1 00:00:06,040 --> 00:00:08,960 Speaker 1: Hello, and welcome to Sephonomics, the podcast that brings the 2 00:00:08,960 --> 00:00:12,040 Speaker 1: global economy to you. So we've spoken before on this 3 00:00:12,080 --> 00:00:17,120 Speaker 1: podcast about global supply chain bottlenecks, ships lined up at ports, 4 00:00:17,120 --> 00:00:20,040 Speaker 1: where to get in, the soaring price of putting anything 5 00:00:20,079 --> 00:00:22,759 Speaker 1: on a container ship, and you maybe thought it wouldn't 6 00:00:22,800 --> 00:00:25,360 Speaker 1: affect you. But things got a lot more serious in 7 00:00:25,400 --> 00:00:28,760 Speaker 1: the past week, and we realized even the tomato source 8 00:00:28,880 --> 00:00:31,520 Speaker 1: on your pastor could be hit by supply shortages in 9 00:00:31,520 --> 00:00:34,839 Speaker 1: the coming months. We have that chilling story from the 10 00:00:34,840 --> 00:00:38,280 Speaker 1: tomato fields of Italy. In a few moments. We'll also 11 00:00:38,360 --> 00:00:41,880 Speaker 1: here how COVID nineteen has turned Australia's attitude to immigration 12 00:00:41,960 --> 00:00:45,640 Speaker 1: upside down from our economy reporter down under Michael Heath. 13 00:00:46,200 --> 00:00:49,040 Speaker 1: But first, a rare treat a conversation I just had 14 00:00:49,400 --> 00:00:51,600 Speaker 1: with one of the most respected economists in the world, 15 00:00:51,720 --> 00:00:54,800 Speaker 1: professor of the International Financial System at Harvard's Kennedy School 16 00:00:54,840 --> 00:00:57,480 Speaker 1: of Government and now the Chief Economist of the World Bank, 17 00:00:57,880 --> 00:01:13,319 Speaker 1: Dr Carmen Reinhardt. Carmen, welcome to this session and I'm 18 00:01:13,360 --> 00:01:18,880 Speaker 1: delighted to see you again. It's an interesting time for 19 00:01:18,920 --> 00:01:22,280 Speaker 1: the global economy because we have this quite a lot 20 00:01:22,360 --> 00:01:25,440 Speaker 1: of what you might call upside surprises certainly in the 21 00:01:25,480 --> 00:01:28,480 Speaker 1: developed world, not just on the pace of vaccination in 22 00:01:28,520 --> 00:01:31,959 Speaker 1: many countries, but also the strength of the recovery. And 23 00:01:32,000 --> 00:01:35,000 Speaker 1: I see even in your in your latest report, you 24 00:01:35,080 --> 00:01:38,960 Speaker 1: see your forecasting global growth this year the highest we've 25 00:01:39,000 --> 00:01:43,160 Speaker 1: had after a recession for eighty years. So there's also 26 00:01:43,200 --> 00:01:45,640 Speaker 1: good news there. But we are also conscious that the 27 00:01:45,680 --> 00:01:47,920 Speaker 1: picture is not so bright in the developing world. So 28 00:01:48,520 --> 00:01:50,840 Speaker 1: how would you characterize the picture and maybe what are 29 00:01:50,840 --> 00:01:54,360 Speaker 1: the surprises that you would say relative to what you 30 00:01:54,440 --> 00:01:57,360 Speaker 1: might have thought at the start of the year. So 31 00:01:57,760 --> 00:02:01,520 Speaker 1: I think Stephanie, you you hit on the key, the 32 00:02:01,600 --> 00:02:06,600 Speaker 1: key point without sending sounding cliche. I think that the 33 00:02:06,760 --> 00:02:10,960 Speaker 1: issue of a K shaped recovery is is very much 34 00:02:11,639 --> 00:02:17,440 Speaker 1: on point. The surprises in the advanced economies have been 35 00:02:18,160 --> 00:02:27,600 Speaker 1: mostly on the upside, and the substantive resources in terms 36 00:02:27,680 --> 00:02:34,200 Speaker 1: of both fiscal stimulus, monetary policy, and more broadly than 37 00:02:34,240 --> 00:02:41,919 Speaker 1: just monetary policy, financial uh support and stimulus made the 38 00:02:41,919 --> 00:02:48,799 Speaker 1: the faster than expected, faster than standard recovery, and the 39 00:02:48,880 --> 00:02:52,880 Speaker 1: advanced economies the emerging markets for starters, let alone the 40 00:02:52,880 --> 00:02:57,280 Speaker 1: poorest countries. The developing countries don't have those kinds of resources. 41 00:02:57,320 --> 00:03:00,480 Speaker 1: So in every check mark that I may about the 42 00:03:00,520 --> 00:03:04,200 Speaker 1: advanced economies, pretty much you can take off the check 43 00:03:04,280 --> 00:03:07,480 Speaker 1: mark for for for many of the developing countries, many 44 00:03:07,600 --> 00:03:12,400 Speaker 1: have had very limited, very limited share of the population 45 00:03:12,520 --> 00:03:17,280 Speaker 1: is yet to be vaccinated. Fiscal space, which was already 46 00:03:17,400 --> 00:03:23,200 Speaker 1: strained in many developing an emerging market countries before COVID, 47 00:03:23,520 --> 00:03:26,640 Speaker 1: isn't there to provide you know, the big push, the 48 00:03:26,720 --> 00:03:32,240 Speaker 1: big stimulus, the big transfers to households. And I'll conclude 49 00:03:32,240 --> 00:03:37,440 Speaker 1: by saying that it isn't just about fiscal stimulus, monetary stimulus. 50 00:03:37,480 --> 00:03:40,920 Speaker 1: For the first time in history, emerging markets during the 51 00:03:41,000 --> 00:03:48,040 Speaker 1: crisis were able to do significant countercyclical monetary policy. However, 52 00:03:48,720 --> 00:03:54,840 Speaker 1: that experience has already been cut short by very pronounced 53 00:03:54,840 --> 00:04:01,360 Speaker 1: pickup and inflation. That divergence is critical to the outlook. 54 00:04:02,760 --> 00:04:07,080 Speaker 1: So the question you post is is a very relevant one. Uh, 55 00:04:07,280 --> 00:04:12,840 Speaker 1: you know, given the concerns that we're seeing about, you know, 56 00:04:13,080 --> 00:04:18,400 Speaker 1: overheating in the US, the possibility the big question mark 57 00:04:18,600 --> 00:04:24,200 Speaker 1: is the popping inflation, temporary or more lasting. And you know, 58 00:04:25,360 --> 00:04:31,800 Speaker 1: for the emerging markets and developing world, they're very impacted 59 00:04:31,800 --> 00:04:36,560 Speaker 1: by global conditions. The inflation we're seeing um certainly in 60 00:04:36,560 --> 00:04:39,800 Speaker 1: the US, but we got we are seeing it globally. 61 00:04:39,839 --> 00:04:42,440 Speaker 1: I think the core CPI globally is rising at its 62 00:04:42,440 --> 00:04:46,640 Speaker 1: fastest place in in more than twenty five years. So 63 00:04:47,400 --> 00:04:49,359 Speaker 1: how do you how do you view that? Do you 64 00:04:49,400 --> 00:04:53,120 Speaker 1: think it's calls for fear or celebration given how much 65 00:04:53,120 --> 00:04:56,279 Speaker 1: we struggle to get inflation rates up in many developed countries, 66 00:04:57,279 --> 00:05:03,400 Speaker 1: So you know, I think for the celebration side, you 67 00:05:03,480 --> 00:05:05,840 Speaker 1: immediately have to think of Japan, right, I mean, they 68 00:05:06,000 --> 00:05:13,080 Speaker 1: they they've had decades first deflation and then undershooting. But 69 00:05:13,120 --> 00:05:16,400 Speaker 1: before we celebrate too much, I think the question that 70 00:05:16,480 --> 00:05:19,080 Speaker 1: remains to be sorted out is how much of this 71 00:05:20,320 --> 00:05:24,280 Speaker 1: is a temporary blip and how much of it sticks. 72 00:05:24,920 --> 00:05:27,599 Speaker 1: I think the concerns about sticking I would I would 73 00:05:27,680 --> 00:05:34,200 Speaker 1: characterize as threefold. The first one is we don't know 74 00:05:34,320 --> 00:05:39,080 Speaker 1: what the supply shocks, the lasting supply shocks. COVID has 75 00:05:39,120 --> 00:05:44,120 Speaker 1: done and continues to create a lot of variation from 76 00:05:44,200 --> 00:05:49,800 Speaker 1: the normal trade patterns and supply chains. Transport costs have 77 00:05:50,000 --> 00:05:54,920 Speaker 1: been doing strange things. The second part, of course, is 78 00:05:55,640 --> 00:06:00,120 Speaker 1: the monetary stimulus at the global level on the scale, 79 00:06:00,400 --> 00:06:06,120 Speaker 1: and so those two factors supply side, the multiplier effects 80 00:06:06,160 --> 00:06:09,040 Speaker 1: of the of the monetary easing, and the fact that 81 00:06:09,080 --> 00:06:12,800 Speaker 1: it's a global shock. Two thousand two tho nine was 82 00:06:12,880 --> 00:06:16,000 Speaker 1: not two thou two thousand nine was a crisis and 83 00:06:16,040 --> 00:06:19,360 Speaker 1: about a dozen advanced economies, but not global. I think 84 00:06:19,400 --> 00:06:24,840 Speaker 1: those three factors raised concerns that the the I'm not 85 00:06:24,880 --> 00:06:27,360 Speaker 1: saying we're off to the races or anything like that, 86 00:06:27,400 --> 00:06:31,040 Speaker 1: but that I think that the there are there is 87 00:06:31,600 --> 00:06:36,880 Speaker 1: cause to be concerned that a it's more the inflation 88 00:06:37,000 --> 00:06:43,920 Speaker 1: pickup has more of a lasting component than just transitory 89 00:06:44,040 --> 00:06:48,960 Speaker 1: rebound slash overheating. But it's interesting you say concerned. I mean, 90 00:06:49,040 --> 00:06:51,360 Speaker 1: as you said at the start, that's not just in Japan. 91 00:06:52,040 --> 00:06:54,800 Speaker 1: Many central banks around the world have struggled to get 92 00:06:54,960 --> 00:06:57,480 Speaker 1: to meet their inflation targets, actually to get up to 93 00:06:57,520 --> 00:07:00,279 Speaker 1: their inflation targets, not least the European central by in 94 00:07:00,279 --> 00:07:03,320 Speaker 1: the last few years. If we if we're moving from 95 00:07:03,320 --> 00:07:05,919 Speaker 1: a world that we've had for ten or fifteen years, 96 00:07:05,960 --> 00:07:08,560 Speaker 1: where the average inflation in the developed world has been 97 00:07:08,640 --> 00:07:11,960 Speaker 1: saying one and we're moving to a world where it's 98 00:07:12,000 --> 00:07:16,240 Speaker 1: more like two, two and a half even three um, 99 00:07:16,520 --> 00:07:20,000 Speaker 1: is that is that really cause for concern, I mean, 100 00:07:20,120 --> 00:07:22,160 Speaker 1: is your concern from the fact that you you think 101 00:07:22,160 --> 00:07:24,560 Speaker 1: that we would struggle to control that because it would 102 00:07:24,560 --> 00:07:26,960 Speaker 1: certainly give policy makers a bit more room for maneuver 103 00:07:27,000 --> 00:07:32,320 Speaker 1: than they've had. Stephanie, if if what you describe is 104 00:07:32,320 --> 00:07:37,040 Speaker 1: is the issue at hard, then indeed it wouldn't be 105 00:07:37,080 --> 00:07:41,160 Speaker 1: a concern. But I think let's not flatter ourselves in 106 00:07:41,800 --> 00:07:46,720 Speaker 1: terms of the what's how how precise lead can can 107 00:07:46,840 --> 00:07:51,240 Speaker 1: central banks really hit the nail as as we highlighted, 108 00:07:51,320 --> 00:07:55,480 Speaker 1: it's been undershooting for a decade and if it's nice, 109 00:07:55,600 --> 00:08:01,720 Speaker 1: well behaved, very moderate, you know, drift upward, what's the 110 00:08:01,800 --> 00:08:07,400 Speaker 1: what's the big deal? The bigger deal is that the 111 00:08:07,400 --> 00:08:14,960 Speaker 1: the sufficiently big spike that lasts for sufficiently long would 112 00:08:15,000 --> 00:08:19,440 Speaker 1: I think impact inflationary expectations in a in a way 113 00:08:19,480 --> 00:08:23,640 Speaker 1: that you know, inflation expectations have been really anchored UH 114 00:08:23,720 --> 00:08:30,600 Speaker 1: for very many many years now, and then you you 115 00:08:30,600 --> 00:08:36,439 Speaker 1: you know, then you get into uh, perhaps inflation rates 116 00:08:36,440 --> 00:08:41,360 Speaker 1: that are beyond those that are desired UH in the 117 00:08:41,440 --> 00:08:44,880 Speaker 1: advanced economies. One of the things we're seeing with the 118 00:08:45,080 --> 00:08:48,880 Speaker 1: pop and inflation, especially in many emerging markets but not exclusively, 119 00:08:48,880 --> 00:08:53,080 Speaker 1: are big increases in food prices. Food prices account for 120 00:08:53,120 --> 00:08:56,920 Speaker 1: the largest share of the CPI basket in the poorer 121 00:08:56,960 --> 00:09:00,640 Speaker 1: countries and even much more so in the poorer households. 122 00:09:01,240 --> 00:09:04,199 Speaker 1: That is a factor. The fact that it is regressive 123 00:09:04,360 --> 00:09:08,719 Speaker 1: on top of a regressive shark like covid um is 124 00:09:09,320 --> 00:09:16,679 Speaker 1: in and of its self a source of concern. I 125 00:09:16,720 --> 00:09:20,000 Speaker 1: guess the other big change in the last couple of years, 126 00:09:20,040 --> 00:09:24,240 Speaker 1: particularly associated with COVID, which maybe we can't quite decide 127 00:09:24,320 --> 00:09:25,920 Speaker 1: is a good thing or a bad thing, or maybe 128 00:09:26,000 --> 00:09:28,000 Speaker 1: is a good thing and a bad thing, is this 129 00:09:28,559 --> 00:09:35,520 Speaker 1: very different attitude towards very large deficits and public borrowing 130 00:09:35,640 --> 00:09:38,800 Speaker 1: in the developed world. We had seen obviously large deficits 131 00:09:38,800 --> 00:09:40,760 Speaker 1: in the past, but there's been a there's been an 132 00:09:40,800 --> 00:09:46,280 Speaker 1: embrace of very high deficit spending by developed economies that 133 00:09:46,320 --> 00:09:49,240 Speaker 1: we've not seen in quite this way before. You know, 134 00:09:49,360 --> 00:09:53,360 Speaker 1: would you say that is overall something we should applaud 135 00:09:53,679 --> 00:09:58,400 Speaker 1: or be also concerned about? Well, it has elements of both. 136 00:09:58,480 --> 00:10:02,360 Speaker 1: I mean, I am no fair of debt, but I 137 00:10:02,480 --> 00:10:05,680 Speaker 1: was and have been more than a hundred percent on 138 00:10:05,760 --> 00:10:10,120 Speaker 1: board on the need to during the COVID pandemic to 139 00:10:10,280 --> 00:10:13,679 Speaker 1: go in there big. I mean, you know, the point 140 00:10:13,760 --> 00:10:16,400 Speaker 1: that this was a kid to a war, and therefore 141 00:10:16,400 --> 00:10:20,839 Speaker 1: you react with that kind of of of stimulus is important. 142 00:10:21,160 --> 00:10:24,680 Speaker 1: Now does that mean that I think everything is very 143 00:10:24,760 --> 00:10:29,120 Speaker 1: benign and we no longer need to worry about debt 144 00:10:29,360 --> 00:10:34,040 Speaker 1: or or any uh possible delatarious effects. No, I don't 145 00:10:34,040 --> 00:10:40,400 Speaker 1: think so. But the previous question you had on inflation also, uh, 146 00:10:40,760 --> 00:10:46,080 Speaker 1: even though inflation is one way eroding debt, if it 147 00:10:46,200 --> 00:10:54,800 Speaker 1: also is associated with rising interest rates, then the calculus 148 00:10:54,840 --> 00:10:58,200 Speaker 1: that people have been accustomed to in this low for 149 00:10:58,280 --> 00:11:02,680 Speaker 1: a very long environment changes. So so I I would not, 150 00:11:03,360 --> 00:11:08,160 Speaker 1: you know, declare victory on the issue. And I had 151 00:11:08,160 --> 00:11:10,160 Speaker 1: one I had one final question, which is, we obviously 152 00:11:10,160 --> 00:11:12,920 Speaker 1: have had a lot of focus on the G seven. 153 00:11:13,120 --> 00:11:16,120 Speaker 1: In the last week. There was much talk, including from 154 00:11:16,160 --> 00:11:18,520 Speaker 1: the World Bank and the International Monetary Fund, about pushing 155 00:11:18,640 --> 00:11:23,160 Speaker 1: for commitment from the international community to make sure that 156 00:11:23,200 --> 00:11:25,640 Speaker 1: you had as many people vaccinated as possible in the 157 00:11:25,679 --> 00:11:29,880 Speaker 1: developing world in everyone's interests. What we got instead of 158 00:11:29,920 --> 00:11:33,439 Speaker 1: the fifty billion that the methics would be needed, we 159 00:11:33,559 --> 00:11:36,720 Speaker 1: got somewhat less than a billion and committed, and we're 160 00:11:36,720 --> 00:11:39,360 Speaker 1: potentially looking at a very low vaccination rate in the 161 00:11:39,400 --> 00:11:41,200 Speaker 1: developing well by the end of the year. Was that 162 00:11:41,240 --> 00:11:46,280 Speaker 1: a failure of leadership the G seven? Were you disappointed? Absolutely? 163 00:11:46,960 --> 00:11:53,640 Speaker 1: It's disappointment not just in terms of the scale, but 164 00:11:54,480 --> 00:11:59,520 Speaker 1: also speed is an issue here. We really are, you know, 165 00:11:59,679 --> 00:12:05,560 Speaker 1: running a race against variants and virus variants and so on. 166 00:12:05,760 --> 00:12:10,839 Speaker 1: That that the delay. For example, we were the World 167 00:12:10,880 --> 00:12:16,080 Speaker 1: Bank supports very much the if advanced economies were to 168 00:12:16,920 --> 00:12:22,680 Speaker 1: send surplus vaccine sooner rather than later. Again the issue 169 00:12:22,679 --> 00:12:26,880 Speaker 1: of timing. So it's a step in the right direction, 170 00:12:27,000 --> 00:12:32,640 Speaker 1: but I think given the scale of the problem, I 171 00:12:32,679 --> 00:12:38,520 Speaker 1: think more and more rapidly, you know, needs to be done. 172 00:12:39,960 --> 00:12:42,480 Speaker 1: Come and Ryan Hort, Vice President Chief Economists at the 173 00:12:42,480 --> 00:12:45,080 Speaker 1: World Banck, thank you very much for joining us. Thank 174 00:12:45,120 --> 00:12:54,839 Speaker 1: you for having me. Now, so the list of casualties 175 00:12:54,840 --> 00:12:57,680 Speaker 1: in the great global supply chain snow that we can 176 00:12:57,720 --> 00:13:01,920 Speaker 1: now add Italian tomatoes which are rotting in the fields, 177 00:13:02,000 --> 00:13:04,720 Speaker 1: were told instead of making their way into tins of 178 00:13:04,760 --> 00:13:10,160 Speaker 1: pasta source. Well, Italy economy reporter Alessandra Miliaccio is here 179 00:13:10,160 --> 00:13:12,160 Speaker 1: to fill you in on this, let's face a deeply 180 00:13:12,240 --> 00:13:16,840 Speaker 1: troubling story. Alessandra, how all these tomato who's rotting? Where 181 00:13:16,880 --> 00:13:20,160 Speaker 1: are the tins right, that's exactly the issue. There are 182 00:13:20,200 --> 00:13:23,480 Speaker 1: plenty of the tomatoes, their basic product, but you don't 183 00:13:23,480 --> 00:13:26,760 Speaker 1: have the tins because the Chinese economy is absolutely booming, 184 00:13:27,000 --> 00:13:29,880 Speaker 1: and what they need to make the tins um is 185 00:13:30,040 --> 00:13:34,920 Speaker 1: these particular sheets of metal that are missing basically um there. 186 00:13:35,040 --> 00:13:38,160 Speaker 1: The Italian producers are telling us that they're asking when 187 00:13:38,280 --> 00:13:40,600 Speaker 1: the deliveries will come, and the deliries are not coming 188 00:13:40,840 --> 00:13:42,840 Speaker 1: and there's no end in sight apparently to the problem. 189 00:13:42,880 --> 00:13:46,160 Speaker 1: The companies, both Italian companies and foreign companies in India 190 00:13:46,160 --> 00:13:49,120 Speaker 1: have said that they can't guarantee anything. And the issue 191 00:13:49,280 --> 00:13:53,040 Speaker 1: is that this type of product needs to be can 192 00:13:53,120 --> 00:13:56,079 Speaker 1: within thirty six hours after picking. So once you've lost 193 00:13:56,120 --> 00:13:58,400 Speaker 1: the time, then you just have to leave them. And 194 00:13:58,440 --> 00:14:00,640 Speaker 1: it's not like I was hoping, oh maybe I'll have 195 00:14:00,720 --> 00:14:03,640 Speaker 1: cheap tomatoes in the market, but no, they will leave 196 00:14:03,679 --> 00:14:06,040 Speaker 1: them in the fields because it's not economically convenient to 197 00:14:06,240 --> 00:14:09,120 Speaker 1: you know, to actually send them to market. So that's 198 00:14:09,440 --> 00:14:12,280 Speaker 1: the unfortunate problem and that, I mean, that's the heartbreaking bit. 199 00:14:12,320 --> 00:14:15,800 Speaker 1: And it's it's five million tons of process tomatoes. I mean, 200 00:14:15,800 --> 00:14:18,120 Speaker 1: it really is one of the biggest producers, right, that's right. 201 00:14:18,160 --> 00:14:20,880 Speaker 1: Italy is the number two sometimes number three producer along 202 00:14:20,920 --> 00:14:24,440 Speaker 1: with China, and the biggest producer is California with a 203 00:14:24,520 --> 00:14:28,160 Speaker 1: ten million. But the thing is that California can also 204 00:14:28,200 --> 00:14:31,000 Speaker 1: put them in Carton's. California can put them in tubes 205 00:14:31,040 --> 00:14:35,160 Speaker 1: because California is not obsessive like US Italians about their tomatoes, 206 00:14:35,200 --> 00:14:37,520 Speaker 1: and therefore they're all right with paste that they are 207 00:14:37,600 --> 00:14:40,160 Speaker 1: right with other kinds of products that are not as fresh, 208 00:14:40,200 --> 00:14:42,920 Speaker 1: that are differently made. Basically, see the things that you 209 00:14:43,000 --> 00:14:46,920 Speaker 1: learn on Stephanomics, the key key national differences in how 210 00:14:46,960 --> 00:14:50,160 Speaker 1: we like to package our our tomatoes. But obviously, and 211 00:14:50,240 --> 00:14:52,400 Speaker 1: people who listen to this podcast, now this is part 212 00:14:52,440 --> 00:14:56,040 Speaker 1: of a broader problem that we've seeing these um I 213 00:14:56,120 --> 00:14:58,480 Speaker 1: call them supply chain snarl ups, but we're seeing the 214 00:14:58,520 --> 00:15:03,040 Speaker 1: price of things as boring in key areas, components and 215 00:15:03,080 --> 00:15:05,440 Speaker 1: also just an inability to get things. I noticed, and 216 00:15:05,560 --> 00:15:08,080 Speaker 1: it's not just fast to source guys. I noticed the 217 00:15:08,120 --> 00:15:11,200 Speaker 1: owner of Burger King and Popeye's had an intern that's 218 00:15:11,200 --> 00:15:15,000 Speaker 1: Restaurant Brand International. We had a report based on an 219 00:15:15,040 --> 00:15:19,000 Speaker 1: internal study that they've done, talking about the soaring price 220 00:15:19,040 --> 00:15:23,560 Speaker 1: of beef mayonnaise bacon. In fact, it said price inflation 221 00:15:23,640 --> 00:15:28,360 Speaker 1: across the protein market complex has far exceeded even our 222 00:15:28,360 --> 00:15:31,560 Speaker 1: greatest forecast. So this is this is a global issue, 223 00:15:31,600 --> 00:15:36,160 Speaker 1: isn't it. Alexander Definitely. Supply constraints are really really bad everywhere. 224 00:15:36,320 --> 00:15:38,880 Speaker 1: One of the issues I was saying is China because 225 00:15:39,320 --> 00:15:43,200 Speaker 1: they are, for example, the steel is all going to China. 226 00:15:43,280 --> 00:15:45,160 Speaker 1: So they're just issues about packaging. But as you as 227 00:15:45,200 --> 00:15:47,360 Speaker 1: you just said, there are issues about other things as well. 228 00:15:47,440 --> 00:15:49,840 Speaker 1: We know that, um there are no boxes right now 229 00:15:49,920 --> 00:15:52,280 Speaker 1: because of all the Amazon orders. So there's just a 230 00:15:52,280 --> 00:15:54,760 Speaker 1: series of very strange things that are happening. You will 231 00:15:54,800 --> 00:15:58,160 Speaker 1: have trouble finding boxes because they've been using too many. Um. 232 00:15:58,200 --> 00:16:00,560 Speaker 1: You know, last year the issue was people. It was 233 00:16:00,640 --> 00:16:03,440 Speaker 1: workers that couldn't get to places, so we were having issues. 234 00:16:03,520 --> 00:16:05,880 Speaker 1: The tomatoes were riding in the field because you couldn't 235 00:16:05,880 --> 00:16:10,000 Speaker 1: get the people. But now it's actually the materials and 236 00:16:10,120 --> 00:16:14,040 Speaker 1: the things themselves, and you know, there's container shortages, there's 237 00:16:14,040 --> 00:16:17,160 Speaker 1: hoarding mentality still. I mean, there's a lot of products that, 238 00:16:17,440 --> 00:16:19,720 Speaker 1: especially things like tomatoes, not to go back to that, 239 00:16:19,800 --> 00:16:22,960 Speaker 1: but that people were hoarding because they keep for a 240 00:16:22,960 --> 00:16:26,040 Speaker 1: long time, and that just made everything much worse. So 241 00:16:26,080 --> 00:16:28,360 Speaker 1: it's a global phenomenon. It will take a while, yes, 242 00:16:29,040 --> 00:16:30,520 Speaker 1: And I mean I noticed that we had we had 243 00:16:30,520 --> 00:16:32,360 Speaker 1: a big piece on this actually a few weeks ago, 244 00:16:32,440 --> 00:16:34,160 Speaker 1: and I like the way that they captured it because 245 00:16:34,160 --> 00:16:36,560 Speaker 1: it was talking about how, you know, last year it 246 00:16:36,680 --> 00:16:40,080 Speaker 1: was consumers that were holding their toilet roll and their 247 00:16:40,160 --> 00:16:43,680 Speaker 1: tomato saws and whatever else, and now it's companies worldwide 248 00:16:43,880 --> 00:16:47,240 Speaker 1: that are effectively hoardering materials and making things worse because 249 00:16:47,280 --> 00:16:51,200 Speaker 1: they're worried about these supply chains. As you as you've 250 00:16:51,240 --> 00:16:53,160 Speaker 1: been saying, this is obviously one of the factors that's 251 00:16:53,200 --> 00:16:56,280 Speaker 1: pushing up inflation. But we are hopefully going to see 252 00:16:56,320 --> 00:17:00,000 Speaker 1: a shift over the next few months as things open up. 253 00:17:00,040 --> 00:17:02,200 Speaker 1: People won't be buying quite so much on Amazon so 254 00:17:02,360 --> 00:17:05,480 Speaker 1: much stuff, They'll be buying more services, they'll be going 255 00:17:05,520 --> 00:17:09,400 Speaker 1: out more. Right. It's it's almost like water being released, 256 00:17:09,400 --> 00:17:11,960 Speaker 1: you know, after there's a dam that's been breaking, and 257 00:17:12,040 --> 00:17:16,199 Speaker 1: so eventually things will calm down and we'll go backward someone. So, 258 00:17:16,240 --> 00:17:18,360 Speaker 1: I mean that's the theory, at least, I know there 259 00:17:18,359 --> 00:17:21,080 Speaker 1: are other theories about the same, but the theory is 260 00:17:21,119 --> 00:17:22,960 Speaker 1: that there will be an uptick and then things will 261 00:17:23,240 --> 00:17:25,560 Speaker 1: go a little bit more back to normal in the 262 00:17:25,640 --> 00:17:27,960 Speaker 1: In the meantime we shall probably we have to hold 263 00:17:27,960 --> 00:17:31,480 Speaker 1: onto our pastor source Alessandra Miniatria, thank you very much, 264 00:17:31,680 --> 00:17:40,560 Speaker 1: thank you. For some years now, Australia has been conducting 265 00:17:40,960 --> 00:17:44,800 Speaker 1: an extreme experiment with high immigration, welcoming in flows of 266 00:17:44,840 --> 00:17:48,320 Speaker 1: people for a prolonged period that dwarf anything attempted elsewhere. 267 00:17:49,000 --> 00:17:52,200 Speaker 1: Now that flow helped a fuel economic growth to such 268 00:17:52,240 --> 00:17:54,520 Speaker 1: an extent the country didn't have a recession for thirty 269 00:17:54,600 --> 00:17:58,040 Speaker 1: years until COVID nineteen finally did it in. But now, 270 00:17:58,080 --> 00:18:01,760 Speaker 1: after twelve months of closed borders, politicians and the public 271 00:18:02,000 --> 00:18:05,560 Speaker 1: seem to be rethinking the so called Big Australian approach. 272 00:18:06,200 --> 00:18:09,000 Speaker 1: We thought there might be some lessons in Australia's experience 273 00:18:09,040 --> 00:18:12,840 Speaker 1: for other countries grappling with the difficult politics and economics 274 00:18:12,840 --> 00:18:16,920 Speaker 1: of immigration. So we asked Australia Economy reporter Michael Heath 275 00:18:17,240 --> 00:18:22,119 Speaker 1: to give us his take. If you're a visitor in 276 00:18:22,119 --> 00:18:25,080 Speaker 1: this country, it is time as it has been now 277 00:18:25,160 --> 00:18:27,560 Speaker 1: for some while, and I know many visitors had to 278 00:18:27,640 --> 00:18:30,880 Speaker 1: make your way home and to ensure that you can 279 00:18:30,920 --> 00:18:33,680 Speaker 1: receive the supports. That was Prime Minister Scott Morrison last 280 00:18:33,760 --> 00:18:38,280 Speaker 1: year as COVID scale became clear. It sounded innocuous, but 281 00:18:38,359 --> 00:18:41,680 Speaker 1: too many temporary visa holders hoping to become Australian it 282 00:18:41,800 --> 00:18:47,959 Speaker 1: felt like betrayal. Australia has long been a laboratory for immigration, 283 00:18:48,240 --> 00:18:51,439 Speaker 1: managing the politics of a highly sensitive issue that raises 284 00:18:51,560 --> 00:18:55,640 Speaker 1: questions over identity and culture, but in recent times its 285 00:18:55,640 --> 00:18:58,520 Speaker 1: system has started to go astray as the country loaded 286 00:18:58,600 --> 00:19:03,240 Speaker 1: up on temporary migrants. We're offering limited places for permanent residents. 287 00:19:03,440 --> 00:19:06,080 Speaker 1: Those migrating down Under have typically done so in two 288 00:19:06,160 --> 00:19:09,679 Speaker 1: steps in Toronto temporary visa and then applied for a 289 00:19:09,720 --> 00:19:12,680 Speaker 1: permanent one under a points system that ranked people's skills, 290 00:19:12,960 --> 00:19:17,240 Speaker 1: age and so forth. Those points can rise or fall 291 00:19:17,440 --> 00:19:21,280 Speaker 1: depending on labor demand, but lately they've been rising as 292 00:19:21,280 --> 00:19:26,040 Speaker 1: permanent visas are directed towards entrepreneurs and high flying professionals. 293 00:19:26,080 --> 00:19:29,800 Speaker 1: That's left lots of would be Australians disenchanted. Actually, we 294 00:19:29,800 --> 00:19:35,320 Speaker 1: were still in school and the discourse started rising, so 295 00:19:35,560 --> 00:19:37,919 Speaker 1: we were like, you know, we were we knew that 296 00:19:38,080 --> 00:19:40,520 Speaker 1: we have to stay in school for two years with 297 00:19:40,600 --> 00:19:43,320 Speaker 1: my class man that was our cos Percy, who with 298 00:19:43,400 --> 00:19:47,119 Speaker 1: wife Marina, arrived in Melbourne from Budapest in two thousand 299 00:19:47,119 --> 00:19:50,639 Speaker 1: and seventeen. He a former chief financial officer at the 300 00:19:50,720 --> 00:19:55,160 Speaker 1: Hungarian State Opera. She a communication specialist. They're the sort 301 00:19:55,160 --> 00:19:58,480 Speaker 1: of people Australia once courted, but they've been in limbo 302 00:19:58,520 --> 00:20:00,520 Speaker 1: since our cost paid to do a mark his degree 303 00:20:00,520 --> 00:20:04,000 Speaker 1: in accounting, a profession he was told was in demand. 304 00:20:04,280 --> 00:20:06,159 Speaker 1: Now he's not sure he will have enough points to 305 00:20:06,160 --> 00:20:09,680 Speaker 1: stay permanently. As I mentioned, was sixty times. When we 306 00:20:09,800 --> 00:20:12,240 Speaker 1: arrived it was seven d n. It went on seven 307 00:20:13,640 --> 00:20:17,400 Speaker 1: and we just carculated that no way we can get there. 308 00:20:17,440 --> 00:20:20,399 Speaker 1: So it was like if this, if this trend continued, 309 00:20:21,760 --> 00:20:24,520 Speaker 1: then we won't have a chance. And all of my 310 00:20:24,720 --> 00:20:30,639 Speaker 1: class me actually got the residences. After four years, he 311 00:20:30,720 --> 00:20:33,000 Speaker 1: and Marina have given up and I headed to Canada, 312 00:20:33,400 --> 00:20:37,560 Speaker 1: which offered them permanent residency. Australia's system today seemed less 313 00:20:37,560 --> 00:20:41,919 Speaker 1: fair than its original seventy five years ago at Bonnagalan 314 00:20:41,920 --> 00:20:45,080 Speaker 1: and you had Albrey. They're making new Australians. Eight hundred 315 00:20:45,040 --> 00:20:47,000 Speaker 1: and forty people from the Baltic States are going to 316 00:20:47,040 --> 00:20:50,640 Speaker 1: school here for Australia's migration policy has determined that never 317 00:20:50,680 --> 00:20:53,760 Speaker 1: again shall our new citizens be falsd to fend for themselves. 318 00:20:54,000 --> 00:20:56,919 Speaker 1: We who had driven from our homes at overjoyed to 319 00:20:57,000 --> 00:21:01,200 Speaker 1: be welcomed as new Australian citizens. Those horrible years now 320 00:21:01,280 --> 00:21:04,080 Speaker 1: seemed like a night now many of us, how a 321 00:21:04,200 --> 00:21:07,440 Speaker 1: lot all their relatives. Until the end of World War Two, 322 00:21:07,760 --> 00:21:11,880 Speaker 1: Australia's population was drawn almost exclusively from Britain. But after 323 00:21:12,000 --> 00:21:16,879 Speaker 1: narrowly escaping invasion by Japan, Australia broadened its horizons. In 324 00:21:16,920 --> 00:21:20,359 Speaker 1: the post war period, it initiated mass migration under its 325 00:21:20,440 --> 00:21:23,960 Speaker 1: rubric of populate or parish, Australia opened its doors to 326 00:21:24,000 --> 00:21:27,720 Speaker 1: European refugees. Jock Collins is a professor at UTS in 327 00:21:27,800 --> 00:21:30,960 Speaker 1: Sydney and has studied immigration for almost half a century. 328 00:21:31,240 --> 00:21:36,280 Speaker 1: Australia is one of the great immigration nations of the world. 329 00:21:37,200 --> 00:21:41,560 Speaker 1: In the post forty five period after the Second World War, 330 00:21:42,160 --> 00:21:48,119 Speaker 1: there are only four countries that became settler immigration countries Australia, US, 331 00:21:48,240 --> 00:21:52,800 Speaker 1: Canada and New Zealand, and as a proportion of the population, 332 00:21:53,600 --> 00:21:56,760 Speaker 1: we have had a much bigger migration program than any 333 00:21:56,800 --> 00:22:00,320 Speaker 1: of the other countries. Australia was, however, determined to preserve 334 00:22:00,400 --> 00:22:04,000 Speaker 1: its British character. It's set up the ten pound pomp program, 335 00:22:04,000 --> 00:22:06,480 Speaker 1: whereby the government paid most of the fair for Brits 336 00:22:06,480 --> 00:22:15,000 Speaker 1: to come to Australia, but that white Anglo saxon Australia 337 00:22:15,280 --> 00:22:19,160 Speaker 1: is now a distant memory. Today half of Australia's million 338 00:22:19,240 --> 00:22:22,720 Speaker 1: people are either born overseas with Asia now dominant, or 339 00:22:22,760 --> 00:22:25,479 Speaker 1: have a parent who was almost one in three year 340 00:22:25,520 --> 00:22:31,760 Speaker 1: first generation. Here at Sydney's Fish Market, many stores set 341 00:22:31,800 --> 00:22:34,480 Speaker 1: up by Greek and Italian families in the nineteen sixties 342 00:22:34,840 --> 00:22:37,680 Speaker 1: have now been brought out by Chinese families. Like each 343 00:22:37,680 --> 00:22:40,600 Speaker 1: wave of migrants, they bring a new style and touch. 344 00:22:40,840 --> 00:22:44,159 Speaker 1: These days, an awesome variety of sushi is available and 345 00:22:44,200 --> 00:22:47,200 Speaker 1: products are packed with immense care. Just as they're heavily 346 00:22:47,200 --> 00:22:55,080 Speaker 1: Asian clients like it. It's okay. The last vestiges of 347 00:22:55,119 --> 00:22:59,760 Speaker 1: the racist White Australia policy were finally abolished by the 348 00:23:00,040 --> 00:23:03,080 Speaker 1: the Labor government in nineteen seventy three, but it took 349 00:23:03,080 --> 00:23:07,040 Speaker 1: a bit longer to mean something. If it was up 350 00:23:07,040 --> 00:23:10,399 Speaker 1: to you, now, which country would you head for? I 351 00:23:10,440 --> 00:23:12,239 Speaker 1: think all of the person in the world now I 352 00:23:12,240 --> 00:23:17,399 Speaker 1: want to go to Austolia. Well, the dominant feeling was 353 00:23:17,440 --> 00:23:20,880 Speaker 1: that we had to give these people a home, especially 354 00:23:20,920 --> 00:23:24,720 Speaker 1: people have been associated with over the Australian Embassy or 355 00:23:25,240 --> 00:23:28,600 Speaker 1: That last voice was Conservative Prime Minister Malcolm Fraser who 356 00:23:28,600 --> 00:23:31,120 Speaker 1: opened the door to tens of thousands of refugees from 357 00:23:31,119 --> 00:23:34,480 Speaker 1: Indo China after the Vietnam War. We were leading the 358 00:23:34,520 --> 00:23:37,520 Speaker 1: world in the eighties and nineties when we were sort 359 00:23:37,520 --> 00:23:42,800 Speaker 1: of introducing multiculturalism and that sort of settlement policy. Jock Collins. Again, 360 00:23:43,040 --> 00:23:45,320 Speaker 1: there was a time in which Australia was a model 361 00:23:45,760 --> 00:23:48,560 Speaker 1: that other world countries looked at, particularly as other countries 362 00:23:48,560 --> 00:23:52,120 Speaker 1: in Europe and not discovered immigration was an important thing. 363 00:23:53,000 --> 00:23:55,879 Speaker 1: In two thousand and one, facing a title election and 364 00:23:55,920 --> 00:23:59,600 Speaker 1: with rising numbers of people arriving illegally by boat from Indonesia, 365 00:24:00,119 --> 00:24:03,919 Speaker 1: Conservative Prime Minister John Howard deployed the navy to stop them. 366 00:24:03,960 --> 00:24:09,000 Speaker 1: He politicized border control and then wrote it to victory. Ironically, 367 00:24:09,160 --> 00:24:11,840 Speaker 1: that tough border stance allowed his government to ratchet up 368 00:24:11,920 --> 00:24:15,800 Speaker 1: legal immigration. It was needed as Australia's economy boomed in 369 00:24:15,880 --> 00:24:19,560 Speaker 1: response to China's demand for minerals. Between the second half 370 00:24:19,600 --> 00:24:22,959 Speaker 1: of and the end of two thousand and nineteen. As 371 00:24:23,000 --> 00:24:26,040 Speaker 1: Australia's economies that had developed world record for a stretch 372 00:24:26,080 --> 00:24:31,680 Speaker 1: without recession its population increased by forty The new arrivals 373 00:24:31,760 --> 00:24:34,960 Speaker 1: and their demand for housing and goods helped the economy surge. 374 00:24:36,640 --> 00:24:39,359 Speaker 1: The nation had found a sweet spot. The points system 375 00:24:39,359 --> 00:24:43,920 Speaker 1: attracted smart, educated, younger people from across the globe. Meanwhile, 376 00:24:44,040 --> 00:24:48,119 Speaker 1: it's education industry, the country's fourth largest export, also offered 377 00:24:48,119 --> 00:24:52,000 Speaker 1: a path to permanent residency for talented students that appealed 378 00:24:52,000 --> 00:24:55,000 Speaker 1: to Prime Minister Boris Johnson, who argued for something similar 379 00:24:55,040 --> 00:24:59,000 Speaker 1: once the UK left Europe. Australia's draconian response to illegal 380 00:24:59,160 --> 00:25:01,960 Speaker 1: entrance by boat seemed to appeal to President Donald Trump. 381 00:25:02,720 --> 00:25:06,800 Speaker 1: In fact, Australia is too faced on immigration, exceptionally severe 382 00:25:06,840 --> 00:25:10,680 Speaker 1: toward a legal entrance, while generally welcoming toward legal arrivals. 383 00:25:11,680 --> 00:25:14,120 Speaker 1: The Grant And Institute is critical of the government's approach 384 00:25:14,200 --> 00:25:17,240 Speaker 1: in a new report, Gone is the time tested policy 385 00:25:17,280 --> 00:25:21,800 Speaker 1: of courting young skilled migrants best place to succeed down under. Instead, 386 00:25:22,119 --> 00:25:25,199 Speaker 1: two fits of permanent visas now go to entrepreneurs who 387 00:25:25,240 --> 00:25:29,680 Speaker 1: have brought negligible investment and an untested high flyers program. 388 00:25:29,760 --> 00:25:33,440 Speaker 1: When this whole crisis started, you know, the whole government 389 00:25:33,840 --> 00:25:38,199 Speaker 1: and everyone pretend that they have nothing to do with 390 00:25:38,320 --> 00:25:41,920 Speaker 1: the immigrants. That was our cost percy again, and everyone 391 00:25:42,040 --> 00:25:45,639 Speaker 1: is here just because they have nothing else to do. 392 00:25:45,840 --> 00:25:49,680 Speaker 1: So it's like they have no no responsibility over this. 393 00:25:49,920 --> 00:25:52,720 Speaker 1: I don't know, two million temporary vies, the holders who 394 00:25:53,680 --> 00:25:58,640 Speaker 1: live here and who have a life here. As Australia 395 00:25:58,720 --> 00:26:01,679 Speaker 1: moves on from the pandemic, it's reputation as a melting 396 00:26:01,720 --> 00:26:04,440 Speaker 1: pot for the world is changing and the landdown Under 397 00:26:04,560 --> 00:26:07,320 Speaker 1: is grappling with the same immigration challenges as the rest 398 00:26:07,320 --> 00:26:22,520 Speaker 1: of the world. For Bloomberg News, I'm Michael Heath. Well 399 00:26:22,560 --> 00:26:24,840 Speaker 1: that's it for this episode of Stephonomics. I'll be back 400 00:26:24,880 --> 00:26:26,760 Speaker 1: next week with a lot more from around the world. 401 00:26:26,880 --> 00:26:28,480 Speaker 1: And remember, in the meantime, you can get a lot 402 00:26:28,480 --> 00:26:31,680 Speaker 1: more news and analysis from Bloomberg Economics by following our 403 00:26:31,760 --> 00:26:35,920 Speaker 1: economics on Twitter. This episode was produced by Magnus Hendrickson. 404 00:26:36,359 --> 00:26:40,480 Speaker 1: The special thanks to Dr Carmen Reinhardt, Alessandra Miliaccio and 405 00:26:40,560 --> 00:26:44,399 Speaker 1: William Heath. Mike Sasso is executive producer of Stephonomics and 406 00:26:44,480 --> 00:26:47,080 Speaker 1: the head of Bloomberg Podcast is Francesca Levy.