The facts about houses and avocados (or, why Bernard Salt is an arrogant $#^&@&$)


Cross-posted from Rational Radical.


“Bernard Salt is a futurist who uses demographic and social change to interpret how society and business might evolve.”

I’ll just leave that there for a moment.

Another day, another self-righteous Baby Boomer castigates themselves in the court of public opinion by equating Millenial eating habits with financial ruin, this time at the expense of ubiquitous hipster-licious avocado. It happens so often that a veritable army of hipster economists are armed and ready to update their innumerable Food / Beverage / TV / iPhone / Overseas Holiday vs. House Price charts to ‘smash’ down the ignorant Boomer home-owner the second they start tweeting so much as a “When will Gen X/Y… blah blah blah”.

Barely is the ink dry and the hashtag offending eyeballs before the glorious chorus of #StopRightThereOldFartDon’tYouDareGenYMeYouIgnorantDoucheBag is unleashed in an unstoppable wave of righteous Millenial indignation and sarcasm. And Bernard Salt did so in textbook fashion, without so much as a trace of economic, financial or demographic analysis to back up his intergenerational condescension, as might be appropriate for an economist and demographer. (Just saying).

It was very nearly a “Let them eat cake!” moment, were it not for the fact that it was actually worse. He basically said “Don’t let them eat cake… and definitely don’t let them eat smashed avocado!”. Fuck me! Did this guy not watch that dreamy Kirsten Dunst film about French Baby Boomers stuffing themselves full of avocado, oblivious to the peasant mob sharpening the guillotines at the foot of their 700 room inner-city bungalow / castle in Paris?

In that light, I’m actually a bit worried that Bernie’s ill-researched outburst puts him at risk of physical backlash, as the rising ranks of young renter scum – otherwise content to survive on smashed avocado brunches, and not even expecting any cake – treat his spray of toast crumbs in The Australian with the contempt it deserves.

And to be fair, it’s not like there’s no truth in what he says, it’s just that he’s completely wrong and his argument utterly devoid of facts. Hmm. Well, at least in regard to housing affordability. I mean $22 is a fuck-load to pay for avocado on toast. But what a delicious irony it is then that the price of avocado on toast is partly driven by its input costs, chief of which would be… you guessed it, LAND! But you do need to be an economist to grasp such subtleties, and it’s far more fun to just rag on hipsters, they get so angry about stuff!

Either way, lets have a look at the facts before we string up poor old Bernie, he was just having a crack. It’s not his fault that he belongs to the landed gentry, enjoying an all-you-can-eat tax-break buffet at the taxpayer’s expense, what to speak of the once in a 100 year demographic tailwind (hello Bernie?!) and never-to-be-repeated financial engineering and pro-bubble policy supports. Anyone (everyone?) in his position would be equally myopic as to the underlying atrophy in Australian society and political economy. Lets give him the benefit of the doubt and look at the facts.

Just sampling the last few weeks alone of obsession with Australian housing, we have all the news we need to explore the relationship between housing and avocados in a more evidence based manner:

Housing and avocado facts

So in Bernie’s defence, it would seem that there is indeed a significant relationship between smashed avocado breakfasts and Australia’s 20 year long housing bubble, but it’s not the one-dimensional relationship with fiscal responsibility that the “Middle Aged Moraliser” scornfully posits through projectile flecks of hard-earned green breakfast fruit.

Far worse than the inability of Australian youth to practice avocado-austerity adherence, is the disturbing fact that unaffordable housing is secondary to the irreparable damage caused to our once productive, dynamic, diverse and competitive economy by over-investment in smashed avocado breakfasts, and the terminal build up of severe risks to both personal and public financial stability caused by the highest level of smashed avocado breakfast debt in the world. We spent the last 20 years putting all our avocados in one basket, leading to a hyper-concentrated and unsustainable debt-fuelled economy, having experiencing the fastest de-industrialisation in the developed world.

Manufacturing now represents some 6% of GDP, as compared to around 12% in the 80s, whereas the finance, insurance and real estate (FIRE) sector has grown from 6% in the 80s tonow comprise some 12% of GDP, a complete trading of places between ‘making things’ and ‘speculating on things’. This an over-concentration that even the IMF admits is damaging to long term economic prosperity. Australia once had a classic ‘mixed economy’, but now we now have nothing more than an avocado and real estate economy. More fool us.

Smashed avocado breakfasts have a lot to answer for, and in time it seems likely that even hard working Bernard Salt may need to forgo his third or fourth weekly brunch dose in order to begin piecing our shattered economy together again.

In my mind, this leaves three serious questions for poor ole’ misunderstood Bernie to answer:

  • On what measure is Australian housing affordable other than the smashed avocado index?
  • On what basis is Australian housing not in the largest and most dangerous asset price bubble in our own long and dangerous bubble history, and in comparison to widely studied global housing bubble history?
  • Even if you believe the first two points to be miraculously irrelevant or incorrect as applied to the Australian situation, how can you possibly deny the extremely well researched and documented destruction to economic sustainability, financial stability, wealth equality and political progress caused by:
    1. the highest levels of household debt in the world?
    2. amongst the most expensive housing in the world?

While Bernard may be unfamiliar with such questions, young Australians are all too familiar with this trifecta of shit facing the economy, the financial system, and the ability to afford housing. His article grossly misjudges hipster wannabes, because unlike Bernie, young Australians are predominantly aware that:

  • Housing at current prices represents the worst value for money in history
  • Housing at current prices represents the highest risk to personal finances in history
  • Housing at current prices represents the lowest prospect for future price gains in history
  • Housing at current prices represents the shittest investment in history, as rental growth and yields plumb record lows
  • Housing at current prices represents the highest risk to the stability of the financial system in history
  • Housing at current prices has helped drive the largest de-industrialisation in history, which will severely endanger any ability to service a 40 year mortgage in the future, let alone afford smashed avocado breakfasts.

Young Australians get it. We are smart enough to realise that in light of these facts, forgoing yet more smashed avocado breakfasts to get a foot on the property ladder (pyramid) at this stage is universally NOT A GOOD DEAL. As Chris Richardson from Deloitte Access Economics remarked in regards to the investment prospects for Australian residential real estate:

“They should have as much quinoa porridge and as much smashed avocado as they want because inevitably property prices are going to come down and their patience will be rewarded.”

Viva La Avocado Revolucion!

Remember that dreamy quote from Salt’s own website that I left at the start of this article? Where he describes himself as a “futurist who uses demographic and social change to interpret how society and business might evolve“?

Well, Bernie’s self-described futurism and prediction of social and demographic trends has so far failed to spot the evolution of an imminent dystopian future for Western Boomer-run neoliberal debt-fuelled asset bubble economies, brought to their knees by private debt saturation and de-industrialisation.

He has failed to identify and explain the groundswell rebellion of ‘heterodox economics’ against the prevailing (and failing) neo-classical order of financialised capitalism, equilibrium theory, monetarism, private debt ignorance, theft by privitisation, population growth Ponzi-nomics, monopoly protectionism and worst of all: the sacred status of the creditor and rentier above any common or public interest.

He has so far failed to predict the global revolt of the young and aspirational classes against those that would sit in their Avocado Towers pouring scorn on their own young. The revolt against those very same Boomer-crats who simultaneously completely miss the fucking point as to why the likes of Donald Trump and Pauline Hanson – regardless of their respective moral vacuums – are being used as figurative or literal Molotov cocktails to try and destroy the rotten and shaky edifice created by the arrogant, corrupt, short-sighted, nepotistic, tax-advantaged scions of the neoliberal era; the sole beneficiaries and champions of the fastest deterioration in working class living standards since the Gilded Age of the late 19th century.

Bernard Salt, I’m sorry to say, you’re not just an arrogant prick, you’re also a shit economist and an irrelevant futurist.

Your lot fucking wrecked the place Bernie, and typical of all such eras throughout history, your own blindness and hubris has sewn the seeds of destruction of your presumptive political, social and economic advantage, as the young avocado munchers of the world begin to amass with torches at the iron gates to your 700 room Californian bungalow.

Enjoy your $22 I-already-raised-my-family brunch while you can you self-righteous irrelevance, because thanks to the brutal honesty of Baby Boomer representatives like yourself, young people are becoming less and less squeamish about stealing the smash right off your hipster-cafe table. We gave you crates to sit on so that your ageing legs would be too seized up to run away or fight back as we stuff our faces with your future-eating, economy-smashing brunch.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


    • Way too long.

      Michael Janda summed it up in a tweet this morning. In US first home buyers make up nearly 50% the housing market. In Australia first home buyers less than 13%, while investors nearly 50%.

      • excellent article. at last.
        And its not just the wealthy fraction of the boomers like the Salt prick and Turnbull its also the GenX , 40 to 50’s year olds fat bummed men who’ve got the neg geared ‘investment’ dwellings.

  1. A great read, but I wonder if talk of a millennial rejection of the status quo isn’t a little optimistic. Most of my contemporaries, who should be capable of better, remain in the thrall of neoliberalism and seem to assume they will enjoy ever growing prosperity. They mostly seem unable to appreciate any significant risk in Australia’s economic situation nor do they appear inclined to think about it.

    I’d say most will be shocked and outraged when it all goes pearshaped.

    No revolution until the avocado runs out.

    • I think that these naive millenials will be the most extreme in their reaction. Those already knowledgeable of the situation won´t be surprised or outraged when things turn pear-shaped, unlike those expecting their share of the pie. Many of the voters of the 5 star movement (Italy) or Podemos (Spain) are youths from the well-to-do families, with university degrees (often pointless ones) and no job. Unfortunately the pendulum swings wildly and only briefly remains in the center.

      • The “useless – degree kid” will want his fair share of the economy from redistribution, lower tax and child care.

        They don’t know about interest rates, housing supply, CGT, immigration, foreign buyers. …. innovation. .. productivity… comparative advantage. …

      • Good obs JMN and Dan!
        Bernie is just using the old marketing tricks of guilt, inadequacy, humiliation (keeping up with the Jones’) that worked a treat on his gen as ‘they’ are plenty worried the required buyers for their inflated goods are no longer stopping by the shop.(see Dan above). Their ‘street’ will be abandoned same as Chapel St (former MEL shopping mecca). Bad ‘value’ gets no second chance with this crowd.

    • Yes,

      There will be little reaction to Mr Salt’s self satisfied dribble for the simple reason that very few understand the costs of the current model of running the economy on taxpayer guaranteed private bank credit creation as public money stimulated by and distributed via a rising household asset price ponzi scheme.

      At the moment most people believe that rising house prices are like some economic magic pudding. They believe it is a cost free exercise and clowns like Bernard Salt run interferrence with dumb articles that suggest there is nothing unusual about the model that was adopted in the early 90s and given after burners by Howard.

      No real structural problem or future eating as national economic policy – Just too much avocado on toast.

      “The more debt that the pudding eats the bigger it gets. So take another slice’

      And why not?

      How many people really understand the magic pudding ingredients are massive and growing taxpayer guaranteed banking system external liabilities and maintaining inflated demand for housing stock with direct sales to foreigners or temporary residents and massive levels of immigration?

      If people don’t understand the costs of the pudding – a temporary industry killing inflated exchange rate and congested failing infrastructure – they will continue to eat it till they pop.

      • I like to think that I’m a fairly well informed and intelligent bloke, but I didn’t understand any of that stuff about external liabilities, banks, debt, housing ponzis etc until a few years ago I started wondering where all the money was coming from to fund the seemingly magical increases in house prices that I was seeing all around me. A lit bit of noodling around the internet in an attempt to figure it all out lead me to MB, and now I understand.

        It’s a lot like the matrix. Most people in our society are living in a dream world while being used as food by The Matrix (ie the FIRE sector and other 1%ers). None of my friends and colleagues are aware of how things really are, and think that we will go on for ever as we are now, without realising that at some point in the future the rest of the world will stop lending us the money that sustains our debt fueled lifestyle. And when that happens, there will be tears.

        Thankfully, there is a tiny minority of people like MB readers and others like the Rational Radical who understand what’s really going on, and what is going to happen when this all turns pear shaped (lots of food references today!). While tiny, I think that the number of people who are taking the correct pill (red or blue, I can’t remember) and seeing the truth is slowly increasing, which can only be a very good thing.

      • most people believe that rising house prices are like some economic magic pudding.

        Spartan, laconic, excellent summa summare.

        Irony is that most people that condemn salt also think the same way and curse the system for not being fair to them due to the timing… most of them want that magic pudding.

        So yep, Salt is wrong.
        But he’s also right (in judgement of millenials being passive)

      • Locus of ControlMEMBER

        Maybe people don’t want to know LSWCHP. So they don’t go looking. As they say, ignorance is bliss. And the truth is depressing.

    • Colonial

      “remain in the thrall of neoliberalism and seem to assume they will enjoy ever growing prosperity”

      Millennials are but embarrassed millionaires

  2. The backlash will build into 2018
    The AUST economy will be exposed when the resi construction in Melb and Syd winds down in 2018.
    Car industry will be gone
    The apartments will be finished – 10% plus lower in price
    FIRE industry will start to slow
    Commodity prices will be lower

    Australia is heading into a 10 year depression from late 17/18 until 2028

    • Meh, I’ve been saying its two years away since 2003.

      I’m three MBiz posts away from going the full Reusa (but not as sexy)

  3. I think Bernard went to brunch with his family and, upon seeing his daughter make her breakfast purchase decision (quite likely on the basis of “well, Daddy’s paying) has decided to express his displeasure and incredulity at having to shell out 4.55% of the average Sydney weekly rent (woof, nigh on double the rental yield for property investors) on his daughter’s breakfast choices in the most public way possible.

  4. reusachtigeMEMBER

    LOLOLOL!!! Some dude banging on about a bubble like it’s 2007 all over again. Ahahaha. Someone else will be doing the same in another 10 years. What young people need to do is stop concentrating on data, as it is always wrong, and just get into the spirit of prosperity by investing in housing. It is THE only way to happiness in our great nation. Liven up people!

    • If the losers reading MB hoping for a property crash tomorrow could be more enlightened like yourself reus ;). You have been more right intentionally or unintentionally for far longer than MB. A lot more handsome to to boot.

      The straw clutching around here is truely amazing. If you need a house to live in, esp a family, you are a price taker, you can’t time the market, just need to get your mega mortgage mug out.

    • I saw some real estate spruikers bukkaking some data the other day, they didn’t have no respect for it

  5. As I said yesterday, am I the only one who thought Salt’s article was predominantly a piss take?

    • Nope, most of the Gen-X and boomers of my acquaintance considered it investigative journalism and a vindication of their virtue.

      Not kidding either. An endless series of homilies about how they denied themselves air and water to buy their foot on the ladder.

      • Don’t get me wrong, Salt is generally quite tedious (probably because, like most columnists at The Australian, he is a one trick pony) but as someone squarely within Gen X, I thought the whole thing was mostly tongue in cheek.

        Meanwhile, Salt should be getting anv award for services to the avocado industry. The free marketing they’ve gotten out of this is worth a fortune.

        And the banks are catching on too:

      • “they denied themselves air and water to buy their foot on the ladder.”

        The irony is that this is indeed correct but applicable in high interest rates environment.
        I still remember people saying how the first 5 years are the hardest and then inflation and pay rises munches and nibbles the repayment to insignificance. Top that up with additional payments and suddenly, in 10 years you almost own it. 5 years of fasting on bread and water was what it took under normal IR’s.

        The ‘magic pudding’ class expect ZIRP at the same time as above AND 10%+ CG per year on the houses….
        Most cannot grasp that $1mil homes will not be paid off in their lifetime.
        If one had $1000 disposable a week it still takes 20 years to pay $1mil with no interest at all.

    • MB should probably be wary of these inflammatory articles. There isn’t any reasonable way to counter the arguments put up on this site, so a smart way to discredit dissenting opinions (like MB) would be to throw up these red herrings and let the ensuing rational debate look like a theatre of the absurd. It would be naive to think that the spin doctors behind the various ponzii are incapable of being devious. The more successful MB is, the bigger the hammer they will use – there is a lot of money riding on the status quo.

    • I’ve been following Salt for a while and he has a thing for the cost of fruit salad plates in various hotels, soap and hipsters not wearing socks (considers it gross)
      On a recent rant about all things hipster he talked about drinks in jars and food served on blocks of wood. I mentioned my personal irritation at “smashing” food, especially avocado.

      I’m not saying I inspired it….. but I may have bought it too his attention and inadvertently created a monster.

      • Linking smashed avo toast and the property ladder is dumb, however the jar business also pisses me off (and no, it isn’t the money). If they were actually keeping the jars that would be admirable but drinking out of glasses shaped like preserve jars is the epitomy of stupid, and it is not the preserve of a cohort but a symptom of a navel gazing society.

  6. Forget avocados. Booze is the real index for discretionary spending behaviour in Straya.
    Average pure alcohol consumption in Australia peaked at 13.1 litres per person in the 1970s – about the time all those miserable Boomer bastards were purportedly depriving themselves of little luxuries so they might scrape together their first home loans.. By 2013-14, it had declined to 9.7 litres.
    The difference is 3.4 litres of pure alcohol. Assuming purchasing parity for a pot of beer over this period, that might equate to around an extra $1500 per year in booze – or $30 per week.
    So Bernard the try-hard wasn’t really depriving himself, he was just substituting avacados with VBs.
    And, given the relative long term health effects of alcohol and avacados, that is why the old prick has early onset dementia.

    PS. And anyone who calls themselves a “futurist” is a bigger prick

    • rob barrattMEMBER

      Only 13.1 litres AK?
      Well, they obviously didn’t buy from GraysOnline at 12 bottles a time. At least, I think it was Grays … I, I can’t remember…..
      But, we have all missed the hidden diamond in the above article. Looking at the ratio of House(H) to Smashed Avocado on Toast (SAT) prices, it becomes wonderfully obvious that a hidden constant – HSAT has been revealed. Apart from a slight variation in Sydney it’s damn near universal! We can now set the price of our SAT breakfasts in our cafes in London, New York & Paris purely by taking the universal HSAT ratio so beautifully revealed. Bloody marvellous!

  7. I think the key here is compromise. What’s wrong with baked beans from a tin? It’s better for you at a fraction of the cost.

    If you really want to spend, why not go for HSR? (Hash browns, spinach, ravioli)

  8. A demographer once rolled her eyes when talk of Bernard Salt arose. Intimated his approach wasn’t respected by the majority.
    That article is fabulous, the entire MB site rewritten in fresh new avocado, what a wealth of pent up talent in this country, smashed down by the Vegemite crunching proptocracy.

    • Bernard’s stock in trade is to do a quick regression and then linearly project far into the future. By definition he’s got fark all chance of being proved right on the average future prediction

  9. ErmingtonPlumbingMEMBER

    Well, after all this talk about avocado eating, I did some research and discovered that this fruit is the most nutritious, high in kilo joule foods produced by nature!
    So I went out and purchased my first Avocado.
    Not sure on how to eat it, i start to peel it, like an Orange or mandarin and just got my fingers covered in mushie, slimy green stuff!

    So anyway I’ve now just finnished eating a terrific Bacon and egg roll, on a fresh sesame roll with fried onions and cheese, with just a light drisel of BBQ sauce. Mmm yummy.
    Along with my medium mocha (no sugar as im watching my weight) the experience only cost me $9.50 @ Ermo’s portico chicken… now im ready to spend half the day burning it off, chopping a water service diversion through sand stone.


    • Try scoop it out like you wold with a kiwi fruit, and make a spread with it. Add it on bread with some egg, sausage (preservative free ones), and maybe some aged cheddar cheese. Also try out some chutney from your local grocers.

    • Cut it around the middle with a sharp knife, pressing all the way into the seed, then twist the two halves to separate. One half will contain the seed, so whack the blade into it and twist to remove.

      Use the tip of the knife to cross-hatch the pulp, and then sprinkle with a little salt. Splash on some balsamic vinegar (or bundy rum if you’re in the mood) then scoop out the salty, tangy goodness and enjoy.

      I do like the sound of your bacon and egg roll, though!

    • Cut down the middle, scoop out the guts and spread it like butter on your bacon and egg roll.

      Chuck it in a food processor first if you want that “smashed” authenticity.

    • ErmingtonPlumbingMEMBER

      May I recomend getting a Boyfriend or Girlfriend, your suggested alternative really dose put me off embracing ” smashed Avocado” Haroldus!

      As for my little “first time Avocado experience”, that was a piss take.
      In fact ive been a big Avo fan for decades and im my opion if you have got to “smash it” its not ripe snd tasty enough,.. ya gota squeeze and test for the perfect ripeness before you buy and then slice the Avocado into lovely thin slices. If its to firm, its shit.

  10. This so called moralist raised his family working for KPMG providing tax dodging and money laundering advise to those able to pay for it.
    Listening to anything this twat says would be almost as dumb as asking George Pell to mind your kids.

  11. H&H….

    With all do respect why do you persist in utilizing a well known marketing perspective of social organization with such dubious academic lack of rigor.

    I mean using the Strauss–Howe The Fourth Turning rubbish, especially considering all the data cheery picking, lack of empiricism, that conclusions are overly broad and do not reflect the reality of every person in each generation regardless of their race, color, national origin, religion, sex, age, disability, or genetic information.

    You do realize that its only application in observing society is from a marketing perspective [as in shaping perspectives] and its the marketing agencies which gave it any life out side a more empirical setting

    I mean next thing your going to reference is old Glen Beck since he is such a big fan of its “prophecy”….

    Disheveled Marsupial… I taints what other wise could be sound opinions about what has and is occurring.

    • To put it in another perspective –

      Whenever I hear “Millenials will…, or Boomer have..” . (short, of course, for “youth will..” and “age has…”) , I think of someone I know in the Millenial age group – Joe, say – or someone I know in the Boomer age group – Jane, perhaps – and ask myself, what is Joe doing, what does he personally want to do? What has Jane done in her life, within the confines of her time?
      Eventual youth becomes age and the advertising starts anew. – flora

      Disheveled Marsupial…. does the hamster wheel ever get tiresome….

      • Agree, the stuff about “Generations” whilst good for headlines, is a divisive distraction and quite meaningless.

  12. Bernard Salt and his wankery can be seen for all it’s glory here.

    I’d recommend watching the whole debate Grattan Institute’s John Daley was very good. This is Mr Salt’s rebuttal. Problem is after his speech most of the audience agreed with him… Which makes me sad.

  13. Don’t worry Bernard your avocado smash comes with some special sauce that was smashed out just for you by the barista/server propping up this economy for your faintly weird tasting treat.

  14. Locus of ControlMEMBER

    A just produced a rather interesting calculation. I determined that a person who lives to exactly 80 years of age and eats breakfast every day will eat 29,220 (365.25 X 80) breakfasts in their lifetime. Yet a Sydney house, as shown in the top graph, costs around 45,000 smashed avocado breakfasts at $22 a pop. In other words, a Sydney house costs more than a lifetime’s worth of smashed avocado breakfasts! Wow… Even if you forgo your expensive brekky your whole life, you still won’t be able to afford a house in Sydney (and you shouldn’t forgo breakfast kiddies – breakfast is a critical meal; one that you should be eating).

    Well, I thought it was interesting…

  15. Get a grip guys. If you want to put shit on the boomers for fracking the RE market then what about the X and Y gens piling onto the stage coach. Even some mills are getting in on the act, so let’s chill for a sec.
    The turds who created this distortion are the pollies happily swilling their taxpayer provided libations in the chook house who won’t do the obvious with any real policy on RE reform …. Christ I hate that word!
    Salt has always been a putz and with his quasi religious mutterings is a bit like Alan Pease on body language which is all very entertaining, but only useful to wipe your arse with after having a giggle.

    I get it that you’re angry, but fuck me, we all are trying to survive this shit storm so let’s stop snapping at each other over the scraps and send the message to those responsible. The generational argument is just a distraction built on the old marketing tool of envy. The pollies and elites are scamming the whole bunch of us. I’m worried sick about my kids and their kids to the point where I’m avoiding walking past the gun safe. Please give it a rest.