable position that has been feathered from the productive enterprise of so many people. Then we go, it's the champagne socialists, right? Yeah, yeah. It's like, everything's great. Oh, that should be great for everyone. Let's just do this. And like, I'm with you in spirit. Right. And that's my point. My point is you start from there, right?

26:47Scott:Which is fine. Yeah. When you first think about it, God love Pauline Hanson. She came out with the old, why don't we just print more money years ago, right? And I was like, if we have enough money, let's print money, we'll have more money. Well, Pauline, hey, we do. We just don't do it as much as you want. But anyway. But that's the thing, right? And that's not a bad first impulse. And that's hopefully what this podcast is going to be even again. Thanks for the question. Yeah, if you were seven, you'd go, that's a perfectly reasonable thing to think. Or if you're 18, mate, you've never confronted the idea, what could possibly be wrong?

27:13Scott:And then you kind of, as you, and that's why I want to get this comedy, because when you go then through the steps, You get to, okay, if it's 50 cents, that'd be better, wouldn't it? Yeah, because energy would be cheaper. Okay, that sounds good. But then people wouldn't make the oil, drill the oil. Well, that sounds bad. You get government to do that. Okay, government's like, what does that do? That's probably less efficient, generally speaking. If it wasn't, by the way, Russia would have been the richest country on earth. So we can assume, generally speaking. Can we, for the sake of your argument, assume that they are 10 % more efficient?

27:37Because it still makes the point. Let's get rid of that argument altogether. Let's say that government can do everything 10 % more efficient than the private sector, just as an intellectual exercise, right? And then we say we want 50 cent a litre fuel and the government will do it and we'll actually assume that they do it more efficiently. They're still going to run out of petrol because what does it mean? I mean, if they are producing below cost, what does that mean? You've got to go beyond that first level thought, oh, it means that in the financial accounts there's a loss that's recorded. But in the real world people are going without.

28:11No, that accounting system, that ledger, that thing that we call money, that we measure everything with, is just telling us what resources we have available and the demand for those resources and the value that those resources are creating. The government, even if it was 100 times more efficient, isn't able to offer everything for everyone because we live in a resource-constrained world. There is so many humans with so much time and so much ability with so many commodities around them. That's it. Full stop. We just can't click our finger. The most efficient, rational, ethical, farsighted, intelligent government on the planet cannot give us all free food, free fuel, free healthcare.

28:55It doesn't happen. Someone has to pay for that. And what I mean pay for it, again, you've got to get deeper into the weeds beyond this dollar or yen or rand or whatever kind of issue it is. These are just abstractions. You've got to answer Mr. Diggs. These very real things in the very real world. There is only so much. There's a ton of oil under the ground. There's only so much above the ground, right? And at some point you've got to ask, well, okay, what do you mean the government? What do you even mean the government? Milton Friedman's got this great line. It's like the government doesn't exist.

29:28Is the government in? There is no point to the government. Yeah. It's just a group of people. Point to a corporation. It's human beings. There are human beings that coordinate under various structures, whether it be a private corporate structure or a government public body kind of structure or a charity structure or a local community. But we're just all human beings. There are just individual human beings. And we say, okay, that individual group of human beings is called the government and they should do it. Okay. So are the bureaucrats in Canberra going to go out into, you know, the Bass Strait and start doing?

30:03No, they're probably going to have to get someone to do it. Well, how are they going to get someone to do it? I guess they've got to point a gun at their head and have slavery. Well, okay, let's not do that. Well, I guess we've got to pay them. And we can talk about money or we can just abstract it away. It's like we'll pay them in a means that allows them to eat and have shelter and all the good things that we want in life. So that has to be provided for. Do you see where I'm going with this? It's sort of like you're making such a great example. I didn't mean to hijack it. I wanted to short-circuit that normal respect.

30:34and I'm the first person to sort of sneaker whenever government, people think government can do things more efficiently. Some cases they can actually, very, very rare edge cases. But in most cases it can't. But let's get rid of that as an argument, right? There must be in a way, accounting is also a very natural thing. If you want to go back 10 ,000 years, the whole reason writing and mathematics was invented was for commerce and trade. Like that's where it all came from. and not because people in the Bronze Age thought it'd be really cool if we could solve quadratic equations and write love letters to each other.

31:08It was like, no, who's got the stuff? Who did the work for the stuff? Who owes the stuff? You know, how can I get some more stuff? How can I make that? This is where it all comes from. It all traces back to some clay tablets with some dude going, Scott, you know, there's like eight weeks of backbreaking labour that I spent in your field doing that. You kind of owe me for that and you promised me some stuff. and look, here, I wrote it on this clay tablet to recognise what I've done. It's like, you know, and you might go, well, screw it, I'm not going to pay. I was like, great, I'm never working for you again and then the whole enterprise dies, right?

31:38So it's just like all of these things, I'm getting very fundamental here, but you kind of have to do that and I get very irritated when people say the government should do it because it's just a different organisational structure but one that still faces the same resource constraints, time constraints, energy constraints, you know, change the structure. Okay, great. But you're still facing this very, very same issues. And it goes beyond just pure vibes here. It's just like every single time, and I'm literally not exaggerating at all, every single time we have tried to centrally control and plan economies, it's ended up in starvation.

32:24You just, you had a point. It's just sort of like, right? And so, okay, this is a long bow to draw at the very early phase of this sort of discussion on healthcare.

32:33Scott:It's only the only prohibiting remarks too, so I'm... But, you know, you've got to start there though because if you can't accept that point, almost every subsequent discussion is moot because you believe in some magic pudding kind of philosophy that it's just all there and that if someone only made a decision and wrote a law, then we could overcome these things. We are hairless apes on a rock spinning through space. Like there just isn't a Ferrari tree. There just isn't a cure for cancer tree that we just walk up to and like, we're not, we got kicked out of the Garden of Eden, right? So this is where we're at.

33:15And I just, I'll shut up and make that point. But I, I think maybe you can round that off and make that more articulate and clear because I do struggle with it.

33:24Scott:No, you've done a great job. And this is, so it's a lovely starting point because then Genevieve's kind of after some, what can we bring to, what can economies bring to the table when it comes to better thoughts of how the market should be either allowed to or restricted from doing its own thing. And that's, which is kind of the key point. And I've got to say to, so you make a perfect point, Matt. So Genevieve, the first thing is obviously trade-offs, right? And you know that, and we've just talked about that. But that's – the first approach is just to recognise, as I said before, I've always liked the line – and actually, originally it was about kind of women's liberation, and I don't want to kick down that path, man, because that's just – I'm not an expert in that area.

34:02Scott:But the idea of like women should – women have everything. It's like, well – and the second or later generations, and I'm not going to describe feminism in any detail, was like women can't have everything, but they should be able to have anything. And the idea of like the super mum idea of, you know, the kind of – some of the feminist drivers are like, now I can work, and I've got to have a family, And so it became like, oh, my God, this liberation has been hugely, you know, almost oppressive because I've been told I can do it all, now I want to do it all. I said, no, no, you should be able to do anything you want, but no one can do everything.

34:28Scott:And that's kind of what I've taken from or to the economy more broadly, and that is literally just the study of trade-offs, which is we can have anything. When a politician says something's not affordable, what they're really simply saying is they're not prepared to cut elsewhere or raise more taxes to pay for it. Of course it's affordable. You want to raise the dollar, it's affordable. You want to double or half taxes, it's affordable. You want to double or triple healthcare spending, it's affordable, but you're going to have to afford it by making changes elsewhere. So nothing is unaffordable.

34:54Scott:You're just saying under the current scenario, the current set of spending priorities I've got, I don't want to change those to do the thing you want. And so when any politician of any stripe says something's unaffordable, what they're really saying is, I want to bat this away without having to confront the fact that the real answer is, we could do that, but I'm choosing not to because I think these other priorities are more important. And that's the reality, right? And so that is a really, and that's trade-offs. That's a perfect starting point. So first thing I would say, Genevieve, to your question is trade-offs are absolutely the story here.

35:26Scott:The other thing I think you raise a beautiful example of is market inefficiencies. And I think, and I suspect Ram and I may have different views on this, or at least, you know, slightly different positions on this. I think you come up with some beautiful examples of where healthcare doesn't work as well as it might. The question still is, is that still the least worst outcome? So there's a difference between, excuse me, there's a difference between is it perfect? No. Is it the least worst outcome? Maybe still. And we have to acknowledge that. And so the question really is, you know, because information asymmetry is huge, right?

35:59Scott:Doctors don't do the surgery. I'd get a second opinion. I'd get a third opinion. But at some point, the cost of doing that, the time of doing that, you know, at what point do you say I've got enough information to do it or I trust the expertise? And then how do you make that decision? I mean, speaking of information asymmetry, man, aren't we all geopolitical experts on the oil crisis now? What Trump should do is... I've got some thoughts. Exactly, right? And it was bloody immunisations, vaccinations through COVID and military, everything. Yeah, China and Taiwan, there'll be geopolitical experts and military experts out there who are telling us what Australia...

36:35Scott:The defence spending is great. I get told all the time on Twitter how much money we should spend on defence. Should we double it? Should we have it? Should we just pretend to GDP? It's like, I'm going to guess. I'm going to guess you're not a rear admiral. I'm going to presume you're not a major general. I'm going to suggest that maybe you've got some thoughts. And, again, we're back to Uncle John or Bob at the end of the Christmas dinner table who's just, you know, dying and krugering his way through the afternoon. So I think, you know, information is huge. And I think that's really, really important, Genevieve.

37:04Scott:We've talked a lot about, and Ram, I think it was your analogy originally, it's the setting the rules and then refereeing the game. I think yours was setting the rules, mine was refereeing the game. And I think together, I think we kind of largely agree on that broad approach. And the rules matter. The rules aren't only... So an absolutist free market person would say, the government should obviously be referee, or rules only, don't worry about the refereeing, or refereeing, don't worry about the rules. My personal view is we need to decide as a society where we want the limits of the outcomes to be and say that far and no further, and then make sure it happens.

37:40Scott:But also the thing we miss a little bit in that analogy is the encouragement of competition. And maybe that's the referee bit, if you kind of extend the analogy far enough. Not just enforcing the rules, which is the referee's job, but almost... I'm going to torture the analogy. The rule creation committee, whose job it is to say that rule... If you're an NRL fan, Genevieve, you're probably not, and that's okay. The Melbourne Storm, God love them. No one loves them. Basically just utilise the rules and create a whole lot of wrestling techniques. And so there's been four or five different rule changes, literally, to stop.

38:16Scott:And Sir George Jags are the 60s and 50s, for those who remember the 11 premierships in a row. They changed the rules because one team was effectively using the current rules to change the game in a way that the rule makers thought wasn't reasonable. So he's like, OK, well, that bit's not working anymore. You've taken the competition and you've distorted it. So we're going to have to reintroduce fairer competition, add rules, remove rules to make sure that the game can be played fairly and appropriately and there's some other torture metaphor mate to talk about the attractiveness of the game so from the outside from the stands as well as for the players is this something we like do we want this to be true do we think this is reasonable and i guess in that context we're talking about i may never be in a position of x so i'm on the sidelines but if i've got some input into the game i want to make sure the game is fair so that the people are who are on the field in this particular pursuit whatever it is health care or uh education or wherever else get what they should get um i've said before my my kid is at a private school yours are a public school ram um i think we should have more public school funding i'm not on that field right i'm over i'm in the stands but i think it's reasonable that we i know it's a different decision i'm just torturing the metaphor within an inch of its life just to kind of talk about what the setting should be and then i think jenna beef's to your point i'll get you jump back in a minute ram the the key for me the economic theories are important for both.

39:34Scott:They describe how people tend to interact, and that's a real positive. That's where you start. And I think Ram's right. You're not pretending they don't exist for a minute, but anyone's saying, well, let's just assume, like in the 50 Cent fuel example, let's assume economics doesn't exist for a minute and do this anyway. It's like, well, okay, but you've just pretended away the trade-offs. You've pretended away the consequences, and they are going to come back and bite you. Even if you don't see it, it'll happen, right so that's true um but so i think the economics describe the circumstances the job that is to say when we should have effectively and really what you're saying genevieve is more or less intervention based on the range of outcomes and the desirability of that range of outcomes and i think that kind of comes down to it's also how right so think about housing for a second and let's jump in sorry i was gonna know it's you i'm on a roll think about housing for a second uh in some states in the u.s they have rent controls uh because that how's that worked out Oh, terribly.

40:29For the very people it seeks to help.

40:32Scott:Exactly. Except for the very small number of people on the right side of the curtain. Who managed to lock it in. Yeah, exactly. So it doesn't mean you don't help people afford it, but the right tool for the job is also important. So if we say we think, as a side, it's important that people can afford affordable housing, I don't think you get much agreement on that. You should be able to afford to live in a house. Some combination of rent assistance, public housing, social housing. I don't think you should use rent controls, but you can throw that in the mix of the conversation. and the job of the economist is not even to...

40:59Scott:This is the other thing, by the way. We happily give ideological and philosophical views and that's what we do and I'm not going to apologise for that, but we're not trying to be pure economists here. The great thing... We talked before about economists being great historians and theoreticians and terrible predictors. What you would say to an economist is... They're not very good historians either for the most part, my friend. Not the mainstream ones. Okay. I'll die on that hill. You say, here's my problem. Help me think through the functions that can get me the least worst output. And that's where those tools are important.

41:32Scott:To think about the trade-offs, to think about the mechanisms. But the public who says, hey, should we have 50 cent fuel? Let's ask our economist friend, Mr Page. And Rem goes, well, you could. And you're the public. You do what you want. Let me explain to you how this would work. Okay, so I want to make fuel more affordable. What things could I do? And then we have that conversation about the least worst way of doing it. if we agree that access to fuel in this example, and don't at me on the example, if we think it should be cheap or cheaper or accessible to everybody and people being locked out, housing's a better example.

42:04Scott:When being locked out of housing, people should be able to afford to put a roof over their heads in one form or another. How do we make sure people aren't intense? And so that conversation you see with the economists and go, guys, here's a range of policy ideas everyone's thrown at us. Let's workshop them through and find the least worst way to intervene to maximise the benefit, minimise the distortions and that sort of stuff. And that is not a specific answer, Genevieve, and Rem will throw you some in a minute, I'm sure. But that's the starting point. If you're trying to do what you're trying to do, that's exactly where you would start, is what do we know?

42:33Scott:What are the objectives? And how do we get there in the best possible way, including all the trade-offs that happen? Sometimes that's just leave the market to itself. Other times there's no government should provide the whole thing. More often than not, it's here's where it would make sense to put some guardrails, some interventions, to get the best possible outcome at the least worst cost effectively. Yeah. I mean, what do you even mean when you say leave the market to itself? You know? Yeah, yeah, go here. These terms get thrown around and there's a lot of baggage. Oh, the market. Oh, the market.

43:03All of a sudden, you know, people start adding you about Reagan and Thatcher and stuff like that. You know, what is the market? Here we go. You know, like it gets very prickly very quickly. But when you say the market, what do you really mean? you just really mean just other human beings deciding, hey, have you got something that I want? Yeah. Are you willing to sell it? Yeah. What are you pricing? That's the market. That's all the market is. It's human beings interacting with each other and trading with each other under a, what's it called, a mutual act of self-fulfillment or something like that.

43:38There's a wonderful turn of phrase that's just escaped me at the moment. But that's essentially what we, I think that's another important thing to say when we talk about the market because it has this really uncaring, greedy, profit-maximising flavour to it in the way that it's used. But that's all it is. That's all it is. And it's not, again, it's not... Both are true, by the way.

44:03Scott:Yeah, you're right. Back to trade-offs, it's recognising that, you know, why would I go into business to make money? Okay, well, that's... Greed's a funny word, back to Gordon Gekko, right? It's assumed to be this horrible... I used to agree on Twitter literally yesterday, and I didn't mean it pejoratively, but I couldn't give a better word. It was the profit motive. It was kind of the economist term. It was like, you know, someone said to me, we're talking about capital gains tax because, man, that's blowing up a whole different conversation. We may have discussed it already, by the way, in previous podcasts we haven't yet recorded.

44:32Scott:But that idea of just, you know, I said, well, you know, if a government doesn't give incentives, then people want to invest. And my answer was, well, no, greed is why they'll invest. I didn't mean greed is in a nasty, greedy kind of sneery way. I just meant they kind of want to make money. I always love it too. It's just like, show me, people who get really upset by that, it's like, oh, you're not greedy? Right. Come on. Yeah, yeah. Come on. And it's a majority, so there's got to be a better word. But, yeah, I just want to point that out because they're all true. Everything you said in that sneery tone is 100 % true and it's also how, I'll say the economy, the market, I know you don't like the terms broadly, but just as a shorthand.

45:08Scott:Yeah, yeah. It's why they work. It's why petrol is the price it is and we still have it because if the government did it without those sneery words, no oil would be produced. It's the other side of that coin. It's the things you want to have. It's the mutual self-interest, as you say, self-fulfillment. It is literally people saying, well, I think I could do that. I think people would like it if I did that. I think they'd pay me to do that and I could make money. That's why I'm going to do it. If I look at it and go, you know what people would really love? People would really love me to make wooden tricycles and I'm going to do it.

45:37Scott:You've made it. I'm going to do it for free. because okay well i can afford to make five of them or 25 of them 100 of them or 5 000 of them and then who makes the next one well i've run out of money because i didn't so now no one gets tricycles because i've stopped making them because i've gone broke so no one benefits right the greed bit gets me into the game and so i can make some money doing i can i can you know it's worth my while rather than doing this podcast i'm gonna make wooden tricycles why would i do that instead well because i mean i've been entirely autistic and live in a cave and whatever but i'm not that altruistic.

46:08Scott:So I'm going to do it if I think I can make some money doing it. And that's why I do it. So the world gets the tricycles because I'm incentivized to do it. Greed is a bad word. Greed is such a bad word. It's just trying to make a better life for you and your family. I mean, it's how you frame it. We all do that. We all do it. Every single one of us do it. And of course we do, right? The best way to think about it is that when you're on a plane and you're watching the safety video. Yes. And they always say, put your own mask on first. Before helping others. Yeah. Before helping others. Now, you greedy, selfish, how?

46:46And I was like, if you're a mother and you want to make sure that your kids have the best chance of survival, you're not going to help them if you're passed out through lack of oxygen. There's very rational, objective, sound thinking behind that. Now, it's not the perfect analogy or metaphor here, but it's a good one, though. And I think we've got to get past this thing of greed and fear. I always say to all my socialist mates, and I've got a lot of them, you know, they've all got jobs. They're all arguing for pay rises, you know.

47:19Scott:I was going to say, no one's out there saying, you know what, I think you pay me a bit much. You pay me too much. I'd rather you pay me less. I think that's probably fairer. I don't call you greedy. It's because of like you're trading what you've got and you're doing it because, not because you want to Scrooge McDuckett and just sort of like live in your gold castle and like make fun of the poor. No, it's because I want the best opportunities for me and my family. And, you know, of course. Anyway, so I just hate all the framing. Yeah. It's interesting you talk about the soccer pitch analogy. No one, I don't follow any sport, but, you know, if the, I don't know, Manly absolutely smashed Melbourne Storm, people would be upset, Storm supporters would be upset, but no one would go it was unfair.

48:09Scott:Isn't that interesting? No, you don't watch enough sport. The referee's always the blame. The referee's always down to the team that loses. Oh, it's bad calls. I'm being silly, mate, I'm being silly. No one will blame the rules. They'll blame the ref, maybe. They won't blame the rules. And I think that's such a good analogy. We're doing a lot of laying groundwork here before we get to any specifics. I do apologise for that. But it's hard. It is, I think, it is hard to sort of get past all of these kinds of things. But I do want to go back to price signals because I guess where I was going with all of that is not to say, again, extremes are bad.

48:47Laissez-faire, whatever the market decides is whatever the right price is. It's just that whenever we, and let's focus back on health, whenever we are thinking we want to improve health outcomes and that starts with something that will distort the price. And I don't mean distort, like lose the baggage with that word, but just in the literal sense of what it means to distort something, to change something, to tweak something, to alter something. Understand that there is a trade-off there and probably 50 trade-offs and probably trade-offs that you are like third, fourth, fifth order consequences that are very, very, very difficult to understand and judge the full ramifications of that.

49:28I'm not saying we don't do that, but I'm saying a hyper-awareness of that, I think is what is lacking from so much debate because we go for the, this is the easy answer, let's just do that. And if ever you seem to go, well, like, oh, you, it's back to the words again, greedy or uncaring. I'm like, no, no, no, no, no. It's just like these things do have a consequence. And the point that I really want to make here is that these things are additive, they're cumulative. So when we all exist, time is the most weird thing to understand. But we right now live in this point of time and we look at our healthcare system and didn't just blink into existence.

50:08It evolved and it continues to evolve. And every day that goes by, someone's making a decision, a law is being made, a policy is being formulated. It is forever and always evolving. And why I just really would love to refocus some of these discussions on more fundamental principles is because where we get into a trouble, the NHS in the UK is a great example of this, which is just such a dearly beloved institution for the Brits and such a great idea at a larger scale that we should all have equal access to high-quality healthcare. I mean, it's very hard to argue against that kind of intention. And I would probably argue as someone who's never lived in Britain, but I'm an avid reader and follower of it, you know, that it's actually for a good part of its life been a very good, noble institution and a pretty effective one.

51:02But it's getting worse and worse and worse and worse. I would say that our system is getting worse and worse. Not just to be negative, cynical, Andrew, but it's the direction of travel that I think I want to focus the conversation on because tax code's the other great example, right? It's sort of like, let's do this and let's do this and let's do that. And then you find, you know, over many years later down the track, you look at that exact point in time and go, oh, this is a dog's breakfast, the poor incentives, completely disregarding of price signals, distortions as far as the eye can see. And it's not as though any one particular policy ruined the healthcare system.

51:40The NDIS is an absolute joke top to bottom, but it actually does a lot of good things within all of that. And it doesn't necessarily mean that elsewhere in the healthcare system is bad. But it's an example of these little additive things that we make these distortions, we make these tweaks without a holistic view, without a consideration of more fundamental laws of economics that we might not like but are nevertheless realistic and just the way that there is and that also are encumbered by an entire constellation of related policies and networks. It's like, it's super complicated. It's almost beyond comprehension of any one human brain.

52:18It's that kind of complicated. And, you know, mathematicians will tell you, dealing with complex, dynamic, chaotic feedback systems, it's just like, it's a three-body problem, you know? Like, you're like, I'm just going to move this little thing here. And it's like, and then all of a sudden you're just like, you're 400 miles from where you started. Was it terrible implementation? Was it an ill-conceived goal? Not always. it's actually more often than not a fundamental misunderstanding of the interconnectedness of all things and the chaotic nature of these. So I guess where I'm starting with here, Genevieve, is that with all of these things, I would love to have a North Star principle, which is minimise intervention and distortion.

53:02Don't do it. Absolutely minimise it because every time we change it, there is a second, third order consequence. and not always, but very often they are bad and not what we like to see. And just that slippery slope component tree of it as well, which is, well, we'll just do this one thing. Now we're just going to do... You know, it's like, what did Churchill say? Never waste a good emergency. COVID happened, boom, let's print a bunch of money. Just this once. Yeah. Just this once, you know? And it... Or the GFC or the.com or go back to, So, you know, whenever these things started becoming in vogue and quantitative easing actually became a word that an average person knew what it at least reports to mean.

53:47You know, and it's sort of like it's a very high-level view of things, but I really come at it because I think that I want to have the best, most efficient system. Not an efficient system from the way that it might be construed from a financial or economic perspective. I mean efficiency in the sense that we get to help as many people as possible for the lowest burden as possible. I don't know how anyone argues with that as a North Star. And if that is your North Star, to make sure that we get as much high-quality healthcare to as many people in the lowest cost means as possible, then we must start with these very, very high-level principles and you must be bloody sure before you change anything.

54:31I tell you what, when they send up the shuttle... Well, that's been retired now. When they send up the, what is it? I forgot now. Falcon 9? The Falcon 9. An engineer comes in, I'm going to change this one thing. They spend the next God knows how long thinking, how does that impact this and that? And that's a good thing, right? Because the stakes are so high. The stakes are just as high. The stakes are actually arguably much higher when it comes to healthcare because if you get that policy wrong, a lot more pain and suffering happens. Like a rocket can blow up and kill a bunch of astronauts and it's an absolute tragedy, but seven people died.

55:04Yeah. versus a very ill-conceived health policy which leaves thousands disadvantaged and suffering every... I mean, which is the worst policy here. So, my God, we really make sure that we think about things very carefully before we change one bloody button on this rocket. We're going to really make sure that we, you know, and we're going to step in it very closely and we're very much going to recognise and defer to the laws of physics before we do anything. I think that kind of thinking to me is a very, very, very, very good place to start rather than a lot of wishful thinking that disregards the reality of certain things and that leaves us with a system that is very, very good.

55:48I mean, don't get me wrong. I wouldn't want to have a chronic illness. Give me Australia. Give me a handful of other places in the world. We are wonderful. So I'm not being negative for the sake of it. and other places as well. It's just a tragedy in how bad it is. But we can be better. We can be better and we've got to keep all of this kind of stuff in mind. I'll give you a very, I talked to this one very briefly off air with you, mate, when you read out the question to me. It's the first thing that came to mind. Here's a little distortion that makes no sense to me, which is for a variety of reasons, there's only so many people who can graduate as a doctor.

56:26Genevieve will know this. She would have had to get a very high ATAR. She would have had to get into the university of her choice. She would have had to complete all of her, you know. And then there's only so many internships and that. Now, there are... I don't want to unnecessarily oversimplify it, but the long version of it is, is actually we restrict, not explicitly, but implicitly, we restrict the number of doctors that graduate each year. Now, as a free market enthusiast and someone who likes that there should be lots of doctors, I think that's a bit silly. I'm not saying we should churn out three times as many because maybe there aren't three times as many suitable candidates that want to do it.

57:06But if anyone rocks up who says, hey, I've got the brains, the capacity and the willingness to do all this training and to go off into the world and help sick people, let them do it. What are we holding back for here? That just seems like such a silly distortion. You know, we could get into a very deep rabbit hole of how pharmacies work and the Pharmacy Guild restricts things, right?

57:30Scott:That is the best union in the country, the Pharmacy Guild. Bar none. Bar none. Who? They are advocating. That's what their job is. They're an advocacy group. They're a, what's the word? Lobbying group. They're there to look after the interests of their members. But they're not, you know, the interests of their members aren't 100 % always aligned with the interests of the broader community. Yeah. You know, and it's just like, Scott's got a chemist there. And let's just say Scott's not very good because you know what? Human beings are not good all of the time. Some pharmacists are better than others.

58:05Some doctors are better than others. Some engineers are better than others. Some stock pickers are better than others. That triggers a lot of people, but it's just the reality of what it is. And you've got this, but you've got this artificially constrained monopoly around you, this geographic monopoly. And it's like, I'm a really good one. I'm young, I'm keen, I'm prepared to work harder and longer, I'm prepared to work for less, and I want to open up next door. No, you can't. Now you explain to me how that adheres to any of the things that we have been talking about. You explain to me, other than Scott and his little artificially imposed geographic monopoly, who is actually benefiting from this arrangement.

58:42And that example that I just gave there, you can extend out a long way, right? Right? And so just as an example of recognising things like supply and demand and understanding of you want cheaper healthcare, it's probably going to mean more healthcare professionals. Like, we've got to increase the supply. We can't, Jeremy made the point, you can't get rid of the demand. I mean, as much as we would love to get rid of the amount of people that get flu every year, we just can't. The demand is the demand is whatever it is. But we can impact supply. That would be a good thing. That would be a good thing to start.

59:18Now, someone else will be going, well, wait a second. Hey, I'm a doctor. Do you, wait, if there are more of me, does that mean that I don't have as much pricing power? Yes, it does. Yep. Yes, it does. I also say if you're a very good doctor, you can probably name your price. So, you know, and whether it's doctors or it's carpenters or it's engineers or it's mechanics, like it's all the same kind of thing, right? So that, I shut up at this point, Does that point make sense? Yeah, it does. That could be a great North Star for a lot of healthcare policy.

1:00:00Scott:You know, it's funny, you start by saying, you said it's to start by, let me get that right, having as little intervention as possible. And I think I agree, but I'd reframe it a little bit only because, maybe not even because, we have an ongoing conversation in our country about big versus small government. And I hate it with a passion. Because it's ideological. Logical. You know, bigger than what, small than what? What's big, what's small? Well, less, well, more. I was like, well, okay, but if it was double, would you still want more? If it's less, do you still want more? I had some guy on Twitter.

1:00:37Scott:Some bloke said I should run for parliament, and I said, yeah, thanks, I'd get six votes. Another guy said, yeah, I wouldn't vote for you because you wouldn't return taxed GDP to 22%. I'm like, okay, okay, so I hear you, and you're right, I wouldn't as an objective, because why is 22 %? Why not 21.5 or 22.5? Why not 30 or 15? It makes zero sense. So I just, you're not wrong in your, and our answer is the same, mate, which is, I would just say, as appropriate as possible, rather as little as possible, which effectively is the same thing, but it's also as much as necessary, and as little as necessary.

1:01:10Scott:So it kind of, it's all the same thing, right? So as little as necessary, as much as necessary, because necessary is the point. Is it needed? If it is needed, it's both as much and as little as necessary because it's the same number, right? And to what degree is it needed and what are the compromises that we take by doing all of that. Yeah, and so that's, you know, and so the same with defence spending. I should be 3 % of GDP. Why? Yeah, why? So China's going to come over the horizon. It's like, oh, stop, guys, they're spending 3.5 % of GDP now. But we've got bigger guns and bigger ships. Yeah, but it's 3 % of GDP.

1:01:42Scott:If our economy shrinks, do we spend half? If our economy doubles, do we spend more? The coastline is the coastline, right? Are we defended or are we not? If we are defended, how much is it cost to defend the coastline? 15 % of GDP, 1 % of GDP. I don't care. do it by the stupidity of this number is too big, this number is too small with zero direction for reality. It just makes no sense. So, as I know, I'm agreeing with you entirely. I just would, partly because people will be listening with either big government or small government views and I wanted to really, because we like to flog dead horses, just really hammer home that idea of I don't want as little as necessary, as much as necessary.

1:02:16Scott:I want as necessary. And once you do that, you kind of take out all the other ideological garbage. It's like I want as much necessary. I want as little as necessary. Good, you both agree. But no, we don't. You do because the word necessary is what's defining the entire construct. And so – Strong agree. And your point is right. So then I would – my next step, mate, I would go to everything possible. So on top of that, everything possible to maximise competition as my next step. So allow the market to operate as freely as possible. Again, as possible. As necessary, these words are really important.

1:02:46Scott:Not freely. I'm not a laissez-faire guy. I've said it before I'm not a free markets guy. I'm a well-regulated markets guy. and well regulated doesn't mean very regulated. It means, again, well, like properly, like what is needed. Again, it's that necessary word. There's a long distance between the wild, wild west and, you know, an auditor and regulator in every single consult room. Exactly. So enforcing competition is the next thing. And then I would say the next step, and this goes back, your first point covers everything because it's necessary. So we're now saying what is necessary. So for me, necessary is competition, distortion, and I mean distortion in a bad way.

1:03:19Scott:So you're talking about don't distort by regulation, and you're right. I would also say government should be involved where competition itself is not working and is creating distortion. As much competition as you can, and when that's not enough, the next step needs to be, in my view. Again, this is all value stuff, right? But it's with all that competition work, okay, what is still not working for the people who we care about, whose needs or wants should be, in our view, it's a value choice. There's no economic version of this one, Genevieve. this is just pure values and pure ideology, philosophy, worldview, call it what you want, where does it not work?

1:03:56Scott:So your point, I love your information asymmetry point, Jennifer, everything's perfect. By the way, requiring doctors to be qualified, that is a regulation. That is a distortion. That is a government involvement, right? Free markets say, anyone can be a doctor. People can just choose who they want to do their operation. It doesn't matter. You just qualifications. Government should get out of markets. They shouldn't tell doctors, the student told people who can operate on and who can't. Let the market decide. It's like, you can, and that's fine. And some people will say, yeah, we should, still should.

1:04:26Scott:I don't care. If you want me to do your operation, all you do is sign the form and I'll cut your leg off with a hacksaw. I'm very happy to do that. You'll pay me and we're good, right? Or you might say, I will actually value qualification. That's a perfectly fine view and that would be a free market view. My view is, I don't think it's unreasonable to say, let's just make sure doctors are qualified. I'm happy for government to intervene in that sense and say, there are minimum rules for service providers where it matters. Mechanics, come to Phillips' garage, I'll fix your brakes for you. Yeah, I mean, how many people die before people stop coming?

1:04:53Scott:I'm OK for them to say, if you call yourself a mechanic, you need to be a licence, you need to have done the work. That seems reasonable to me. So qualifications for me is a great place for governments to be involved. Now, not for everything in the US, you have to have a union ticket and a qualification to be a hairdresser. I mean, at some point, no, a hair braider it was. At some point, that just gets silly, right? So there are, again, like... It's massive distortions. Again, to Ram's point about the word necessary, this is... It's everything, right? So take an economic lens, put necessity over the top, and define necessity.

1:05:21Scott:And this is, there is no easy answer, Genevieve, to this one. You will disagree with me on some, Ram will disagree with me on some, you and Genevieve will disagree on each other. Plenty of people listening are like, no, they should have hair braiders qualified. No, surgeons shouldn't have to be qualified. Totally okay views. You can have, I disagree with one and not the other, but you can have the view and that's fine. It's not my place to say what your value system should be. I'm just advancing a view. But to me it's that. And then the last one for me is, again, it goes back to that distortion thing of where the market is not suitably addressing the needs of those whose needs we think should be met.

1:05:52Scott:That's a bit wordy. I think kids should be educated. And I don't want parents choosing to have Uncle Bob educate kids by throwing them in the river and, you know, only pulling out the ones who don't drown. So there's probably, you know, I think in that case, I think society should have a view on how kids are treated. That seems reasonable and if you're providing a service that does that i think you probably should intervention a rule a regulation a license a uh whatever i think that's fair and again i'm using extreme examples because when we get to and ram talked about you know when you get to splitting hairs it's really tough you know how involved should government be the northern territory for you said no a maximum speed limit they just said the road is big enough knock yourself out drive carefully now they have 130k an hour speed limit um there's 10k speed limits in some places we can argue about how big the speed limit should be or where there should be speed limits and that's that's not easy that's that's just hard because the trade-offs are hard not because they're not knowable but who chooses how many people should die on the roads you know if we if every speed came down 10 k's an hour how long how much longer would we spend on the roads how less efficient would the economy be how many fewer people would die and i'll keep going back to that just a really easy example so that's that's hard right because it's it's a trade-off and someone's got to make the call but i think on those basic views to my mind genevieve um i think and ram and i on a ticket of let the economy do what it's going, let people do what they want to do, until and unless.

1:07:15Scott:That's the better way of saying people. Until and unless. I love that correction. I love that correction. Yeah. Until and unless it has outcomes that we think are deleterious or need fixing. And that's where the economic stops and the value systems start. But when you apply those value systems again, remember there are trade-offs every time you step in and do something. And I think that's fine. I'm not anti-trade-off. Everything's trade-off. There's no pejorative in the word trade-off. You're just saying. I'm anti-trade-off. Well, I'm totally anti-trader. I just recognise that it's a fairy fantasy.

1:07:44Don't get me wrong. I wish there was a trade-off. Every child was a unicorn. That's right. Yeah, fair, fair. OK, cool. What's the trade-off? None.

1:07:50Scott:Woo! That's brand-new. All right. I agree with that, mate. Sorry. No, no, I've done jumping. Well, yeah, so when... I agree. When does government need to step in? When the free market system fails, that's when it needs to step in. or when it's producing outcomes that we don't find desirable and are happy with the trade-offs. I think that's it. The interesting thing is that there actually, there's not that many of them. There's not as many as we like to pretend. And I think we need to pretend that they're everywhere because that kind of justifies bigger intervention and bigger, I mean, you know, he whose bread I eat is song I sing.

1:08:29And, you know, if you and your peers are going to do better by your department doubling in size and more money, I mean, maybe you're going to advocate for certain things. and your incentives are just a reality. But that's really the only time it should happen. And I'm not for anything other than I want the best outcome, the most efficient outcome. And those words are so important. I loved how you said something about the economy and then you changed it to people. And it was the exact same sentence. But one sounds like you're an uncaring a-hole who only cares about GDP or some stupid economic metric.

1:09:03The other one, I care about people. And it's like, no, isn't that exactly the same thing here? I just, I don't know. It's just, it's amazing how much a simple interchange there of words can have an effect. And I was reminded of it when I just used the word efficient there again, because again, it's just like, why? Because more people benefit. So the other thing I wanted to say there was that, okay, so where should government get involved? Well, maybe there is something. Again, I don't, people have different views on this, but let's just put one out there, which is what do you, because this is usually the justification for various programs.

1:09:42What about the poor? Now, it's a good argument, right, because what about the poor? And I said at the start, I do not want to live in a society where we turn people away from very treatable illnesses and ailments because they don't have enough money, right? So that's great. 100%. But then I do rail against it a lot too because it's sort of like, But where I rail against it is because it starts with a very good place and then before you know it, we're just drowning in middle-class welfare. Yeah. You know, my parents are fine. And the amount of subsidy they get in the healthcare system is just like, what?

1:10:18Yeah. I thought the argument for this was to help the poor. Now, mum and dad aren't, you know, super rich, but they're doing okay. It's like, I just feel like, and we're giving you guys subsidised public transport. And, you know, free healthcare for this and that. It's like, you don't need it. So there are these arguments that I think are really good arguments, but they get taken too far. And it's not even trying to pick on the boomers here. It's like, how many people within our peer group and that? I mean, I remember in COVID, the state government was buying my kids' shoes. Great, I'll take it.

1:10:54You know, but actually, I really wish you didn't do that because I don't need the help. and it's also, where's the money coming from? You've taxed me and then you're giving me some back in a very direct form through some voucher. It's so inefficient. So this is my next point here is, is that if we're going to help the poor, can we make sure that we're just helping the poor and we're not helping the people who just like free stuff, which is everyone? And again, I'm talking against my own interests and I dare say virtually every single person listening to this podcast, is you're listening to a money podcast, you've probably got some discretionary income and savings and you like to invest, right?

1:11:31So, you know, someone on the street, and if you are in this category, I apologise for being so black and white about it all, but I dare say that most people listening to this don't need help with the basic things, right? And so this help the poor argument is a really good one, but we've got to take it more seriously in what we mean. And the second part of it is there's two ways to help the poor. Or do we give, set up these massive administrative bodies that sort of require a gazillion forms and that and the rest of it? Or do we just give them, we need some, you know what we need, mate? We need some kind of token that represents value.

1:12:13Oh, that's enough.

1:12:13Scott:That's enough. I'm not even talking about that. Oh, OK, good. The Australian dollar, right? Which is what it is. We need some kind of token that represents value that they can take and then redeem at a point when is necessary for a thing that they would want. So I tend to think with a lot of welfare, rather than, and goodness me, let's not even get into the way that, you know, our First Nations people are treated in terms of the welfare that they receive. You know, you get into a very, you get into very, what's the word for it, murky water. It's just like, well, we need to help you. Okay, let's give you some, no, we can't trust you with money.

1:12:54It gets very paternal and very Orwellian very, very, very quickly. Right. And so it's sort of like, am I in support of making sure that disadvantaged people have access to healthcare? Absolutely 100%. I'm more than happy to pay my fair share of tax to make sure that that's the world we live in. No complaints. Can I stop funding the millionaire baby boomers? That would be nice too. And if I'm going to help them, can we just give them some money that will enable them to make the right decisions for them. Because that then, again, I'm quoting Milton Friedman a lot, but he's just, he's the goat. Friedman's the goat.

1:13:33He made the point that it actually allows for a best of both worlds kind of scenario because the people who are given the money will make the choice of which is the doctor that I like the most, that I feel most comfortable with, which is the service that I feel is like I need, that most appropriate. And then it sort of allows that public funding to interact and interface with the private free market system in a really elegant way, giving people the freedom to choose. Unfortunately, you do get some, what's the word for it? People are like, no, no, no, no, you can't be trusted to make the right decision.

1:14:11You're not smart or capable enough. I am. I am and the people in my bureaucracy can make that decision for you can't make that decision. It gets really silly and slippery. And it comes back to my very first argument as well, which is that there is no perfect outcome and there are always trade-offs. So people will go, oh, oh, so you're just going to give a payment to a drug addict and let them decide what to do? And they're just going to spend it on drugs. It's like, probably. But you know what? If I didn't, they're going to anyway, right? So it's just like, so perfect being the enemy of the good.

1:14:42I thoroughly reject the premise that the most disadvantaged people would we up the funds against the wall. I think that is so disrespectful and condescending. You know, the single mum who's trying to raise her kids the best that she can, and she needs a little bit of extra money so that she can take them to the doctor and take care of the ear infection, but let's not just give them the money because they can't be trusted and they're just going to spend it on this, that and the other. It gets really messy. Now, again, again, the extremes of that debate are very bad. So I'm not just saying it's just money for all.

1:15:16and that's what it is. But where I make the point because the slider, at least, well, I come back to the directionality of things. The directionality of things tends to be, well, yes, you can have that, but I now need to stand up a 900-body department somewhere that's going to administer all of this. And once I've set that up, it's never going away. It's going to get larger and larger and larger and larger, right? We've seen the charts where they were, like you look at the cost of healthcare, which has gone up and up and up and up. And I forget the exact percentage, but like the lion's share of that is not because, it's because of the administrative burden that's on top of it.

1:15:57For everyone trying to make sure that no one's cheating the system, it's like rather than just sort of say, maybe just accept that some people on the fringe are going to make some dumb decisions and some people are going to waste it, but most people aren't. And guess what? When you do all of this kind of stuff to try and avoid that in the first place, people still waste it and there's still inefficiencies. Oh, and by the way, actually, on aggregate, it's worse for everyone. So there's another, again, I'm trying to sort of say not entirely laissez-faire, but not entirely centrally planned either.

1:16:28And in fact, again, back to that North Star, the North Star being, I think, we need to empower people to have the dignity and freedom of choice and agency to do what they feel is best for them without being all paternalistic and only I know what's best for you and this is how you need to... This is the service. You're too poor to afford it, but I will decide what you can do and where you can do it and what you can pay. I mean, I would even go as far to say... Oh, shut up at this last... I'm just going to drop this grenade and throw it to you, actually. Great, thanks. Which is bulk billing. Now, it's a set figure, right?

1:17:05Yep. Who decided that figure? Where did that come from? Is that the right figure? I don't know, you know? Talk to doctors what they think about it. Is there a gap in most instances? Yes, there is. Why is that? Oh, it turns out that economics is a thing. You know, there are certain concerns. It's a really good... Medicare is a great idea. It really is. But then within that, you've got someone setting arbitrary prices and limits and constraints, and I am arguing, I guess, that that as an aggregation of distortions probably is not as effective effective as it otherwise could be. Boom, over to you.

1:17:46Scott:I think... There's a sacred cow right there. Yeah, I think you're... My only... You and I have this argument regularly, or I disagree regularly, and it's kind of about the role of someone setting a price. And so you're right that that exists, but without it, what else do you do? And it's kind of that... You set a point at which people can afford it, and if you're the government, you're paying it, back to the three-party problem, which is kind of mentioned the NDS has been destroyed by, is we've got it roughly right with Medicare and probably, I suspect, and I don't want to get the NDS-Medicare thing, doctors are limited in what they can over-service and over-charge, frankly.

1:18:26Scott:And I don't mean that doctors will be necessarily bad people, but the NDS has so many different options, so many different participants, and if you qualify for one, you qualify for all, so you get all the things, and you can only have, a doctor can only, I mean, and they can treat you every week, I suppose, if they want to keep you coming back. But at some point it's like, well, I'm only getting this much bulk billed and I want to treat other patients. And so there's a natural... We've got Medicare roughly right, the NDIS roughly wrong. So someone's got to choose the price, I guess, is my point, where if you're going to bulk bill and if you're not, then you're effectively saying I'm going to let people who can't afford or don't want to afford it or whatever go without medical treatment.

1:18:59Scott:So you've always got that. Someone has to make it every... A little bit... Can I just refine that a little bit? Please, please, please. It's not, it's, I would say in a, let's just take it, it's a silly extreme example, but hopefully illustrates it. A perfectly entirely free market system. Absolutely, there is no government. Here we are, completely anarcho-capitalistic society here. And there is going to be a market demand, a people demand, I should say, which is better, for healthcare. Of course, I don't like being sick. And there's going to be someone else who goes, well, I know how to fix that.

1:19:32I'll do it for you. And I would say, and I don't even have to say, well, history shows, right? It's just these things emerge really naturally, right? And the prices, as we talked about before, will emerge naturally because people will, one person is trading a service, the other person is trading money, and they're both going to agree on it and stuff. I think in that kind of world, and let's very conveniently put a bunch of distortions, not distortions, negative consequences of that aside. But I would say all else being equal, that would actually lower the cost of funding, healthcare funding altogether.

1:20:04And then if we were to give someone... Look, we talked about... We've got to do this, actually. Let's do a UBI episode. Oh, yeah. UBI is a funny thing, right? When you talk about universal basic income, it's like, oh, yeah, totally, totally. But when you frame it slightly differently, oh, I'm totally against all of that. But a UBI is a UBI. It's like, here's your basic income. You will use this to cover your basic expenses and we trust you to do it. Once you start... Once you start saying that, no, I have to decide what price is appropriate for this. I know you're right that, I guess I'm trying to deframe it, that you're saying that under the system we have, you're right, someone has to decide the price.

1:20:39I was saying, actually, if you really want to take a silly example and go right to the other end, the market will decide the price and then all we have to do is decide, well, what is the level of monetary welfare that we give to someone that's going to enable them to then make the choice and interface with that private system in a way that's probably, in aggregate, far better, maybe. But you're right. In the confines that we have, someone has to set that. But they're going to be wrong. They're going to be wrong because they're human. Correct, correct. And they're going to make mistakes and they can't see the full picture and that's, you know...

1:21:18Scott:I'm just making the argument that it's still sometimes least worst. Yeah, sure. So just because it has to choose doesn't mean we should, you know... And I know it's a silly example, but every law has a human choice of what is a limitation or a rule or an extension or the limitation of the particular law or regulation. Who chooses what the temperature of the cook-chook should be? Who says what is the libertarian man's law in a murder? Who says the parking fine for stopping more than 15 minutes in a loading zone? And the answer is kind of like, well, there's no natural... If you agree that the law is necessary or useful or worthwhile or whatever, you've got to say, OK, well, he's a best guess by someone who's hopefully at least modestly educated in the area to say, here's kind of where it's at that number or that rule or whatever.

1:22:05Scott:You just have to. I think that's... I understand the... We absolutely need to highlight the fact that it is, by definition, then arbitrary, but I also think that the reality as well, and that's the... Either you don't do it or you do it and make a best guess, and that has to be okay if you choose to do it. So, you know, is there a rule in which, you know, Mansour becomes murder? Yes, what's that line? and someone's got to choose. Well, if you can't choose, there's no, you know, do we not have the distinction? Of course we do. And I'm not verbally, I'm just saying like that's, I think you agree.

1:22:32Scott:So it's like that decision of just, I think we need to accept the imperfection of human judgment because that's just the way you have to do it. Otherwise you have anarchy and that's just the way it goes. And it comes back to that idea of that North Star kind of thinking with it, the broad directions that we want. The devil is in the detail. It's when you try to over-engineer these things, that's when they go wrong. So what you say is correct, but it really needs to be considered from a very, very high-level perspective because you start getting ultra-prescriptive on this kind of stuff, it just...

1:23:08It always goes bad. Again, it's that false dichotomy. I was like, oh, what I'm advocating over here is Nirvana and everything's perfect and there's never... No, there's a whole bunch of troubles over here as well. Which one is sort of the least worst? Trade-offs, rah, rah, rah, all of that kind of stuff. but we also know that there's a lot of there's a lot of institutional inertia with a lot of things it's like how many times do you encounter even this is private and public right you encounter another institution and we do it like this and you go why and the answer is because we've always done it that way which makes my head explode every time it's like that may be the case but please God tell me that there is a reason beyond that because if that is the only reason And then that is just, that is, I don't know, it's stupid to the nth degree.

1:23:57Why? Because is not going to cut it for me. And you see these things, particularly in healthcare spaces, like, well, that's just how we've always done it. And you think, yeah, but you know there's like 170 other sovereign nations around the world and they've existed for hundreds of years and we can see that not everyone runs the same system as us and that there are pros and cons and there's better ways of sort of doing things. And like, so not saying that we aren't, we're doing it the wrong way, but if we're doing it this way, can you at least lay out the rationalization and contrast this against other competing approaches, right?

1:24:30Like, I don't know. I don't know why it's that hard just to take an audit of history and geography and go, what do we want? Really good quality, high quality, low cost healthcare. Cool. Have humans been doing this before? Oh, since Adam was a boy. Where? Or just in New Zealand? No, everywhere. Everywhere that any human has ever suffered. You know, it's like, okay, what has worked? You know, and like borrow from that idea and then set some very broad directional goals within that and then let people, back to the soccer pitch analogy, then let the players play according to that, sure, with a ref on the field rather than we're just doing, I guess I've gone on a tangent from your initial point, but it's just like it's another thing to raise with those kinds of things because someone does set a thing and then it just becomes a capital gains tax.

1:25:27Let's not go there. But it's just like this whole debate we're having is because, well, we just did it a certain way and now we're changing it, right? Totally.

1:25:33Scott:And once we change it, that's the next thing that's going to be this rock that's impossible to move. It's all arbitrary, totally arbitrary, right? In theory, it should be super easy to change. I'm just very mindful that institutional inertia is a real thing and it is hard to change. So if we are going to do it this way, oh, my God, please at least try and incorporate within that some flexibility and some adaptability and the rest of it because it just, you know, it just comes back to because Bruce in 1984, who was head of the department at the time, thought it was a good idea. Exactly. It's like...

1:26:11Scott:Exactly. It's kind of like the central bank reserve target, like, you know, 2%. It came from a Kiwi interview from a central banker like 30 years ago, and now it's just a thing, right? It's a far less controversial example, but it's the old... With the space shuttle was designed by the Paws and Cart Track. Yes! Yes! The path dependency stuff is massive, right? Yes. And now you can't change it. So it's both... To my mind, it's both don't just keep doing it because it's done that way, but also if you're going to do something, when you do something, recognise and he's like, oh, if we do it now, we can always change it.

1:26:42Scott:It's like, you can, but the guy who, you know, the carpet with the two horses had no concept that in X thousand years' time it would be, you know, the width of the thing that took us to the moon. It's a bizarre kind of idea, or not the moon space shuttle, but you know what I mean. It's just a bizarre idea that those things actually drive.

1:27:03Scott:Precedents are, can be completely useless. useless and ineffectual or they can be just, they can govern just literally in this case centuries of progress because a horse was too, you know, a cart was two horses wide. That's literally what the special size it is. It's like, ah, I won't go into the details of why. Look it up if you want to. I dare say people look at maybe apocryphal, so I hope it's not an entirely apocryphal story. Either way, the idea is still sound that that's kind of where you start. It matters a lot. To your point, I'm making some of those changes. Dude, you were so sure. I mean, I won't go too far down this path, but the entire internet infrastructure is built exactly on that.

1:27:38That's right. The fundamental protocols of the internet are the way they are just because that's what we happen to stick on. There's no reason, there's no technical reason that we have to use these. There are other perfectly competing ones which is never going to happen because of that path dependence. But also like the internet, which is such a good example for so many different things. And I've used this before. You know I'm fond of my raises and my laws. I do. I'm very fond of Gaul's Law. and Gaul's Law I've used many times on the pod, but it just basically says that any complex system that is seen to work invariably is built on a series of smaller systems that also work.

1:28:16So, in other words, what are we dealing with healthcare and the economy? We're talking about complex system. So let's not have a set of legislation that requires, like, eight copies of the Encyclopedia Britannica. Look it up, kids. It's a big book, basically. Lots of books in a volume, you know, that needs to dictate that because that is a complex system and that is almost guaranteed to be brittle and to fail. What you want is a whole bunch of really simple principles that you can bolt on top of each other, such as the internet, such as other things, such as the space shuttle, where it doesn't guarantee perfection but it does allow for a very, very robust hole because the hole is built on the sum of its parts, and the whole is greater than the sum of its parts.

1:29:05So for God's sake, let's get the sum of the parts right, rather than I'm on the outside, there's a problem, I'm just going to change that one thing. And it's just like looking at a house of cards and going, I really wish that card at the bottom there wasn't the king of spades. I'm going to leave the overall structure okay, I'm just going to swap it out for this. You know? And it's sort of, it's not a terrible analogy, right?

1:29:31Scott:Nice summary. There you go, Genevieve. I hope that was useful. I hope you've enjoyed a bit of a deep dive into some of this stuff. We didn't. I feel like we're still in the first part of laying the foundations. Do we even get to the rest? I know we're running out of time. Andrew likes it too, I don't want to say. No, I think, you know, so look, I think we didn't get to the examples. Yeah, we didn't. And I think maybe that's worth doing, maybe it's not. But I think, Genevieve, to your question, and I love some of the topics and the concepts you brought to the table as to why these things don't often work.

1:30:00Scott:And they're absolutely right. And I think there's a bit to that that works on, and in your healthcare industry, I love that you gave us the example because it's a really nice summary of the industry-specific stuff. The concern, I suppose, or the issue is every industry will have its own set of those similar criteria where there are trade-offs, there are implications, there are areas that don't necessarily always lend themselves to either intervention or free market or somewhere in between where it's like, you know, what does that matter? and probably we could probably throw some ideas at you. The NDS is the obvious one.

1:30:32Scott:Aged care is an obvious one. I think where the outcomes are less obviously able to be solved and measured economically, and I mean, I guess, monetarily, I'm talking about here, not monetary policy, but just with, you know, if Heinz sells more baked beans, they make more money, that's pretty easy. If the average patient, you know, dies or doesn't die, has good care, bad care, what is that? Would an extra nurse help? would one less nurse really cost that, you know, save that much money? They're amorphous outcomes, even if you can measure them. And if you can measure them, what do you use as averages?

1:31:07Scott:You know, half below, half lived. Do you use distributions? Are you looking at, you mentioned quality adjusted life here. So I think we're not going to get new individuals, and we probably could never do it reasonably. I think you've probably done a better job on the weekend, Genevieve, of giving us an industry example where there are issues to how this can come to pass. I think hopefully we've answered the question, is what should we be thinking about when it comes to this sort of stuff? Yeah, that's the point I wanted to make. Yeah, I think that's what we've... You've got, because it is a 12-part episode and we still scratch the surface if we get to the specific policies.

1:31:36It is the hope that I had with this pod was to just try and get some of those bigger principal ideas because I feel as though we skip over them too much, you know? And again, just back to... If there's some brain surgeon out there making$4 million per operation, I don't know about you, but it's just like anyone who's got the capacity to be a brain surgeon is all of a sudden very seriously thinking about being a brain surgeon all of a sudden, right? Like how much? Oh, I might do that, right? And let's not interfere with those big ideas because those big ideas are going to make sure that things do go to where they need to go.

1:32:16There were so many other good examples I wanted to get into, but we're just not going to. But I do really love the question, Genevieve, and hopefully it's helped.

1:32:23Scott:Well done. And a great start to our pre-recorded episode session. So thank you very much for the question. Thanks for listening. If you've got a question, it's too late to send it in now because those are all pre-recorded. But we thank you anyway. Do me a favour if you are. If I've got questions, we'll need to refill the mailbag. So while we're away, we can't give you evergreen content options because we're going to have pre-recorded them all. But we will have more mailbag episodes to record after the return. And so please hit us up, info at fool.com.au. You can follow us on all the socials, of course, sage underscore simian or strawmaninvest on Twitter.

1:32:53Scott:I'm TMF Scott P on Twitter and Insta and Scott Phillips Money on Facebook. Until, let's come back on Sunday. Will you come back on Sunday? Sure. In that case, Fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies 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 fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.