Ask Us Anything: Elon Musk the World's Richest Person? + Can we build stuff quicker in Australia?

0:00I'm Adam Schwab. I'm Adir Shifman. And this is The Contrarians with Adam and Adir.

0:07And we're back. Episode 137, Ask Us Anything, where you ask the questions and we try to answer them. Over to you, Mike, Chief Question Asker. This one comes in on LinkedIn from Travis. The question is, Elon Musk has become the first person to reach$500 billion of personal wealth. What are your thoughts of this feat? Andy, you've been skeptical of Elon's recent travails. What are your views on him being the richest person in the world by a long way? He was behind Larry Elton for a few hours, like two weeks ago, and now he's a couple hundred billion dollars up. What's going on? Why is he up? Because Tesla had some good results, right?

0:49That surprised the market. Is that right? Well, funnily enough, Tesla had a record quarter last quarter, really on the back of The US has this EV credit. I think it's about$6 ,000 or$7 ,000 US. They're removing that literally now. So I think it ended on 30 September. So Tesla understandably had a massive quarter. Funnily enough, Tesla shares dropped 5 % after the results got announced a few days ago, which were good results, but obviously it's all relative. And obviously customers realized that was sort of being front loading, that customers front loading before the credit got removed. So Tesla has hit$1.5 trillion in market cap though.

1:26So it has really leapt in the last – we couldn't believe it was worth a trillion, and now it's gone up 50 % in the last couple of months. So it's pretty crazy. I mean, there's many ways to think about your question. I mean, what do I think about Tesla? It's massively overvalued. I don't think there's any doubt about that, except we just missed out on a 50 % gain by thinking it was overvalued in the last, what, month or two, right? So that's disappointing. but that's, you've got to accept, when your feet are touching the ground, unfortunately, you're going to miss grabbing some of the stars, right?

1:58And, you know, this is just a shooting star because the markets are crazy. Then you might say, what do I think about Elon being the richest person in the world? Actually, I think given what he builds and creates, I think he's an appropriate person to be the rich. I mean, I don't really think about richest people. I hate these lists, as you know, as John Stensholt always complains to me about. Like, I don't like these lists. But if someone has to be on top of it, you know, a guy that basically accelerated the adoption of electric cars and he's doing this SpaceX stuff, which is crazy, that feels like a good guy to be the richest person in the world.

2:30At least it's not, you know, someone that is just taking from society. I think he's contributed. And then you might say, how do I feel about someone being worth half a trillion dollars? And I've got deeper, more complex thoughts about that. So that's the bit that I want to talk about in a bit more detail, not a lot, because it's a Q &A. Before we get to that, just to get back around on Elon. So Elon, since he hit 500 billion in the last few days, he's dropped back down. He's now 450 billion. So what's 50 billion between mates? Number two is Larry Olsen, 348 billion. Then Zuck on 256, Bezos 245, then Larry and Sergey just over 200.

3:08So Elon's still quite a way ahead. And if you look at sort of the proportion of Elon's wealth, which is probably the interesting part. So you've got Tesla, which has dropped a few hundred million dollars in market cap in the last few days. But he owns around$140 billion of his wealth is Tesla. The biggest proportion of his wealth is SpaceX. If you assume a$400 billion valuation for SpaceX, which is probably on the conservative side, Elon owns 42 % of SpaceX, a much higher stake. His$168 billion stake in SpaceX. I don't think any of us doubt that valuation being pretty genuine. I think that is a lot more legit than the Tesla.

3:46Tesla could go to 10 billion. So you could lose all that Tesla at stake. And then he's got XAI and other stuff, which is, I don't know, some whatever, 10, 20, 30 billion, whatever it is, but pretty material. Negative billions. Oh, it was worth something, but it's pretty material. So it's really Tesla and SpaceX that are most of the wealth, and it's SpaceX, which is much more likely to keep going up, and Tesla, which is, we think, likely to go down. My favorite part of that little talk you just gave is that it means I'm not going to have to do a quiz about who the richest people in the world are.

4:24Quizzes obviously don't go on this Q &A episode, thankfully for you. That's for the bigger. No, but you've burnt the quiz down because you've told me that. By the way, I'm no chance of remembering them. So you can probably do the quiz. Please don't. We're pretty safe for next episode. It's four days away. But what about like four, so 500 or whatever it is, billion dollars. Plus, I think he wants to get another trillion if Tesla hits some crazy number or whatever it is, right? Put that to the side. 8.5 trillion. He wants a trillion. It doesn't even matter, right? Like half a trillion is enough to make the comments I'm going to make.

4:53So I tell you what I don't like in life, my most hated thing. Revolutions where I'm on the end of a spear, they're the worst things you can possibly have. and there's been a history of those in the last couple of hundred years and we haven't had one in the west for quite a while and it would be nice to keep it that way but unfortunately things are looking a bit shaky and one of the things driving the shake is income inequality and i was having this conversation i won't say with who might not want me to say his name but like i was having this conversation recently with someone in a in a great deal of depth which is are we seeing a return of the aristocracy to Western civilization.

5:34Now, obviously, we're not really seeing a full aristocracy because we don't have rights that are enshrined in law and differences that are enshrined in law. And like at the peak of the French aristocracy, people were wearing different clothing by legal mandate and like their lives were literally worth different amounts of money. but my concern is that one of the core elements of income inequality is the lack of social mobility. That means people that are born poor don't feel like they can get richer and move up in life and that is worst when a lot of wealth is hereditary. That means passed down through families and Elon's$500 billion and there's a lot of billionaires in the world now.

6:18There's thousands of billionaires and then the number of people that have more than let's say 300 million dollars i mean it's tens of thousands he's just the peak of the iceberg there's a heap below the surface and my bigger concern with people having this much money is that it's bringing back this aristocracy amongst in western society of hereditary wealth and being the primary way to earn huge amounts of money and also that there's a class at the very top of the pyramid that really has much more control over things than this class did 50 years ago. And so that's really my issue with Elon having this much money.

6:57I don't like what it's saying about the direction that society is going in. I'd have less comment about him personally and more about what it means for society. Yeah, I think they're hugely rich people. I think it's highly problematic, but ultimately that wealth tends to not be generational. Usually, it's subsequent generations, so it's further away. That rich list tends to turn over pretty regularly. If you look at the recent US GDP numbers, it came out at 3.8%, which is pretty incredible GDP growth. At the same time, the poor in the US are incredibly poor. We're seeing increasing polarization of rich and poor.

7:33People think, oh, that's terrible for the poor. Yeah, it's very bad for the poor, but it's actually very bad for the rich as well. As you say, this continues eventually. And eventually, there's not that many rich people, and there's a lot of not rich people. And not rich people eventually wake up and realize, hold on, this is a pretty terrible situation for me. I'm going to change that situation. So I don't think anyone is used to have this increasing wealth disparity that is happening in the US. It's actually happening in Australia and the UK as well at the same time. But the US is probably a more extreme version.

7:59And Elon Musk is the most extreme version of this extreme version. So I think you're spot on. He is symbolic of the massive wealth gap that is continuing to emerge in the US and it bodes terribly for society. There's no doubt on your beloved lists, an increasing number of people on rich lists, including in Australia, are there with hereditary wealth. We can ask John about that, but I'm saying that to you as fact, like it's an increasing number. Well, yes and no, because the rich list is only 30 years old. So it's still a relatively new list, but I think there's a lot of new wealth in that list as well.

8:38We can get John in. He's the expert, not us. We'll ask John. We'll ask him about that. You might be right, but I feel like I feel that because, you know, well, anyway, you know what? We'll save this. I think this is a good topic for the broader pod, to be honest with you. Like it's the core question of business. Great question. On to question number two. All right. This one comes in from Duncan Perkins, and I might butcher the pronunciation of this word, so please forgive me, anyone listening. He asks, the Peljicic Bridge in Croatia was built in four years. Would it be a good idea to engage companies like this to get stuff done here in Australia?

9:20After a while, our Aussie teams would learn and maybe be able to build a bridge in a similar time frame at similar costs. What do you guys think? Is it still standing, that bridge? I don't know. I can find out if you want. It looks like it is. I suspect it is. I mean, why stop with that? Why stop with that four years? China would probably build it in one year. And under Saddam Hussein, they built a building in 14 days. because instead of building the car park normally, they just poured concrete straight onto it for the car park. So the question is, like, why does it take so long to build? Is it sort of the same thing right?

9:58I wasn't aware of a rack being a hotbed for construction. No, what Saddam did, he had a very interesting strategy. He would say he would put out this tender to build infrastructure and then every time it went through a bureaucrat, they would just cut the timeline in half. And so a guy said he can build a building. They were trying to get a building built in a year. A guy said he could build it in six months. for the time it got the contract signed, it was 45 days. And then he was surrounded by people with guns. And so essentially nobody went home. This was like a building for the science bureau or something.

10:30Basically nobody went home for two weeks and they built it in two weeks. But they poured like millions of dollars more concrete on it than they had to. And like they built multiple levels at the same time. Anyway, the question is, how do you build infrastructure more quickly? That's one way. Have people with guns surrounding you and not letting you sleep until it's done. I don't think we're going for that in Australia. You know, things get built more slowly for a few reasons. I'm talking about infrastructure in Australia. Some of the reasons are good reasons. One of those reasons is occupational health and safety.

11:01So we really don't like people dying or getting injured on building sites. That definitely slows it down. That's a good reason. Another reason is that people cost lots of money in Australia compared to Croatia, I would assume. And so we can't employ as many people to build things. And that makes it go more slowly. And then you've got more nefarious reasons like bureaucracy. So we've got bad bureaucratic problems. And then you've got the worst reason, which counteracts my second reason on not employing that many people, which is when governments employ people in Victoria, for example, they employ insane numbers of people.

11:34It's as part of a rort, and that slows down the whole process as well. And my fifth reason is incompetence. But I suspect that all countries around the world are probably roughly equally incompetent. I think China actually may be less incompetent because the people they employ in leadership and bureaucracy often have technical backgrounds, whereas in Australia, the politicians we have basically have no backgrounds, like they've been political staffers or lawyers or whatever. And so I think those are my off the top of my head five reasons. And do I think they can change? Well, the last ones can change, but I think it's unlikely to change without a change in government in most places.

12:14I think there were two reasons. I think reason one, and there are all subsets of your reasons. I think reason one is the union, especially the CFMEU, is very strong. And this isn't necessarily a criticism or a praising of CFMEU. It's just a fact of life that CFMEU has incredible power, especially over the Labor Party. We see it with the big build in Victoria, but it happens residential builds, commercial builds. Because they're so powerful, they do a great job for the members, to their credit. They also do a terrible job for people wanting to build stuff in Victoria. So I'm not saying that's good or a bad thing.

12:45I was just pointing out that it's a really powerful union and they have a lot of holidays, a lot of RDOs. There's a lot of them that don't want to work. So to their credit, their job is to represent workers and they do a great job of it. So that's a great result for the workers and not a great result for people wanting to build a building. And I think government red tape is pretty horrific here. And you've also got some ridiculous laws. Basically, when you're trying to get a building permit in Victoria, the law, and this isn't a criticism of Labor or Liberal government, because they both have stood back while this has happened, but developers and even residential home builders can get legally blackmailed by neighbours.

13:18And this is the law. So the law encourages blackmail. So when you've got a law that encourages blackmail and basically says, if you don't pay out your neighbours, they can hold up your building for a year. There's nothing you can do about it and you pay that cost. Well, this is an absurd planning scheme in a state that is just a debacle. And this is just one of the many reasons why it is. So I think it's government stupidity is one reason and the power of unions is reason number two. But people also in Australia, like for, there are little things that we do here that I would put in the good basket, but we've seen what happens if you don't do them.

13:48So for example, if people are living in the neighborhood, because, you know, like in the city or something, we don't like to build stuff at two o 'clock in the morning with heavy equipment. There are rules and laws and regulations about how much noise you can generate. But when Sydney was running behind on their metro, they loosened those rules considerably. And all of a sudden, their metro got built a lot quicker for the last stages. But I happened to be in the city for those loosened rules and unfortunately, across the road from one of the stations. And I can tell you, selfishly, I was very supportive of it taking a bit longer and me not having to wear headphones to bed.

14:25So that's one of the, like we have all of these, And that's not OH &S, that's kind of community comfort, I'd call it. So all of those are also reasons why things take longer in liberal democracies, basically. That's fair enough. I think a great question. We'll go to a super quick break and back with question number three in just a moment.

14:49And we're back. Mike, on to you. Okay, third question for this week comes from Daphne. Over to you. Hi, Adam and Adia. My name's Daphne. I'm calling up because I'm really interested to know what you think about the US shutdown and how that affects trade. Adia, you're obviously over the shutdown. What are your views? I'm both across it and over it. These people are, in the words of Adam, these people are idiots. I think, unlike most of these shutdowns, which are just down to political bickering and points scoring. I'm suspicious that Trump is quite enthusiastic about this shutdown because a whole lot of people that had jobs before the shutdown are not going to have jobs after the shutdown.

15:35So I think it might be a strategic cost-cutting exercise after his little Elon dabble finished. And so I think it's a disaster. I think if you're flying to the US in the next one to three weeks, it might be very hard to get through the customs process because people are going to have to work without pay, which is very bad. And overall, I can't believe in 2025, the most powerful country in the world that we are all relying on to be able to continue speaking English into the future and have our countries protected is fighting about stuff that effectively shuts down a country that is not paying for itself anyway.

16:15They're paying with 100 % complete debt. So I just find the whole thing bizarre and scary, to be honest? I'll take the contrarian view, unsurprisingly. So the reason there is a debt ceiling in place is that founding fathers didn't want a country embridled by debt and who was spending consistently. And the reason why we have this consistently hitting the debt ceilings, this is across both Republican and Democrats, is since Bill Clinton in 1996 or 1998, no single party has balanced the budget. So we've been increasing debt. We've seen debt increase far more than GDP has increased, far more than real wealth increase.

16:52So this fake wealth increase in the US has come from just an incredible accumulation of debt. And the only time where you might see some fiscal responsibility is when you've got this notional debt ceiling. But all I just can do is pushing the debt ceiling out. It's the internal kicking the can down the road, which both parties have done for multiple decades. If they didn't spend more than they earned, if they actually ran a budget surplus, not a budget deficit, we wouldn't have this debt ceiling issue because debt would be being reduced, not increased. So heaven forbid the Republican, Democrats, and Republicans especially who claim to be the party of moral fiscal rectitude but are far from it, heaven forbid the Republicans and Trump claimed to be Mr.

17:30Doge and will cut spending and do away stuff, he's added $1.5 trillion to the deficit. So the Republicans are almost worse than the Democrats in this case. They're both absolute spendthrifts. But I would love to see the government shut down for six months and see what happened. and maybe a lot of these people shouldn't be working. Maybe we can actually get to a position where, heaven forbid, the US can spend less, spend, live within its means. All right, I'm going to just respond to your answer in three parts. Part number one, rectitude. What a great word. Full credit for that word. Haven't heard that for a while.

18:01So that's the best part of the response. Part number two, part number two is, I know you made this impassioned contrarian pitch, but almost entirely you agreed with me because I said to you, I can't believe they're doing this when they're just doing it to spend other people's money. And as you correctly said, all they do is shut down and spend more ultimately. So it's pointless and useless. And I think it's insane. And the bit I don't agree with you about is shutting down for six months. I don't think you're going to enjoy the US shutting down for six months. The army is not going to get paid.

18:33Health workers are not going to get paid. I don't know if the garbage collectors get paid or not. They're probably city workers. But I don't think we want to see what the US looks like when nobody in the public service, the federal public service gets paid for six months. I suspect that country might cease to function, which might be a low bar. I don't think it is. Some people might think it is. But I think a much better approach to this would be to say, can we get a politician in power? I'm going to agree with you on this. Can we get a politician in power that says, I'm not going to just do whatever I need to do to get reelected, especially in their second term as president, when they can't get reelected, although let's see how Trump goes.

19:13I'm actually going to go and cut spending in a smart way so that we stop endlessly increasing the debt because it's getting to a point where it might end up driving the downfall of the US at some stage. I think just on Trump, I think the whole Trump derangement syndrome, I think there is an element of that. I don't disagree with everything Trump does. I think his foreign policy is actually pretty good. I think his unwillingness or his willingness to exit wars or an unwillingness to enter wars is fantastic. Ultimately, he's still increased Pentagon spending by a significant amount, which is far from ideal.

19:49You should call it the Department of War, as he would request. As it currently is. But what he certainly hasn't done is he certainly hasn't reduced spending since he came in. He came back a year ago with a sort of Javier Malay-type platform, Javier obviously from Argentina, and he's done nothing of a sort. He's been as spendthrift as any other leader. He argued in his first term, it was because COVID the spending went up, but he was spending a lot before COVID. So he is as spendthrift as any leader there is. And that's almost the most disappointing aspect of his leadership and some of the unnecessary cruelty around ICE and the like, but his unwillingness to act as an old school Republican and actually be concerned about budget deficits and deficits in general is certainly one of the worst elements of his administration.

20:40On that note, thank you, Daphne, for your question. Fantastic as always. We'll see everybody with our regular episode on Tuesday. Thanks for listening in.