This video was made possible by Skillshare. Get access to 21,000 classes for free for
two months at https://skl.sh/hai11 Imagine taking some random town of 11,000,
let’s say Millington, Tennessee, and giving it a billion dollars. Do you: A) think Millington will make responsible
investments to assure long-term economic success or B) think Millington will make terrible
financial decisions out of a lack of experience and eventually economically and environmentally
devastate itself forever? If you answered “B,” you’re correct. Switch Millington for the country of Nauru,
sprinkle a little corruption in, and add one terrible, terrible musical and that’s the
story of Nauru. Nauru, you see, is a tiny island country in
the Pacific laying a mere 35 miles south of the equator. It’s only larger in size than the Vatican
and Monaco and larger in population than the Vatican and yet, for a short period in the
60s and 70s, Nauru was the country with the highest GDP per capita in the world. All that money, all that wealth, came from
one mineral—phosphate. If anyone ever told you that your startup
idea to make low-fat oxygen wasn’t worth shhhhhh…. this is a family show but if anyone
ever told you that, they’ve clearly never been to Nauru because their phosphate deposits
were formed from millions of years of fossilized bird poop but of course you already know this
since you’ve absolutely watched every single video we’ve made. Nauru is not an enormous island—its about
3.5 miles tall and 3 miles wide—but virtually the entire landmass was caked in phosphate
many feet deep. Phosphate sold for hundreds of dollars per
ton and Nauru had tons of it. In the height of the mining days the island
was making close to $100 million per year but the island’s supply of phosphate was
finite and quickly depleting and they were just hemorrhaging money. Much of the money initially went to funding
their national airline—Nauru Airlines. At one time, this airline flew all around
the Pacific to far flung destinations like Singapore, Hong Kong, Taipei, Guam, and Honolulu
all with about 80% of their seats empty. A typical airline, like United, for example,
flies with only 17% of their seats empty. Nauru Airlines, on the other hand, actually
had to drag people on to fly. In fact, for a six-month period in 1988 the
certificate allowing Nauru Airlines to operate as a commercial airline was revoked so, to
get around that, the government decided to let anyone fly anywhere on the airline for
free so that legally they were operating private jets. The government eventually realized that if
you spend money then you don’t have that money in the future. They needed to take this phosphate money,
which was coming in all at once over the span of a few decades, and turn it into long-term
income to keep the island afloat. Therefore, they established the Nauru Phosphate
Royalties Trust. They bought hotels all around the world—the
Sheratons in Auckland and Rotorua, the Pacific Star Hotels in Manila and Guam. They bought properties in the US and India
and the UK. They built enormous skyscrapers in Honolulu
and Melbourne. At its peak this fund had close to a billion
dollars invested but just like all good stories, this one involves a stupid songwriting financial
advisor. That genius was Duke Minks who had written
Leonardo the Musical: a Portrait of Love. This was a very loosely reality based account
of Leonardo da Vinci’s creation of the Mona Lisa and somehow, rather impressively, Duke
Minks convinced the government of Nauru to invest $5 million of their phosphate money
to open this show on the prestigious West End in London. This four-hour long musical was a narrative
disaster and the reviews were scathing but Duke Minks said the show must go on. The audience actually didn’t disagree because
there was no audience. Nobody was really coming and Leonardo the
Musical closed after a mere five weeks meaning the country of Nauru lost almost the entire
$5 million they invested. That was likely the worst use of Nauru’s
money, but nearly all the investments they made failed and the trust was soon insolvent. They were out of money and also, by the early
1990’s, out of phosphate. They hit rock bottom. The mining destroyed about 80% of the island’s
land leaving it with sharp limestone pinnacles so all of the population today lives on the
coast. The island no longer has enough fertile land
to grow enough food to feed its small population or enough jobs to employ the whole island. It’d be easy to call Nauru foolish with
how it wasted its money but the government had zero experience on how to manage such
levels of wealth. They relied on the experience of western financial
advisors who took advantage of them and wasted, embezzled, and mismanaged the trust. You can be sure, though, that Nauru will rise
again… as in the population will rise to higher elevation because the coast, which
is most of the inhabitable land on the island, is going underwater due to climate change. They used to be swimming in cash, now they’re
just swimming. In the end, not all stories have happy endings…
but if you want your story to have a happy ending—no, no, come on that’s just insensitive. But you know what’s not insensitive—Skillshare’s
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21,000 classes for free for two months at https://skl.sh/hai11 and you’ll be supporting
the show while you’re at it.
TIL Guam is almost half way between Nauru and Taipei