Tupperware loses more than a lid or two. September 20, 2024

25:36And he's going to think, well, wait a second. You did everything that was quote unquote wrong and were rewarded. I did everything that was quote unquote right and I've been punished. But now you're telling me that I still am on the right path and I should keep doing it. Even though I'm just watching everyone else make a fortune with seemingly easy money on incredible amounts of leverage, which just doesn't seem to have any downside. it's so it's i think i think what we're saying is right but it is it is a very hard thing to lean into after so many years of that being the wrong thing to do and and and by the way as i said it's a slow moving train wreck so it might be there's still more juice in this particular lemon you can get a bit more blood from the stone potentially it was like no i'm still going to keep doing it and maybe the the real reckoning is still another five years away it's a lot of money i might be leaving on the table by switching or pivoting or maintaining a more defensive sort of stance.

26:35And yet anything times zero is still zero at the end. I mean, you're playing a game of chicken, right? And some people swerve in time. And maybe you're the kind of person who swerves in time. But, you know, everyone tends to, a significant majority of people don't. And when I say, you know, I'm not talking about some teenager in their mom's basement, you know day trading game stock shares i'm talking about people at morgan stanley and some of the biggest like always you just it's it's everyone thinks that they they will they will tilt the steering wheel hard to the left just just in time and and yet very very few people do these are the it is very much these economic situations are very much uh gradually and suddenly kind of phenomenon so i i i just i can't hope to time it and i'm happy to you know not quote unquote maximize my potential gains i i just want to be able to just you know survive because when you come out the other side they're the people who who tend to be in a much better place it's also you don't even have to believe that there is a train wreck coming to do these and serve them i think that's where i you know i i'm not as i'm not as worried as you are and this is no that but our approaches are still the same because it just makes no sense not to we're both parents mate it's like the kid who jumps off the roof don't do that make you hurt yourself he jumps say see you later fine i'm okay that was a great idea you know it's like and it's one of those as a parent you're like okay you might get away with this time but it's not you know it's it's kind of like that and you want to say do it a hundred times right let's let's tally up the stats kid does he break your own they'll take you to hospital i'll say i told you so kid uh which of course is not what you do but that's that's kind of you know just because you jump off the roof and don't hurt yourself doesn't mean jumping off the roof is a good idea and so yes you might you know other kids are doing it it's all that all that stuff and sometimes we just we're pretty kind of you know unevolved creatures right there's that that idea of i did a thing the thing worked therefore i was right um annie duke uh author calls it eventing using the outcome to determine whether or not the result the action was a good idea and you just can't right she talked about poker in her example and it's interesting book if you i've never made it through the whole book it gets a bit repetitive and slow but read the first half it's really interesting just and it's that's the major lesson is a good hand can sell out with a bad result or sorry a hand played well can sell out with a bad result a hand played badly can sell out with a good result but more often the more often you play a good hand the more likely the result's going to be good and that's kind of its probability right so as an investor as a person you don't want to put yourself in a position again i'll throw another buffet at us because it's fun he says you never want to be in a position where you rely on the kindness of strangers no whether that's the bank manager whether that's being bailed out whether that's what just just don't do it right so did i make as much money as the person with 195 % leveraged investment properties?

29:16No. Does that mean I should have done it? No. Should he have done it? No. But he did and got away with it. Yes, he did. Robbing a bank, you might get away with it, but 99 % of people aren't going to it. I think I spent 20 years in jail. Does that mean you should rob a bank because someone got away with it? No, it's not a very good idea. So think probabilistically. It's probably, I said, I'm not as negative as you. I'm not saying don't do it because it's definitely going to go badly. I'm just saying, why would you take the risk? Why would you risk the things you have and need? Again, the third Buffett quote very early on, for what you don't have and don't need.

29:47Don't take the risk. Not everything's about wealth preservation. There is a time for accumulation. There's a time for considered, I will say risk-taking. I mean that in a lowercase r, not stupid risks, just the reality of cash under the mattress is probably safer than money and shares, but more often than not, it's going to do badly. Just be careful. Yeah, and be mindful too that you may, There's not too much of a stretch to think in the future you may be forced to do some investments you prefer not to, right? Indirectly, it's called financial repression. It happens in advanced economies regularly throughout history.

30:20And it's a bit of a scary sounding word, but you put things like capital controls or investment mandates into things like pension funds, super funds, wherever. It's like, you know, when no one is buying your funny money paper anymore, i.e. the government is unable to sort of sell the bonds that they want. They just say, well, there's a huge pot of super there. Let's say that every Australian for their country should hold 10 % in government bonds. It's supporting this, and we can actually wrap that up in terms of, well, it means that you're taking on lower risk. We think it's a good idea. Look, here's an expert that we found that reckons that all Australians should have 10 % exposure to this.

30:53And we'll throw in a patriotic angle. It doesn't work out well. Ask yourself this. Why does China have capital controls? Why does the Chinese government feel it necessary to say to its citizens, you can't take out, what is it, 50 grand a year, 10 grand a year? not much um right like because because they know if that wasn't there people would be getting their money out as fast as they possibly can like that is that is sort of like hey i'm having a party is it a good party well it's a really good party but i'm not gonna i'm gonna once you're in i'm locking the doors you can't go home but it's a really good party oh yeah it's great party yeah you won't want to leave but if i want to leave can i no and and and again that's another that That is another fascinating experiment that is playing out in real time.

31:39Again, over many, many, many years. But it's sort of – this is sort of the go-to policies that you have to kind of get to at a point. Because at the end of the day, it's a debt-based system. And you either somehow assume that all of this money that's been borrowed and therefore created has been invested so prudently that we're going to get incredible returns or we don't, in which case someone's going to cop a loss. some of the people who are copying a loss are not a pretty powerful and influential and don't want to and so we we engineer things and we just we distort the natural order of things i would say and the natural order of things includes nasty stuff happening from time to time and but but in our in our efforts to sort of engineer all of these kinds of things we just make it really bad and it just it it works until it doesn't gradually and suddenly and i don't know maybe it's 10 years away.

32:40Maybe it's next year. I have no idea, but we're on a pretty bad path. I know it's so doomerish to say all that kind of stuff, but I'm really open to someone sort of saying, no, no, no, no, no. It's all going to work out really well because. And the only explanations I've ever heard is, oh, no, the economy will turn around and we'll just experience such incredibly mind-blowing growth that everyone will be making great returns on their investment. They'll be ought to pay back their debt. We know the government will start spending responsibly within their means on sensible projects. And I go, okay, so if all of that happens, I'm okay.

33:20Yep. And if it doesn't happen, no, it's going to happen. Okay. So I'm not saying it definitely won't happen, but I do think it's just basic prudence to sort of say, well, maybe it won't. And it's so easy to sound cynical and tinfoil hattie with this kind of stuff. But it's like, Well, again, any student of history would tell you that 99.9 % of the time, that's the way it goes. And you're telling me, put all my chips on the 0.1 % outcome because, like, okay. And I'm the doomer for thinking that maybe this is like, history is just going to rhyme as it so often does. I don't know, mate. I don't know.

33:59It just, it's a worry. Be prudent is the key answer. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

34:13We kind of mentioned Porton Podcasts and Pinot and Picasso at the top. I don't mean to make too much fun of them because the business called Pinot and Picasso actually went broke this week. They had 42 franchises and seven company-owned stores. This is one of those things where you go and paint and have some wine. You kind of get together. It's normally corporate team building or the hen's knights or whatever. Shop fronts where you go and spend a bit of time. and it's kind of canary in the coal mine's gonna sound horrible because i don't suggest there's that much below the surface necessarily but when discretionary spending stops we talked about that just before with savings falling everything else it is kind of about the most discretionary business i can think of right big shop front uh you're gonna have group bookings sometimes so it's not like you got people coming in out of the door all the time you're not selling something all the time you're kind of waiting people to come and book in groups of 10 or 20 and i'm sure it's i'm sure it's lucrative when they do come uh but if no one turns up on a given day you're paying the rent You're paying the lighting, you're paying the staff, and no one's there.

35:04It's like childcare or airlines. It's an occupancy game. Yes, it is. Exactly. Good point. And we lose a little bit, you're in a bit of trouble. So, yeah, they've unfortunately seen that sales have fallen off a cliff. And I guess I raise it largely only for the sake of saying as the pointiest end of what I think is probably about the most discretionary business I can think of. These guys are struggling and have gone broke. And there's other businesses that are in similar situations. I don't really have a so what, mate, other than I think it's an interesting emblem of where we are economically. That discretionary retail, we saw last month with the retail sales numbers that retail sales were flat, but food sales were up 0.2%.

35:45In other words, retail other than food was down, not just by the point two, you can't do the straight maths, but it was down in general. And we're talking about food, we're talking about furniture, clothing, cafes, restaurants, that sort of stuff. So food up because people need to eat and prices are going up. everything else down uh and by the way again that's in total dollars not in per capita dollars so we've got a bigger population as well um things are pretty grim and i guess back to your point about the fed and back to the the question about the rba um it really does feel like economically that the rubber's hitting the road and we're kind of at a at a tipping point's the wrong word i don't want to i'm not not predicting anything necessarily i guess i was happy when the gdp numbers came in positive as we said because they could have very easily been negative but i don't know if you and That was the June quarter, by the way, now at the end of September almost.

36:29I don't know. It feels like just an interesting marker in the economic journey. Yeah. I mean, you know, businesses failing happens all the time, good times, bad times. And you've got to be careful how you say this because it always involves misery and suffering. Someone put a lot of their hard-earned savings into that or they took on – Yeah, totally. Speaking of debt, right? They took on a debt. And probably have all these, by the way. Yeah. Investors put their money in. People were hired and then that became their livelihood and they're gone. So it's really dangerous. It's really, what's the word?

37:09It's not something you want to go, oh, well, that's good. Because it means that, you know, the system is riding itself. Why did it go fast? Because not enough people were using it. Their costs were more than their takings. and it's just like, well, what's the alternative? What, do you mandate that people have to go to Pinoy and whatever it was called? Pinoy on Picasso, yes. Picasso, thank you. Like, well, that's called communism. That doesn't work, right? It's like it failed because it just didn't meet a market need. Sufficiently to cover its costs, yeah. Yeah, and we've here and I think the media at large focus all on the you know the woolies the quantuses the big companies but you know i forget the percentage but most business is small business yeah in in most countries in fact and certainly in australia and what's the survivorship rate i mean very few is it 90 of businesses fail in their first year yeah yeah and and again it's it's really it's not something you ever want to sort of celebrate but that is the wonderful self-correcting mechanism of capital allocation and wealth creation and improvement of standard of livings.

38:22The ones that survive in theory are the ones that take in more than they spend. And they take in more than they spend not because someone said, you have to buy my product, but because I want to buy your product. Scott's making some really nice sourdough I saw on Twitter the other day and some homebrew. Give me some of that. I'll buy it, right? And that is the signal. That's the signal, right? And this just – no one wanted to do it. Well, not enough people wanted to do it. So it's kind of like – I guess I don't know what my point is either other than to sort of say, okay, it got a bit of a write-up because of it's – I don't know, people – it's a bit clickbait-y.

39:04Yeah, you know, oh, well, you drink wine and pain. Oh, of course it went bankrupt. How dumb is that? Like, no, it's perfectly sensible. Look at Zumba, right? Zumba's a pretty – I haven't looked at that for a while, but that was a very big success in the day. You know, similar kind of model, sort of a franchise sort of based operation. But it was successful because a lot of people really liked it, you know, and get fit, have fun, dance around. Someone, you know, and the economics just sort of worked and they were successful. And this is, yeah. So I don't know. The other careful thing you got to be careful with is, and I do this all the time, is to say, ah, this reinforces a particular narrative that I've got.

39:45That's right. In other words, you know, in this particular case, oh, the economy really is in a basket case. And look, this company failed. That's proof of it. It's like, well, we could be in a very strong economy and a massive bull market. And those things happen every day as well. So I'm just throwing words at you at this point, other than to sort of say where it gets interesting is when this starts to happen at a far greater rate. Correct. And I suspect it will be something that will be met with a political response because it's nasty and it's horrible and someone should do something about it.

40:22And it's usually when that happens that things get worse because in trying to fix things, people, you know, it can often get worse. In other words, you often introduce distortions into the economy and you prop up businesses that are usually referred to as zombie companies that in any other world would be dead. but they're undead because we basically tilt the economics in a way where it's just like, well, you're not viable if it was just purely on the consequences of consumer demand. But if we give you a bunch of subsidies and reduce your tax and do this, well, then you can make sense. And it's like that's – why that's a shame is that – because, again, some people might argue, well, isn't that good because that business gets to stay in business and they get to keep employing people and all of this other kind of stuff.

41:09Why it's a problem is because it diverts money away from what might arguably more productive use cases. And people as well. Yeah, people as well. So people, there might be someone else who's got a really great business idea that's really going to create huge amounts of value for a lot of people, ultimately end up employing a lot of people, but they don't get the start because we've diverted money towards propping up these politically favoured kind of enterprises because it feels good. and and again there'll be winners and losers in all of that but in aggregate we're losers like there's there's more negatives that there's more losers than winners in in that state of affairs yeah and you could yeah i don't know i'll shut up now what's your point what's your thoughts i think that's a really good summary i i agree with you i've i've tried to gently at least i would have been asked about these things in the last little while you know business insolvencies are rising and it's kind of exactly what happens in cycles and it's not it's not great for anybody who's running the business invested in the business working for the business as a customer or supplier of the business i mean these are really dislocating events yeah but the reality is that the it isn't it is the nature of things it is it is capitalism doing its thing right if if if no business ever fail either we're not starting enough of them or probably might but in an unhealthy way, as you say, like communism or something else where no business is allowed to fail.

42:33So we're then subsidizing or we're making people shop there or we're doing something else. And none of those things are great. I think it's kind of, the other thing I think is, we want a lot of stuff being thrown at the wall. I've said before, and we do the Good Oil podcast, we interview, let me spit that out, geez, entrepreneurs every now and again. And kind of their story. And I've said, you've been on the podcast. You know, part of it is, I find it fascinating, right? Because the ego and the self-confidence and the self-belief, knowing those stats you just said, it's like, I know nine out of 10 fail, but I'm going to be the one.

43:06It's like, but if Teddy is saying that, nine of you are wrong, this is the point. And yet, and yet, you know, as you say, the Woolies of the world, we talk about them. The Woolies was once a single store general merchandise retailer back in the early 1900s, which may or may not have been Pinot and Picasso today. It turns out it wasn't. But that's, you know, every big business starts as a small business. and grows from there. And we kind of want that to happen. But for that, by the way, for Woolies to grow, they put other people out of business doing it. I mean, the simple reality is it's not like Woolies grew only because the market grew.

43:36They were one of, at one point, hundreds, thousands of general corner stores. And are we sad for the corner stores to close? Yeah, kind of. My grandparents had a corner store in their place and I'd walk around and get my dollars worth of lollies once upon a time. It was dollars, it wasn't shillings and pence, thank you. And that was kind of what happened. and it is behind the progress of the economy. We have better standards of living because businesses find better ways to do things, and those don't adapt, fall by the wayside. Yes, absolutely. And the point that I was going to make here is that no central authority or person made that decision.

44:12We made that decision. So if you want to bemoan the failure of this business, we should talk about Tupperware as well, right? Because Tupperware has just filed for Chapter 11. And that's like, you know, a lot of us have very fond memories. Everyone's got Tupperware. in their kitchen, right? And it's like, oh, it's a shame what happened there. And it was like, well, you didn't buy enough of it is what happened there. And my neighbor didn't and I didn't. And that's what we, the corner store isn't there anymore because as much as I would like it there and I've got fond memories of it, well, guess what?

44:45The person running that didn't close for any other, they wouldn't have closed. They're making too much money. They're making too much money. That's right. And so it's not, there's no one to, we can't even blame. There's no, it's not even the blame is the wrong word. It reveals when we spend, we reveal our preferences and you can't tell me my preferences are right or wrong. Everyone's got their own, what they want to spend their money on. I earn money and I spend it on what I like. And I look around the marketplace and this person's offering this and that person's offering that I'm going to pick the best thing that suits me and my preferences, not neither right nor wrong.

45:18It just is what it is. And, and if it turns out that enough people don't like your product or service and they won't go there and you'll go out of business but the person that is providing genuine value will thrive and go on and grow and and and this is this is this is how we all win this is how we all win we all we all move forward individually someone loses a job someone loses a business they are bad outcomes for those people yeah but as a society we improve over time and that's you keep that in your head you know i hear people about inflation interest rates right and they say well i would like more inflation so that jimmy across the road keeps his job in construction and i get that i really honestly i get the sense of i see the individual circumstance inflation is big hard to grasp that i'll take us back there necessarily but it's being hard to grasp thing and so it's out there and it's big amorphous thing and no one's really seen as being responsible for it directly just a thing that's happened to us but the rba is making a decision that is putting jimmy out of a job and so if jimmy didn't get put out of a job i'd pay a bit more for groceries that's okay i don't mind that another one percent on my I made Wee-Pix, that's okay.

46:16Jimmy keeps his job. Everyone's happy. And in isolation, that's a perfectly reasonable, sustainable, responsible, frankly, caring thing to say. No one wants Jimmy to lose his job, right? But the reality is that that writ large and over time means we all end up poorer, including Jimmy, who loses his job eventually anyway. We all end up worse off. Right? Jimmy loses his job eventually anyway because we haven't got the money to buy the construction that Jimmy's doing because we're spending too much on Wee-Pix. Yep. And again, our views on niche rates and reserve banks are different, but that's okay.

46:43but the broad idea still applies whether it's centrally mandated or simply happens as a as a context or consequence of of just the circumstances that evolve yeah there is there is there is no solution in which the the bad business stays in business other than at our cost are you going to get rid of your second car to keep jimmy in a job well we're not going to do that i just want to pay one percent more for my weepix well you pay one percent more for your weepix now and then that goes into your wages that goes into your boss's cost that goes into you know he has less customers He has less customers, so he's going to have less people.

47:12Guess what? You get laid off trying to keep Jimmy's job. There is no magic solution where we get to say higher prices for longer are fine, and Jimmy gets to keep his job, and we're all better off. You can't – it is not, to use your phrase, circle you can square. The reality at a national level is just different to the reality at an individual level. It has to be. It must be. And you can say, look, it's not fair that I'm doing well in this economy, and Jimmy's now not got a job. He's only employed for the long term. That isn't fair. I agree. The result is, though, the alternative is Jimmy's still unemployed and we're all still poorer, and that's even the worst outcome.

47:45So we're not choosing - And our kids will never buy a house. We're not choosing two good outcomes here. We're choosing from two outcomes, both trade-offs, trying to choose the least worst. And that's kind of where we find ourselves. So what you do, given all of that, is when I'm emperor of the world, is that you make it very easy to start a business. I don't know if anyone who started a business, it's a nightmare. Oh my God, it's a nightmare. Like the hoops you've got to jump through, the boxes you've got to tick, the bureaucrats you've got to deal. And again, it's very easy to sort of sound a certain way here.

48:22And it's not that regulation be damned, everyone do whatever they want. But I think it's well documented. the regulatory bureaucratic barriers to forming a business, not just the paperwork, but the costs involved. It's a nightmare. And if you talk about people starting businesses with blind optimism, I think that's probably the thing that you don't appreciate how bad it's going to be. And then the other side of it that we do in this country, which is so bad, is that when you fail, and most people will fail, not because they were dumb or lazy or had a bad idea, but because business is hard and the arena of capitalism is cut and throw.

49:08It's just super difficult, right? Yeah. And so you're just going to fail a lot. But when you do fail, you don't make it an event that is going to put you in a tent city, right? You make – and America does this well. Israel does this well, actually, as well. There's a few other places where it's sort of – again, not that you should be rewarded or, or, or protected from failure. No failure is, is, is part of it, but you don't want to make it so onerous and crippling that you've got one shot at this Scott. If you want to do a business, you've got to, you've got an idea you want to create value for your fellow human.

49:45I tell you what, you've got to climb this massive mountain just to get to the starting gate. And if you fail, God help you. You're falling a long way down off that very jagged cliff where it should just be easy to start with appropriate safeguards and, you know, regulations, et cetera. And then if you do fail, it doesn't mean that you're just entirely wiped out and you can never, ever, ever start again. In fact, look at all of the successful business people that you can think of. And I will guarantee you that 99.99 % of them all tried three or four times beforehand and failed miserably. And the reason that they ultimately went on to, that they were able to ultimately go on and create value and their own success was because they were allowed another crack at it.

50:32And I used to work for a company that dealt with high net worth individuals. And I remember going in there thinking, wow, they must all be really smart. Well, yeah, and hardworking. But I guess that there was some truth to that, but no more than the general population they just they just had more they had more shots on goal you know if i've got if i've got a chance to make it i get you put me in the basketball court and i have to shoot from the three-point line and that's it one shot one shot yeah yeah and it's like i don't know if i want to do that and what happens if i fail i'm here i'm never allowed back on the court again okay now what have you said well now it's not it's a penalty shot it's not at the three-point line and you get to have 10 shots.

51:14Now, there'll still be a lot of failure. There'll be actually more failure in a lot of ways. But I would imagine, I think a lot of economists would argue this as well, is that generally society is far, far better served over that because you get more people trying more things. You get this grand experiment in the economy where just people are just tinkering and, oh, maybe I'll try this. Oh, it didn't work. Maybe I'll try that. Oh, my gosh, I just invented the iPhone, right? Like, oh my goodness, SaaS technology is now a thing, right? Like just because you were able to experiment and tinker and try.

51:51And anyway, I just think that's the broader point that we need to make from this. Not that businesses fail, is that yes, they fail and we should accept that as part of normal, but we should allow for that in how we sort of design things and recognize that it's okay to try. and to be able to try again. If you can convince someone that you've got a good idea and you can encourage investors to come in and you can start your thing. And I just say, entrepreneurism is the reason, a big part, not all, but a big part of the reason why America is the superpower of the world. And Russia isn't. I mean, that was the one winner of the Cold War and pretty much the economic system is, and the structure and the design of that is pretty much all you need to know as to which one was going to ultimately be the winner.

52:41Anyway. Sorry, mate. Long, long time. No, it's all very, very good. Very tangential. But do you agree or do you disagree? What would you do? You say it's tangential. Now you ask me. My only question would be, this is going to be the end of the podcast. Because I can see it. I can read your face through my little Zoom screen here. No, I totally disagree. I was toying with either trying to move on or engage with it, Realizing that if we do, then this is the end of the podcast by the time we finish the conversation. So let's go with it because you've thrown it up there. It depends on what you mean by the consequences of failure and what is required.

53:17So I agree that capitalism requires entrepreneurship. I agree that capitalism is the least worst of any system we've ever tried. As horribly imperfect and ugly as it is, it's still the least worst. So be careful what you wish for, right? If you want to get rid of capitalism and replace it with something else, trust me when I say every other thing we've done, it doesn't work. and worked worse. So, you know, I don't mind people being unhappy that capitalism isn't perfect, but junking it starting again is a crazy, crazy... Perfect is the enemy of the good, right? So I agree with all that as a starting point.

53:50My question to you then, I suppose, before I answer your question, do I agree, is what would be different in Australia? How would we better... Well, I'll set it up with a statement, actually, and then I'll ask you the question. I agree with you, but it's kind of like listening to the business council versus the unions right everyone's got their reason why their view is the right one and why you know it's trickle down trickle up it's you know business employees people yeah but workers have to have a living wage so you kind of and the truth is always somewhere in the middle and i would be i would be a little bit concerned about the who pays the costs of a different system that you might otherwise propose not systems wrong different treatment of entrepreneurship than that you might suppose so my answer is like i don't know what I would say to what you said, hence me asking the question, what would you do differently?

54:34What would you have as a different structure or setup or treatment or whatever for those entrepreneurs who do give it a go and fart? Obviously, less red tape setting up. That's where I was going to go. That to me is just such the low-hanging fruit, right? What do you think is that? Obviously, the regulators are in place for a reason that people at some point thought necessary. So what is... It's an unanswerable question, but I'll ask anyone. what red tape is unnecessary what should we remove what what's not necessary because my other suspicion by the way man is no entrepreneur says i've got this great idea but i'm not going to do it because the red tape they might go this red tape sucks it took me six months longer but i'm still doing it right so some people say oh you need more funding for entrepreneurs like well which which of the businesses created in the last 200 years wouldn't have been created you know because like the founder went i've got this world changing idea but you know bank bank interest is 1 % more than I otherwise would prefer to pay.

55:25So I'm not going to do it. I find that, not by you, but other people have said to me, you know, it's all about bank funding. If there's more bank funding, it'd be better. It's like, well, you know, the banks take more risk. That feels systemic to me. And I'm not sure any entrepreneur who is worth their salt. For the reason I said before, right, they're all mad. And I mean mad in the most wonderful way, right? Because - The Steve Jobs crazy ones, right? Right, it literally is. You know, you left a reasonably well-paying job to go and start your own business. I'm like, dude, you're giving up money.

55:51Like, what the hell are you doing? And you're like, no, I need to do this. This is going to work. And you were right, by the way. That's almost my point is it's that sense of I have this burning thing. I don't disagree with removing red tape. I tweeted during the week to exactly that, just not to quote myself, just to make sure I'm on the record here. I'm often accused of being a nanny statist by some people. I want too many rules, too many bans, too many regulations. That's true in some cases. Other cases, I'm like, we've got this regulation for no good reason. What the hell? But I'm not entirely sure that there are that many potential businesses that aren't being started because of those things.

56:25So is it a small business person, Andrew Page, founder of Managing Director and Chief Cooker Bottle Washer of Strawman saying, I really like the rules. I want people to be nicer to me because I'm a business person. I'm important. You should thank me. Or is it actually a case of there are things there that do stifle but otherwise would be done? Yeah. Well, the other thing is, I guess, this kind of conversation conjures up the person with the world-changing idea. But the boring reality of it is most people are just wanting to run a bank. It's all a mar on the hairdresser. Yeah, a fish and chip shop.

56:58Yeah, I'm a hairdresser. It's not like they feel as though they're going to change the world. It's just like, you know. Don't want to do a thing. I want to do a thing where I work for myself, right? Yeah, love it. And it's not just the setting up and the ongoing compliance costs and auditing requirements and what ASIC requires of you, but just the taxation system is so diabolically complex. It's impossible. You're getting the point now, it's not impossible for you to do it yourself, but I don't think any business person does their taxes because it's just, I've got 5 ,000 plates spinning here. I'm desperately trying to sort of keep everything together.

57:32And now I've got to spend 30 % of my time trying to figure out all of this nonsense as well. So I just, I would, I'm not saying it's a silver bullet, but why are we putting obstacles in the way is what I'm saying, right? Like why not make the path as clear as possible? You know, it's like we talk about with the housing problem, you know, is there a single solution? No. But is there 20, 30 different small things that we could do that in aggregate probably combine for a better outcome? I think it probably goes that way too in regard to business. and you know it just it just doesn't need to be that way the trouble is when you add it's very hard it's easy to add rules and regulations are very hard to repeal them and they just layer up they layer up and layer up and layer up where you know it just it just it just becomes so nightmarish to navigate that it just even when there's situations where and again so a lot of these things happen on the margin so it's not like that for a lot of people it might be a bit of a a nuisance, but I can still deal with it.

58:37But there's plenty of people who are very close to the edge. And as the economies, you know, do take a term for the worse, they're all the ones that go under. Like we could probably prevent a lot of failure just by removing a bit of this cost and burden. And again, not to sort of say laissez-faire capitalism. Absolutely not. I hate the word capitalism, by the way. I think it's too low to the term to use these days. It's just. You don't like a lot of words, Andrew. I don't. I mean, it's a great word. It is the word. It is the word. You're right. But I've learned to experience. There's capital C capitalism and there's, yeah, exactly.

59:10You know, when you say that word, it just instantly conjures up a mental image that we all have formed over the years through our own unique experience. And it's too loaded a term. It's just, you know, cavemen practice capitalism. They didn't know it was capitalism. They just, you know, give me that skin, I'll give you a spear. We're trading? Yeah, we're trading. oh I'm going to found a society based on this system of property rights and free trade and like what no I just I just want the I just want the skin dude here's a spear um anyway uh I don't know maybe that that topic's run its natural course but it's it well I'm still curious what we would need to change to be more like the states and not to not to put you in a box I'm just trying to let's talk about Tupperware right so they've got chapter 11 filings that you can do which basically removes some of your obligations there to give you the best possible chance to sort of salvage things.

1:00:04So that's just one small thing. It's not cost-free though, right? I mean, there's borrowers who won't get their money back because the Americans have a gentler way of dealing with failure. You would, on the other hand, say failure is part of capitalism. Why should Tupperware be protected from the consequences of their bad decisions, which effectively they are? I've got to say, I'm still not sure that it might be better for those businesses. uh would that money be better if things went bang that the the uh lenders creditors got their money back invested it somewhere else versus nursing along a tupperware or something else at a single business level a tupperware is very happy that's got chapter 11 rather than rather you know our version of administration liquidation um again like i i i see they are being treated more nicely i'm not sure that i to this one i was struggling to answer your question i'm not entirely sure it's better it's it's better for tupperware is it better for capitalism it's better for the society is it better for the creditors it's better for the customers or should be like tupperware is dead it's it's done we've just discussed exactly as you say what was wrong with it it's dead move on but why would we why would we sort of wet nurse this thing through through some rebirth that that could simply be done by capitalism doing capitalism things i'm i'm still not as sure i'm and again i'm a capitalist for all the connotations, as you say, that it brings that are uncomfortable, you know, the people more than me.

1:01:26But part of me is like, you know, I don't know that a for-profit business would take its risks that it knows it's taking. With all the upsides it gets if it's successful. I mean, jobs are a lot of risks in the garage and Apple could have gone into Chapter 11 in 1983, but instead it's now worth a squillion billion dollars. You know, that's the trade-off. Do we really want to need to mollycoddle entrepreneurs who are going to make six, seven, eight, nine, 10-figure fortunes if they get it right? Or is that just, you know that risk when you take it? I don't know, man. I'm really not sure. Again, I feel like I'm being anti-entrepreneur or anti-capitalism.

1:01:59We're really, really not. Like, I love it. I think it's great. But I kind of don't think, you know, you started a straw man because you thought straw man was a good idea, not because you had Chapter 11 protection if things went badly. You know, you started to spite. And again, I'm not, like, we should remove regulation. We should make, I'm not, we shouldn't make life easier for business. We should make life less hard for business. Yeah. right so that's all i'm saying let's get rid of the grimey oh yeah well calvin if that's and it's just i completely agree it's a spectrum right so there's a lot of things where it's just not a black and white binary kind of thing or it's like there's this or there's that there's there's just and and they they they evolve over time in a sort of direction where it just becomes more and more burdensome i don't know where you hit a point where it's like oh that's that's the point beyond that it's not tenable so it's not right it's like um it's where absolutism is so much easier, but so far so wrong.

1:02:47It's like, you know, let's get rid of all regulations. Well, that doesn't work. Let's have more regulations. No, that doesn't work. So you mean there's somewhere weird, squishy in the middle that seems about roughly right? Yeah. Where is that? I don't know. Yeah. Well, I'm very unsatisfied. Then I would like a hard answer, please. Yeah. So it's just about trying to be aware of things. I think too often the knee-jerk reaction is well-intentioned, but ultimately is counterproductive is all i guess is my my only point here and then and once once processes and systems are in play they're very they just for whatever reason there's a huge amount of inertia in those kinds of things and yeah you know we're still dealing with sort of you know things today that was like put in place decades ago why do we do it that way oh we've always done it that way yeah i understand that but why we just do yeah but that we we enacted that before the internet was a thing right like why do we do you know it's just like i don't know it's above my pay grade and it just it just it's called institutional inertia because it's a thing and it's a real thing and and and it's easier to um it's easier you mentioned putting a regulation for it to take one away i i've been my fault i'm i'm i find i find it funny saying this stuff because i'm generally in favor of stuff that's keeping us safe and you know i'm i'm probably more nanny stated than you are you're probably more libertarian than i am and neither of us is entirely one or The other is just that's the spectrum, right?

1:04:07Yeah. And so, but the local area, there's a couple of two things. My local area, there's been three different speed zones that have been reduced by 10 k's an hour. And nothing's ever increased. And it's not like they need to be increased, should be increased, but someone said, okay, 60 is okay. Actually, now it's 50. Okay, 90 was okay down the road. That's now 80. Well, why was 90 ever okay? Well, because we thought it was, okay, so 80 is better yet. Why is the 80 zone not going up to 90? It's somewhere else because they did the work can realize actually it wasn't necessary it never is to your point because you don't take it away here's my favorite i used to work you mentioned home brew before i used to work for a grog company diazio who did spirits and alcohol pop side drinks and some a couple of beers in guinness and other things so i'm very very familiar with the excise rates on alcohol right and the excise rates on alcohol differ depending on what it is by alcohol content what product it is so australian speaking of decades ago, Australian brandy was our first spirits industry.

1:05:03We had wine. We're ever good at making wine, so we made it into brandy, right? Because then just, why wouldn't you? Fortify it, job done, fortify wine. There was a lower excise on Australian brandy than on other spirits, including other Australian spirits, because at one point, the brandy makers lobbied the government, so they got a different excise rate. There was a different excise rate on beer pudding kegs versus beer pudding bottles. But it's still beer, right? Yeah, it is. So here's the other thing I found out literally only the other day, because I was looking at, what was it? The home brew thing, I was talking about it.

1:05:31So you make home brew, completely fine. You can also make your own moonshine. You make your own spirits at home, right? But you need a license from the ATO and you need to pay the ATO excise on every liter of alcohol produced from a home still. So I can make beer at home. No dramas, but I can't make spirits at home. Even if it's one bottle, one liter once that I drink over 16 years, I would have to pay the ATO an excise for that bottle produced, but off a home brew. well why for beer right I can make meat at home and so it's just that it's that stuff where it's and again it's not illegal it's like people say oh safety but it's not none of that you literally can do it you just need a license from the AD it's easy to get apparently you just need to pay it's a tax collection mechanism not a not a product production not a safety it's purely just I would like some money please and you go why can I make beer but not I don't know vodka or whatever people make at home or gin or something I suppose it's just all that stuff as you say um sorry really quick one uh a lady on twitter who i economist who i interact with she's got a background in the food industry is in primary production and the number of different excises taxes and fees per product to go to these mickey mouse kind of government schemes they're either they're either biosecurity or their food marketing or something it's if you do potatoes at this rate if you do wheat it's that whatever sorghum at something else and it's just the whole thing just drives me absolutely bananas.

1:06:57So I'm on your page about reducing regulation. Maybe not as much as you want, I don't know. But certainly we swing one way and when something's put in, it's never ever taken away. No. I'll give you another example closer to home. If you and I set up a YouTube channel, actually just doing what we're doing right this very second with a podcast, and I say, I think you should – I'm not going to mention a company, but I can't, right? I can't. Because in theory, a random person listening to this three years from now could buy some shares lose their money and have legal entitlement andrew fudge told me to sue me yeah so he said i should buy this and it was bad advice and he didn't know my personal financial circumstance and you go now now whether or not you think that's appropriate um and i'm not again saying that i should be able to say anything with consequence i'm not right but if you and i were doing a property podcast or a crypto podcast yes yes we can say whatever we like Like anything.

1:07:51Oh, you should totally buy Scott coin. It's going to the moon. And I could pump it, pump, pump, pump. You should buy a hundred properties. Leverage the eyeballs. In fact, leverage past your eyeballs. Gears of horribly, horribly in debt. There's 1 % chance of this working, but go and knock yourself out, guys. This is a great idea. So Scott Phillips says$500 in BHP for a long-term investment might be a good idea. Lots of trouble around that. You really need a lot of licensing and fees and all of it. Not in BHP. A broad index-based ETF. Yep. Oh, you get sued for that. Yeah. I shouldn't be telling our listeners, you can sue Scott.

1:08:26I'll let it just out loud. I couldn't get that out fast enough. You can sue Scott. You got excited about that, didn't you? If there's anything he said that induced you to make a financial decision. Now, again, there should be some degree of regulation when it comes to investments. But my point is that for something that involves far higher level, like you can't buy$10 ,000 worth of property, right? So you're now in the realm of millions of dollars, unavoidable for almost everyone, to not do that without huge amounts of leverage, consequence-free. Do what you like. Say whatever you like. And it's like, why?

1:09:01And even I personally could do both of those things. I'd only get sued for one. It's not a separate person. I could say, go and buy Scott Coin, go and buy a$10 million property with$11 million worth of debt, and buy$500 worth of an ASX 200 ETF. And only one of those get me in trouble. And it's not the property. It's not the crypto. Work that out. Yeah. No, it makes no sense. And it's been that way for at least 30 years, as far as I can remember. And there's no appetite for that ever to change. It's bizarre, isn't it? Yeah. Well, I personally think it's a good illustration of what they call regulatory capture.

1:09:36Because when you realize, actually, who really wants these big barriers to entry? It's the incumbents, right? So the last thing you want if you're a compsec or someone like that is to allow other people to very easily get into this game because you face more innovative, potentially, competition. And that's the last thing you want. So I was like, no, we need regulation. Only responsible people like us who have been found to do all kinds of illegal things through various commissions and investigations and money laundering and taxing dead people. But only us, only us can give you advice. it's a little bit uh it's a little bit you're a little city cool dude you're a little city cool um i i will finish this i um i tweeted you in the like i more often consider a natty statist than a levitarian in truth i'm neither but i can't believe that we can't remove a large chunk of red tape with little to no negative impact start with the question what's the real world or proven evidence that this rule or law is necessary i figure that's just kind of a reasonable starting point i said i'm i by the same token this week and last week i was tweeting about banning gambling ads right i'm i'm not a libertarian by any stretch of the imagination um there are absolutely rules we should have in place for for absolutely good reasons the ones that don't have a good reason are the ones i think we should probably have a look at and say you know what isn't this just gumming up the works just a little bit um think about administration of the tax think about the the management of a regulation think about i've thought about we need to stop mate but there was only a cafe i i couldn't i wouldn't start a cafe and it's not because well don't start it i take it from someone who started a cafe yeah don't start a cafe but if i think Think about you've got the outdoor seating rules and you've got the food rules.

1:11:10And none of these are inappropriate, but I kind of think, how would you as someone who said, I'm going to start my own cafe, how do you get your head in all this stuff? You've got the workplace rules. You've got the superannuation rules. You've got the unfit dismissal rules. You've got outdoor seating. You've got food safety. This is my point. But again, none of these are unreasonable. My challenge to myself and others is, what do you take away? I don't know about food safety. No, you kind of, ah, screw your employees. You hire 12-year-olds. Probably shouldn't do that. Put seats on the footpath.

1:11:36Who cares how far out they are if people can't get past in wheelchairs? Oh, okay. That's probably – I can absolutely see a reason for each of the conceptual rules. I suspect at some point the answer is probably technology, not to do too much of a, oh, it's all out there. It's going to happen. There's too much that with climate change. Oh, it'll be fine. Technology will be invented and we'll be okay. But at some point there's got to be a way to – and maybe it's AI, frankly. You probably type in the chat GPT these days. You know, start a cafe. What Australian or New South Wales rules don't need to be aware of?

1:12:02And it probably gives you a list that's 99 % accurate and you can probably tick it off. But I imagine as a government, firstly, I'd say get rid of the regulations aren't necessary. Secondly, there's got to be a more approachable way to deal with compliance proactively, which is what do I need to know? What should I have done? Give me the forms, give me the links, give me the lists, whatever I need to do. As I said, get rid of the ones you don't need for sure. But then even compliance with those regs and you say the cost of them should be a whole lot easier as well. Oh, absolutely. I lean more towards the go for a stricter punishment and less on active enforcement.

1:12:37And I feel as though it's not that, I mean, it's kind of at odds with the idea of prevention being better than cure. But I think it speaks to the practical, while it might sound good in theory, the practicality of having some body that goes around to every cafe in a certain region and checks all of this stuff to make sure and then waves the finger, no, no, you shan't do this. And it's sort of like, maybe we just sort of say, look, here are the rules. We make it very clear, very obvious, very, very reasonable. And we just assume that you'll follow it. And if you're found to be not, then there are punishments, right?

1:13:16So it's more of a big stick kind of threat than anything else. And I suspect that most people will want to avoid the big stick and will do the right thing. Not because they think, you know, someone's going to, I don't know. it's hard mate you also have a die of food poisoning before you take the cafe owner to court right they might get a stronger punishment but the person's still dead and that's what I mean it's stupidly difficult and that's where it's easy for us to send at the end of a microphone red tape red tape red tape and someone on the other end is like well here's the real world that's what I meant with the real world but here's the trade offs do I want cafes to have surprise inspections probably not how many lives would it have to save to be worth it well that's when you start to ask a question right one life save some people again it's like jimmy who's working construction across the road one life save is that enough to make every cafe owner have regular inspections yeah what price i don't know it's late in the podcast right but there is a we learned through covid there is a very real trade-off we back to speed limits we could if we'd all drive at 40 k's an hour no one would die on the roads literally nobody so we are we are swapping what 300 lives a year to be able to drive at 110 okay well that's and let's be really that Really honestly, that's exactly – we might not ever ask that specific question or put those two sides in a discussion paper.

1:14:36Yeah. That's exactly what we do every single day. We accept – we let people get chainsaws. We let people drop hair dryers and baths. I mean, these things, we trade off safety for convenience and value and efficiency and freedom and whatever other things you want to throw in that list. Some mature conversation about what that tradeoff is is really important. There is no perfect answer. That's the problem. It's all moral and philosophical at some point. What's the price of a life? I don't know, but we do it every day. We just kind of don't think about it because it makes it hard if we do. Yeah. Yeah.

1:15:07That's a good point to end it. I was going to say, where do we go from there? I'm not sure. We're done. It's hard. We're done. This has been lots of fun. Will you come back on Sunday? Yeah, man. Looking forward to it. We know you will. Until then, enjoy the first half of your weekend. If you've got any questions for us, hit us up, info at fool.com.au. We'll see you Sunday. And until then, Fool on. See you Sunday. 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.

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