WEBVTT - The Ultra-Rich Are Building a Separate World Here on Earth 0:00:03.160 --> 0:00:18.840 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:20.200 --> 0:00:23.599 Hello and welcome to another episode of the Odd Lots Podcast. 0:00:23.680 --> 0:00:26.160 I'm joll Wisenthal and I'm Tracy Alloway. 0:00:26.440 --> 0:00:29.280 Tracy, did you see that story a few weeks ago 0:00:29.480 --> 0:00:34.720 about Andresen Horowitz, the big VC firm closing its Miami office. 0:00:34.760 --> 0:00:37.360 Who I did partially because you tweeted about it. 0:00:38.960 --> 0:00:42.400 See, my tweeting serves a purpose. It allows us to 0:00:42.479 --> 0:00:45.159 coordinate and be on the same page on topics. 0:00:45.240 --> 0:00:46.839 It gives us shared content. 0:00:46.960 --> 0:00:49.159 Sure, that's right. But I found that story to be 0:00:49.200 --> 0:00:52.520 really fascinating because in twenty twenty or I think, yeah, 0:00:52.520 --> 0:00:56.880 around twenty twenty, and obviously with COVID and people frustrated 0:00:57.080 --> 0:00:59.920 about things going on in San Francisco, it felt like 0:01:00.120 --> 0:01:04.320 there was this big effort to sort of manufacture an 0:01:04.400 --> 0:01:07.800 environment in a new city. So it's like, Okay, Miami's nice, 0:01:07.920 --> 0:01:09.679 and the standard of living if you have a lot 0:01:09.680 --> 0:01:12.720 of money, it seems pretty good. Let's just see if 0:01:12.760 --> 0:01:16.760 by a sheer force of will and money and tweets, etc. 0:01:17.280 --> 0:01:20.880 Whether we can relocate everything there. And there has been 0:01:20.880 --> 0:01:23.000 a lot and we've talked a little bit about Miami 0:01:23.080 --> 0:01:25.840 and Citadel has obviously brought a ton of money to 0:01:25.920 --> 0:01:28.560 the city. But this sort of impulse to sort of 0:01:28.920 --> 0:01:34.560 manufacture cities and manufacture new physical networks is a very 0:01:34.560 --> 0:01:36.080 interesting phenomenon. 0:01:35.520 --> 0:01:38.360 To me, right, and I always find it's sort of 0:01:38.400 --> 0:01:41.120 the strongest whenever you see a city talk about becoming 0:01:41.240 --> 0:01:43.880 a crypto hub or something like that. And there have 0:01:43.920 --> 0:01:46.240 been so many, right, so Miami was one of them 0:01:46.760 --> 0:01:50.080 at certain points. Eric Adams in New York has talked 0:01:50.080 --> 0:01:52.960 about it. Malta wants to be a crypto hub, Dubai 0:01:53.000 --> 0:01:55.440 wants to be a crypto hub. It's neighbor, Abu Dhabi 0:01:55.480 --> 0:01:57.440 wants to be a crypto hub. And it kind of 0:01:57.480 --> 0:02:02.960 raises the question can everyone basically repeat the same economic 0:02:03.160 --> 0:02:06.960 or financial model and become these sort of offshore wealth 0:02:07.040 --> 0:02:11.560 centers that foster, you know, new business and innovation. It 0:02:11.680 --> 0:02:15.480 seems like there are multiple cities where countries or locations 0:02:15.480 --> 0:02:16.919 that are trying to do the same thing. 0:02:17.480 --> 0:02:19.680 By the way, well, you lived in Abu Dhabi. 0:02:19.840 --> 0:02:20.720 I did, what do they do? 0:02:20.800 --> 0:02:22.640 What's the business there? What does everyone do? 0:02:23.120 --> 0:02:27.799 Uh No, I'm seriously, I I don't know what Dubai 0:02:27.840 --> 0:02:29.680 I mean, I know there's a ton of money there, 0:02:29.960 --> 0:02:32.160 but I don't actually know what the big industries are 0:02:32.200 --> 0:02:34.080 there in these places, so you must know. 0:02:34.160 --> 0:02:37.799 I'm trying to word this very diplomatically. I would say 0:02:38.200 --> 0:02:42.560 light touch regulatory environment. I mean, that's what's basically it 0:02:42.600 --> 0:02:47.320 to start companies, yeah, and payload taxes and be able 0:02:47.360 --> 0:02:49.800 to do it in a fairly quick way. But the 0:02:49.840 --> 0:02:52.520 interesting thing about Abu Dhabi, and again going back to 0:02:52.600 --> 0:02:55.920 the point of all these cities basically trying to do 0:02:55.960 --> 0:02:59.920 the same thing, is Abu Dhabi very very almost explicitly 0:03:00.720 --> 0:03:03.519 was trying to follow the model of Singapore. In fact, 0:03:03.560 --> 0:03:06.600 they even hired Richard Tang, who used to run the 0:03:06.600 --> 0:03:10.880 Singapore Monetary Authority, to come behead of ADGM. Like it 0:03:10.919 --> 0:03:14.680 was that explicit. It's very obvious what a lot of 0:03:14.680 --> 0:03:15.800 these places are trying to do. 0:03:16.040 --> 0:03:17.680 It seems to be working well. I mean, I know 0:03:17.760 --> 0:03:20.360 people always think like there's a bubble, it's all real 0:03:20.480 --> 0:03:22.800 estate and speculation or whatever is going to crash. But 0:03:23.200 --> 0:03:25.040 for the most part, I mean, there was something that 0:03:25.120 --> 0:03:26.720 happened in late two thousand and nine and one of 0:03:26.720 --> 0:03:28.760 them on bankrupt or something, But for the most part, 0:03:29.080 --> 0:03:30.480 seems like it's been working. 0:03:30.480 --> 0:03:33.720 For certain countries. Certainly I mean Singapore again is the 0:03:33.760 --> 0:03:37.960 big example of this. But I guess the more people 0:03:38.120 --> 0:03:42.480 and places try to imitate these particular business models, you know, 0:03:42.600 --> 0:03:45.680 not everywhere in the world can be an offshore financial 0:03:45.760 --> 0:03:49.720 center for obvious reasons. And I think like one man's 0:03:49.800 --> 0:03:53.440 loophole might be another country's comparative advantage. But there's a 0:03:53.520 --> 0:03:55.440 limit to how far you can push. 0:03:55.200 --> 0:03:56.720 That, you think, So I wonder how far we are 0:03:56.720 --> 0:03:59.600 from Milmot. Anyway, We're in an age clearly where there's 0:03:59.640 --> 0:04:01.800 just a l lot of interest in cities and people 0:04:01.880 --> 0:04:03.800 want to talk about, you know, on Twitter. They're like 0:04:03.840 --> 0:04:06.000 what city should I move to? And where people have 0:04:06.040 --> 0:04:08.960 a ton of money and option. Some people have a 0:04:09.000 --> 0:04:11.600 ton of money and they go to somewhere for some reason, 0:04:11.640 --> 0:04:15.280 maybe because regulation is low, or taxes are low, et cetera, 0:04:15.960 --> 0:04:19.760 and essentially kind of be I don't know, rootless. I 0:04:19.839 --> 0:04:24.120 remember during the pandemic when ostensibly I thought all of 0:04:24.160 --> 0:04:27.320 the borders were closed and you couldn't travel, seeing you know, 0:04:27.800 --> 0:04:30.440 friends on Instagram and stuff all over the world and 0:04:30.520 --> 0:04:32.800 places where they didn't seem to be any restrictions at all, 0:04:32.839 --> 0:04:36.159 and on beaches. I'm very fascinated by this sort of 0:04:36.200 --> 0:04:39.440 parallel world that seems to be emerging and still growing, 0:04:39.920 --> 0:04:44.240 where the ultra wealthy push up real estate prices, build 0:04:44.480 --> 0:04:48.400 giant towers branded by various brands like Porsche, et cetera. 0:04:48.520 --> 0:04:51.520 It seemed to live in a sort of just separate world. 0:04:51.240 --> 0:04:53.920 Than what I live in in New York City, right, 0:04:54.000 --> 0:04:57.440 And we've talked about this primarily from a real estate perspective, 0:04:57.480 --> 0:05:00.359 but we haven't really gotten into these separate world world 0:05:00.520 --> 0:05:04.160 of light touch regulatory and tax regimes. 0:05:04.160 --> 0:05:07.680 So I'm excited the separate legal world. Well, I'm very excited. 0:05:07.839 --> 0:05:10.520 We are going to be speaking with truly the perfect guest. 0:05:10.720 --> 0:05:13.440 We're going to be speaking with a Tusa Eroxia Abrahemian. 0:05:13.600 --> 0:05:16.080 She is the author of the brand new book The 0:05:16.160 --> 0:05:19.880 Hidden Globe, How Wealth Hacks the World, talking about all 0:05:19.920 --> 0:05:23.640 of these different cities and legal regimes and the sort 0:05:23.640 --> 0:05:26.359 of separate, parallel world that exists here on Earth for 0:05:26.440 --> 0:05:29.560 the ultra rich. Sotusa, thank you so much for coming 0:05:29.560 --> 0:05:30.480 on Odd Lots. 0:05:30.279 --> 0:05:32.000 Joe Tracy, thanks so much for having me. 0:05:32.120 --> 0:05:34.239 Absolutely. What's your book about? 0:05:34.680 --> 0:05:34.760 So? 0:05:34.839 --> 0:05:38.440 My book is about this parallel world of loopholes. It's 0:05:38.520 --> 0:05:41.560 hiding in plain sight. It's all around us, and once 0:05:41.600 --> 0:05:43.640 you see it, you can't unsee it. So I hope 0:05:43.640 --> 0:05:45.479 that when you read the book, you'll start to see 0:05:45.480 --> 0:05:47.320 it and you will just see it at every turn. 0:05:48.040 --> 0:05:51.000 This world, much of it is territorial, some of it isn't. 0:05:51.440 --> 0:05:55.880 So I start with my hometown of Geneva. I grew 0:05:55.960 --> 0:05:59.880 up in a very sort of stateless environment in Geneva, Switzerland. 0:06:00.440 --> 0:06:03.839 My parents were un employees. I went to international schools 0:06:03.839 --> 0:06:06.040 for the most part, and it was just this big 0:06:06.080 --> 0:06:08.280 mix of people from all over the world who were 0:06:08.320 --> 0:06:09.120 always moving. 0:06:09.960 --> 0:06:10.800 I wasn't moving. 0:06:11.720 --> 0:06:14.120 I lived eighteen years in Geneva and I still don't 0:06:14.120 --> 0:06:16.320 feel like I know the place. It is the most 0:06:16.360 --> 0:06:19.680 mysterious place to me, even though my mother still lives there. 0:06:20.320 --> 0:06:24.440 And I started thinking about why that was. How can 0:06:24.480 --> 0:06:27.280 you live somewhere and still not really grasp it. And 0:06:27.600 --> 0:06:30.360 part of it is, yes, I was in this kind 0:06:30.400 --> 0:06:34.400 of international community, didn't really learn a lot about Swiss history. 0:06:34.680 --> 0:06:37.200 I have a Swiss passport, but I don't speak German, 0:06:37.240 --> 0:06:39.200 I don't speak Italian. I actually don't have a lot 0:06:39.240 --> 0:06:42.440 of Swiss friends, so that was definitely part of it. 0:06:42.839 --> 0:06:45.560 But the other side, when I kind of zoomed out, 0:06:45.600 --> 0:06:48.320 and I thought of the legal topography of the place 0:06:48.360 --> 0:06:51.800 that I grew up in. It's like Swiss cheese. Geneva 0:06:52.240 --> 0:06:55.800 is this historic, beautiful city with an old town and 0:06:56.520 --> 0:06:59.800 old walls that are, you know, more ancient than like 0:07:00.120 --> 0:07:02.560 most of the things in the United States. At the 0:07:02.600 --> 0:07:05.719 same time, it has all of these pock marks and 0:07:06.360 --> 0:07:09.680 black holes and mysteries. An example of that is the 0:07:09.680 --> 0:07:11.560 Geneva Freeport. You might have heard of that. 0:07:12.280 --> 0:07:14.400 I was going to say. You mentioned once you see 0:07:14.440 --> 0:07:17.440 these things, you can't unsee them. And I remember I 0:07:17.560 --> 0:07:20.440 read a book called Unruly Places and they had a 0:07:20.520 --> 0:07:22.920 chapter on freeports, and that was the first time I'd 0:07:22.960 --> 0:07:25.800 have heard of them, and ever since then, I haven't 0:07:25.800 --> 0:07:27.559 forgotten them. I can't get them out of my mind. 0:07:27.840 --> 0:07:29.760 Yeah, what's the Geneva Freeport. What do you get to 0:07:29.800 --> 0:07:30.160 do there? 0:07:30.680 --> 0:07:30.800 Uh? 0:07:30.920 --> 0:07:31.400 The Genia? 0:07:31.400 --> 0:07:33.880 Well, I have never been inside, Okay, and it is 0:07:34.000 --> 0:07:35.360 not for lack of trying, trust me. 0:07:35.840 --> 0:07:38.080 The Geneva Freeport is a warehouse. 0:07:38.280 --> 0:07:39.960 It was built a long time ago, in the late 0:07:40.000 --> 0:07:43.720 eighteen hundreds, and it was originally built to store things 0:07:43.800 --> 0:07:47.440 like grain, things like supplies for wartime, and it was 0:07:47.560 --> 0:07:50.880 used for that, and the idea was that merchants could 0:07:51.080 --> 0:07:54.600 put their goods there, have them sort of hang out 0:07:54.680 --> 0:07:58.720 without declaring them to customs, without paying for taxes or 0:07:58.720 --> 0:08:01.240 tariffs or what have you, and then move them to 0:08:01.320 --> 0:08:06.760 their next destination. So for something like sacks of oats, 0:08:07.160 --> 0:08:09.600 there's a shelf life. You can't keep them there forever. 0:08:10.200 --> 0:08:12.480 They got to move otherwise everyone's interest. 0:08:12.520 --> 0:08:14.840 To be clear, it serves a very specific purpose because 0:08:14.880 --> 0:08:17.800 if you want Geneva, if Switzerland wants to be a 0:08:17.880 --> 0:08:20.760 hub of trading, they don't want merchants to have to 0:08:20.760 --> 0:08:22.800 pay a tax or a tear of just if they're 0:08:22.880 --> 0:08:23.600 like stopping by. 0:08:23.760 --> 0:08:24.160 You got it. 0:08:24.200 --> 0:08:26.320 If you want you want a place to be an entropo, 0:08:26.560 --> 0:08:28.800 you want to make it as easy as possible to 0:08:30.200 --> 0:08:32.640 be an entropo to leave your things there temporarily and 0:08:32.679 --> 0:08:36.200 then move on. Geneva was also a crossroads for trade. 0:08:36.200 --> 0:08:38.480 They had a big market, so it made sense. But 0:08:38.559 --> 0:08:41.760 as time went on, and as you know, the economy evolved, 0:08:41.760 --> 0:08:44.640 and as Switzerland evolved, this became a place to store 0:08:44.679 --> 0:08:50.880 things like gold, things likes, and eventually things like very 0:08:50.960 --> 0:08:56.040 expensive paintings. And today it's estimated that billions of dollars 0:08:56.240 --> 0:09:00.720 worth of paintings and cars and wine and luxury goods 0:09:00.920 --> 0:09:02.200 are being stored there. 0:09:02.679 --> 0:09:02.839 Now. 0:09:02.840 --> 0:09:04.960 The difference between a sack of oats and a DaVinci, 0:09:05.000 --> 0:09:07.839 apart from how expensive it is, is that now these 0:09:07.880 --> 0:09:12.200 places are super climate controlled, like humidity is monitored. Everything 0:09:12.320 --> 0:09:16.640 is very very very tightly controlled, and so there's no 0:09:17.600 --> 0:09:19.959 there's no rotting, things don't go bad. Things can stay 0:09:19.960 --> 0:09:23.920 there perhaps forever. And it's a completely different game because 0:09:24.160 --> 0:09:26.920 if you're someone who wants to hide something or to 0:09:27.200 --> 0:09:29.640 just sit on something for a very long time without 0:09:29.640 --> 0:09:33.000 incurring tax or maybe declaring it to your ex spouse, 0:09:33.720 --> 0:09:35.720 you can do that in the Geneva Freeport. 0:09:36.440 --> 0:09:38.840 So you touched on this when you were talking about 0:09:38.840 --> 0:09:41.720 the evolution of the freeport. But one thing I often 0:09:41.840 --> 0:09:47.720 wonder with these sort of loophole liminal places is how 0:09:47.800 --> 0:09:51.880 deliberate are the choices to create them. So the freeport 0:09:52.000 --> 0:09:54.720 started out as a place where you could store green 0:09:54.880 --> 0:09:57.640 because it wasn't meant to stay there forever and you 0:09:57.679 --> 0:09:59.600 wanted to be a hub for trade, and then it 0:09:59.640 --> 0:10:02.800 gradually evolved to a place where you could stash things 0:10:02.880 --> 0:10:06.800 potentially forever. How did that decision come about? What were 0:10:06.840 --> 0:10:09.640 the choices that went into that outcome. 0:10:10.040 --> 0:10:13.319 In the case of Geneva, there's a somewhat organic or 0:10:13.400 --> 0:10:17.440 natural progression of things. I don't know that you know, 0:10:17.520 --> 0:10:21.280 in like eighteen eighty you necessarily would have anticipated the 0:10:21.480 --> 0:10:25.680 art market being just unbelievably full of speculation and using 0:10:25.720 --> 0:10:29.640 these places to enable that. So for one of these 0:10:29.800 --> 0:10:32.480 entrepose that's been around for a long time, the decisions 0:10:32.480 --> 0:10:36.040 are more in the lack of involvement of the states. 0:10:36.120 --> 0:10:39.319 So you have this rule for grain, maybe you're not 0:10:39.360 --> 0:10:41.400 going to change it too much and have it apply 0:10:41.520 --> 0:10:44.840 for gold bars. But there are more freeports than just 0:10:44.880 --> 0:10:47.600 the Geneva freeport. There are brand new ones that were 0:10:47.600 --> 0:10:50.800 built in the past, you know, twenty thirty years in Luxembourg, 0:10:50.920 --> 0:10:55.120 in Singapore there was talk of creating when in Russia, 0:10:55.640 --> 0:10:58.160 And for the new ones that are being built, it's 0:10:58.280 --> 0:11:01.160 very clear what the intention here is. Right, we're not 0:11:01.200 --> 0:11:05.319 talking about oats or salt or any food stuff, so 0:11:05.320 --> 0:11:10.160 we're really talking about high end goods that you know, 0:11:10.520 --> 0:11:14.920 increasingly are one of the only ways to get around 0:11:14.960 --> 0:11:16.240 financial controls as well. 0:11:32.440 --> 0:11:35.559 For country or a city like Singapore, what do they 0:11:35.559 --> 0:11:37.840 get from it from the existence of a freeport that 0:11:38.280 --> 0:11:41.680 explicitly is there so that people can have our not 0:11:41.800 --> 0:11:42.240 declare it. 0:11:42.440 --> 0:11:44.680 I'm trying to figure this out. I'm not sure there's 0:11:44.760 --> 0:11:47.320 one exact answer, to be honest, I think a big 0:11:47.360 --> 0:11:48.520 part of it is branding. 0:11:48.720 --> 0:11:49.480 It looks good. 0:11:49.600 --> 0:11:51.920 It looks good to say that you have, you know, 0:11:52.000 --> 0:11:57.280 stashes of picassos, And the people involved in these enterprises 0:11:57.440 --> 0:12:01.439 will say, well, we are creating a huh. And when 0:12:01.480 --> 0:12:04.400 the paintings come, then the artists come, and the dealers come, 0:12:04.440 --> 0:12:06.560 and the bankers come, and so it creates a sort 0:12:06.559 --> 0:12:09.320 of a little ecosystem of. 0:12:09.400 --> 0:12:11.200 Art and art art markets. 0:12:11.720 --> 0:12:14.320 I think that there's a more cynical way of putting it, 0:12:14.400 --> 0:12:19.439 which is that these types of places, freeports and so on, 0:12:19.920 --> 0:12:23.360 are ways to launder money when it's much harder to 0:12:23.400 --> 0:12:26.960 launder money through the banks. So you can have many 0:12:27.040 --> 0:12:30.640 reasons for this, and a country would be interested probably 0:12:30.679 --> 0:12:32.880 in both sides of this, if the ultimate goal is 0:12:32.920 --> 0:12:36.200 to bring money to its territory. 0:12:36.480 --> 0:12:39.840 In researching and writing this book, did you observe any 0:12:40.080 --> 0:12:45.240 interesting examples of either freeports or other types of offshore 0:12:45.360 --> 0:12:50.120 centers competing with each other and what happens when everyone 0:12:50.200 --> 0:12:52.120 is trying to do a similar thing, and you have 0:12:52.160 --> 0:12:54.680 a freeport here and a freeport here and a freeport there. 0:12:55.000 --> 0:12:57.320 Yeah, these places are always one uping each other. I mean, 0:12:57.360 --> 0:12:59.200 how many you guys work at Bloomberg. How many times 0:12:59.200 --> 0:13:01.839 have you read the headline X is the new Switzerland? 0:13:02.840 --> 0:13:03.040 Right? 0:13:03.280 --> 0:13:05.840 I think Singapore has been the new Switzerland, Dubai has 0:13:05.880 --> 0:13:08.920 been the new Switzerland. Luxembourg has been the new Switzerland, 0:13:08.920 --> 0:13:10.000 although that was a while ago. 0:13:10.160 --> 0:13:12.120 One day Switzerland will be the new Switzerland. 0:13:12.240 --> 0:13:14.120 Well, and then Switzerland is always trying to be the 0:13:14.200 --> 0:13:17.320 new Switzerland. Right. They were also trying to do this 0:13:17.400 --> 0:13:19.720 crypto valley thing in the Canton of Zug. 0:13:21.760 --> 0:13:24.040 Yeah. 0:13:24.240 --> 0:13:27.920 So yes, there's always competition and they're always trying to 0:13:27.920 --> 0:13:31.360 one up each other. It's relentless. And that's why. Also 0:13:31.600 --> 0:13:33.520 for regulators who might want to crack down on this, 0:13:33.640 --> 0:13:36.679 it's like whackam mol. One jurisdiction might say, Okay, we're 0:13:36.679 --> 0:13:39.080 going to put tighter controls on our freeport or on 0:13:39.120 --> 0:13:42.080 our crypto market. Another one is going to pop up 0:13:42.120 --> 0:13:44.080 tomorrow to fill that void. 0:13:44.480 --> 0:13:46.600 I asked Tracy this, but maybe I should just ask you. 0:13:46.640 --> 0:13:49.439 When Abu Dhabi in Dubai, what goes on. 0:13:49.480 --> 0:13:52.280 There, Abu Dhabi and Dubai. I can speak to Dubai. 0:13:52.440 --> 0:13:58.520 I've not been to Abu Dhabi. Dubai has, for its 0:13:58.559 --> 0:14:01.320 recent I guess the past two twenty or so years, 0:14:01.600 --> 0:14:06.960 made really really concerted efforts to attract millionaires and billionaires. 0:14:07.480 --> 0:14:10.520 There is the real estate play here. Obviously, You've talked 0:14:10.520 --> 0:14:14.480 about this a lot. There's a lot of There are 0:14:14.480 --> 0:14:16.480 a lot of articles about these wacky things that they 0:14:16.559 --> 0:14:19.840 build and the developments and whatnot, the ski slopes in 0:14:19.880 --> 0:14:23.520 the malls. At the same time, there have been many 0:14:23.560 --> 0:14:30.080 reports that show from the think tanks and the OCCRP 0:14:30.400 --> 0:14:33.560 and the ICJ, the show that Dubai is really the 0:14:33.960 --> 0:14:39.040 center of the world of money laundering, criminality and those 0:14:39.200 --> 0:14:44.200 types of offshore theatrics. So they are up to that too. 0:14:44.480 --> 0:14:47.280 Before Dubai was what we think of today as Dubai, 0:14:47.320 --> 0:14:50.000 this place with tall buildings and and crazy stuff going on, 0:14:50.680 --> 0:14:53.000 there was a lot of smuggling and pearl smuggling and 0:14:53.000 --> 0:14:55.520 gold smuggling going on. It has a sort of long 0:14:55.560 --> 0:14:59.480 tradition of this that this did not occur overnight. When 0:14:59.760 --> 0:15:02.680 the shakes past a bunch of laws that said For 0:15:02.720 --> 0:15:06.480 the past twenty or so years, Dubai has made a 0:15:06.520 --> 0:15:10.880 concerted effort to create laws to attract businesses and people. 0:15:11.760 --> 0:15:15.480 Some of these laws involve carving out free zones within 0:15:15.600 --> 0:15:21.360 the territory of Dubai that cater very specifically to certain sectors. 0:15:21.920 --> 0:15:25.720 So you have a media city where ostensibly there's more 0:15:25.800 --> 0:15:29.840 freedom of speech and expression. There is an internet city 0:15:29.840 --> 0:15:33.680 that has world class infrastructure. I think there's a medical one, 0:15:33.760 --> 0:15:39.960 and there's one for commodities, and all of these little zones, clusters, hubs, 0:15:40.000 --> 0:15:42.720 whatever you want to call them, have a kind of 0:15:42.720 --> 0:15:46.000 a bespoke legal regime. A lot of that is spin, 0:15:46.600 --> 0:15:49.760 a lot of that. They're sort of interchangeable, but by 0:15:49.840 --> 0:15:53.240 virtue of appealing to a certain type of business, I 0:15:53.280 --> 0:15:56.240 think there's something to be said for proximity and exchange, 0:15:56.240 --> 0:15:58.600 and that's real. This is why we like to go 0:15:58.680 --> 0:16:01.000 back to the office, because you can talk to people anyway. 0:16:01.320 --> 0:16:02.960 All of these zones. 0:16:02.640 --> 0:16:06.080 Also have very preferable tax regimes. They make it easier 0:16:06.120 --> 0:16:09.000 to import workers, so the immigration side of things is 0:16:09.000 --> 0:16:12.920 a little more streamlined, and overall, I think now Dubai 0:16:12.960 --> 0:16:16.480 is on a big kick of reducing bureaucracy. We can 0:16:16.560 --> 0:16:19.600 all appreciate the idea of reducing bureaucracy, and I think 0:16:19.600 --> 0:16:22.000 that they actually do it, So that's another part of 0:16:22.080 --> 0:16:22.640 their play. 0:16:23.280 --> 0:16:27.720 You mentioned the legal regimes and the financial centers in 0:16:27.840 --> 0:16:33.720 Dubai and Abu Dhabi, DIFC and ADGM. They're really interesting 0:16:33.760 --> 0:16:37.280 to me because they essentially got to craft a whole 0:16:37.360 --> 0:16:40.720 new body of law and kind of cherry pick what 0:16:40.800 --> 0:16:45.440 they wanted to include in order to attract financial businesses. 0:16:45.480 --> 0:16:48.840 And they're obviously influenced by English law. It's an English 0:16:48.920 --> 0:16:52.960 law regime, but their systems are still different in various ways. 0:16:53.600 --> 0:16:56.920 What's the process that these types of new jurisdictions go 0:16:57.040 --> 0:16:59.840 through when they're crafting laws and how much input do 0:16:59.880 --> 0:17:03.480 you think is overtly had by people who are perhaps 0:17:03.520 --> 0:17:06.000 looking to preserve loopholes. 0:17:06.240 --> 0:17:08.359 So I'll tell you about this story of the Dubai 0:17:08.440 --> 0:17:13.359 International Financial Center and more specifically the Dubai International Financial 0:17:13.359 --> 0:17:17.720 Center's courts, which are within the Dubai International Financial Center 0:17:18.119 --> 0:17:22.719 but their own things. So, the DIFC was established as 0:17:22.760 --> 0:17:25.080 one of these free zones that was going to be 0:17:25.240 --> 0:17:29.720 the center for finance, banks, traders, et cetera. As companies 0:17:29.760 --> 0:17:33.360 started to express interest in moving there, and as Dubai 0:17:33.440 --> 0:17:35.880 was making their pitch, come here, you're going to pay 0:17:35.920 --> 0:17:38.440 less tax, et cetera, et cetera, they ran into an issue, 0:17:38.480 --> 0:17:42.479 which was that the lawyers and the councils and all 0:17:42.560 --> 0:17:45.199 the sort of legal infrastructure of the companies that they 0:17:45.200 --> 0:17:49.000 were trying to bring in were balking at the idea 0:17:49.480 --> 0:17:53.399 of having to deal with a whole new legal system, 0:17:53.840 --> 0:17:58.320 namely the Arabic language is law influenced courts. Maybe they 0:17:58.320 --> 0:18:01.040 did this out of racism, Maybe they did this because 0:18:01.080 --> 0:18:03.280 they truly had no idea how these courts worked. 0:18:03.800 --> 0:18:05.920 We should talk a little bit about the history here. 0:18:06.640 --> 0:18:10.600 So the emirates were previously protectorates of the UK of 0:18:10.680 --> 0:18:14.679 England and they had two systems of law. There were 0:18:14.760 --> 0:18:17.760 laws for Muslims for natives, and then there were laws 0:18:17.840 --> 0:18:21.520 for Brits and expats. So that's the context out of 0:18:21.520 --> 0:18:24.480 which this is all coming. So the DIFC sets up 0:18:24.480 --> 0:18:27.840 in the early two thousands and they decide, well, we 0:18:27.920 --> 0:18:30.840 need to have another set of laws because we don't 0:18:30.880 --> 0:18:34.560 want to scare away the big companies. And so they 0:18:34.560 --> 0:18:36.240 get to work thinking, well, how are we going to 0:18:36.320 --> 0:18:40.200 come up with this parallel legal regime on the one hand, 0:18:40.920 --> 0:18:46.919 it's kind of a throwback to the battle days where 0:18:47.080 --> 0:18:50.679 the Brits had their laws for themselves and locals had 0:18:50.680 --> 0:18:54.480 their own laws. Right. This is colonialism, to put it bluntly. 0:18:55.080 --> 0:18:58.359 So instead of just taking the old laws or just 0:18:58.440 --> 0:19:01.720 imposing their own court system, they. 0:19:01.560 --> 0:19:04.640 Came up with a kind of a hybrid. And this 0:19:04.720 --> 0:19:05.320 is in the book. 0:19:05.359 --> 0:19:08.439 But there was one man who was really instrumental in 0:19:08.480 --> 0:19:11.119 building the system. His name was Mark Bier. He was 0:19:11.280 --> 0:19:15.800 he is an Englishman, really clever, clever guy, and they 0:19:15.960 --> 0:19:19.560 kind of cobbled together a bunch of laws based in 0:19:19.640 --> 0:19:23.080 common law, which the multinationals are comfortable with, which the 0:19:23.080 --> 0:19:28.240 big banks are comfortable with, and essentially created a court 0:19:28.440 --> 0:19:32.280 that was sitting inside the DIFC that would serve the 0:19:32.320 --> 0:19:37.320 tenants of the DIFC, and that eventually expanded its reach 0:19:37.800 --> 0:19:41.120 to be this kind of opt in jurisdiction, so anyone 0:19:41.600 --> 0:19:46.240 could say in their contracts, shouldn't disputarize, We're gonna have 0:19:46.280 --> 0:19:49.280 our day in court at the DIFC. The term at 0:19:50.000 --> 0:19:53.240 is doing a lot of work here because it is 0:19:53.320 --> 0:19:55.840 a place. There is a court house, there was a 0:19:55.920 --> 0:19:59.840 court room, but the judges don't all live in Dubai. 0:20:00.359 --> 0:20:02.720 They don't all show up for hearings at the DIFC. 0:20:03.080 --> 0:20:06.000 A lot of this was taking place remotely even before 0:20:06.600 --> 0:20:10.320 Zoom came to consume our lives during the pandemic, and 0:20:10.520 --> 0:20:13.440 so the notion that the law and the land are 0:20:13.560 --> 0:20:17.640 in any way tied together just doesn't make sense here anymore. 0:20:17.720 --> 0:20:19.600 It's a really new way of thinking about law. 0:20:19.880 --> 0:20:22.359 It's a little bit like Delaware in that sense, right 0:20:22.480 --> 0:20:25.240 where it's like everyone is like, okay, we want to 0:20:25.480 --> 0:20:29.240 be incorporated under Delaware law, but the company and the 0:20:29.359 --> 0:20:31.480 judges are prayed there. But by and large the companies 0:20:31.520 --> 0:20:33.040 have no meaningful. 0:20:32.680 --> 0:20:35.320 I'm sure Dubai will appreciate it being called the Delaware 0:20:35.359 --> 0:20:35.520 of the. 0:20:35.520 --> 0:20:38.120 World, the Delaware the world in your book. I don't 0:20:38.119 --> 0:20:42.280 know what the grouping is Dubai, Abu Dhabi, Singapore, Geneva like, 0:20:42.600 --> 0:20:44.320 but when you in your mind, when you sort of 0:20:44.440 --> 0:20:47.760 think about these cities around the world, like how big 0:20:47.880 --> 0:20:50.840 are we talking about? How much money, how much wealth, 0:20:51.000 --> 0:20:54.320 or however you want to quantify it has flowed into 0:20:54.880 --> 0:20:57.000 these sort of preferential locations. 0:20:57.680 --> 0:20:58.720 Oh, that's a good question. 0:20:59.119 --> 0:21:02.359 I can't really put a number on it, but I 0:21:02.440 --> 0:21:06.960 can tell you that the oceans are another jurisdiction that 0:21:07.040 --> 0:21:10.280 I write about in the book, and something like ninety 0:21:10.320 --> 0:21:12.960 percent of all goods are shipped through the ocean, And 0:21:13.080 --> 0:21:16.920 so that'll just give you a sense of scale. Things 0:21:17.000 --> 0:21:19.320 do not just happen on the national level. That doesn't 0:21:19.359 --> 0:21:22.600 make any sense. Things are always moving and moving between places. 0:21:23.119 --> 0:21:26.280 So one thing you often hear when people are talking 0:21:26.320 --> 0:21:29.840 about establishing these new hubs or centers or whatever they 0:21:29.880 --> 0:21:33.240 want to call them sandboxes. Maybe people often talk in 0:21:33.359 --> 0:21:38.400 terms of innovation and creating new business opportunities and startups 0:21:38.640 --> 0:21:41.920 and maybe not falling behind in the brand new thing. 0:21:42.720 --> 0:21:46.600 And so I'm curious, how do you think governments or 0:21:46.800 --> 0:21:50.399 localities looking to set up these types of things are 0:21:50.560 --> 0:21:57.240