00:01:49.620So I started looking into it and people actually had data going back hundreds of years to the 1800s.
00:01:55.560And I could see like from government statistics on land sales, because in the early part of the American history, government was funded primarily by land sales.
00:02:08.320Same way that China funds itself now is most of the revenue comes from leases.
00:02:40.240But the idea is that there is a slow buildup in land values.
00:02:46.620And it's fed through with the credit cycle.
00:02:48.840So in England and in the United States, about 85% of all money creation happens through the financing real estate, primarily land.
00:02:59.440And so most of that, we talked about housing, you know, house prices go up, house prices go down, but actually that's all land value.
00:03:07.200So house prices don't increase really or decrease.
00:03:11.340It's, you know, they're made out of bricks and wood and nails.
00:03:15.440so they don't go up any more than a car goes up in value but obviously if you took giant rebar
00:03:21.880stakes and spiked cars into lots of land then they would go up in value too so that's the same kind
00:03:29.980of idea and in between these 18 cycles there's it's a little bit more complicated but there's a
00:03:35.480mid-cycle and where i recently made a lot of money was the mid-cycle in 2020 so in 2019 i could see
00:03:45.260that we were on the precipice of a mid-cycle crash and they're not as big as the full cycle
00:03:52.140crashes the mid-cycle crash is like the 2000 and 2019 which was primarily focused around
00:04:00.400it seemed like bonds and investments in corporations so in the the final cycle
00:04:05.780where everything collapses it's a credit deleveraging so that's where you get
00:04:11.420deflationary pressures and then land prices go way down and rents go way down so business is
00:04:18.980locked in long-term leases and things like that at very low cost and then as sometimes they're
00:04:27.440seven-year leases and then so you get to a mid-cycle crash where they have to start
00:04:32.660renewing their leases and they get much higher rents and that leads to layoffs and that leads
00:04:40.620to crashing expectations and then there's usually a mid-cycle crash and so that was okay so that's
00:04:47.120interesting so there's a there's a cycle approximately 18 years long and previous
00:04:53.200instantuations of that has been 2000 and then 2019 so by 2038 we should expect a land price crash
00:05:00.480should we no by next year so that's that's 2027 so because the last one was 2008 how long is the
00:05:08.320cycle is not so it's not 18 years it's it's 18 years so um uh 2008 2009 that would be 2026 2027
00:05:17.860i see okay yeah okay and then the mid cycle is more of industrial boom it's more of a technology
00:05:27.100boom and that's driven by the high profits that companies earn from the lower longer rents that
00:05:34.600they locked in when the after the crash happened so that their financing costs drop because it can
00:05:40.680get lower interest rates and their rents drop because they can lock into long-term leases and
00:05:45.580very affordable prices and then they can afford to hire lots of people they can invest in innovation
00:05:50.480and technology so i'm not huge expert in um all the aspects of the land cycle but i know it works
00:05:59.200and uh very close about it this is one nason gaffney is a good person to hear
00:06:05.380fred fulvery fred fulvery he wrote a he wrote a lot about combining the austrian economics
00:06:14.620with combining austrian economics with georgism so he called it geo austrian economics and he
00:06:20.600really looked into that a lot how the wine cycle works okay that's interesting so we might have
00:06:26.980to come back to that because i kind of pulled you on a tangent before we kind of really got into it
00:06:30.160but yeah um georgism i mean let's start start with that because my understanding is henry george
00:06:36.280came along in something like 1879 something around then and proposed a a new system of
00:06:43.120taxation was based on land and in the late 1900s land was a bit of a bottleneck and so that sort
00:06:50.460of made a lot of sense but supporters have continued that on i mean have i broadly got
00:06:55.360the i mean well you tell you tell us what what is george's and where did it come from yeah well
00:07:00.160that's interesting it's actually a really old idea so it goes back thousands of years and many
00:07:05.900philosophers who are disconnected from each other have come up to with the exact same conclusions
00:07:10.760that george george came to over time at different different times different places you can even talk
00:07:17.360about for example the uh the abrahamic religions for example in the judaic tribes they had a
00:07:26.940tithing system to fund their their society and you only had to pay that i've heard you only have to
00:07:32.460i haven't i have a book on it but i haven't read that because i'm not as much into all the history
00:07:37.540and it takes a lot of time but from my understanding those israeli or those hebrew tribes
00:07:43.880They only funded the public with a tithe, but you only had to pay that tithe if you were engaged in a work that was relocated to land. So farming or herding, if you were a tradesman or something like that, you weren't really expected to tithe.
00:08:00.840And you can find ancient Chinese philosophers who said the same thing.
00:08:59.520it so when he put these ideas down concisely into into one book it was his first and it it created
00:09:07.460sort of a phenomena it was kind of it was the idea exploded all across the world so for for a while
00:09:13.020after this I think it outsold all other books except for the bible um and you know it was
00:09:20.100very popular in Australia very popular in England and Scotland and Germany it was tried in China so
00:09:27.060So at that time, I think China had, that might have been before, but I think China was sort of a colony.
00:09:33.340So the Germans implemented it in China and it didn't work.
00:09:40.140So the problem is it's not always very popular, but I guess I should get into what the actual idea is, right?
00:09:45.920Yeah, I mean, it sounds like Henry George was basically a proto-YouTuber, you know, but a track of all trades, but good at expressing himself, making his point.
00:09:53.080But he definitely would have been on YouTube if he was around, whatever it is, 150 years later.
00:10:03.140Essentially, his idea is that there's a distinction between the fruits of nature and the fruits of labor.
00:10:10.180And in classical economics, there were three factors of production, land, labor and capital.
00:10:15.580Later on, this was obscured by some of the other pro-monopoly economists.
00:10:21.580economists and now we usually when i went to school econ 101 they said we heard we we have
00:10:28.160land labor and capital but actually we're not ever going to talk about land and that's actually a
00:10:32.840form of capital that was literally the first sentence i had in my econ 101 so that's that's
00:10:39.660where modern economics was but george actually said the opposite so he actually said really
00:10:46.060there are only two factors of production land and labor and in george's mind and in classical
00:10:50.980economics capital is a fan of labor so it's a it's a stored durable form of labor in in tools
00:10:59.040so there a capital capital is a way to leverage labor so it's you get to be literally a lever
00:11:05.780like a crowbar that's capital it could be a bicycle it's anything to augment the power of
00:11:11.780human labor that makes sense so that was that was george's and he separated that from money he said
00:11:18.880money wasn't capital you know bonds aren't capital that's it's a can be a store of value
00:11:25.240but it's not it's capital so we're talking about economics would he have seen that as basically
00:11:30.980again a stored form of labor in the sense that it's that it's a can be it's it can be a savings
00:11:36.280but it doesn't you don't necessarily know where somebody got that that money right so right you
00:11:43.880would have to know how they acquire that money before you would know if it was a store of labor
00:11:48.480whereas capital is always a smooth labor right because you're you're you're creating it with
00:11:53.600labor so you put in your your physical effort into creating it and then you use it to augment
00:12:00.300your own production or or the production of somebody else so and he wasn't talking when
00:12:06.240you're talking about the three factors of production you're talking about the three
00:12:09.080things that literally create more things so you can't you can't create more things with money you
00:12:14.760can use it to buy those other batches of production but you can't use money to make if that makes sense
00:12:21.280yes okay so that makes sense so yeah so so yeah i i i get it if you know if i'm living living on a
00:12:29.260desert island and every morning i have to go out and sharpen a stick in order to hunt my fish
00:12:34.200okay fine that sharpened stick can be and you know considered my labor essentially and i could do
00:12:41.000without it and i could just make another sharp and stick the following day um but what what about
00:12:46.420when we've reached a stage where capital is you know an ai company or or some other big software
00:12:53.120conglomerate i mean i mean at that point doesn't the doesn't capital have to take on a sort of
00:12:57.980personality of its own i would argue that investments in ai are depreciating as fast or
00:13:03.960faster or as fast or faster than a sharpest stick that's not to say that it's not advancing but
00:13:10.660the ai of two years ago is is not really it's totally outmoded and all of those those graphics
00:13:18.640cards too all the you know the semiconductors they're going to be outmoded in a year or two
00:13:24.220as well could be sooner so even when you're talking about nvidia chips those depreciate
00:13:30.580in the same way that sharpen stick does okay okay i see i see where you're going that i might push
00:13:37.080back on that later but okay so um once you've got this framework does that naturally follow
00:13:43.200onto the tax proposal because that's the thing i'm most familiar with with georgism as being
00:13:46.940or is what is there more that we need to understand before we can understand the sort
00:13:50.780of the central thrust of what he was saying well there's i would say there's a little bit more in
00:13:56.360in essence land is everything that's supplied by nature so it's not just urban locations it's
00:14:03.840it's not just prime locations it's also oil and gas in the north sea it's timber it's also
00:14:11.680to some extent the wild deer that you know you might you might find in the commons in olden
00:14:18.220times so he distinguished those things that were supplied by for free by nature as land and that's
00:14:26.680that was standard in classical economics and then he said that nobody created those things
00:14:31.820and the supply is fixed so you can't make more location land is just you know what you're
00:14:38.280talking about geography land is a synonym for location and that's why real estate agents always
00:14:43.600say location location location but his idea was that you distinguish between things that people
00:14:49.480produce with ingenuity and and human labor with their own hands and you distinguish that from
00:14:56.700the fruits of nature, which I think maybe John Long coined, and then you fund the public
00:15:03.380revenue, the government or the public goods, you fund those with the flow of it from the fruits
00:15:10.320of nature. And in economics, the flow of income from the fruits of nature is called rent. And
00:15:16.500the word rent actually comes from to rip away or to rob or to tear off. So in our modern vocabulary,
00:15:24.800we would call that like a rip off so that's that's you know where we get these words is
00:15:30.280where we get these concepts you know render under c under under under caesar that's that's a form
00:15:36.120that's referring to rent basically it's it's income that was ripped off of somebody else
00:15:41.820without contributing anything of equal value in return well i mean i mean that's still the word
00:15:46.680rent i mean it's it's it's the form that's used much less often but i mean you can say that
00:15:51.280you know the knight gouged to rent in his enemy's armor i mean it does still mean that it's just
00:15:58.140less commonly used so yeah i mean that makes perfect sense yeah so so those are the the kinds
00:16:03.640of income that georgia say both economically and philosophically should be funding the public
00:16:11.200through the commons so before the commons were in were enclosed anybody could use them as long
00:16:18.220as it wasn't occupied and then a thousand a thousand years ago for example all public revenue
00:16:24.380in in england was from land and then as i understand i'm not an expert in this but as i
00:16:31.960understand it after the norman conquest that started to change and it started to change faster
00:16:36.680after the magna garta because the king lost a lot of power and the the lords started gaining a lot
00:16:44.460power but previous to that all public revenue came from land rents and then those lords which
00:16:52.780i think literally meant like red bread steward and then you know and i think that's partly where
00:16:57.780we get the last name steward or the first name steward lord was referring to a a land and a
00:17:04.260bread steward and in order to have that title they had to be a great person and sometimes they had to
00:17:10.480be elected from a council but then they had to supply things to the king in return so they had
00:17:16.580they had an obligation and a privilege so their privilege was that they got to manage the
00:17:23.840allocation of land and resources and maintain you know look after the the faith and the the population
00:17:31.820there uh but they also had an obligation to go fight they had an obligation to supply
00:17:38.540passes to the to the king and to the and to the country and what happened over time is
00:17:44.920after the norman conquest the and after the magna carta the lords which became a hereditary title
00:17:52.800they they they removed all their obligations but they kept their privileges so they started
00:18:00.060voting for taxes on the public and they started removing the peasantry from the land and they
00:18:08.440started replacing the peasants with sheep and that was because the sheep were easier to manage
00:18:13.400being a steward or a lord was difficult work and so it's funny you say that because something very0.82
00:18:20.740similar is going on in our countries today that the natives are being replaced with something0.93
00:18:25.640which is easier to manage because it's easier for the ruling class so that is interesting but you
00:18:31.060know while we're on the historical perspective i'm curious how did georgia deal with something
00:18:36.120like amsterdam or venice because you can't say that they were just there human labor went into
00:18:43.380making sure that those places were viable and that you could live there so is is that is is that land
00:18:51.120or is that labor if you if you if you own a building in denis that's a good question some of1.00
00:18:57.560that land still does require public investment to maintain so they have dykes and levies you know and0.99
00:19:04.300And I wonder the connection between the word levy for keeping water out and levy for raising taxes.1.00
00:19:13.320I don't know. Maybe there's a connection there.
00:19:14.980But economists would say that they would find a way of saying, OK, that goes back in the land bucket and therefore the tax is applicable.
00:19:22.480Yeah, because if at least in many of those places, and that's true in places in California, too, if you or along the Mississippi River,
00:19:31.880If you stop maintaining those levees and dikes and water barriers, that land becomes flooded.
00:19:39.940So its value is maintained through public investment.
00:19:45.220And that's also analogous to irrigation systems where in California they have vast public infrastructure that's funded by the state and federal government
00:19:56.080that brings water long distances or from underground