1 00:00:03,160 --> 00:00:18,840 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:20,200 --> 00:00:23,599 Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast. 3 00:00:23,680 --> 00:00:26,160 Speaker 3: I'm joll Wisenthal and I'm Tracy Alloway. 4 00:00:26,440 --> 00:00:29,280 Speaker 2: Tracy, did you see that story a few weeks ago 5 00:00:29,480 --> 00:00:34,720 Speaker 2: about Andresen Horowitz, the big VC firm closing its Miami office. 6 00:00:34,760 --> 00:00:37,360 Speaker 3: Who I did partially because you tweeted about it. 7 00:00:38,960 --> 00:00:42,400 Speaker 2: See, my tweeting serves a purpose. It allows us to 8 00:00:42,479 --> 00:00:45,159 Speaker 2: coordinate and be on the same page on topics. 9 00:00:45,240 --> 00:00:46,839 Speaker 3: It gives us shared content. 10 00:00:46,960 --> 00:00:49,159 Speaker 2: Sure, that's right. But I found that story to be 11 00:00:49,200 --> 00:00:52,520 Speaker 2: really fascinating because in twenty twenty or I think, yeah, 12 00:00:52,520 --> 00:00:56,880 Speaker 2: around twenty twenty, and obviously with COVID and people frustrated 13 00:00:57,080 --> 00:00:59,920 Speaker 2: about things going on in San Francisco, it felt like 14 00:01:00,120 --> 00:01:04,320 Speaker 2: there was this big effort to sort of manufacture an 15 00:01:04,400 --> 00:01:07,800 Speaker 2: environment in a new city. So it's like, Okay, Miami's nice, 16 00:01:07,920 --> 00:01:09,679 Speaker 2: and the standard of living if you have a lot 17 00:01:09,680 --> 00:01:12,720 Speaker 2: of money, it seems pretty good. Let's just see if 18 00:01:12,760 --> 00:01:16,760 Speaker 2: by a sheer force of will and money and tweets, etc. 19 00:01:17,280 --> 00:01:20,880 Speaker 2: Whether we can relocate everything there. And there has been 20 00:01:20,880 --> 00:01:23,000 Speaker 2: a lot and we've talked a little bit about Miami 21 00:01:23,080 --> 00:01:25,840 Speaker 2: and Citadel has obviously brought a ton of money to 22 00:01:25,920 --> 00:01:28,560 Speaker 2: the city. But this sort of impulse to sort of 23 00:01:28,920 --> 00:01:34,560 Speaker 2: manufacture cities and manufacture new physical networks is a very 24 00:01:34,560 --> 00:01:36,080 Speaker 2: interesting phenomenon. 25 00:01:35,520 --> 00:01:38,360 Speaker 3: To me, right, and I always find it's sort of 26 00:01:38,400 --> 00:01:41,120 Speaker 3: the strongest whenever you see a city talk about becoming 27 00:01:41,240 --> 00:01:43,880 Speaker 3: a crypto hub or something like that. And there have 28 00:01:43,920 --> 00:01:46,240 Speaker 3: been so many, right, so Miami was one of them 29 00:01:46,760 --> 00:01:50,080 Speaker 3: at certain points. Eric Adams in New York has talked 30 00:01:50,080 --> 00:01:52,960 Speaker 3: about it. Malta wants to be a crypto hub, Dubai 31 00:01:53,000 --> 00:01:55,440 Speaker 3: wants to be a crypto hub. It's neighbor, Abu Dhabi 32 00:01:55,480 --> 00:01:57,440 Speaker 3: wants to be a crypto hub. And it kind of 33 00:01:57,480 --> 00:02:02,960 Speaker 3: raises the question can everyone basically repeat the same economic 34 00:02:03,160 --> 00:02:06,960 Speaker 3: or financial model and become these sort of offshore wealth 35 00:02:07,040 --> 00:02:11,560 Speaker 3: centers that foster, you know, new business and innovation. It 36 00:02:11,680 --> 00:02:15,480 Speaker 3: seems like there are multiple cities where countries or locations 37 00:02:15,480 --> 00:02:16,919 Speaker 3: that are trying to do the same thing. 38 00:02:17,480 --> 00:02:19,680 Speaker 2: By the way, well, you lived in Abu Dhabi. 39 00:02:19,840 --> 00:02:20,720 Speaker 3: I did, what do they do? 40 00:02:20,800 --> 00:02:22,640 Speaker 2: What's the business there? What does everyone do? 41 00:02:23,120 --> 00:02:27,799 Speaker 4: Uh No, I'm seriously, I I don't know what Dubai 42 00:02:27,840 --> 00:02:29,680 Speaker 4: I mean, I know there's a ton of money there, 43 00:02:29,960 --> 00:02:32,160 Speaker 4: but I don't actually know what the big industries are 44 00:02:32,200 --> 00:02:34,080 Speaker 4: there in these places, so you must know. 45 00:02:34,160 --> 00:02:37,799 Speaker 3: I'm trying to word this very diplomatically. I would say 46 00:02:38,200 --> 00:02:42,560 Speaker 3: light touch regulatory environment. I mean, that's what's basically it 47 00:02:42,600 --> 00:02:47,320 Speaker 3: to start companies, yeah, and payload taxes and be able 48 00:02:47,360 --> 00:02:49,800 Speaker 3: to do it in a fairly quick way. But the 49 00:02:49,840 --> 00:02:52,520 Speaker 3: interesting thing about Abu Dhabi, and again going back to 50 00:02:52,600 --> 00:02:55,920 Speaker 3: the point of all these cities basically trying to do 51 00:02:55,960 --> 00:02:59,920 Speaker 3: the same thing, is Abu Dhabi very very almost explicitly 52 00:03:00,720 --> 00:03:03,519 Speaker 3: was trying to follow the model of Singapore. In fact, 53 00:03:03,560 --> 00:03:06,600 Speaker 3: they even hired Richard Tang, who used to run the 54 00:03:06,600 --> 00:03:10,880 Speaker 3: Singapore Monetary Authority, to come behead of ADGM. Like it 55 00:03:10,919 --> 00:03:14,680 Speaker 3: was that explicit. It's very obvious what a lot of 56 00:03:14,680 --> 00:03:15,800 Speaker 3: these places are trying to do. 57 00:03:16,040 --> 00:03:17,680 Speaker 2: It seems to be working well. I mean, I know 58 00:03:17,760 --> 00:03:20,360 Speaker 2: people always think like there's a bubble, it's all real 59 00:03:20,480 --> 00:03:22,800 Speaker 2: estate and speculation or whatever is going to crash. But 60 00:03:23,200 --> 00:03:25,040 Speaker 2: for the most part, I mean, there was something that 61 00:03:25,120 --> 00:03:26,720 Speaker 2: happened in late two thousand and nine and one of 62 00:03:26,720 --> 00:03:28,760 Speaker 2: them on bankrupt or something, But for the most part, 63 00:03:29,080 --> 00:03:30,480 Speaker 2: seems like it's been working. 64 00:03:30,480 --> 00:03:33,720 Speaker 3: For certain countries. Certainly I mean Singapore again is the 65 00:03:33,760 --> 00:03:37,960 Speaker 3: big example of this. But I guess the more people 66 00:03:38,120 --> 00:03:42,480 Speaker 3: and places try to imitate these particular business models, you know, 67 00:03:42,600 --> 00:03:45,680 Speaker 3: not everywhere in the world can be an offshore financial 68 00:03:45,760 --> 00:03:49,720 Speaker 3: center for obvious reasons. And I think like one man's 69 00:03:49,800 --> 00:03:53,440 Speaker 3: loophole might be another country's comparative advantage. But there's a 70 00:03:53,520 --> 00:03:55,440 Speaker 3: limit to how far you can push. 71 00:03:55,200 --> 00:03:56,720 Speaker 2: That, you think, So I wonder how far we are 72 00:03:56,720 --> 00:03:59,600 Speaker 2: from Milmot. Anyway, We're in an age clearly where there's 73 00:03:59,640 --> 00:04:01,800 Speaker 2: just a l lot of interest in cities and people 74 00:04:01,880 --> 00:04:03,800 Speaker 2: want to talk about, you know, on Twitter. They're like 75 00:04:03,840 --> 00:04:06,000 Speaker 2: what city should I move to? And where people have 76 00:04:06,040 --> 00:04:08,960 Speaker 2: a ton of money and option. Some people have a 77 00:04:09,000 --> 00:04:11,600 Speaker 2: ton of money and they go to somewhere for some reason, 78 00:04:11,640 --> 00:04:15,280 Speaker 2: maybe because regulation is low, or taxes are low, et cetera, 79 00:04:15,960 --> 00:04:19,760 Speaker 2: and essentially kind of be I don't know, rootless. I 80 00:04:19,839 --> 00:04:24,120 Speaker 2: remember during the pandemic when ostensibly I thought all of 81 00:04:24,160 --> 00:04:27,320 Speaker 2: the borders were closed and you couldn't travel, seeing you know, 82 00:04:27,800 --> 00:04:30,440 Speaker 2: friends on Instagram and stuff all over the world and 83 00:04:30,520 --> 00:04:32,800 Speaker 2: places where they didn't seem to be any restrictions at all, 84 00:04:32,839 --> 00:04:36,159 Speaker 2: and on beaches. I'm very fascinated by this sort of 85 00:04:36,200 --> 00:04:39,440 Speaker 2: parallel world that seems to be emerging and still growing, 86 00:04:39,920 --> 00:04:44,240 Speaker 2: where the ultra wealthy push up real estate prices, build 87 00:04:44,480 --> 00:04:48,400 Speaker 2: giant towers branded by various brands like Porsche, et cetera. 88 00:04:48,520 --> 00:04:51,520 Speaker 2: It seemed to live in a sort of just separate world. 89 00:04:51,240 --> 00:04:53,920 Speaker 3: Than what I live in in New York City, right, 90 00:04:54,000 --> 00:04:57,440 Speaker 3: And we've talked about this primarily from a real estate perspective, 91 00:04:57,480 --> 00:05:00,359 Speaker 3: but we haven't really gotten into these separate world world 92 00:05:00,520 --> 00:05:04,160 Speaker 3: of light touch regulatory and tax regimes. 93 00:05:04,160 --> 00:05:07,680 Speaker 2: So I'm excited the separate legal world. Well, I'm very excited. 94 00:05:07,839 --> 00:05:10,520 Speaker 2: We are going to be speaking with truly the perfect guest. 95 00:05:10,720 --> 00:05:13,440 Speaker 2: We're going to be speaking with a Tusa Eroxia Abrahemian. 96 00:05:13,600 --> 00:05:16,080 Speaker 2: She is the author of the brand new book The 97 00:05:16,160 --> 00:05:19,880 Speaker 2: Hidden Globe, How Wealth Hacks the World, talking about all 98 00:05:19,920 --> 00:05:23,640 Speaker 2: of these different cities and legal regimes and the sort 99 00:05:23,640 --> 00:05:26,359 Speaker 2: of separate, parallel world that exists here on Earth for 100 00:05:26,440 --> 00:05:29,560 Speaker 2: the ultra rich. Sotusa, thank you so much for coming 101 00:05:29,560 --> 00:05:30,480 Speaker 2: on Odd Lots. 102 00:05:30,279 --> 00:05:32,000 Speaker 5: Joe Tracy, thanks so much for having me. 103 00:05:32,120 --> 00:05:34,239 Speaker 2: Absolutely. What's your book about? 104 00:05:34,680 --> 00:05:34,760 Speaker 1: So? 105 00:05:34,839 --> 00:05:38,440 Speaker 5: My book is about this parallel world of loopholes. It's 106 00:05:38,520 --> 00:05:41,560 Speaker 5: hiding in plain sight. It's all around us, and once 107 00:05:41,600 --> 00:05:43,640 Speaker 5: you see it, you can't unsee it. So I hope 108 00:05:43,640 --> 00:05:45,479 Speaker 5: that when you read the book, you'll start to see 109 00:05:45,480 --> 00:05:47,320 Speaker 5: it and you will just see it at every turn. 110 00:05:48,040 --> 00:05:51,000 Speaker 5: This world, much of it is territorial, some of it isn't. 111 00:05:51,440 --> 00:05:55,880 Speaker 5: So I start with my hometown of Geneva. I grew 112 00:05:55,960 --> 00:05:59,880 Speaker 5: up in a very sort of stateless environment in Geneva, Switzerland. 113 00:06:00,440 --> 00:06:03,839 Speaker 5: My parents were un employees. I went to international schools 114 00:06:03,839 --> 00:06:06,040 Speaker 5: for the most part, and it was just this big 115 00:06:06,080 --> 00:06:08,280 Speaker 5: mix of people from all over the world who were 116 00:06:08,320 --> 00:06:09,120 Speaker 5: always moving. 117 00:06:09,960 --> 00:06:10,800 Speaker 6: I wasn't moving. 118 00:06:11,720 --> 00:06:14,120 Speaker 5: I lived eighteen years in Geneva and I still don't 119 00:06:14,120 --> 00:06:16,320 Speaker 5: feel like I know the place. It is the most 120 00:06:16,360 --> 00:06:19,680 Speaker 5: mysterious place to me, even though my mother still lives there. 121 00:06:20,320 --> 00:06:24,440 Speaker 5: And I started thinking about why that was. How can 122 00:06:24,480 --> 00:06:27,280 Speaker 5: you live somewhere and still not really grasp it. And 123 00:06:27,600 --> 00:06:30,360 Speaker 5: part of it is, yes, I was in this kind 124 00:06:30,400 --> 00:06:34,400 Speaker 5: of international community, didn't really learn a lot about Swiss history. 125 00:06:34,680 --> 00:06:37,200 Speaker 5: I have a Swiss passport, but I don't speak German, 126 00:06:37,240 --> 00:06:39,200 Speaker 5: I don't speak Italian. I actually don't have a lot 127 00:06:39,240 --> 00:06:42,440 Speaker 5: of Swiss friends, so that was definitely part of it. 128 00:06:42,839 --> 00:06:45,560 Speaker 5: But the other side, when I kind of zoomed out, 129 00:06:45,600 --> 00:06:48,320 Speaker 5: and I thought of the legal topography of the place 130 00:06:48,360 --> 00:06:51,800 Speaker 5: that I grew up in. It's like Swiss cheese. Geneva 131 00:06:52,240 --> 00:06:55,800 Speaker 5: is this historic, beautiful city with an old town and 132 00:06:56,520 --> 00:06:59,800 Speaker 5: old walls that are, you know, more ancient than like 133 00:07:00,120 --> 00:07:02,560 Speaker 5: most of the things in the United States. At the 134 00:07:02,600 --> 00:07:05,719 Speaker 5: same time, it has all of these pock marks and 135 00:07:06,360 --> 00:07:09,680 Speaker 5: black holes and mysteries. An example of that is the 136 00:07:09,680 --> 00:07:11,560 Speaker 5: Geneva Freeport. You might have heard of that. 137 00:07:12,280 --> 00:07:14,400 Speaker 3: I was going to say. You mentioned once you see 138 00:07:14,440 --> 00:07:17,440 Speaker 3: these things, you can't unsee them. And I remember I 139 00:07:17,560 --> 00:07:20,440 Speaker 3: read a book called Unruly Places and they had a 140 00:07:20,520 --> 00:07:22,920 Speaker 3: chapter on freeports, and that was the first time I'd 141 00:07:22,960 --> 00:07:25,800 Speaker 3: have heard of them, and ever since then, I haven't 142 00:07:25,800 --> 00:07:27,559 Speaker 3: forgotten them. I can't get them out of my mind. 143 00:07:27,840 --> 00:07:29,760 Speaker 2: Yeah, what's the Geneva Freeport. What do you get to 144 00:07:29,800 --> 00:07:30,160 Speaker 2: do there? 145 00:07:30,680 --> 00:07:30,800 Speaker 5: Uh? 146 00:07:30,920 --> 00:07:31,400 Speaker 6: The Genia? 147 00:07:31,400 --> 00:07:33,880 Speaker 5: Well, I have never been inside, Okay, and it is 148 00:07:34,000 --> 00:07:35,360 Speaker 5: not for lack of trying, trust me. 149 00:07:35,840 --> 00:07:38,080 Speaker 6: The Geneva Freeport is a warehouse. 150 00:07:38,280 --> 00:07:39,960 Speaker 5: It was built a long time ago, in the late 151 00:07:40,000 --> 00:07:43,720 Speaker 5: eighteen hundreds, and it was originally built to store things 152 00:07:43,800 --> 00:07:47,440 Speaker 5: like grain, things like supplies for wartime, and it was 153 00:07:47,560 --> 00:07:50,880 Speaker 5: used for that, and the idea was that merchants could 154 00:07:51,080 --> 00:07:54,600 Speaker 5: put their goods there, have them sort of hang out 155 00:07:54,680 --> 00:07:58,720 Speaker 5: without declaring them to customs, without paying for taxes or 156 00:07:58,720 --> 00:08:01,240 Speaker 5: tariffs or what have you, and then move them to 157 00:08:01,320 --> 00:08:06,760 Speaker 5: their next destination. So for something like sacks of oats, 158 00:08:07,160 --> 00:08:09,600 Speaker 5: there's a shelf life. You can't keep them there forever. 159 00:08:10,200 --> 00:08:12,480 Speaker 5: They got to move otherwise everyone's interest. 160 00:08:12,520 --> 00:08:14,840 Speaker 2: To be clear, it serves a very specific purpose because 161 00:08:14,880 --> 00:08:17,800 Speaker 2: if you want Geneva, if Switzerland wants to be a 162 00:08:17,880 --> 00:08:20,760 Speaker 2: hub of trading, they don't want merchants to have to 163 00:08:20,760 --> 00:08:22,800 Speaker 2: pay a tax or a tear of just if they're 164 00:08:22,880 --> 00:08:23,600 Speaker 2: like stopping by. 165 00:08:23,760 --> 00:08:24,160 Speaker 6: You got it. 166 00:08:24,200 --> 00:08:26,320 Speaker 5: If you want you want a place to be an entropo, 167 00:08:26,560 --> 00:08:28,800 Speaker 5: you want to make it as easy as possible to 168 00:08:30,200 --> 00:08:32,640 Speaker 5: be an entropo to leave your things there temporarily and 169 00:08:32,679 --> 00:08:36,200 Speaker 5: then move on. Geneva was also a crossroads for trade. 170 00:08:36,200 --> 00:08:38,480 Speaker 5: They had a big market, so it made sense. But 171 00:08:38,559 --> 00:08:41,760 Speaker 5: as time went on, and as you know, the economy evolved, 172 00:08:41,760 --> 00:08:44,640 Speaker 5: and as Switzerland evolved, this became a place to store 173 00:08:44,679 --> 00:08:50,880 Speaker 5: things like gold, things likes, and eventually things like very 174 00:08:50,960 --> 00:08:56,040 Speaker 5: expensive paintings. And today it's estimated that billions of dollars 175 00:08:56,240 --> 00:09:00,720 Speaker 5: worth of paintings and cars and wine and luxury goods 176 00:09:00,920 --> 00:09:02,200 Speaker 5: are being stored there. 177 00:09:02,679 --> 00:09:02,839 Speaker 4: Now. 178 00:09:02,840 --> 00:09:04,960 Speaker 5: The difference between a sack of oats and a DaVinci, 179 00:09:05,000 --> 00:09:07,839 Speaker 5: apart from how expensive it is, is that now these 180 00:09:07,880 --> 00:09:12,200 Speaker 5: places are super climate controlled, like humidity is monitored. Everything 181 00:09:12,320 --> 00:09:16,640 Speaker 5: is very very very tightly controlled, and so there's no 182 00:09:17,600 --> 00:09:19,959 Speaker 5: there's no rotting, things don't go bad. Things can stay 183 00:09:19,960 --> 00:09:23,920 Speaker 5: there perhaps forever. And it's a completely different game because 184 00:09:24,160 --> 00:09:26,920 Speaker 5: if you're someone who wants to hide something or to 185 00:09:27,200 --> 00:09:29,640 Speaker 5: just sit on something for a very long time without 186 00:09:29,640 --> 00:09:33,000 Speaker 5: incurring tax or maybe declaring it to your ex spouse, 187 00:09:33,720 --> 00:09:35,720 Speaker 5: you can do that in the Geneva Freeport. 188 00:09:36,440 --> 00:09:38,840 Speaker 3: So you touched on this when you were talking about 189 00:09:38,840 --> 00:09:41,720 Speaker 3: the evolution of the freeport. But one thing I often 190 00:09:41,840 --> 00:09:47,720 Speaker 3: wonder with these sort of loophole liminal places is how 191 00:09:47,800 --> 00:09:51,880 Speaker 3: deliberate are the choices to create them. So the freeport 192 00:09:52,000 --> 00:09:54,720 Speaker 3: started out as a place where you could store green 193 00:09:54,880 --> 00:09:57,640 Speaker 3: because it wasn't meant to stay there forever and you 194 00:09:57,679 --> 00:09:59,600 Speaker 3: wanted to be a hub for trade, and then it 195 00:09:59,640 --> 00:10:02,800 Speaker 3: gradually evolved to a place where you could stash things 196 00:10:02,880 --> 00:10:06,800 Speaker 3: potentially forever. How did that decision come about? What were 197 00:10:06,840 --> 00:10:09,640 Speaker 3: the choices that went into that outcome. 198 00:10:10,040 --> 00:10:13,319 Speaker 5: In the case of Geneva, there's a somewhat organic or 199 00:10:13,400 --> 00:10:17,440 Speaker 5: natural progression of things. I don't know that you know, 200 00:10:17,520 --> 00:10:21,280 Speaker 5: in like eighteen eighty you necessarily would have anticipated the 201 00:10:21,480 --> 00:10:25,680 Speaker 5: art market being just unbelievably full of speculation and using 202 00:10:25,720 --> 00:10:29,640 Speaker 5: these places to enable that. So for one of these 203 00:10:29,800 --> 00:10:32,480 Speaker 5: entrepose that's been around for a long time, the decisions 204 00:10:32,480 --> 00:10:36,040 Speaker 5: are more in the lack of involvement of the states. 205 00:10:36,120 --> 00:10:39,319 Speaker 5: So you have this rule for grain, maybe you're not 206 00:10:39,360 --> 00:10:41,400 Speaker 5: going to change it too much and have it apply 207 00:10:41,520 --> 00:10:44,840 Speaker 5: for gold bars. But there are more freeports than just 208 00:10:44,880 --> 00:10:47,600 Speaker 5: the Geneva freeport. There are brand new ones that were 209 00:10:47,600 --> 00:10:50,800 Speaker 5: built in the past, you know, twenty thirty years in Luxembourg, 210 00:10:50,920 --> 00:10:55,120 Speaker 5: in Singapore there was talk of creating when in Russia, 211 00:10:55,640 --> 00:10:58,160 Speaker 5: And for the new ones that are being built, it's 212 00:10:58,280 --> 00:11:01,160 Speaker 5: very clear what the intention here is. Right, we're not 213 00:11:01,200 --> 00:11:05,319 Speaker 5: talking about oats or salt or any food stuff, so 214 00:11:05,320 --> 00:11:10,160 Speaker 5: we're really talking about high end goods that you know, 215 00:11:10,520 --> 00:11:14,920 Speaker 5: increasingly are one of the only ways to get around 216 00:11:14,960 --> 00:11:16,240 Speaker 5: financial controls as well. 217 00:11:32,440 --> 00:11:35,559 Speaker 2: For country or a city like Singapore, what do they 218 00:11:35,559 --> 00:11:37,840 Speaker 2: get from it from the existence of a freeport that 219 00:11:38,280 --> 00:11:41,680 Speaker 2: explicitly is there so that people can have our not 220 00:11:41,800 --> 00:11:42,240 Speaker 2: declare it. 221 00:11:42,440 --> 00:11:44,680 Speaker 5: I'm trying to figure this out. I'm not sure there's 222 00:11:44,760 --> 00:11:47,320 Speaker 5: one exact answer, to be honest, I think a big 223 00:11:47,360 --> 00:11:48,520 Speaker 5: part of it is branding. 224 00:11:48,720 --> 00:11:49,480 Speaker 6: It looks good. 225 00:11:49,600 --> 00:11:51,920 Speaker 5: It looks good to say that you have, you know, 226 00:11:52,000 --> 00:11:57,280 Speaker 5: stashes of picassos, And the people involved in these enterprises 227 00:11:57,440 --> 00:12:01,439 Speaker 5: will say, well, we are creating a huh. And when 228 00:12:01,480 --> 00:12:04,400 Speaker 5: the paintings come, then the artists come, and the dealers come, 229 00:12:04,440 --> 00:12:06,560 Speaker 5: and the bankers come, and so it creates a sort 230 00:12:06,559 --> 00:12:09,320 Speaker 5: of a little ecosystem of. 231 00:12:09,400 --> 00:12:11,200 Speaker 6: Art and art art markets. 232 00:12:11,720 --> 00:12:14,320 Speaker 5: I think that there's a more cynical way of putting it, 233 00:12:14,400 --> 00:12:19,439 Speaker 5: which is that these types of places, freeports and so on, 234 00:12:19,920 --> 00:12:23,360 Speaker 5: are ways to launder money when it's much harder to 235 00:12:23,400 --> 00:12:26,960 Speaker 5: launder money through the banks. So you can have many 236 00:12:27,040 --> 00:12:30,640 Speaker 5: reasons for this, and a country would be interested probably 237 00:12:30,679 --> 00:12:32,880 Speaker 5: in both sides of this, if the ultimate goal is 238 00:12:32,920 --> 00:12:36,200 Speaker 5: to bring money to its territory. 239 00:12:36,480 --> 00:12:39,840 Speaker 3: In researching and writing this book, did you observe any 240 00:12:40,080 --> 00:12:45,240 Speaker 3: interesting examples of either freeports or other types of offshore 241 00:12:45,360 --> 00:12:50,120 Speaker 3: centers competing with each other and what happens when everyone 242 00:12:50,200 --> 00:12:52,120 Speaker 3: is trying to do a similar thing, and you have 243 00:12:52,160 --> 00:12:54,680 Speaker 3: a freeport here and a freeport here and a freeport there. 244 00:12:55,000 --> 00:12:57,320 Speaker 5: Yeah, these places are always one uping each other. I mean, 245 00:12:57,360 --> 00:12:59,200 Speaker 5: how many you guys work at Bloomberg. How many times 246 00:12:59,200 --> 00:13:01,839 Speaker 5: have you read the headline X is the new Switzerland? 247 00:13:02,840 --> 00:13:03,040 Speaker 1: Right? 248 00:13:03,280 --> 00:13:05,840 Speaker 5: I think Singapore has been the new Switzerland, Dubai has 249 00:13:05,880 --> 00:13:08,920 Speaker 5: been the new Switzerland. Luxembourg has been the new Switzerland, 250 00:13:08,920 --> 00:13:10,000 Speaker 5: although that was a while ago. 251 00:13:10,160 --> 00:13:12,120 Speaker 3: One day Switzerland will be the new Switzerland. 252 00:13:12,240 --> 00:13:14,120 Speaker 5: Well, and then Switzerland is always trying to be the 253 00:13:14,200 --> 00:13:17,320 Speaker 5: new Switzerland. Right. They were also trying to do this 254 00:13:17,400 --> 00:13:19,720 Speaker 5: crypto valley thing in the Canton of Zug. 255 00:13:21,760 --> 00:13:24,040 Speaker 2: Yeah. 256 00:13:24,240 --> 00:13:27,920 Speaker 5: So yes, there's always competition and they're always trying to 257 00:13:27,920 --> 00:13:31,360 Speaker 5: one up each other. It's relentless. And that's why. Also 258 00:13:31,600 --> 00:13:33,520 Speaker 5: for regulators who might want to crack down on this, 259 00:13:33,640 --> 00:13:36,679 Speaker 5: it's like whackam mol. One jurisdiction might say, Okay, we're 260 00:13:36,679 --> 00:13:39,080 Speaker 5: going to put tighter controls on our freeport or on 261 00:13:39,120 --> 00:13:42,080 Speaker 5: our crypto market. Another one is going to pop up 262 00:13:42,120 --> 00:13:44,080 Speaker 5: tomorrow to fill that void. 263 00:13:44,480 --> 00:13:46,600 Speaker 2: I asked Tracy this, but maybe I should just ask you. 264 00:13:46,640 --> 00:13:49,439 Speaker 2: When Abu Dhabi in Dubai, what goes on. 265 00:13:49,480 --> 00:13:52,280 Speaker 5: There, Abu Dhabi and Dubai. I can speak to Dubai. 266 00:13:52,440 --> 00:13:58,520 Speaker 5: I've not been to Abu Dhabi. Dubai has, for its 267 00:13:58,559 --> 00:14:01,320 Speaker 5: recent I guess the past two twenty or so years, 268 00:14:01,600 --> 00:14:06,960 Speaker 5: made really really concerted efforts to attract millionaires and billionaires. 269 00:14:07,480 --> 00:14:10,520 Speaker 5: There is the real estate play here. Obviously, You've talked 270 00:14:10,520 --> 00:14:14,480 Speaker 5: about this a lot. There's a lot of There are 271 00:14:14,480 --> 00:14:16,480 Speaker 5: a lot of articles about these wacky things that they 272 00:14:16,559 --> 00:14:19,840 Speaker 5: build and the developments and whatnot, the ski slopes in 273 00:14:19,880 --> 00:14:23,520 Speaker 5: the malls. At the same time, there have been many 274 00:14:23,560 --> 00:14:30,080 Speaker 5: reports that show from the think tanks and the OCCRP 275 00:14:30,400 --> 00:14:33,560 Speaker 5: and the ICJ, the show that Dubai is really the 276 00:14:33,960 --> 00:14:39,040 Speaker 5: center of the world of money laundering, criminality and those 277 00:14:39,200 --> 00:14:44,200 Speaker 5: types of offshore theatrics. So they are up to that too. 278 00:14:44,480 --> 00:14:47,280 Speaker 5: Before Dubai was what we think of today as Dubai, 279 00:14:47,320 --> 00:14:50,000 Speaker 5: this place with tall buildings and and crazy stuff going on, 280 00:14:50,680 --> 00:14:53,000 Speaker 5: there was a lot of smuggling and pearl smuggling and 281 00:14:53,000 --> 00:14:55,520 Speaker 5: gold smuggling going on. It has a sort of long 282 00:14:55,560 --> 00:14:59,480 Speaker 5: tradition of this that this did not occur overnight. When 283 00:14:59,760 --> 00:15:02,680 Speaker 5: the shakes past a bunch of laws that said For 284 00:15:02,720 --> 00:15:06,480 Speaker 5: the past twenty or so years, Dubai has made a 285 00:15:06,520 --> 00:15:10,880 Speaker 5: concerted effort to create laws to attract businesses and people. 286 00:15:11,760 --> 00:15:15,480 Speaker 5: Some of these laws involve carving out free zones within 287 00:15:15,600 --> 00:15:21,360 Speaker 5: the territory of Dubai that cater very specifically to certain sectors. 288 00:15:21,920 --> 00:15:25,720 Speaker 5: So you have a media city where ostensibly there's more 289 00:15:25,800 --> 00:15:29,840 Speaker 5: freedom of speech and expression. There is an internet city 290 00:15:29,840 --> 00:15:33,680 Speaker 5: that has world class infrastructure. I think there's a medical one, 291 00:15:33,760 --> 00:15:39,960 Speaker 5: and there's one for commodities, and all of these little zones, clusters, hubs, 292 00:15:40,000 --> 00:15:42,720 Speaker 5: whatever you want to call them, have a kind of 293 00:15:42,720 --> 00:15:46,000 Speaker 5: a bespoke legal regime. A lot of that is spin, 294 00:15:46,600 --> 00:15:49,760 Speaker 5: a lot of that. They're sort of interchangeable, but by 295 00:15:49,840 --> 00:15:53,240 Speaker 5: virtue of appealing to a certain type of business, I 296 00:15:53,280 --> 00:15:56,240 Speaker 5: think there's something to be said for proximity and exchange, 297 00:15:56,240 --> 00:15:58,600 Speaker 5: and that's real. This is why we like to go 298 00:15:58,680 --> 00:16:01,000 Speaker 5: back to the office, because you can talk to people anyway. 299 00:16:01,320 --> 00:16:02,960 Speaker 6: All of these zones. 300 00:16:02,640 --> 00:16:06,080 Speaker 5: Also have very preferable tax regimes. They make it easier 301 00:16:06,120 --> 00:16:09,000 Speaker 5: to import workers, so the immigration side of things is 302 00:16:09,000 --> 00:16:12,920 Speaker 5: a little more streamlined, and overall, I think now Dubai 303 00:16:12,960 --> 00:16:16,480 Speaker 5: is on a big kick of reducing bureaucracy. We can 304 00:16:16,560 --> 00:16:19,600 Speaker 5: all appreciate the idea of reducing bureaucracy, and I think 305 00:16:19,600 --> 00:16:22,000 Speaker 5: that they actually do it, So that's another part of 306 00:16:22,080 --> 00:16:22,640 Speaker 5: their play. 307 00:16:23,280 --> 00:16:27,720 Speaker 3: You mentioned the legal regimes and the financial centers in 308 00:16:27,840 --> 00:16:33,720 Speaker 3: Dubai and Abu Dhabi, DIFC and ADGM. They're really interesting 309 00:16:33,760 --> 00:16:37,280 Speaker 3: to me because they essentially got to craft a whole 310 00:16:37,360 --> 00:16:40,720 Speaker 3: new body of law and kind of cherry pick what 311 00:16:40,800 --> 00:16:45,440 Speaker 3: they wanted to include in order to attract financial businesses. 312 00:16:45,480 --> 00:16:48,840 Speaker 3: And they're obviously influenced by English law. It's an English 313 00:16:48,920 --> 00:16:52,960 Speaker 3: law regime, but their systems are still different in various ways. 314 00:16:53,600 --> 00:16:56,920 Speaker 3: What's the process that these types of new jurisdictions go 315 00:16:57,040 --> 00:16:59,840 Speaker 3: through when they're crafting laws and how much input do 316 00:16:59,880 --> 00:17:03,480 Speaker 3: you think is overtly had by people who are perhaps 317 00:17:03,520 --> 00:17:06,000 Speaker 3: looking to preserve loopholes. 318 00:17:06,240 --> 00:17:08,359 Speaker 5: So I'll tell you about this story of the Dubai 319 00:17:08,440 --> 00:17:13,359 Speaker 5: International Financial Center and more specifically the Dubai International Financial 320 00:17:13,359 --> 00:17:17,720 Speaker 5: Center's courts, which are within the Dubai International Financial Center 321 00:17:18,119 --> 00:17:22,719 Speaker 5: but their own things. So, the DIFC was established as 322 00:17:22,760 --> 00:17:25,080 Speaker 5: one of these free zones that was going to be 323 00:17:25,240 --> 00:17:29,720 Speaker 5: the center for finance, banks, traders, et cetera. As companies 324 00:17:29,760 --> 00:17:33,360 Speaker 5: started to express interest in moving there, and as Dubai 325 00:17:33,440 --> 00:17:35,880 Speaker 5: was making their pitch, come here, you're going to pay 326 00:17:35,920 --> 00:17:38,440 Speaker 5: less tax, et cetera, et cetera, they ran into an issue, 327 00:17:38,480 --> 00:17:42,479 Speaker 5: which was that the lawyers and the councils and all 328 00:17:42,560 --> 00:17:45,199 Speaker 5: the sort of legal infrastructure of the companies that they 329 00:17:45,200 --> 00:17:49,000 Speaker 5: were trying to bring in were balking at the idea 330 00:17:49,480 --> 00:17:53,399 Speaker 5: of having to deal with a whole new legal system, 331 00:17:53,840 --> 00:17:58,320 Speaker 5: namely the Arabic language is law influenced courts. Maybe they 332 00:17:58,320 --> 00:18:01,040 Speaker 5: did this out of racism, Maybe they did this because 333 00:18:01,080 --> 00:18:03,280 Speaker 5: they truly had no idea how these courts worked. 334 00:18:03,800 --> 00:18:05,920 Speaker 6: We should talk a little bit about the history here. 335 00:18:06,640 --> 00:18:10,600 Speaker 5: So the emirates were previously protectorates of the UK of 336 00:18:10,680 --> 00:18:14,679 Speaker 5: England and they had two systems of law. There were 337 00:18:14,760 --> 00:18:17,760 Speaker 5: laws for Muslims for natives, and then there were laws 338 00:18:17,840 --> 00:18:21,520 Speaker 5: for Brits and expats. So that's the context out of 339 00:18:21,520 --> 00:18:24,480 Speaker 5: which this is all coming. So the DIFC sets up 340 00:18:24,480 --> 00:18:27,840 Speaker 5: in the early two thousands and they decide, well, we 341 00:18:27,920 --> 00:18:30,840 Speaker 5: need to have another set of laws because we don't 342 00:18:30,880 --> 00:18:34,560 Speaker 5: want to scare away the big companies. And so they 343 00:18:34,560 --> 00:18:36,240 Speaker 5: get to work thinking, well, how are we going to 344 00:18:36,320 --> 00:18:40,200 Speaker 5: come up with this parallel legal regime on the one hand, 345 00:18:40,920 --> 00:18:46,919 Speaker 5: it's kind of a throwback to the battle days where 346 00:18:47,080 --> 00:18:50,679 Speaker 5: the Brits had their laws for themselves and locals had 347 00:18:50,680 --> 00:18:54,480 Speaker 5: their own laws. Right. This is colonialism, to put it bluntly. 348 00:18:55,080 --> 00:18:58,359 Speaker 5: So instead of just taking the old laws or just 349 00:18:58,440 --> 00:19:01,720 Speaker 5: imposing their own court system, they. 350 00:19:01,560 --> 00:19:04,640 Speaker 6: Came up with a kind of a hybrid. And this 351 00:19:04,720 --> 00:19:05,320 Speaker 6: is in the book. 352 00:19:05,359 --> 00:19:08,439 Speaker 5: But there was one man who was really instrumental in 353 00:19:08,480 --> 00:19:11,119 Speaker 5: building the system. His name was Mark Bier. He was 354 00:19:11,280 --> 00:19:15,800 Speaker 5: he is an Englishman, really clever, clever guy, and they 355 00:19:15,960 --> 00:19:19,560 Speaker 5: kind of cobbled together a bunch of laws based in 356 00:19:19,640 --> 00:19:23,080 Speaker 5: common law, which the multinationals are comfortable with, which the 357 00:19:23,080 --> 00:19:28,240 Speaker 5: big banks are comfortable with, and essentially created a court 358 00:19:28,440 --> 00:19:32,280 Speaker 5: that was sitting inside the DIFC that would serve the 359 00:19:32,320 --> 00:19:37,320 Speaker 5: tenants of the DIFC, and that eventually expanded its reach 360 00:19:37,800 --> 00:19:41,120 Speaker 5: to be this kind of opt in jurisdiction, so anyone 361 00:19:41,600 --> 00:19:46,240 Speaker 5: could say in their contracts, shouldn't disputarize, We're gonna have 362 00:19:46,280 --> 00:19:49,280 Speaker 5: our day in court at the DIFC. The term at 363 00:19:50,000 --> 00:19:53,240 Speaker 5: is doing a lot of work here because it is 364 00:19:53,320 --> 00:19:55,840 Speaker 5: a place. There is a court house, there was a 365 00:19:55,920 --> 00:19:59,840 Speaker 5: court room, but the judges don't all live in Dubai. 366 00:20:00,359 --> 00:20:02,720 Speaker 5: They don't all show up for hearings at the DIFC. 367 00:20:03,080 --> 00:20:06,000 Speaker 5: A lot of this was taking place remotely even before 368 00:20:06,600 --> 00:20:10,320 Speaker 5: Zoom came to consume our lives during the pandemic, and 369 00:20:10,520 --> 00:20:13,440 Speaker 5: so the notion that the law and the land are 370 00:20:13,560 --> 00:20:17,640 Speaker 5: in any way tied together just doesn't make sense here anymore. 371 00:20:17,720 --> 00:20:19,600 Speaker 5: It's a really new way of thinking about law. 372 00:20:19,880 --> 00:20:22,359 Speaker 2: It's a little bit like Delaware in that sense, right 373 00:20:22,480 --> 00:20:25,240 Speaker 2: where it's like everyone is like, okay, we want to 374 00:20:25,480 --> 00:20:29,240 Speaker 2: be incorporated under Delaware law, but the company and the 375 00:20:29,359 --> 00:20:31,480 Speaker 2: judges are prayed there. But by and large the companies 376 00:20:31,520 --> 00:20:33,040 Speaker 2: have no meaningful. 377 00:20:32,680 --> 00:20:35,320 Speaker 3: I'm sure Dubai will appreciate it being called the Delaware 378 00:20:35,359 --> 00:20:35,520 Speaker 3: of the. 379 00:20:35,520 --> 00:20:38,120 Speaker 2: World, the Delaware the world in your book. I don't 380 00:20:38,119 --> 00:20:42,280 Speaker 2: know what the grouping is Dubai, Abu Dhabi, Singapore, Geneva like, 381 00:20:42,600 --> 00:20:44,320 Speaker 2: but when you in your mind, when you sort of 382 00:20:44,440 --> 00:20:47,760 Speaker 2: think about these cities around the world, like how big 383 00:20:47,880 --> 00:20:50,840 Speaker 2: are we talking about? How much money, how much wealth, 384 00:20:51,000 --> 00:20:54,320 Speaker 2: or however you want to quantify it has flowed into 385 00:20:54,880 --> 00:20:57,000 Speaker 2: these sort of preferential locations. 386 00:20:57,680 --> 00:20:58,720 Speaker 6: Oh, that's a good question. 387 00:20:59,119 --> 00:21:02,359 Speaker 5: I can't really put a number on it, but I 388 00:21:02,440 --> 00:21:06,960 Speaker 5: can tell you that the oceans are another jurisdiction that 389 00:21:07,040 --> 00:21:10,280 Speaker 5: I write about in the book, and something like ninety 390 00:21:10,320 --> 00:21:12,960 Speaker 5: percent of all goods are shipped through the ocean, And 391 00:21:13,080 --> 00:21:16,920 Speaker 5: so that'll just give you a sense of scale. Things 392 00:21:17,000 --> 00:21:19,320 Speaker 5: do not just happen on the national level. That doesn't 393 00:21:19,359 --> 00:21:22,600 Speaker 5: make any sense. Things are always moving and moving between places. 394 00:21:23,119 --> 00:21:26,280 Speaker 3: So one thing you often hear when people are talking 395 00:21:26,320 --> 00:21:29,840 Speaker 3: about establishing these new hubs or centers or whatever they 396 00:21:29,880 --> 00:21:33,240 Speaker 3: want to call them sandboxes. Maybe people often talk in 397 00:21:33,359 --> 00:21:38,400 Speaker 3: terms of innovation and creating new business opportunities and startups 398 00:21:38,640 --> 00:21:41,920 Speaker 3: and maybe not falling behind in the brand new thing. 399 00:21:42,720 --> 00:21:46,600 Speaker 3: And so I'm curious, how do you think governments or 400 00:21:46,800 --> 00:21:50,399 Speaker 3: localities looking to set up these types of things are 401 00:21:50,560 --> 00:21:57,240 Speaker 3: balancing the need for rules and regulation with that innovation impulse. 402 00:21:57,600 --> 00:22:00,240 Speaker 3: Because no one ever says explicitly this is just a 403 00:22:00,320 --> 00:22:03,200 Speaker 3: money grab and we want lots of income coming into 404 00:22:03,240 --> 00:22:05,639 Speaker 3: the country. It's always about, you know, we're going to 405 00:22:05,720 --> 00:22:09,879 Speaker 3: create this creative place where small businesses can flourish and 406 00:22:10,080 --> 00:22:10,600 Speaker 3: things like that. 407 00:22:11,080 --> 00:22:13,280 Speaker 5: I don't haven't heard the small business pitch so much, 408 00:22:13,520 --> 00:22:16,199 Speaker 5: at least not in the jurisdictions that I've been covering. 409 00:22:16,680 --> 00:22:19,919 Speaker 5: Balancing the sort of wild West aspect with the regulatory 410 00:22:19,960 --> 00:22:23,680 Speaker 5: aspect is obviously pretty tough. If we look at how 411 00:22:23,960 --> 00:22:26,280 Speaker 5: crypto has played out and continues to play out, you'll 412 00:22:26,320 --> 00:22:30,480 Speaker 5: see that the regulatory side has not been as strong 413 00:22:31,160 --> 00:22:35,320 Speaker 5: as the more free wheeling, you know, quote unquote innovation 414 00:22:35,520 --> 00:22:39,520 Speaker 5: side of things. I think this really depends on the jurisdiction. 415 00:22:40,560 --> 00:22:44,159 Speaker 5: Some have much higher tolerance for risks, some don't. I 416 00:22:44,240 --> 00:22:48,920 Speaker 5: don't know that like Sweden is doing crazy things, but 417 00:22:49,680 --> 00:22:53,640 Speaker 5: maybe you know a place like Palau, which is smaller 418 00:22:54,440 --> 00:22:57,560 Speaker 5: and maybe a bit more niche can do crazier things. 419 00:22:57,640 --> 00:23:00,840 Speaker 5: I mentioned Palau because it comes up twice in the book, 420 00:23:01,400 --> 00:23:05,639 Speaker 5: once because they have been offering e residency, but geared 421 00:23:05,680 --> 00:23:09,239 Speaker 5: at people who want to transact in cryptocurrencies but come 422 00:23:09,320 --> 00:23:12,120 Speaker 5: from a country that doesn't allow it. Huh So it's 423 00:23:12,119 --> 00:23:15,080 Speaker 5: almost like a crypto passport. To be clear, you don't 424 00:23:15,280 --> 00:23:17,920 Speaker 5: have right to live there, you don't have an address there. 425 00:23:18,119 --> 00:23:21,000 Speaker 5: It's really just digital and virtual. 426 00:23:21,200 --> 00:23:21,920 Speaker 2: Wait what do you get? 427 00:23:22,080 --> 00:23:25,280 Speaker 5: You get an identification card and number that you can 428 00:23:25,400 --> 00:23:26,879 Speaker 5: sign up for crypto services with. 429 00:23:27,240 --> 00:23:30,359 Speaker 2: Huh oh. I see if you're in a country that 430 00:23:30,520 --> 00:23:34,080 Speaker 2: has high restrictions on cryptoactivity, but you want to set 431 00:23:34,160 --> 00:23:37,280 Speaker 2: up a fund that can trade and stuff like that, 432 00:23:37,800 --> 00:23:41,520 Speaker 2: you basically incorporate there and your money is housed there 433 00:23:41,560 --> 00:23:43,520 Speaker 2: and you can then legally transact from there. Is that 434 00:23:43,640 --> 00:23:44,160 Speaker 2: kind of the idea. 435 00:23:44,320 --> 00:23:46,200 Speaker 5: I don't even know that your money would be housed there. 436 00:23:46,320 --> 00:23:48,520 Speaker 5: It's that you as that you can have a kind 437 00:23:48,560 --> 00:23:51,240 Speaker 5: of a second flag that you can and fly under 438 00:23:51,480 --> 00:23:53,560 Speaker 5: for the purposes of your blog. 439 00:23:54,160 --> 00:23:57,200 Speaker 2: Is an island country in Micronesia. I didn't know where 440 00:23:57,240 --> 00:23:57,440 Speaker 2: it was. 441 00:23:57,480 --> 00:23:59,840 Speaker 3: I had to look it up on the thriving Crypto Center. 442 00:24:01,359 --> 00:24:02,440 Speaker 6: They're trying, They're trying. 443 00:24:03,440 --> 00:24:08,120 Speaker 5: Palau also has had some adventures in the maritime flagging industry, 444 00:24:08,760 --> 00:24:12,680 Speaker 5: which is actually very analogous to these crypto passports or 445 00:24:12,720 --> 00:24:16,600 Speaker 5: second passports. So most of the ships in the world 446 00:24:17,040 --> 00:24:19,879 Speaker 5: do not fly the flag of their owner or of 447 00:24:19,960 --> 00:24:22,800 Speaker 5: their parent company, or of where their home port is. 448 00:24:23,440 --> 00:24:28,480 Speaker 5: They're flying flags of convenience places like Marshall Islands, Liberia, Panama, 449 00:24:29,160 --> 00:24:32,600 Speaker 5: and Palao. Is a really interesting case because it's a 450 00:24:32,680 --> 00:24:36,840 Speaker 5: relatively new flag. It's still relatively small, but it's growing 451 00:24:36,920 --> 00:24:40,200 Speaker 5: tremendously because it is providing a service that more and 452 00:24:40,320 --> 00:24:44,000 Speaker 5: more shipowners want, which is a deregulated way for the 453 00:24:44,119 --> 00:24:51,080 Speaker 5: ship to die. Ship breaking is increasingly regulated by European countries, 454 00:24:51,160 --> 00:24:55,639 Speaker 5: by the US and more. It's very dirty business, and 455 00:24:55,760 --> 00:24:58,600 Speaker 5: it's a very expensive business. To take a ship apart 456 00:24:58,720 --> 00:25:01,920 Speaker 5: in a way that does not pull the environment, harm workers, 457 00:25:02,040 --> 00:25:05,679 Speaker 5: et cetera. Is quite expensive and often the ships are 458 00:25:05,720 --> 00:25:08,280 Speaker 5: not even worth the money it takes to take them apart, 459 00:25:08,720 --> 00:25:13,000 Speaker 5: and so jurisdictions like Palau, but also Kumoro Islands and 460 00:25:13,119 --> 00:25:16,880 Speaker 5: Cameroon have stepped in to offer a flag under which 461 00:25:16,920 --> 00:25:20,040 Speaker 5: the ship can fly for its final journey to the 462 00:25:20,119 --> 00:25:24,040 Speaker 5: ship breaking yard. That helps them sort of evade these rules. 463 00:25:24,400 --> 00:25:26,080 Speaker 5: There's a bit more to it than that. You have 464 00:25:26,160 --> 00:25:28,440 Speaker 5: to have shell companies and cash buyers and all of 465 00:25:28,520 --> 00:25:30,600 Speaker 5: these transactions. 466 00:25:29,920 --> 00:25:31,480 Speaker 6: That will help you hide. 467 00:25:32,040 --> 00:25:35,199 Speaker 5: But it's pretty wild that a tiny country like Palau 468 00:25:35,520 --> 00:25:38,320 Speaker 5: can pull this off and create its own kind of 469 00:25:38,359 --> 00:25:39,240 Speaker 5: offshore economy. 470 00:25:39,680 --> 00:25:42,680 Speaker 3: I'm just going to be hyperbolic. What's the point of 471 00:25:43,040 --> 00:25:48,000 Speaker 3: like passports and regulations and restrictions on taking apart ships 472 00:25:48,280 --> 00:25:51,159 Speaker 3: If for two hundred and forty eight dollars, I can 473 00:25:51,200 --> 00:25:55,240 Speaker 3: buy a crypto residency in Palau, or I can find 474 00:25:55,240 --> 00:25:59,560 Speaker 3: a flag of convenience and evade environmental restrictions and stuff. 475 00:25:59,600 --> 00:26:01,560 Speaker 3: Why have them at all when there seem to be 476 00:26:01,640 --> 00:26:02,800 Speaker 3: loopholes everywhere. 477 00:26:03,560 --> 00:26:07,480 Speaker 5: The loopholes apply mainly to people who have the time 478 00:26:07,560 --> 00:26:10,280 Speaker 5: and money and know how to figure them out. These 479 00:26:10,280 --> 00:26:13,080 Speaker 5: are not equal opportunity loopholes. You have to know where 480 00:26:13,080 --> 00:26:16,240 Speaker 5: they are. Often you have to have lawyers arrangement for you. 481 00:26:16,520 --> 00:26:18,760 Speaker 5: Often you have to pay that. You know, two hundred 482 00:26:18,760 --> 00:26:20,760 Speaker 5: and fifty bucks for the crypto passport is one thing. 483 00:26:20,880 --> 00:26:24,159 Speaker 5: But if you are actually in the market for a 484 00:26:24,320 --> 00:26:27,560 Speaker 5: real passport, a second passport that might help you do 485 00:26:27,680 --> 00:26:30,719 Speaker 5: some of these things, it's going to cost you hundreds 486 00:26:30,760 --> 00:26:35,680 Speaker 5: of thousands of dollars. So it's a great question, why 487 00:26:35,720 --> 00:26:37,080 Speaker 5: do we have these things at all if they're so 488 00:26:37,160 --> 00:26:39,840 Speaker 5: easy to get around? But the answer is that getting 489 00:26:39,880 --> 00:26:43,200 Speaker 5: around them is hardly democratic, and for the vast majority, 490 00:26:43,400 --> 00:26:47,040 Speaker 5: the vast vast majority of people and companies and institutions, 491 00:26:47,320 --> 00:26:50,560 Speaker 5: they are still subject to the rules of their state. 492 00:26:51,240 --> 00:26:54,080 Speaker 2: Your previous book was about the market for passports. I 493 00:26:54,160 --> 00:26:56,959 Speaker 2: believe what's the easiest passport to get? I don't think 494 00:26:57,000 --> 00:26:59,080 Speaker 2: I'm going anywhere, but you know, everyone's in a wat 495 00:26:59,240 --> 00:27:01,280 Speaker 2: turn on the TV. Things are kind of weird here, 496 00:27:01,400 --> 00:27:04,200 Speaker 2: where's the easiest passport to get where I can get 497 00:27:04,240 --> 00:27:06,399 Speaker 2: it and also live somewhere, so it's not just a 498 00:27:06,520 --> 00:27:08,400 Speaker 2: virtual like a digital passport. 499 00:27:08,800 --> 00:27:11,920 Speaker 5: The easiest passports to get or the most straightforward, time 500 00:27:12,000 --> 00:27:15,160 Speaker 5: tested ones, those are mainly in the Caribbean. Saint Kitts 501 00:27:15,200 --> 00:27:20,520 Speaker 5: and Davis was a pioneer in the passport industry Dominica Antiga. 502 00:27:20,720 --> 00:27:23,159 Speaker 5: So there's a number of islands in the Caribbean that 503 00:27:23,240 --> 00:27:27,359 Speaker 5: will offer their passport for money. Until recently you didn't 504 00:27:27,359 --> 00:27:30,120 Speaker 5: even have to go there. You could do your citizenship 505 00:27:30,240 --> 00:27:33,240 Speaker 5: interview remotely. They're starting to crack down on that a 506 00:27:33,280 --> 00:27:37,080 Speaker 5: little bit more, but there are options. There were more 507 00:27:37,160 --> 00:27:41,679 Speaker 5: options in Europe. Those have basically been reduced down to Malta, 508 00:27:42,359 --> 00:27:46,000 Speaker 5: and Malta is being challenged at the European Court of Justice. 509 00:27:46,280 --> 00:27:48,119 Speaker 5: In fact, by the time this podcast comes out, it 510 00:27:48,160 --> 00:27:51,800 Speaker 5: will have been decided. So you know, the future of 511 00:27:51,960 --> 00:27:54,760 Speaker 5: the European programs because these countries are part of the 512 00:27:54,880 --> 00:27:58,520 Speaker 5: EU is a little more dicey that you has been 513 00:27:58,640 --> 00:28:02,359 Speaker 5: very critical of them, But yeah, I think depending on 514 00:28:02,440 --> 00:28:04,440 Speaker 5: your budget, probably the Caribbean is the way to go. 515 00:28:04,880 --> 00:28:08,880 Speaker 3: Is there any example from your book of someone either 516 00:28:09,080 --> 00:28:12,800 Speaker 3: a person or a corporation who you think was particularly 517 00:28:13,080 --> 00:28:18,560 Speaker 3: adept at using loopholes or favorable regimes to their advantage. 518 00:28:18,840 --> 00:28:20,640 Speaker 5: I actually have a piece coming out in New York 519 00:28:20,680 --> 00:28:24,679 Speaker 5: Times magazine about a man who, to me just embodies 520 00:28:25,000 --> 00:28:29,520 Speaker 5: every aspect of offshore. He unfortunately died in an accident 521 00:28:29,640 --> 00:28:32,840 Speaker 5: on the sea. He was living on a barge twenty 522 00:28:32,920 --> 00:28:36,760 Speaker 5: seven miles offshore from Dubai, and his name was Samuel Landi. 523 00:28:37,240 --> 00:28:39,600 Speaker 3: Truly offshore, truly offshore. 524 00:28:39,640 --> 00:28:41,240 Speaker 5: I mean, you don't get more offshore than this. So 525 00:28:41,320 --> 00:28:44,760 Speaker 5: this man, Samuel Landi, was an Italian guy from Tuscany. 526 00:28:45,160 --> 00:28:50,200 Speaker 5: His first company was arbitraging phone numbers. So Italy was 527 00:28:50,280 --> 00:28:54,040 Speaker 5: deregulating its telecoms industry, and he bought up a bunch 528 00:28:54,120 --> 00:28:57,000 Speaker 5: of those easy to remember phone numbers and sold them 529 00:28:57,120 --> 00:29:02,080 Speaker 5: to weather reports and phone sex and all of the 530 00:29:02,200 --> 00:29:04,480 Speaker 5: numbers that you dial in for services, and you know, 531 00:29:04,560 --> 00:29:07,880 Speaker 5: he take cut off the difference between the prices. Then 532 00:29:08,080 --> 00:29:10,880 Speaker 5: he went on to be a telecom's entrepreneur. He had 533 00:29:10,920 --> 00:29:14,960 Speaker 5: a big telecom's company that went bust, and it later 534 00:29:15,080 --> 00:29:17,640 Speaker 5: came out that much of the money of this company 535 00:29:17,720 --> 00:29:22,320 Speaker 5: made was sent to some really remote offshore jurisdictions, the 536 00:29:22,440 --> 00:29:23,360 Speaker 5: island of Niui. 537 00:29:23,600 --> 00:29:28,520 Speaker 6: He thought Paulau was remote, This is really pretty Niche obviously. 538 00:29:28,480 --> 00:29:31,640 Speaker 5: Switzerland, a couple of Swiss banks who have a record 539 00:29:31,680 --> 00:29:33,320 Speaker 5: of this, you know, et cetera. 540 00:29:33,480 --> 00:29:34,880 Speaker 6: That was his corporate stuff. 541 00:29:35,800 --> 00:29:38,440 Speaker 5: As soon as the law came for him, he decamped 542 00:29:38,480 --> 00:29:41,360 Speaker 5: to Dubai set up a company in one of these 543 00:29:41,400 --> 00:29:45,000 Speaker 5: special economic zones. He had an encrypted cell phone company. 544 00:29:45,640 --> 00:29:48,200 Speaker 5: And not only did he move to Dubai, a place 545 00:29:48,320 --> 00:29:52,160 Speaker 5: with no extradition agreement with his home country of Italy, 546 00:29:52,760 --> 00:29:58,960 Speaker 5: but he then obtained diplomatic immunity via a Liberian diplomatic appointment. 547 00:29:59,440 --> 00:30:04,160 Speaker 5: He became the Liberian Honorary Consul General to Dubai. What 548 00:30:04,360 --> 00:30:06,120 Speaker 5: this meant is that there is a guy on the run. 549 00:30:06,320 --> 00:30:08,640 Speaker 5: He goes to a place with no extradition treaty and 550 00:30:08,760 --> 00:30:11,800 Speaker 5: on top of that, he gets diplomatic immunity, so he's 551 00:30:11,880 --> 00:30:12,800 Speaker 5: kind of untouchable. 552 00:30:13,480 --> 00:30:14,800 Speaker 6: And you'll have to read this story. 553 00:30:14,880 --> 00:30:17,000 Speaker 5: But long story short, he starts to run out of 554 00:30:17,040 --> 00:30:19,920 Speaker 5: options and he moves to a barge that he anchors 555 00:30:20,120 --> 00:30:22,200 Speaker 5: between Dubai and Iran, and he lives there for an 556 00:30:22,360 --> 00:30:26,800 Speaker 5: entire year until a wave comes and you know that 557 00:30:27,000 --> 00:30:29,440 Speaker 5: was the end. Once you develop a mind for these 558 00:30:29,520 --> 00:30:32,280 Speaker 5: kinds of offshore structures, like I said, it's hard to 559 00:30:32,400 --> 00:30:35,400 Speaker 5: unsee them, and just this whole world of opportunity arises 560 00:30:35,480 --> 00:30:37,240 Speaker 5: for you if you have the right mindset. 561 00:30:52,720 --> 00:30:54,760 Speaker 2: First of all, there's a wild story, looking forward to 562 00:30:54,800 --> 00:30:56,240 Speaker 2: reading it. By the way, Tracy, you know who I 563 00:30:56,400 --> 00:31:00,680 Speaker 2: just remembered, Justin the Son. Yeah, he served as the 564 00:31:00,720 --> 00:31:04,600 Speaker 2: permanent representative of Granada to the World Trade Organization, which 565 00:31:04,680 --> 00:31:08,480 Speaker 2: apparently isn't anymore. But this Chinese crypto entrepreneur, I remember 566 00:31:08,600 --> 00:31:10,960 Speaker 2: one day he was suddenly the honorable Justin Sun. 567 00:31:11,680 --> 00:31:13,440 Speaker 5: Anyway, did he buy the passport? 568 00:31:13,520 --> 00:31:14,680 Speaker 6: Grenada was in this business. 569 00:31:14,680 --> 00:31:16,880 Speaker 2: I don't know if you bought the passport, and I 570 00:31:16,920 --> 00:31:21,000 Speaker 2: don't want to insinuate anything, but he became an official 571 00:31:21,080 --> 00:31:25,040 Speaker 2: ambassador of Granada to the WTO. So good for him. Okay, 572 00:31:25,120 --> 00:31:27,240 Speaker 2: So we know the Dubais and Nabu Dhabi's, and then 573 00:31:27,280 --> 00:31:29,200 Speaker 2: we get a little more out there in the world, 574 00:31:29,360 --> 00:31:32,520 Speaker 2: the Pulaos and what was the other one, Neo Ni Niwi. 575 00:31:33,000 --> 00:31:34,400 Speaker 2: I don't know where that is. I'll have to look 576 00:31:34,440 --> 00:31:36,600 Speaker 2: it up. The other thing that's going on in this 577 00:31:36,800 --> 00:31:40,720 Speaker 2: new world of like cities. Is these various attempts to 578 00:31:40,800 --> 00:31:44,160 Speaker 2: like create startup cities. I once went to a party 579 00:31:44,320 --> 00:31:47,040 Speaker 2: at the offices of Praxis, which is this thing which 580 00:31:47,120 --> 00:31:49,840 Speaker 2: is a bunch of like crypto people who like talk 581 00:31:49,880 --> 00:31:51,440 Speaker 2: about like we were going to set up a crypto 582 00:31:51,480 --> 00:31:53,520 Speaker 2: city and like Albania or Montenegro. 583 00:31:53,960 --> 00:31:56,080 Speaker 5: To be clear, practice does not exist. 584 00:31:56,320 --> 00:31:58,840 Speaker 2: Right, yes, but but they talk about exist. 585 00:31:58,960 --> 00:31:59,680 Speaker 6: They do talk about it. 586 00:32:00,040 --> 00:32:03,040 Speaker 2: Any of these real have any of them broken ground anywhere? 587 00:32:03,120 --> 00:32:04,800 Speaker 2: Like what's going on in the world of like sort 588 00:32:04,800 --> 00:32:07,560 Speaker 2: of just creating a new city whole cloth for rich 589 00:32:07,640 --> 00:32:08,960 Speaker 2: crypto people to hang out in. 590 00:32:10,040 --> 00:32:13,120 Speaker 5: Creating new cities from scratches pretty hard, as you can imagine. 591 00:32:13,520 --> 00:32:17,240 Speaker 5: There have been a number of attempts. The ones that 592 00:32:17,360 --> 00:32:20,440 Speaker 5: come to mind are mostly in Africa. I think there 593 00:32:20,520 --> 00:32:24,480 Speaker 5: is one someone in Nigeria. I think the rapper Akon 594 00:32:25,320 --> 00:32:29,239 Speaker 5: was involved in one. Yeah, so these things exist. There 595 00:32:29,320 --> 00:32:31,840 Speaker 5: are there are cities that are being built. Unclear what 596 00:32:31,920 --> 00:32:34,000 Speaker 5: the result is because it takes quite a while to 597 00:32:34,040 --> 00:32:36,840 Speaker 5: build a city. I think what you're alluding to, Joe 598 00:32:37,120 --> 00:32:40,600 Speaker 5: is there is a startup city ecosystem, and then there's 599 00:32:40,640 --> 00:32:44,520 Speaker 5: also this idea of a charter city, and I mean, 600 00:32:44,560 --> 00:32:46,320 Speaker 5: there's a lot of overlap in these two things. A 601 00:32:46,360 --> 00:32:48,880 Speaker 5: startup city, I guess that it's most basic. It's just 602 00:32:49,040 --> 00:32:52,480 Speaker 5: a new city that you know. Some of them have 603 00:32:53,280 --> 00:32:59,200 Speaker 5: smart city elements, some of them have different kinds of 604 00:32:59,280 --> 00:33:01,520 Speaker 5: zoning laws than make it easier to build. That's one 605 00:33:01,600 --> 00:33:04,880 Speaker 5: set of things, and then the charter city universe is 606 00:33:04,960 --> 00:33:06,959 Speaker 5: maybe a little bit more political and a little bit 607 00:33:07,040 --> 00:33:11,240 Speaker 5: less like urban planning. The original concept of the charter 608 00:33:11,360 --> 00:33:15,280 Speaker 5: city was an idea from the economist Paul Romer and 609 00:33:16,000 --> 00:33:18,840 Speaker 5: his kind of his papers and his writing about this 610 00:33:19,400 --> 00:33:22,520 Speaker 5: essentially said, there are poor countries that have land, and 611 00:33:22,600 --> 00:33:24,320 Speaker 5: there are rich countries that don't have land, but they 612 00:33:24,400 --> 00:33:26,960 Speaker 5: have good laws. So why don't we take a piece 613 00:33:27,000 --> 00:33:31,080 Speaker 5: of land from country X, which may have not so 614 00:33:31,200 --> 00:33:35,640 Speaker 5: great economy, applied the rules and regulations and sort of 615 00:33:36,720 --> 00:33:40,640 Speaker 5: way of doing business from country Z, and you know, 616 00:33:40,840 --> 00:33:44,560 Speaker 5: together they can create a thriving new place for people 617 00:33:44,640 --> 00:33:46,800 Speaker 5: to go. Romer got a lot of flak for this 618 00:33:47,000 --> 00:33:51,000 Speaker 5: because that too sounds an awful lot like colonialism. Well, 619 00:33:51,040 --> 00:33:53,320 Speaker 5: you have a lot of economists on this show. Economists 620 00:33:53,360 --> 00:33:56,000 Speaker 5: have a very particular way of coming to their ideas. 621 00:33:56,120 --> 00:33:57,560 Speaker 5: I thought about this a lot, and I think that 622 00:33:57,680 --> 00:34:02,840 Speaker 5: Roma came to his honestly not sort of reverse engineering colonialism, 623 00:34:03,280 --> 00:34:06,920 Speaker 5: but actually just working from his previous ideas about how 624 00:34:07,040 --> 00:34:11,839 Speaker 5: economies benefit from foreign foreign influence. So let's give them 625 00:34:11,880 --> 00:34:14,920 Speaker 5: that to counter a lot of the pretty vicious criticism. 626 00:34:15,719 --> 00:34:17,600 Speaker 5: And so the idea of a charter city is that 627 00:34:18,239 --> 00:34:20,040 Speaker 5: you can if you bring in the right kinds of 628 00:34:20,160 --> 00:34:24,160 Speaker 5: laws and incentives in business environment, the economy will follow 629 00:34:24,200 --> 00:34:26,279 Speaker 5: and people will thrive, and then that will have an 630 00:34:26,320 --> 00:34:29,520 Speaker 5: impact on the country that is around this city or zone, 631 00:34:30,000 --> 00:34:34,359 Speaker 5: so it will lift all boats. Do any of these exist, Well, 632 00:34:34,480 --> 00:34:37,759 Speaker 5: there is one in particular that is maybe a little 633 00:34:37,800 --> 00:34:41,320 Speaker 5: more advanced than a praxis, which is mostly a praxice 634 00:34:41,360 --> 00:34:44,520 Speaker 5: of the mind, and that's an Honduras It's called Prospera, 635 00:34:45,160 --> 00:34:51,440 Speaker 5: and it is really contentious because it was initiated and 636 00:34:51,600 --> 00:34:54,800 Speaker 5: built by some pretty ideological people. They will tell you 637 00:34:54,880 --> 00:34:57,680 Speaker 5: they are not libertarians, that they don't have these ideologies, 638 00:34:57,800 --> 00:35:00,719 Speaker 5: but you know it's pretty clear that they do, and not. 639 00:35:00,800 --> 00:35:01,520 Speaker 6: Everyone likes it. 640 00:35:02,080 --> 00:35:06,000 Speaker 5: Prospera is a more or less deregulated zone on the 641 00:35:06,120 --> 00:35:08,800 Speaker 5: island of Roatan, which used to be British. Sort of 642 00:35:08,960 --> 00:35:12,960 Speaker 5: interesting history there of foreign influence as well, And for 643 00:35:13,160 --> 00:35:16,080 Speaker 5: now there's a real estate angle they're selling. They're going 644 00:35:16,160 --> 00:35:21,480 Speaker 5: to sell condos they purport to putting Hondurance, giving Hondurance 645 00:35:21,560 --> 00:35:22,480 Speaker 5: work opportunities. 646 00:35:22,719 --> 00:35:23,839 Speaker 6: I don't know. I haven't been there. 647 00:35:23,960 --> 00:35:26,040 Speaker 5: I was supposed to go there during COVID, but then 648 00:35:26,719 --> 00:35:29,360 Speaker 5: it didn't work out, not because of COVID, but because 649 00:35:29,840 --> 00:35:32,880 Speaker 5: a left wing government was elected in Honduras and the 650 00:35:33,000 --> 00:35:34,440 Speaker 5: kind of the people I was going to be called 651 00:35:34,440 --> 00:35:38,759 Speaker 5: the whole thing off. Anyhow, Prospera exists in so far 652 00:35:38,880 --> 00:35:41,040 Speaker 5: that they have broken ground, they have built things, and 653 00:35:41,160 --> 00:35:44,320 Speaker 5: that they have a system of law and regulation for 654 00:35:44,480 --> 00:35:48,279 Speaker 5: their zone. But the future of Prospera is a little 655 00:35:48,360 --> 00:35:52,360 Speaker 5: up for grabs because since this new left wing government 656 00:35:52,400 --> 00:35:55,279 Speaker 5: has come in in Honduras and there have been various 657 00:35:55,360 --> 00:36:00,640 Speaker 5: regulatory moves to curb the autonomy of Prospera, Prospera has 658 00:36:00,719 --> 00:36:05,480 Speaker 5: hit back and actually issuing the State of Honduras for 659 00:36:05,640 --> 00:36:09,600 Speaker 5: like a third of third GDP in international court. So 660 00:36:10,040 --> 00:36:12,120 Speaker 5: we don't know how that's going to play out yet. 661 00:36:12,400 --> 00:36:15,280 Speaker 5: I'm not sure that they're going to be successful because 662 00:36:15,320 --> 00:36:18,919 Speaker 5: the sum of money is so astronomical and a couple 663 00:36:18,960 --> 00:36:21,400 Speaker 5: of lawyers I've spoken to think it's a little ridiculous, 664 00:36:21,520 --> 00:36:24,279 Speaker 5: but who knows what's going to happen, So there is 665 00:36:24,320 --> 00:36:27,600 Speaker 5: a charter city. They were very clearly inspired by Romer's ideas. 666 00:36:28,120 --> 00:36:30,680 Speaker 5: Romer was even involved in an early version of the 667 00:36:30,920 --> 00:36:32,920 Speaker 5: legislation in Honduras until. 668 00:36:32,680 --> 00:36:33,640 Speaker 6: He got out of it. 669 00:36:34,480 --> 00:36:37,520 Speaker 5: But the future of Prospera is not entirely clear to me. 670 00:36:37,880 --> 00:36:40,920 Speaker 3: Can you talk a little bit more about the downsides 671 00:36:41,200 --> 00:36:45,880 Speaker 3: of these types of offshore centers or regimes? And also 672 00:36:46,680 --> 00:36:51,120 Speaker 3: is there anything that can be done to maybe crack 673 00:36:51,239 --> 00:36:54,480 Speaker 3: down on them or at least limit their growth. And 674 00:36:54,840 --> 00:36:57,799 Speaker 3: it seems difficult in the sense that perhaps you need 675 00:36:57,960 --> 00:37:01,600 Speaker 3: international coordination and has been a lack of that recently. 676 00:37:01,719 --> 00:37:03,399 Speaker 3: But on the other hand, you know, you have seen 677 00:37:04,080 --> 00:37:08,200 Speaker 3: some things happen, like with Swiss banking and the Secrecy 678 00:37:08,320 --> 00:37:11,200 Speaker 3: Act and all of that. So what are the downsides 679 00:37:11,360 --> 00:37:14,240 Speaker 3: and what can be done to limit those downsides. 680 00:37:14,800 --> 00:37:18,640 Speaker 5: The classic argument against these types of offshore jurisdictions is 681 00:37:18,680 --> 00:37:21,040 Speaker 5: that they create a race to the bottom. Country A 682 00:37:21,160 --> 00:37:24,680 Speaker 5: cuts taxes, country beak cuts taxes even more, country cuts 683 00:37:24,680 --> 00:37:29,000 Speaker 5: taxes even more. New Switzerland, newer Switzerland, even newer Switzerland, right, 684 00:37:29,080 --> 00:37:32,480 Speaker 5: when does it end? And the impact of that is, 685 00:37:33,480 --> 00:37:36,719 Speaker 5: as argument goes, it takes money away from the state. 686 00:37:36,880 --> 00:37:40,400 Speaker 5: There's less money to spend on social services and education. 687 00:37:40,200 --> 00:37:42,640 Speaker 6: And healthcare and so on. And that's real. 688 00:37:42,800 --> 00:37:45,680 Speaker 5: I mean, that's happening. There's been a lot of economic 689 00:37:45,800 --> 00:37:49,920 Speaker 5: research into the impact of offshore, the billions of not 690 00:37:50,080 --> 00:37:53,000 Speaker 5: trillions of dollars that are just not accounted for and 691 00:37:53,080 --> 00:37:55,880 Speaker 5: not being taken by governments in the form of taxes, 692 00:37:56,600 --> 00:38:00,120 Speaker 5: and that's convincing. The second issue with offshore is that 693 00:38:00,840 --> 00:38:04,279 Speaker 5: offshore is much bigger than just money. Offshore can have 694 00:38:04,400 --> 00:38:08,239 Speaker 5: really serious human rights repercussions. To use an example, for 695 00:38:08,680 --> 00:38:12,160 Speaker 5: more than a decade, Australia was using two offshore sites 696 00:38:12,640 --> 00:38:15,920 Speaker 5: to send refugees who who were trying to arrive in 697 00:38:15,960 --> 00:38:20,760 Speaker 5: Australia by boat and actually just warehoused people on Manus 698 00:38:20,840 --> 00:38:24,440 Speaker 5: Island and Nouru for years and years and years. They 699 00:38:24,680 --> 00:38:27,319 Speaker 5: were never told when they were getting out. They were 700 00:38:27,719 --> 00:38:33,399 Speaker 5: just in limbo. And if the fiscal stuff has big 701 00:38:33,560 --> 00:38:38,520 Speaker 5: picture impact on state budgets, this has really tangible and 702 00:38:38,680 --> 00:38:41,520 Speaker 5: traumatic effect on individuals. So I think we need to 703 00:38:41,600 --> 00:38:45,480 Speaker 5: talk about offshore both as a money thing and as 704 00:38:45,560 --> 00:38:48,120 Speaker 5: a human rights thing. And these are two sides of 705 00:38:48,200 --> 00:38:50,759 Speaker 5: the same coin. If you think of offshore as a 706 00:38:50,840 --> 00:38:54,920 Speaker 5: legal mechanism to send responsibility elsewhere, you can see that 707 00:38:55,000 --> 00:38:58,319 Speaker 5: it can affect people as well as balance sheets. 708 00:38:58,560 --> 00:39:01,800 Speaker 2: Talk more like whether it's the US, US or Europe, 709 00:39:01,960 --> 00:39:05,920 Speaker 2: or places or maybe places in Asia, places that are 710 00:39:06,000 --> 00:39:09,120 Speaker 2: the net where money is being drained from. And we 711 00:39:09,200 --> 00:39:13,440 Speaker 2: always see angry alter rich people wanting to you know, 712 00:39:13,600 --> 00:39:16,279 Speaker 2: lower taxes, etc. A threaten to move, etc. What is 713 00:39:16,400 --> 00:39:19,520 Speaker 2: being done respond fight? Is there a pushback in any way? 714 00:39:20,000 --> 00:39:23,239 Speaker 5: There's been some pushback the Swiss banks that maybe you 715 00:39:23,440 --> 00:39:25,200 Speaker 5: want to call it ground zero of all this stuff 716 00:39:25,560 --> 00:39:29,360 Speaker 5: have reformed somewhat. There is going to be as global 717 00:39:29,520 --> 00:39:32,120 Speaker 5: corporate minimum tax. How many loopholes there will be to 718 00:39:32,120 --> 00:39:34,799 Speaker 5: get around that is another question. But I do feel 719 00:39:34,840 --> 00:39:37,640 Speaker 5: like there has been a broad agreement that this is 720 00:39:37,800 --> 00:39:41,279 Speaker 5: not great. The only way that anything is going to 721 00:39:41,320 --> 00:39:43,440 Speaker 5: be done is to get every single country on board 722 00:39:43,640 --> 00:39:46,759 Speaker 5: with whatever agreement is made. Right, if you have any 723 00:39:46,840 --> 00:39:50,640 Speaker 5: jurisdiction that decides to become the outlier, the international community 724 00:39:50,719 --> 00:39:53,440 Speaker 5: can ice them out by putting them on financial blacklist, 725 00:39:53,600 --> 00:39:56,680 Speaker 5: cutting them off from swift you know, typical sanctions regimes, 726 00:39:57,080 --> 00:39:59,200 Speaker 5: but they'll still be there and they'll still always be 727 00:39:59,280 --> 00:40:02,120 Speaker 5: ways around it. I think another thing that can be 728 00:40:02,239 --> 00:40:07,279 Speaker 5: done is to think of ways that offshore can be positive. 729 00:40:08,120 --> 00:40:12,160 Speaker 5: And that might sound really contradictory, but the reason that this, 730 00:40:12,480 --> 00:40:15,520 Speaker 5: I think kept my attention for so long is that these. 731 00:40:15,440 --> 00:40:16,479 Speaker 6: Hacks are so clever. 732 00:40:16,960 --> 00:40:22,440 Speaker 5: They're ingenious, and what if they were dreamed up not 733 00:40:22,600 --> 00:40:24,560 Speaker 5: by people who were just trying to make more money, 734 00:40:24,680 --> 00:40:27,360 Speaker 5: but people who were trying to create new types of 735 00:40:27,400 --> 00:40:31,840 Speaker 5: places for people to live. This idea of offshoring refugees 736 00:40:31,960 --> 00:40:34,560 Speaker 5: is horrendous and horrible, but what if there was a 737 00:40:34,640 --> 00:40:38,080 Speaker 5: way to create places that were safe, temporary zones for 738 00:40:38,160 --> 00:40:41,239 Speaker 5: people who were fleeing war that were not prisons. So 739 00:40:41,719 --> 00:40:44,840 Speaker 5: I think you can regulate, and states know how to 740 00:40:44,920 --> 00:40:47,600 Speaker 5: do this. They just have to want to and they 741 00:40:47,680 --> 00:40:50,680 Speaker 5: have to get it together to do it, because ultimately 742 00:40:50,719 --> 00:40:53,120 Speaker 5: all of this is in many ways in under the 743 00:40:53,160 --> 00:40:53,840 Speaker 5: state's control. 744 00:40:54,280 --> 00:40:56,520 Speaker 6: But I think you also want to come up. 745 00:40:56,480 --> 00:41:00,200 Speaker 5: With new solutions by using this way of thinking, because they're. 746 00:41:00,160 --> 00:41:03,560 Speaker 2: Something to ITTUSA. Thank you so much for coming on outlocked. 747 00:41:03,640 --> 00:41:04,279 Speaker 6: Thanks for having me. 748 00:41:04,320 --> 00:41:19,239 Speaker 2: This is really fun, Tracy, I really enjoyed that conversation. 749 00:41:19,400 --> 00:41:21,160 Speaker 2: We've talked a little bit about the real estate side 750 00:41:21,200 --> 00:41:23,960 Speaker 2: in the past with Hitten, some Tani and some others. 751 00:41:24,280 --> 00:41:28,040 Speaker 2: You know, when they're crypto or I guess, like condos 752 00:41:28,200 --> 00:41:30,879 Speaker 2: in a high rise somewhere in Miami or Dubai, et cetera. 753 00:41:31,040 --> 00:41:33,400 Speaker 2: You know, the common thread to all of it, to 754 00:41:33,560 --> 00:41:37,600 Speaker 2: me is people finding ways to store a lot of 755 00:41:38,719 --> 00:41:42,960 Speaker 2: high dollar value in a small container. Like to me, 756 00:41:43,120 --> 00:41:46,400 Speaker 2: that's like the common thread here, and that basically what 757 00:41:46,520 --> 00:41:50,680 Speaker 2: these countries or jurisdictions offer is that ability kind of 758 00:41:50,800 --> 00:41:54,000 Speaker 2: like jewels and jewelry, et cetera. Basically to find a 759 00:41:54,040 --> 00:41:56,640 Speaker 2: way to put a lot of wealth in a small place. 760 00:41:56,920 --> 00:41:59,320 Speaker 3: Yeah, it's sort of a modern version of I don't know, 761 00:41:59,440 --> 00:42:03,200 Speaker 3: stashing a bunch of gold coins under a stone wall 762 00:42:03,400 --> 00:42:05,440 Speaker 3: in like Roman times or something. 763 00:42:06,160 --> 00:42:06,320 Speaker 1: You know. 764 00:42:06,400 --> 00:42:08,920 Speaker 3: What's interesting to me is the sort of tension between 765 00:42:09,239 --> 00:42:12,440 Speaker 3: globalization and nationalism there. And it comes up in a 766 00:42:12,520 --> 00:42:15,160 Speaker 3: lot of different ways. But I remember one of my 767 00:42:15,280 --> 00:42:18,800 Speaker 3: favorite examples of this is do you remember a brage 768 00:42:19,120 --> 00:42:20,160 Speaker 3: and RIFKNOCKVI? 769 00:42:20,719 --> 00:42:20,759 Speaker 1: No? 770 00:42:21,280 --> 00:42:24,239 Speaker 3: Okay, So abrage once upon a time was like the 771 00:42:24,360 --> 00:42:28,480 Speaker 3: world's biggest private equity emerging markets investor, and it was 772 00:42:28,640 --> 00:42:32,279 Speaker 3: very much about globalized investing. And then the whole thing 773 00:42:32,360 --> 00:42:35,759 Speaker 3: collapsed and turned out to be a fraud and Rfnovi, 774 00:42:36,200 --> 00:42:39,360 Speaker 3: the founder, was arrested, and it turned out, you know, 775 00:42:39,400 --> 00:42:41,640 Speaker 3: there were all these profiles of him and how did 776 00:42:41,719 --> 00:42:45,680 Speaker 3: he become a billionaire while running this fraud? And it 777 00:42:45,760 --> 00:42:50,040 Speaker 3: turned out he lived in a place in Dubai called 778 00:42:50,120 --> 00:42:54,080 Speaker 3: Emirates Hills. And when you looked up who else lived 779 00:42:54,200 --> 00:42:59,840 Speaker 3: in Emirates Hills, it was like a roster of particular character, 780 00:43:00,440 --> 00:43:02,720 Speaker 3: let's put it that way. But it was like Robert 781 00:43:02,760 --> 00:43:08,160 Speaker 3: mcgabi's son, the Gupta family who were friends with Jacob Zuma. 782 00:43:08,320 --> 00:43:11,440 Speaker 3: It was like those types of people living in offshore 783 00:43:11,520 --> 00:43:16,080 Speaker 3: centers while sometimes espousing a particular brand of nationalism. 784 00:43:16,360 --> 00:43:19,640 Speaker 2: I love these like destinations where it's like the gangs 785 00:43:19,719 --> 00:43:23,080 Speaker 2: all here, so to speak. I have no real connection 786 00:43:23,200 --> 00:43:24,840 Speaker 2: to any of this, but when I was nine, I 787 00:43:24,920 --> 00:43:27,600 Speaker 2: did live in Malaysia for a year. My dad was 788 00:43:27,640 --> 00:43:30,800 Speaker 2: a professor, he taught there. I went to an international school. 789 00:43:30,880 --> 00:43:33,080 Speaker 2: It is a fun environment, like being around all of 790 00:43:33,160 --> 00:43:35,759 Speaker 2: these people who are like children of ambassadors and heads 791 00:43:35,760 --> 00:43:38,040 Speaker 2: of state. As far as I know, there are no 792 00:43:38,320 --> 00:43:41,600 Speaker 2: like war, criminals on the land there, or you know, 793 00:43:41,800 --> 00:43:43,399 Speaker 2: children of dictators or whatever. 794 00:43:43,560 --> 00:43:48,040 Speaker 3: But es, I went to mostly international schools, and it 795 00:43:48,120 --> 00:43:52,640 Speaker 3: is a very particular space, and it often feels like 796 00:43:52,760 --> 00:43:57,000 Speaker 3: you're not actually living in that particular country, but living 797 00:43:57,080 --> 00:44:01,480 Speaker 3: in like a yeah, compound version of it. But anyway, 798 00:44:01,880 --> 00:44:05,120 Speaker 3: without getting too much into my high school experience, shall. 799 00:44:04,880 --> 00:44:05,359 Speaker 6: We leave it there. 800 00:44:05,480 --> 00:44:06,160 Speaker 2: Let's leave it there. 801 00:44:06,480 --> 00:44:09,120 Speaker 3: This has been another episode of the All Thoughts podcast. 802 00:44:09,280 --> 00:44:12,120 Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway. 803 00:44:12,360 --> 00:44:15,200 Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart. 804 00:44:15,440 --> 00:44:19,600 Speaker 2: Follow our guest atusa Eroxia Abrahemian. She's at atusa Eroxia, 805 00:44:19,800 --> 00:44:22,120 Speaker 2: and check out her brand new book, The Hidden Globe, 806 00:44:22,320 --> 00:44:25,839 Speaker 2: How Wealth Hecks the World. Follow our producers Carmen Rodriguez 807 00:44:25,880 --> 00:44:29,120 Speaker 2: at Carman armand dash Ol Bennett at Dashbot and Kilbrooks 808 00:44:29,200 --> 00:44:32,160 Speaker 2: at Keilbrooks. And thank you to our producer Moses Ondam. 809 00:44:32,480 --> 00:44:35,240 Speaker 2: For more Oddlots content, go to Bloomberg dot com slash 810 00:44:35,320 --> 00:44:37,239 Speaker 2: odd Lots, where you have transcripts, a blog in a 811 00:44:37,280 --> 00:44:39,720 Speaker 2: newsletter and you can chat about all of these topics 812 00:44:39,800 --> 00:44:43,240 Speaker 2: with fellow listeners. Twenty four seven in our discord Discord 813 00:44:43,320 --> 00:44:45,960 Speaker 2: dot gg, slash od loots and if. 814 00:44:45,840 --> 00:44:48,000 Speaker 3: You enjoy Odd Lots, if you like it when we 815 00:44:48,160 --> 00:44:51,480 Speaker 3: dive into the separate legal world that the ultra rich 816 00:44:51,480 --> 00:44:54,560 Speaker 3: are building for themselves, then please leave us a positive 817 00:44:54,600 --> 00:44:58,400 Speaker 3: review on your favorite podcast platform. And remember, if you 818 00:44:58,440 --> 00:45:00,759 Speaker 3: are a Bloomberg subscriber, you can and listen to all 819 00:45:00,840 --> 00:45:03,759 Speaker 3: of our episodes absolutely ad free. All you need to 820 00:45:03,800 --> 00:45:06,840 Speaker 3: do is find the Bloomberg channel on Apple Podcasts and 821 00:45:07,120 --> 00:45:09,520 Speaker 3: follow the instructions there. Thanks for listening.