Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Authoughts podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 3: And I'm Joe Whisenthal.
Speaker 2: Joe, we've talked before in reference to I think it
Speaker 2: was the US real estate market. Yeah, there seems to
Speaker 2: be this weird thing going on with housing where it
Speaker 2: feels like policymakers or maybe people even are not sure
Speaker 2: what exactly they want it to be. Right, Is it
Speaker 2: supposed to be this social good, this affordable thing we
Speaker 2: all can live somewhere that we can, you know, preferably
Speaker 2: a place we want to live in, something that we
Speaker 2: can afford. Or is it effectively a giant piggy bank, Yeah,
Speaker 2: an investment vehicle, in which case we would expect prices
Speaker 2: to always keep going up.
Speaker 3: Yeah, right.
Speaker 4: I mean my personal preference is for housing to be
Speaker 4: very affordable, very briefly, and in that time that I
Speaker 4: buy how to accumulate more hows and then it stops
Speaker 4: being affordable.
Speaker 3: That's my I don't many people have different takes. I
Speaker 3: just want a very brief period.
Speaker 5: Thing about it.
Speaker 4: Very important that in that brief period I don't lose
Speaker 4: my job. It's very important that in that brief period,
Speaker 4: my other investments don't go down. I just want a
Speaker 4: very brief period of housing affordable.
Speaker 2: But this is another thing about housing, which is like,
Speaker 2: historically it is one of the few ladders to big
Speaker 2: yea for the masses. Right, We've all heard the stories
Speaker 2: about artists and soho buying a loft correct for like
Speaker 2: five hundred dollars and now it's worth ten millions, so
Speaker 2: good for them.
Speaker 4: The other thing that's interesting about housing, particularly when it
Speaker 4: comes to affordability, is that this seems to be a
Speaker 4: truly global challenge. So people have lots of theories like, oh,
Speaker 4: it's because they didn't allow zoning and San Francisco or whatever,
Speaker 4: and it's like maybe, but like I think any question
Speaker 4: about housing affordability has to wrestle fact that this is
Speaker 4: a really global phenomenon, so it can't be some idiosyncratic thing.
Speaker 4: It does seem as though places where housing is more
Speaker 4: affordable do not have particularly dynamic economies. So it's like
Speaker 4: I know that people are like, oh, look how cheap
Speaker 4: Tokyo is. It's like a umb success story, but like
Speaker 4: they had a massive bubble and it's been deflating ever since,
Speaker 4: and it's not like Japan, is it like some cutting
Speaker 4: edge of particularly any booming industries and its population. Japan's
Speaker 4: still pretty nice. I'm sure it's very nice. I'm not
Speaker 4: saying otherwise. It's just not clearly not where the action is.
Speaker 4: I'd love to go to. Japan seems like one of
Speaker 4: the nice places. And the other thing that's interesting about this,
Speaker 4: which is that there are all kinds of ills that
Speaker 4: sort of devil particularly the rich world these days, and
Speaker 4: then we look at China's like, oh, they have it
Speaker 4: all figured out. It seems like housing is a mess
Speaker 4: in China too. One of these rare congratulate like sort
Speaker 4: of like moments where we could shake hands with China's like, yeah,
Speaker 4: we're dealing with a lot of.
Speaker 3: The same issues.
Speaker 2: Well, here's the thing. China is like the ultimate example
Speaker 2: of that tension between investment, asset and social good, right
Speaker 2: because even in China, as you point out, there are
Speaker 2: affordability issues, and every once in a while you see
Speaker 2: policymakers try to put limits on house prices in like
Speaker 2: really expensive cities. But then when they start doing stuff
Speaker 2: that actually pops housing crisis, everyone starts protesting, which is
Speaker 2: kind of you know, a rare thing in China, so
Speaker 2: that is the tension.
Speaker 4: I also find real estate speculation in China to be
Speaker 4: kind of I thought there were communists, and I mean
Speaker 4: that on ironically, like, where did communists get the idea
Speaker 4: of real estate?
Speaker 2: No, well, this is another thing because the social net
Speaker 2: starts going away in like the nineteen nineties, and so
Speaker 2: people have to do something with their money to have
Speaker 2: retirement income to.
Speaker 4: I guess the houses in the old days used to
Speaker 4: like be owned by the companies. There more dormitories, and
Speaker 4: then when that started to split apart, I don't know.
Speaker 3: Maybe our guest knows more.
Speaker 2: Yeah, we do have the perfect guests, the perfect guest. Yes,
Speaker 2: we are going to be speaking with Mike Byrd. He is,
Speaker 2: of course, the Wall Street editor over at The Economist
Speaker 2: and the author of the new book all about this
Speaker 2: called The Land Trap, a New History of the World's
Speaker 2: Oldest Asset. So welcome to the show.
Speaker 5: Mike, Thank you very much for having me. Great to
Speaker 5: be here.
Speaker 3: I love my We both love my, so we're excited.
Speaker 2: Also, someone who spent some time in Asia when I
Speaker 2: was there in Hong Kong as well, so knows the
Speaker 2: sort of global history of land, and I was reading
Speaker 2: your book and you go all the way back to
Speaker 2: like Babylon or Samaria, so very impressive. So why did
Speaker 2: you decide to look at land?
Speaker 5: It's a great question. I guess it started. I started
Speaker 5: my career in London, and there's a huge thing in
Speaker 5: London about housing as there is here, you know, people's
Speaker 5: lack of ability to afford it. I think it's even
Speaker 5: even worse than the UK than the US, because you know,
Speaker 5: the culture of equity investing in all sorts of other
Speaker 5: things is so much weaker. But I guess I really
Speaker 5: got into it when I moved to Hong Kong, because
Speaker 5: Hong Kong felt like London on steroids. The housing was
Speaker 5: even more expensive. It was part of you know, I
Speaker 5: moved in twenty eighteen. You there, Tracy, it was like
Speaker 5: the extraordinary bull run, like the absolute peak the post
Speaker 5: two thousand and eight surge in Hong Kong. And learning
Speaker 5: about how land was really expensive but also the government
Speaker 5: owned all the land and leased the land out made
Speaker 5: money from the land. I found it very confusing and
Speaker 5: it helped me to sort of dig into things, and
Speaker 5: I think it helped me to like start thinking about
Speaker 5: this as like a framework of how land works at
Speaker 5: different places and how you can use it and abuse
Speaker 5: it and whatever. And yeah, Hong Kong was a great
Speaker 5: place to think about that because it's such a example
Speaker 5: story of how bad things can get.
Speaker 3: So if you buy property in Hong Kong, what exactly
Speaker 3: are you buying?
Speaker 5: You are buying like you're buying an apartment, right, but
Speaker 5: you don't own the land. So if you say you're
Speaker 5: a real estate developer, right, you buy a land lease
Speaker 5: from the government, like a seventy five year, ninety nine
Speaker 5: year land lease. They've clipped back and extended the terms
Speaker 5: of the lease over time. But yeah, that's what you're buying.
Speaker 5: You're buying the right to use it for a certain
Speaker 5: amount of time.
Speaker 4: Does every just go away like other examples, like you
Speaker 4: know what, seventy five years is up?
Speaker 3: Not your land?
Speaker 5: This is a big problem. This is a big problem
Speaker 5: them and in these places, in places like Hong Kong
Speaker 5: and Singapore, there is the difficulty of when lots of
Speaker 5: the land starts to roll over, when lots of the
Speaker 5: leases start to get at the end, the question of
Speaker 5: whether you just bow to political pressure and just give
Speaker 5: it to people, right, just let people keep it, or
Speaker 5: whether you kick them off and start again, whether you
Speaker 5: knock something down and rebuild. It's a big difficult issue.
Speaker 2: Yeah, Mozambique is the other country I know that does this,
Speaker 2: which is kind of funny. Also communist history there. Anyway,
Speaker 2: what role does housing actually play in the Chinese economy?
Speaker 5: So, I think the best part of living in Hong
Speaker 5: Kong was learning how this relates to Hong Kong. Right,
Speaker 5: So put in very simple terms the nineteen eighties, Gemin
Speaker 5: the Mau is dead dung shopping, consolidating power, and you're
Speaker 5: in a strange position where you have to start or
Speaker 5: dounge once to start bringing in market forces into the economy.
Speaker 5: But it's pretty dangerous. He's got a lot of political opponents.
Speaker 5: You've got to step pretty slowly. And housing is one
Speaker 5: of the areas it's most difficult. China's housing at the
Speaker 5: time is pretty ramshackle and terrible. It's attached, as Joe
Speaker 5: suggested at the beginning, to like the industrial base. Your
Speaker 5: employer houses you on a farm or next to a
Speaker 5: factory or wherever it is. But what China needs is urban,
Speaker 5: modern residential housing. So Jao Xiang, who's the premier of
Speaker 5: China later on, and he's one of the sort of
Speaker 5: peak reformers in Dung's China. He credits this to a
Speaker 5: conversation with a Hong Kong real estate developer called Henry Fox,
Speaker 5: who said, in a conversation with him, where Joao is
Speaker 5: explaining the difficulty of oh, we don't have any money
Speaker 5: and we can't get foreign investment in and Henry Fox said,
Speaker 5: but if you have land, why don't you have money?
Speaker 5: How can you not have money? And basically they started
Speaker 5: adopting on a small scale, initially the Hong Kong system.
Speaker 5: They started leasing out land to make money. First one
Speaker 5: of these is in Shenzen in December nineteen eighty seven.
Speaker 5: There's an auction. The Hong Kong government gives them the
Speaker 5: avil to do the auction, the auction of for pretty
Speaker 5: small piece of land. But this is a symbolic thing
Speaker 5: because you know, it's a communist country and the Chinese
Speaker 5: government owns all the land. They hadn't even at this
Speaker 5: point changed the constitution to make this legal. They're sort
Speaker 5: of experimenting just at the edge, and then slowly this
Speaker 5: becomes the main financing model. It's a big tax change
Speaker 5: in the middle of the nineteen nineties that shifts this,
Speaker 5: but it's it's a really good way of making money,
Speaker 5: especially if you're the government and you own all the land.
Speaker 5: China owns that in the mainland for communist reasons, but
Speaker 5: it's actually a handover to some degree from Hong Kong.
Speaker 3: Actually, can I back up a few decades? What's land reform?
Speaker 4: You always here the people debating economics like, Oh, they
Speaker 4: instituted land reformer, this is really important.
Speaker 3: This is what else says? Oh no, actually, land reform
Speaker 3: was not there. What is land reform?
Speaker 5: Yeah, I've got a chatter on this in the book,
Speaker 5: and it was sort of towards the end of it
Speaker 5: quite carefully worded to not upset the people that feel
Speaker 5: very strongly about land reform.
Speaker 4: Land reform things you don't talk about on Twitter. Yeah, yeah,
Speaker 4: el asterisk and d reform. Absolutely, the bots don't attack you.
Speaker 5: The land reform is mostly middle of the twentieth century phenomenon,
Speaker 5: and it's basically there was a lot of economic thinking
Speaker 5: at the time. It was a guy called Wolf Ladashinski
Speaker 5: who was a US Department of Agriculture employee. He was
Speaker 5: an economist and he was an obsessive about land reform,
Speaker 5: which essentially is redistributing really concentrated ownership of land to
Speaker 5: larger numbers of people, especially in the developing rural world.
Speaker 5: We're not talking about like, you know, cities or anything here.
Speaker 5: And he went into Japan after World War Two, a
Speaker 5: bunch of other reformers basically forced the Japanese government at
Speaker 5: the time to pass a land reform bill which redistributed
Speaker 5: an enormous amount of Japan's agricultural land. This happens in
Speaker 5: Taiwan as well, it happens in South Korea, and there's
Speaker 5: a huge amount of attempt to do it elsewhere, to
Speaker 5: varying degrees across Asia in other parts of the world. Basically,
Speaker 5: it's by far the most successful in those three original countries.
Speaker 5: They try it in India, it doesn't work. They try
Speaker 5: it in Vietnam at South Vietnam, it doesn't really work.
Speaker 5: You know. I think one of the.
Speaker 4: Most impressing recurring themes on this podcast is the number
Speaker 4: of times there is some like sort of very successful
Speaker 4: project in industrialization or economic development, and then at the
Speaker 4: end there's disasters. But it's only ever worked in three
Speaker 4: like East Asian countries, and we have no evidence that
Speaker 4: any of this works anywhere else.
Speaker 3: Here's the problem.
Speaker 2: Now you have a solution that you cannot use. Yeah, okay,
Speaker 2: Well the other thing about land in China, and again
Speaker 2: we're sort of fast forwarding back to the nineties, and
Speaker 2: we should talk about the hukou systems as well later on.
Speaker 2: But land has this really unique position I guess culturally,
Speaker 2: socially and financially for Chinese people. Right, Like, everyone basically
Speaker 2: decides they want to be a landlord, they want to
Speaker 2: own an apartment, even if it's not built. You see
Speaker 2: the ads in like newspapers, flyers, things like that in
Speaker 2: a way that you don't necessarily see them for stocks
Speaker 2: or bombs.
Speaker 5: Right Totally. I think there's a big cultural thing there.
Speaker 5: I'm never too sure whether I'm like a culture is
Speaker 5: downstream of policy or policy is downstream of culture guard
Speaker 5: but it clearly is a big cultural impulse there, whatever
Speaker 5: it's driven by. I remember when I lived in Hong Kong,
Speaker 5: obviously not mainland China, but used to get adverts pushed
Speaker 5: through your door and they'd be like invest in the
Speaker 5: northern English riviera, right, there's housing in Leeds in Bradford
Speaker 5: to be bought as investment properties. This is a big thing.
Speaker 5: You didn't get those in Leeds and Bradford, right, if
Speaker 5: you learn in the UK, you don't get those adverts.
Speaker 5: So yeah, it's a big cultural thing. It's also a
Speaker 5: big thing in the mainland, I think because of financial repression.
Speaker 5: Basically you can't invest long term in the equity market
Speaker 5: in China. Right, It's a sideways game. It's a terrible
Speaker 5: way of compounding. Wealth. Bank accounts in general in China
Speaker 5: for a very long period of its modern history had
Speaker 5: like near a real negative returns because of financial repression.
Speaker 5: So the question is if you're saving a lot of money,
Speaker 5: where do you put it? And it's only really been
Speaker 5: one answer. It's been a completely rational thing for China.
Speaker 5: These households to do that, you know, extremely high saving
Speaker 5: households buying property after property, a lot of them left vacant.
Speaker 5: One of the things I say in the book is
Speaker 5: that China has the symptoms of both a housing shortage
Speaker 5: and a housing glove. Right, it managed to get the
Speaker 5: worst of both worlds.
Speaker 2: Joe, you know what I call this what China's great
Speaker 2: ball of money. Yeah, within the country, from asset class
Speaker 2: to asset class.
Speaker 4: So, Okay, the stock market hasn't done well for a
Speaker 4: very long time, raids on the savings are very low.
Speaker 3: How did like Chinese.
Speaker 4: Leaders feel about those emergence of a very speculative, high growth,
Speaker 4: high return at least during the good old days, Yeah,
Speaker 4: before a few years ago, About the emergence of this industry,
Speaker 4: About this emergence of this sort of thing that's crucial
Speaker 4: for a living and also becoming a major respeculative of vehicle.
Speaker 5: Houses are for living, not for speculations. Yes, say yeah,
Speaker 5: I mean I should say. It's an incredibly useful way
Speaker 5: of building out a city. Okay, this tool is like
Speaker 5: super powerful if you're just starting out and no one
Speaker 5: wants to invest. It's a really good way of pairing
Speaker 5: real estate development with infrastructure. You can pay for a
Speaker 5: lot of things. You can do it sort of expanding
Speaker 5: very very rapidly.
Speaker 2: Plus you boost other sectors totally, construction, manufacturing.
Speaker 5: Employment, build out. Right, you don't know the industry, Yeah,
Speaker 5: you don't have to do that much administration. It's fairly
Speaker 5: easy to do this stuff, right, So there's lots of
Speaker 5: advantages to it. I think people start to see the
Speaker 5: problems even at the level of the central Chinese government
Speaker 5: in these sort of early twenty tens, right, and you
Speaker 5: get this series of like whack them all attempts to
Speaker 5: get the big ball of money, the big ball of
Speaker 5: credit out of the system. So the first thing you
Speaker 5: see is the Chinese leadership saying, okay, banks limits on
Speaker 5: real estate lending to developer, right, which is what pushes
Speaker 5: them into the international bond markets where most of the
Speaker 5: Chinese property developers fund themselves. Then you see the limits
Speaker 5: on borrowing from the bond market, which sort of come
Speaker 5: in and out during the twenty tens, and eventually it's
Speaker 5: sort of seriously limited in twenty twenty, twenty twenty one.
Speaker 5: But even then you see Chinese developers trying to essentially
Speaker 5: borrow through pre sales from ordinary Chinese households, right, which
Speaker 5: is like, you give me all the money to build
Speaker 5: your house up front, I promise I'll get round for it,
Speaker 5: you know, not stating actually, I've got twenty other projects
Speaker 5: that I've got to build with your money first. There's
Speaker 5: no escrosystem here. So yeah, you do see the Chinese
Speaker 5: government sort of waking up to the problems, but it's
Speaker 5: like in any other country you know, it doesn't have
Speaker 5: same sort of Western democratic politics. But how do you
Speaker 5: get off the train while it's moving?
Speaker 3: Yeah?
Speaker 5: Right, And they've tried with the three Red lines and
Speaker 5: the campaign against the real estate development sector in the
Speaker 5: last five years, and it hasn't gone very well.
Speaker 3: You know something I'm wondering about.
Speaker 4: You always hear about the CCP trying to learn the
Speaker 4: lessons of the collapse of the Soviet Union, and they
Speaker 4: don't want to have that fan So they're very obsessed
Speaker 4: with this question of what brought the Soviet Union down.
Speaker 4: Do they spend much time looking at the collapse of
Speaker 4: the Japanese real estate bubble and the effect that Dad
Speaker 4: had on Japan as an industrial dynamo.
Speaker 5: It's a great question. I'm not in direct touch on
Speaker 5: a day to day basis. My understanding was that they
Speaker 5: did that this was a preoccupation of the Chinese leadership.
Speaker 5: I used to hear it a lot from people close
Speaker 5: to economic and financial policy making that this was a
Speaker 5: serious consideration and it was why they didn't want to
Speaker 5: pop the bubble, which is essentially what the Japanese government
Speaker 5: and the Bank of Japan did at the very end
Speaker 5: of the nineteen eighties early nineteen nineties, they seem to
Speaker 5: have done that anyway. I mean, it is a fascinating thing.
Speaker 5: There's always this discussion of, you know, on an autocratic
Speaker 5: regime can think in really long term, you know, they
Speaker 5: think in decades and centuries. But in this case, you know,
Speaker 5: there was a land final model that Chines's local governments had,
Speaker 5: which has been pulled out from under them. There was
Speaker 5: an asset class that Chinese households could invest in, which
Speaker 5: has been pulled out from under them. The government hasn't
Speaker 5: replaced those two things with anything particularly good.
Speaker 2: We certainly know that they look at it now, right
Speaker 2: because we had Richard Ku on the broadcast a couple
Speaker 2: of times, and we know that deflationary spiral caused by
Speaker 2: real estate collapse is kind of a topic DuJour over there.
Speaker 2: Talk more about the three red lines, because this is
Speaker 2: something I remember. They came out when we were both
Speaker 2: in Hong Kong, and you could see why policy makers
Speaker 2: were doing it. And to some extent, you know, okay,
Speaker 2: house prices came down and there's less new builds and
Speaker 2: things like that nowadays, but they also seem to kind
Speaker 2: of flub them, right.
Speaker 5: Yeah, totally so the three Red lines were basically the
Speaker 5: Chinese government identifies the real estate developers as the tool
Speaker 5: through which they're going to cool the housing market down,
Speaker 5: and they come out with the three red lines, which
Speaker 5: are three different metrics of debt to cash and other
Speaker 5: sort of debt metrics, and they basically say, if you
Speaker 5: violate one or two of these, you can maybe keep
Speaker 5: borrowing only to refinance old debt. If you're green on
Speaker 5: all of the three red lines, you're fine. Right, if
Speaker 5: your metrics are okay, keep borrowing, go for it. But
Speaker 5: none of them are at this point. And if you
Speaker 5: have three red scores on the red lines, basically, if
Speaker 5: you're violating all of these, no borrowing even to refinance. Right,
Speaker 5: You've got to pay down debt. Now, these companies are
Speaker 5: some of the most insanely structured financial vehicles in history. Right.
Speaker 5: They can only expand through extremely rapid debt driven growth. Right.
Speaker 5: The model is such. You know, if you're Everground and
Speaker 5: you're paying like a fifteen percent interest on your borrowing,
Speaker 5: you've got to keep borrowing to expand. Right. It's not
Speaker 5: a good idea, but you've got nothing else.
Speaker 2: So funny thing about Evergrand also is the diversification into
Speaker 2: a bunch of other things. I remember again in Hong
Speaker 2: Kong asking someone like, we should do a graphic of
Speaker 2: China evergrands all there are different businesses, right because it
Speaker 2: would be really interesting, And it took like three weeks
Speaker 2: to make and when it came out, it was almost
Speaker 2: unreadable because there were just so many of them, like
Speaker 2: splayed out.
Speaker 3: You know, it sounds like we work.
Speaker 4: I mean that was a company that had diversified into
Speaker 4: literal wave wavepool.
Speaker 3: Business and about one hundred other things.
Speaker 4: So also just an insanely complicated, leveraged organization. There was
Speaker 4: a multi billion dollar unicorn now is where the bag Offridos.
Speaker 5: We mocked when they bought Friday Futures, the US EV company,
Speaker 5: and we all mocked right everground saying honestly, now, I'm
Speaker 5: like maybe if they the three red lines hadn't come in,
Speaker 5: we'd be like soon around me.
Speaker 4: This carsonization of Chinese companies were on a long enough timeline.
Speaker 3: They're all becoming EV companies.
Speaker 4: Like there was a great article in Bloomberg earlier this
Speaker 4: week about multiple vacuum cleaner companies in China that are
Speaker 4: now releasing EV.
Speaker 3: So I guess I'll make sense.
Speaker 5: That their argument was always like, you know, where do
Speaker 5: you put your car in the car park in the
Speaker 5: estate that you live in? Who built that? Yeah, they
Speaker 5: believed in it, But basically, yeah, they bring the three
Speaker 5: red lines in the real estate development sector begins contracting
Speaker 5: very rapidly. The most in debted companies get into trouble
Speaker 5: almost immediately, but also some of the companies that people
Speaker 5: thought were pretty safe, that borrowed at pretty low rates
Speaker 5: are getting into trouble fairly quickly as well. Your sort
Speaker 5: of country gardens China, Vanka, like, they're all getting into
Speaker 5: trouble quite quickly. The way I think of it is
Speaker 5: that basically the Chinese government attacked the sector that had
Speaker 5: grown up to intermediate between the households and the local governments,
Speaker 5: but they didn't change anything about the incentives to the
Speaker 5: households of the local governments. The households still need to invest,
Speaker 5: the local governments still need money from somewhere, and these
Speaker 5: companies were just making that arrangement work for those two sides, see,
Speaker 5: and destroying them does nothing really, you know, it causes
Speaker 5: a lot of distress, Construction activity drops, lots of people
Speaker 5: aren't going to get the homes they invested in through
Speaker 5: the pre sale system, But it doesn't really address the
Speaker 5: actual core driving forces.
Speaker 4: Talk a little bit more about the local government finances
Speaker 4: and what it is about land that is particularly importantly
Speaker 4: because there are other ways that local governments could theoretically
Speaker 4: taxes on there.
Speaker 2: I was never sure what the driving if the driving
Speaker 2: force was at the sort of Beijing national level, or
Speaker 2: if it was the local governments that you know, first
Speaker 2: started doing this because they're like, Oh, here's a way
Speaker 2: to make money and develop and look good in Beijing's eyes,
Speaker 2: and then Beijing just kind of went with it.
Speaker 5: So I would trace it back largely too. As I
Speaker 5: said before, you know, people started experimenting with land auctions
Speaker 5: land sales from nineteen eighty seven. It starts to get
Speaker 5: more popular in the early nineties, but it's nineteen ninety
Speaker 5: four when they change the tax and spending system, the
Speaker 5: distribution of spending and tax responsibilities between the Chinese central
Speaker 5: and local governments that really sort of hammers it home.
Speaker 5: So traditionally China People's Republic like decentralized in terms of
Speaker 5: revenue and spending obligations. Local governments did most of the
Speaker 5: tax raising. They did most of the spending. The central
Speaker 5: government told them there were certain things they had to do,
Speaker 5: but they did it all fairly independently. And then nineteen
Speaker 5: ninety four they switched the system and the central government says,
Speaker 5: you could raise the red but we'll take most of that, right, yeah,
Speaker 5: will tell you how much you get back of that.
Speaker 5: It became a much more centralized system, and overnight the
Speaker 5: local governments were left with huge spending responsibilities those don't change,
Speaker 5: but only making sort of sixty or seventy percent of
Speaker 5: the money that they needed to fund them. They stumbled
Speaker 5: through the nineteen nineties trying to find ways of doing this.
Speaker 5: There's lots of sort of flagrantly illegal administrative fees and
Speaker 5: fines placed on things. This actually gets them in trouble
Speaker 5: because it's very politically sensitive. You know, there's rural Chinese
Speaker 5: residents being absolutely rinsed for anything the local governments can
Speaker 5: get their hands on. And they land on land. Basically,
Speaker 5: they see the land auctions, which are off balance sheet revenues.
Speaker 5: They do not count for the purpose of being remitted
Speaker 5: to Beijing in the same way that normal tax revenues do,
Speaker 5: and they say, right, okay, that's it. That's what we'll do.
Speaker 5: That's so why I will raise money. And you see
Speaker 5: the proportion of income rise and rise and rise very
Speaker 5: aggressively through the late nineteen nineties from a pretty sort
Speaker 5: of residual amount that was useful for it was useful
Speaker 5: for land allocation, it wasn't mostly useful the beginning for
Speaker 5: raising money, and it becomes the main fundraising tool.
Speaker 2: And then they're in the trap. Yeah, the land trap.
Speaker 2: Has any country ever successfully gotten out of this type
Speaker 2: of situation?
Speaker 5: It depends what you mean my success.
Speaker 2: Yeah, without a massive collapse or without a period of
Speaker 2: very long stagnation, which seems to be what China is
Speaker 2: in now.
Speaker 5: I would say basically no. And funnily enough, I actually
Speaker 5: think one of the best cases for relatively rapid like
Speaker 5: return to normalcy is after two thousand and eight in
Speaker 5: the US specifically. You can tell how few cases there
Speaker 5: are that I'm using the Great Recession.
Speaker 2: This is the best one, as like.
Speaker 5: This might be the best outcome for a number of
Speaker 5: different reasons. But yeah, that might be the best outcome.
Speaker 5: There are places that didn't get into the trap in
Speaker 5: the first place.
Speaker 2: Right that that seems to be the ideal. Probably.
Speaker 4: I've obviously never been to mainland China. All of the
Speaker 4: China news that I consume is on propaganda that makes
Speaker 4: it onto my Instagram reels that shows all these incredible
Speaker 4: futuristic cities and robots doing everything. One hundred percent of
Speaker 4: my China news consumption makes it look like paradise on
Speaker 4: Earth again, because I only consume propaganda.
Speaker 3: Is it actually stagnating?
Speaker 5: I will say I can't claim to have been to
Speaker 5: mainland China for years now. I think it is. I
Speaker 5: think the long term threat from undermining what was really
Speaker 5: right at the middle of the Chinese development model for
Speaker 5: a very long time and not replacing it with anything
Speaker 5: has been really dangerous. You've seen this effort as investment
Speaker 5: in the real estate sector has dropped and dropped from
Speaker 5: drop to drive it into the manufacturing sector. But the
Speaker 5: reality is that the manufacturing sector, as big as it
Speaker 5: is in China isn't big enough to productively absorb all.
Speaker 4: This isn't the question like, can the Chinese manufacturing sector
Speaker 4: just be so dominant that it just offsets the decline
Speaker 4: of real estate?
Speaker 3: And your analysis is no.
Speaker 5: My analysis is no, Chinese economy is too big. I
Speaker 5: would say, and too big means that the domestic real
Speaker 5: estate market is absolutely gargantian. Right. The thing you're trying
Speaker 5: to replace is enormous, and there's only so many buyers
Speaker 5: for your products in the rest of the world. And
Speaker 5: this is why you see I think the anti evolution campaign.
Speaker 2: Trying to get consumption up exactly.
Speaker 5: The pressure against it, because the sort of consequences, the
Speaker 5: negative consequence is already starting to display themselves. And we're
Speaker 5: really like three years into this really big push to
Speaker 5: drive the investment into manufacturing, and it's showing those problems
Speaker 5: in a way that it's a real estate much longer.
Speaker 5: I don't think it can be a like for like replacement.
Speaker 2: Wait, talk more about real estate and productivity, because this
Speaker 2: is something that I didn't really internalize until I read
Speaker 2: the chapter in your book China chapter.
Speaker 5: Yes, so there is a lot of really really interesting
Speaker 5: research about real estate in China and what it's done
Speaker 5: to productivity. So if you think about it from the
Speaker 5: perspective of we're going to get into a banking argument
Speaker 5: that's already got that's going to get me in trouble
Speaker 5: as well in terms of like the you know, the
Speaker 5: amount of credit you can have. But if you think
Speaker 5: there's any constraint on the amount of credit, which obviously
Speaker 5: in China there is, there are actual like targets and limits.
Speaker 5: It's still a fairly state oriented system in lots of
Speaker 5: different ways. Then the resource is going to one part
Speaker 5: of the economy means they aren't going to another part
Speaker 5: of the economy. And in China's case, this means employment,
Speaker 5: it means material investment, it means you know, steel and
Speaker 5: concrete and copper and everything else. The real estate sector
Speaker 5: in general, in a long run, I think has pretty
Speaker 5: low productivity. Right. You can build constructively in places where
Speaker 5: you know housing's really in demand, but there's only so
Speaker 5: much you can get out of it.
Speaker 2: It's not making new stuff.
Speaker 5: No, totally, and certainly in China. What has happened and
Speaker 5: what was certainly happening during the run up to the
Speaker 5: the three Red Lines policy is you saw a lot
Speaker 5: of productive, entrepreneurial and innovative activity instead going into real estate.
Speaker 5: We talk about Chinese real estate developers having lots of arms.
Speaker 5: Every big Chinese company was trying to run a real
Speaker 5: estate company on the side during the twenty tens, right,
Speaker 5: because there's so much money to be made, why not
Speaker 5: do that as well? And there's really interesting research from
Speaker 5: yush at the IMF talking about how individual Chinese entrepreneurs
Speaker 5: would go into real estate over time because there's so
Speaker 5: much money to be made and it is productivity destroying,
Speaker 5: especially if I think you're in a state oriented financial
Speaker 5: system where you're not probably going to see like a
Speaker 5: two thousand and eight style crash. This is where you
Speaker 5: see the consequences come through, you know.
Speaker 4: I Wou was thinking about that the Sopranos where Aj
Speaker 4: tells us Sunday's like by real estate, they're not making
Speaker 4: any more of it, whether China elsewhere, that's not really true,
Speaker 4: Like a artificial islands exist b again in.
Speaker 2: The islands literally a drop in the ocean.
Speaker 3: You guys start somewhere. You guys start somewhere.
Speaker 4: But more importantly, again if the my mainlining consumption of
Speaker 4: Chinese propaganda, I always see these things like this used
Speaker 4: to be a desert. Now it's this beautiful like farmable
Speaker 4: land and there's greenery here. Like whether it's China or elsewhere,
Speaker 4: or the history of land like, it's not really that fixed.
Speaker 4: They always find new ways to sort of create habitable land.
Speaker 4: That's that's what it used to be human.
Speaker 5: I think there's two things. That one is like actual reclamation,
Speaker 5: which is like we've probably added like can you.
Speaker 4: But by the way, I think that's the most powerful
Speaker 4: word in English language, reclamation, because it's like it means
Speaker 4: turning watery land into land. Yeah, but the implication is
Speaker 4: like we're reclaiming it. We are reclaiming what used to be.
Speaker 4: Are think there's such a powerful world, right, It's very.
Speaker 5: Like Francis Bacon. It's very like, you know, man's dominions.
Speaker 4: Like this land that we ken't live in was only
Speaker 4: we were temporarily embarrassed.
Speaker 5: It's always good to do land recommention where you can,
Speaker 5: but there's really not very much of it, Okay. I
Speaker 5: think that the more interesting way that you can create
Speaker 5: more land in the way that I think of it
Speaker 5: is more like if you think of land as a
Speaker 5: like a commutable, reachable area, then we've always at treaded
Speaker 5: more land. Right, It's like the Bronx wasn't useful land
Speaker 5: one hundred and fifty years ago, and now it's extraordinarily
Speaker 5: expensive land because you can get into the productive center
Speaker 5: of New York. And that's actually one thing that loosens
Speaker 5: the sort of trap conditions around land over time. You
Speaker 5: see this in the US, like during the early twentieth century,
Speaker 5: you saw New York, for example, loosen a lot of
Speaker 5: its problems with housing in real estate because suddenly it
Speaker 5: was like the outer boroughs you could populate full of
Speaker 5: people and they could work in Manhattan still and that
Speaker 5: was fine. And that was a bit like multiple New
Speaker 5: York's worths of land to attach to it.
Speaker 2: Oh, here's where we can talk about the hook house system,
Speaker 2: because that ended up being precisely a limiting force on
Speaker 2: this dynamic.
Speaker 3: Yeah.
Speaker 5: Absolutely, And I think that that feeds into the whole
Speaker 5: question of the Chinese welfare system and the fact that
Speaker 5: Chinese households are driven to invest so aggressively in land. Right,
Speaker 5: if your welfare is linked completely to the place where
Speaker 5: you grew up, and you become a migrant worker and
Speaker 5: you go and work somewhere else, then you're going to
Speaker 5: want to invest very aggressively, either in real estate where
Speaker 5: you can in the place you moved to, or in
Speaker 5: real estate at home. It's essentially like a sort of
Speaker 5: savings technique more than it is. Again in China, it
Speaker 5: feels like the land use and the land as an
Speaker 5: asset are more divorced from one another than anywhere else.
Speaker 5: You can see this in the rental yield data right,
Speaker 5: rental yields and rents in China aren't expensive, even in
Speaker 5: you know, the really popular cities, they're not expensive at all.
Speaker 5: So that that sort of gap and the hook how
Speaker 5: system really feeds into this by essentially it's another force
Speaker 5: driving Chinese households to invest more and more and more.
Speaker 4: Sorry, I don't totally understand, explain a lot of what
Speaker 4: is the essence of the system, what are the constraints
Speaker 4: are played, and then clarify like how it how the
Speaker 4: incentives therefore are to enquire.
Speaker 5: But the essence of the system basically is that you
Speaker 5: have a welfare system that is linked to the place
Speaker 5: where you're registered as a household. It's usually the place
Speaker 5: where you grew up, so you're able to get all
Speaker 5: sorts of different ordinary welfare state things based there only.
Speaker 5: And if you move for work it doesn't matter, right,
Speaker 5: So you're not eligible if you're a migrant worker to
Speaker 5: all of those things in Shanghai, for example, And these
Speaker 5: things are really really so you can move there, You
Speaker 5: can move there.
Speaker 3: But you really be a sort of literally a second classes.
Speaker 5: Yeah. Absolutely. So this is without huge amounts of external migration,
Speaker 5: or with almost no external migration. Really, China has been
Speaker 5: able to create system that lots of other parts of
Speaker 5: the world have with very poorly paid migrant workers turning
Speaker 5: up who don't have many rights in the place they'm
Speaker 5: moving to. These are the people doing the construction jobs
Speaker 5: that people doing a lot of low paid work.
Speaker 2: I don't know if this still happens, but I remember
Speaker 2: in the two thousands, if you early two thousands, if
Speaker 2: you walked around Beijing at night and looked in the
Speaker 2: windows of some of the restaurants, the waiters would be
Speaker 2: sleeping on the table because most of them came in
Speaker 2: from the farmland, didn't have access to housing. So kind
Speaker 2: of crazy.
Speaker 5: Yeah. Yeah.
Speaker 4: People who are sort of more on the immigration restrictionist
Speaker 4: end in the US will often say things like, you
Speaker 4: know what, the US has actually fallen behind on productivity
Speaker 4: because we have this endless supply of cheap labor with
Speaker 4: diminished rights. Had we not had that, that would have
Speaker 4: forced US firms to do more capital deepening, maybe invest
Speaker 4: in robots, et cetera. It's interesting because we think of
Speaker 4: China as a very advanced industrial nation, and yet your
Speaker 4: description that makes me think that's story doesn't really hold
Speaker 4: water totally.
Speaker 5: And I understand why people concentrate on that element of
Speaker 5: the Chinese economy. It's like the most exciting, interesting bit,
Speaker 5: and you don't need to downplay in any way the
Speaker 5: advanced manufacturing and sort of hyper futuristic elements of it
Speaker 5: to say that that doesn't represent the overwhelming share even
Speaker 5: Chinese industry, right, which is relatively low productivity, relatively low return.
Speaker 5: It's at scale, but it's not enormously like futuristic, and
Speaker 5: certainly once you get out of the manufacturing industry, you
Speaker 5: are going into the standard East Asian development model, where
Speaker 5: the service industries productivity is absolutely awful, right, really really
Speaker 5: poor service productivity. So yeah, I think it's a the
Speaker 5: two things are true at once. Right. It's large and
Speaker 5: it contains multitudes, but it's not most of the story
Speaker 5: to me.
Speaker 2: Do you see any signs that Chinese people are starting to,
Speaker 2: I guess move into other assets like equities, probably not bonds,
Speaker 2: But we know that government has been trying to stimulate
Speaker 2: the entire economy, and I think they've been pretty clear
Speaker 2: they've been trying to lift various asset prices, not house. Well,
Speaker 2: now they're doing housing as well. Actually, but do you
Speaker 2: see any signs that people are starting to change their
Speaker 2: minds on something like Chinese equities.
Speaker 5: I think to make the Chinese equity market really work,
Speaker 5: you would have to make a series of deep political
Speaker 5: decisions about the way China's run that I think they
Speaker 5: probably won't make, which is basically things like Jack mal
Speaker 5: when he got really slapped down right. Basically, you need
Speaker 5: to allow that sort of behavior, right, You need to
Speaker 5: allow the innovation. You need to allow the entrepreneurs to
Speaker 5: sort of go nuts. You can't have all of these
Speaker 5: restrictions around. We don't want the young people playing video games,
Speaker 5: and we want it to be driven into this kind
Speaker 5: of robotics and not that kind, and all of those
Speaker 5: sort of limitations are going to I would say, prevent
Speaker 5: that from happening. There's too much political activity that a
Speaker 5: Chinese company has to do.
Speaker 4: What about just like the hyper competitiveness. I mean, people say, well,
Speaker 4: there's hundreds of ev companies in China, most of them
Speaker 4: are going to fail, and yet you read about launches.
Speaker 4: I don't know, like this is one of those stories
Speaker 4: that I really like because it feeds all my biases,
Speaker 4: So therefore.
Speaker 3: I'm sort of very skeptical of it.
Speaker 4: But I've probably repeated it's like, oh, like China's stock
Speaker 4: market hasn't done well because they're too good at capitalism,
Speaker 4: because it's too competitive, because they really get it, they're
Speaker 4: really competing has driven all this abundance and so forth, Like,
Speaker 4: is there something to that that, Like, the reason Chinese
Speaker 4: equities haven't done well is because with such intense competition,
Speaker 4: with the provinces all having their normal champions, that none
Speaker 4: can really sort of capture something that might reflect sort
Speaker 4: of monopoly rents.
Speaker 5: I think there's definitely something to that in a way.
Speaker 5: When I think about that, I would say, it's true
Speaker 5: when you're subsidizing the competition, it's not true competition in general. Right,
Speaker 5: It seems crazy to me to say, like, not bad
Speaker 5: if everyone's getting like cheap inputs. There's lots of competition.
Speaker 4: But the provinces still do have a role in subsidizing,
Speaker 4: either implicitly or directly in subsidizing their national champions. And
Speaker 4: when she says, yeah that we want to make spark
Speaker 4: plugs big priority for the next five years they all
Speaker 4: go They still do that, right, They scramble to find
Speaker 4: their local spark plus.
Speaker 5: And I think there's lots of like American examples and
Speaker 5: examples elsewhere. And sector is where people said, oh, it's
Speaker 5: too competitive, no one will ever achieve it. Uber is
Speaker 5: a good example. People said this would never work. It
Speaker 5: does work, right, So there is a scale that you
Speaker 5: can build where I think you develop a value even
Speaker 5: in a market with it's really competitive and really sort
Speaker 5: of low entry costs. But you won't do that if
Speaker 5: every other imagine a world with Uber but where every
Speaker 5: other rideshare company was aggressively subsidized every time above a
Speaker 5: certain market cap, then yeah, you wouldn't have Uber at
Speaker 5: a certain market cap.
Speaker 2: I'm really curious because again, the book goes through it's
Speaker 2: not just China. It goes through all sorts of land models.
Speaker 2: But what was the most interesting one that you looked at.
Speaker 2: Not only does it go across different ways that different
Speaker 2: countries treat land across the world, it also goes across time,
Speaker 2: like three thousand years worth of human history.
Speaker 5: Yeah, I should emphasize to anyone listening. I was really
Speaker 5: interest and the China stuff, but it's not a not
Speaker 5: a child. The two most interesting to me, one of
Speaker 5: which because I live there and I think it's the
Speaker 5: most unusual and fascinating real estate system in the world
Speaker 5: is Singapore, which has defied in many ways a lot
Speaker 5: of the limitations that other countries have seen. And one
Speaker 5: of the first parts of the book, which is like
Speaker 5: Colonial America, where there were all of these efforts to
Speaker 5: turn land into money. Right, these colonists get to a
Speaker 5: place where they have essentially to them, infinity land. It
Speaker 5: just keeps going on and on. They don't know where
Speaker 5: it stops. It seems to be relatively fertile and good
Speaker 5: and more people turn up, but have shortages and cash
Speaker 5: and labor and everything else. And there's all of these
Speaker 5: efforts to turn land into money with public and private
Speaker 5: land banking projects. I found all of that like absolutely fascinating.
Speaker 5: It's not actually something I knew very well before starting
Speaker 5: to research the book. Yeah, so Singapore and Colonial America.
Speaker 4: What is it about Singapore that makes it? I actually
Speaker 4: I don't know why. I sort of assumed they did
Speaker 4: the same ninety nine year they leason that this is
Speaker 4: the most interesting thing. They start off with all the
Speaker 4: inherited things that Hong Kong starts off with. Up until
Speaker 4: the middle of the twentieth century, the cities have run
Speaker 4: on very very similar lines. Hong Kong goes off in
Speaker 4: one direction and Singapore goes off in another. And the
Speaker 4: Singaporean direction is basically, how do you maximize home ownership permanently?
Speaker 4: How do you have a sustainable model for making sure
Speaker 4: people can still afford to come in. So what they
Speaker 4: have is this bizarre public private system. I say bizarre,
Speaker 4: you know, it's very impressive where the government owns most
Speaker 4: of the city's land, not all of it like in
Speaker 4: Hong Kong, but most of it, and they have the
Speaker 4: Housing and Development Board that builds housing estates. They then
Speaker 4: sell the units in the housing estates to Singaporean citizens.
Speaker 4: You can only own one, you can't own multiple and
Speaker 4: rent them out. There are restrictions on how long you
Speaker 4: can hold them before but there's an internal market, but
Speaker 4: you can only sell them to Singaporean systems and permanent residents.
Speaker 4: The amount of building is done to make sure that
Speaker 4: everyone can afford it. They've really divorced usage from speculations totally.
Speaker 5: They divorce users from speculation and a place that I
Speaker 5: think most people think of as very capitalistic, free market,
Speaker 5: low tax has basically decided this asset class land and
Speaker 5: real estate, this is something different and we're doing Yeah,
Speaker 5: we're doing a different thing with this. Were you know,
Speaker 5: the normal forces simple. There's so much international money center
Speaker 5: of like capital and trade flows is.
Speaker 4: Rich commercial reachs though in Singapore they do. You remember
Speaker 4: this because when I was in Singapore, I saw the
Speaker 4: ticker symbol on this out of a few buildings. It's
Speaker 4: like you could invest in this but anyway, Yeah.
Speaker 5: But commercial state a little bit different. But the residential
Speaker 5: and real estate and they've done this in again, they
Speaker 5: decided land was different. They have a thing called the
Speaker 5: Land Acquisition Act, which really allowed them to strip a
Speaker 5: lot of people of their land extraordinarily low prices through
Speaker 5: the sort of sixties, seventies, eighties, and it's allowed them
Speaker 5: to do something very very different. I don't know whether
Speaker 5: most countries can sustain the idea that capitalism works for
Speaker 5: everything but not land, and which is just going to
Speaker 5: be One Singaporean senior politician described it to me as piracy.
Speaker 5: They did in the seventies and eighties. Pennies on the
Speaker 5: dollar basically demanding people handover this land so it could
Speaker 5: be housing for Singaporeans. But it has worked very well.
Speaker 2: Okay, so China probably cannot pursue the Singaporean model at
Speaker 2: this point, right, But why can't they institute like a
Speaker 2: stronger social safety net so that the burden of saving
Speaker 2: for retirement, for health emergencies, things like that doesn't always
Speaker 2: necessarily fall on the citizens and therefore they have to
Speaker 2: invest in highly speculative assets.
Speaker 5: Yeah, they should, is the answer. There seems to be
Speaker 5: huge political opposition to doing this at the top of
Speaker 5: the Chinese Communist Party, and it's bizarre again because you
Speaker 5: talk to someone like Richard Ku and it'll give you,
Speaker 5: it'll explain why if you don't do this, this is
Speaker 5: the consequence, right Japan is the consequence long term stagnation.
Speaker 5: It's going to be really difficult. They should do all that,
Speaker 5: and maybe they will be sort of drummed into it eventually,
Speaker 5: because I think the alternative is both stagnation and lots
Speaker 5: and lots of trade friction with the people you're exporting to,
Speaker 5: as we've already seen.
Speaker 3: Right, because it's not just the US, is it.
Speaker 4: Everyone's sort of no one there got to be a
Speaker 4: lot of countries that are not thrilled.
Speaker 5: No one's totally happy with it. It's a weird mix
Speaker 5: because for some countries it's like, if you're not going
Speaker 5: to make some of these items, right, If you're a
Speaker 5: country that's simply not gonna make evs, then why should
Speaker 5: you care about getting the really cheap evs. But everyone's
Speaker 5: got something to be upset about. In Southeast Asia, it
Speaker 5: was always steel when I was there. Everyone wants to
Speaker 5: have their own local steel sector, and they don't like
Speaker 5: the Chinese dumping of steel in Indonesia. They don't want
Speaker 5: like cheap Chinese direct to consumer merchandise coming in because
Speaker 5: it messes with their small and medium sized businesses. I
Speaker 5: guess for most of these countries, the difficulty is do
Speaker 5: you want to pick a fight with the Chinese government.
Speaker 5: It's not an obvious question like it is in the US.
Speaker 4: I guess I just have one last question. And you know,
Speaker 4: the sort of Singapore example is what reminded me like
Speaker 4: land is weird, Like the idea that you could have
Speaker 4: a capitalist system except for residential land.
Speaker 3: A lot of people actually kind of think that.
Speaker 4: You hear, what is the Georgists right? And they think
Speaker 4: like no land is special and we need to have
Speaker 4: these like special taxes on ownership.
Speaker 3: And yeah, we love free markets.
Speaker 4: But again, maybe because there's always so much land, they're
Speaker 4: not making much more of it, et cetera. Maybe there
Speaker 4: really is something to do. It's sort of unfair, Like
Speaker 4: I get born in the year nineteen eighty and I
Speaker 4: already a bunch of people already own the land around me,
Speaker 4: which doesn't really seem fair. It's like I was just born,
Speaker 4: where's my chance? Like we're never going to go to
Speaker 4: the pure Singapore model, But are there things that we
Speaker 4: could do with the tax system that would like sort
Speaker 4: of further hammer home the idea that residential land is
Speaker 4: for living.
Speaker 5: Yeah, I think there's dozens of different things you could do.
Speaker 5: But I mean one of the big things is that
Speaker 5: the legacy of Henry George and the politicians in municipal
Speaker 5: America that really loved Henry George is that America has
Speaker 5: relatively high property taxes. Anyway, you can do all sorts
Speaker 5: of things with property taxes to lean more of the
Speaker 5: value on the land rather than the structures. Right, Yeah,
Speaker 5: lots of states, lots of cities have done this. I
Speaker 5: think it's going to be increasingly important in the future
Speaker 5: because what you're going to get is increasingly people inheriting
Speaker 5: homes from their parents when you can't afford them. And
Speaker 5: then that main store of wealth is about whether your
Speaker 5: parents decided to buy in the right place at the
Speaker 5: right time. I talked to a lot of seventy year
Speaker 5: olds will be like, wow, I picked my two bedroom
Speaker 5: flat in nineteen seventy three, and yes I bought it
Speaker 5: for three and a half dollars, but it's mine. That's
Speaker 5: going to be a lot less tenable I think when
Speaker 5: it's handed down wealth. So yeah, there's loads and loads
Speaker 5: of things. And Henry George is in the book. The
Speaker 5: political consequences have George's and fell apart in there too.
Speaker 2: All right, Mike Bird, thank you so much for coming
Speaker 2: on our thoughts and grabs on the book.
Speaker 5: Thank you very much for events Joe.
Speaker 2: That was really great and genuinely the book is great.
Speaker 3: Yeah.
Speaker 4: I love talking to Mike once again. I'm just like,
Speaker 4: hasn't he been like on the internet as much as
Speaker 4: we have?
Speaker 3: How do you? How did you write a book of
Speaker 3: this time?
Speaker 4: I have no idea, don't understand how anyone writes a book,
Speaker 4: especially a very serious book on a very big, meaty topic.
Speaker 2: But I just want tweeting constantly.
Speaker 3: Well tweeting. He tweets a lot. Speaking of propect, It's
Speaker 3: like it would be one thing if you were never online.
Speaker 3: He's online as much as I am.
Speaker 2: Okay, you know you asked that question about whether or
Speaker 2: not Chinese cities are actually futuristic. Yeah, I have an
Speaker 2: anecdote on this point. I think I might have said
Speaker 2: it before, but China is the place where I went
Speaker 2: to both the most impressive bathroom ever in like a
Speaker 2: highly futuristic luxury shopping mall in Beijing, and also the
Speaker 2: worst one ever in my entire life, which was a
Speaker 2: rural It was basically a hole in the ground.
Speaker 5: Right, Yeah, terrible.
Speaker 3: China. It's a land of contradiction. Thank you.
Speaker 2: Thank you for highlighting the cliche.
Speaker 4: No, I thought like it. It always did seem very interesting.
Speaker 4: It still does that. Like there's so much speculation that
Speaker 4: happens in China, and I always found.
Speaker 3: That to be a little weird. I also just find.
Speaker 4: The idea of like buying a property, but it's actually
Speaker 4: really you're not buying it early. Buying the property for
Speaker 4: like seventy five years to be a little weird.
Speaker 2: But on the other hand, that kind of exists in
Speaker 2: New York.
Speaker 4: Yeah, yeah, and in the US, like, look, we pay
Speaker 4: property taxes and perpetuity, which means to some extent that
Speaker 4: when you own something, you are paying a permanent rent
Speaker 4: to use it, and if you stop paying that rent,
Speaker 4: then you could theoretically lose it. So maybe it's less
Speaker 4: weird than I thought it is. Actually we should do
Speaker 4: more on Singapore specifically, like but also you know, like
Speaker 4: I'm not sure to your point in the very beginning
Speaker 4: whether people actually want the divorce between usage and speculation.
Speaker 4: I just think that for several of the last decades
Speaker 4: didn't have to choose. You got to live in and
Speaker 4: he made.
Speaker 3: A lot of money.
Speaker 2: I think it's very hard to get off the train
Speaker 2: once it's kind of rolling, right, And that's the problem
Speaker 2: that we're seeing in China, and now they're trying to
Speaker 2: walk this very fine tightrope where it's like, we don't
Speaker 2: want to make everyone incredibly poor, but we also want
Speaker 2: to depress housing and the importance of housing in our
Speaker 2: economy in order to boost manufacturing and productivity.
Speaker 4: This is why, again my proposal affordable housing for one
Speaker 4: year and then it goes back to being really expensive.
Speaker 2: All right, well you can suggest that, Joe, Yeah, we
Speaker 2: go to Baja.
Speaker 3: I'll run on that. I'll run on that. I'll run
Speaker 3: on that platform.
Speaker 5: All right. Shall we leave it there?
Speaker 2: Yeah, this has been another episode of the All Thoughts podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 4: And I'm joll Wisenthal. You could have followed me at
Speaker 4: the Stalwart.
Speaker 3: Follow our guest.
Speaker 4: Mike Byrd He's at Birdie Word and check out his
Speaker 4: book The Land Trap, A New History of the World's
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