Michael Hudson on the Vancouver Real Estate Crisis

hello everybody can you hear me yes we know that there is still a few people outside who are making their way in but in the tradition that I like to follow we like to honor those who have shown up on time and so we're going to be in for those who don't know me my name is Stephanie Smith I'm the president of the BC government and Service Employees Union we represent seventy three thousand workers and the problems of British Columbia and just about every sector of the economy that you can imagine and we're very proud to do so I'd like to begin this evening by acknowledging that we are on the traditional unseeded share territories of the month William swamis and the flava tooth First Nations and while this expression and the technology is an expression of respect and recognition it is also deeply relevant to the topic that we're going to be talking about tonight Michael husband's work reveals how some profit enormously from the rent and the interest that come from property and natural resources but as indigenous title and rights remind us in the case of British Columbia this profiting have come from property that belonged to others and was never seated today Vancouver is rated as having the worst housing affordability in Canada and the numbers of homeless and the under house are increasing in 2006 19% of single-family homes in the City of Vancouver cost 1 million dollars today 100% of single family homes are over a million dollars and we're facing a crisis and we can't afford to keep these trends continuing affordable housing is a fundamental part of well-being of individuals families and communities and without it everything from the decision to start a family to the ability of employers to attract and retain workers in our region is being negatively impacted and meanwhile communities are weakened because our young people are being forced to leave these areas to find alternatives that are less costly dentals are soaring for first-time buyers as well as those dependent on the increasingly expensive rental market the real estate crisis bound up with high levels of consumer and household debt and the advancing inequality in BC posed a significant threat to social and economic stability in our province and with so much at stake it's no surprise that housing affordability has been named one of the top concerns in the upcoming provincial election and in a survey of our own members they also included housing and childcare costs as one of their top concerns so it's time for all government stakeholders local provincial and federal to take concrete steps towards solutions and we're extremely pleased tonight to be hosting renowned economist Michael Hudson in Vancouver to contribute his expertise and perspective on how this can be done in just a moment I'm going to end by VCG you treasurer Paul Finch to introduce Michael but before he does I want to thank the Canadian Centre for Policy Alternatives VC Office for coordinating this event with us CCPA yes please yeah CCPA directors best line and economist Anika Ivanova are going to lead us in a panel discussion later on this evening and I also want to thank our sponsors Vancity the jim.green foundation the UBC school of community and regional planning FSU city programs SFU School of Public Policy and the high E for their support as well like all of you I'm really looking forward to this evening to talk and the discussion that's going to follow and certainly we invite all of you to participate in that discussion so as you made your way in hopefully you grabbed your cards but you can write your questions down and we're going to collect them after Michael speaks and asking for some responses so thank you again very much for joining us this evening and I'm now going to turn it over to be CTU treasurer Paul Finch hi everyone it's great when you're able to sell out the Rios verdict on iment I think that I'm not sure that happen before so when I asked dr. Hudson how I'd like to be introduced he said as briefly as possible which I think speaks greatly to the character and into the wealth of the work that he's done over many years about dedicate himself to good analysis but also analysis that benefits people that fundamentally helps people I want to thank as well in addition the a lot of the logistical organization behind this was owned by a few people amber Riddick gene Stevens Roman Barnett and a number of people at BCG you so thank you very much there's many too many of the name I also want to thank common ground magazine for their their help in promoting use that as well as deep deeply appreciated my questions is a rare intellect and somebody who spent tremendous amount of time analyzing economic patterns but has also carved up a kind of anis an understanding how structures economic stresses work and in in that respect he is also he's authored many books you know the bubble in beyond killing the host super imperialism a whole wide swath of books but as well he also was fundamental in developing a strain of archaeology that looks at the economies of ancient Near East societies and if you haven't checked that out it's actually a secure future like me it's actually a good face so but he brings that historical lens in that context and and why that's important is because being able to thread that context of the progression of human economies throughout the ages essentially to situate does in a place that gives us a better understanding of how we got to where we work and where we can go so I would like to introduce and so I'll give a warm welcome to I can't see any of you because the light do like yell at someone who interrogated by the FBI but you look like rebels and I'm sure that's why you're here maybe it should be in front of it you mean this my voice did not carry enough with that point well we were in a very noisy bar before right my voice is gone what's happening in Vancouver is almost the opposite of everything you read in the economic textbook which is why I don't call myself an economist edge mark since 1973 I've called myself a futurist because that doesn't mean really anything at all and an economist is someone who tells you the economy can get richer by making the population poor and more competitive and you just have to squeeze labour and you'll get richer in no time and that's basically what's happening in Europe and it's creating the kind of seeming internal contradiction that you're having in Vancouver today most people traditionally think of rising real estate prices as a reflection of a society that's getting richer and sit from World War two the ending of that really for about 50 years most Canadians and Americans and the Europeans the middle class got most of its wealth from the rising price of its real estate and the reason the traces rose was because people were earning more they were more productive and there was an overall economic surplus and real estate prices pretty much until the mid-1980s kept pace with the growth of earnings and you could say that rising housing prices were a reflection of the overall prosperity people could afford to buy the houses and in fact if they would buy a house in America in the United States the typical mortgage was a 30-year mortgage that would be so feminizing pay itself off and the banks would not make a mortgage if it absorbed more than one-quarter of the borrower's income so that they wanted to make sure that housing didn't take more than about 25 percent of the income they made that was a rule of thumb and also the buyers had to somehow save up 20% of the down payments so that they were solvent enough to be able to leave the banks with some leeway although that hasn't changed since the financial system really took off and became decoupled from the economy at large to a point where in Vancouver today real estate prices are not a reflection of prosperity they're actually making your city a poor is Stephanie pointed out in our introduction so how can it be that a real estate boom goes hand in hand with impoverishing many of the families and even most of the families that live here last night Paul took me on a walk through some of the main streets of Vancouver the commercial streets and I noticed maybe one third of every block either was for rent or had just been developed or there was a going-out-of-business there so obviously the real estate boom here is traumatizing the whole structure of the city so I want to talk about there's not a real estate bubble here but I want to talk about the curse of rising real estate prices it's like the oil curse of a Norway or countries that are very rich off oil or very natural resources the resources tend to be all siphoned off by a wealthy class and then their cloud they're bought and sold the buyers with banks putting up all the money and behind every real estate bubble really is the banking system and it's almost impossible to think of real estate without looking out for the banks because 80% of bank loans in the United States and I think Canada also take the form of mortgage loans a banks make their money by finding people willing to go into debt and for 50 years after World War Two people were willing to go into debt pay everything they could on the home because they told that they could always sell it to somebody else as the economy's growing but the economy is not growing anymore in the United States since Barack Obama was elected in 2008 the economy has shrunk for 95% of Americans all of the economic growth has accrued only 5% of the population and that 5% is largely the finance insurance and real estate sector not the population at large so what's happening in Vancouver is very much like what's happening in Manhattan and London and a few other cities the center of the city in London now is it is not a real estate bubble because 80% of the properties in central London are own without a mortgage so the banks haven't really done it it's a flight capital center largely for Russian and post-soviet Apple but investors all over the world has put their money into London because if you're a foreign real estate owner you don't have to pay any capital gains in England the foreign real estate owner is an Englishman who holds the real estate the isle of man or some foreign bank accounts basically so basically the speculators don't have any pay so it's nice although central London may have a busy street lights for the stores and the restaurants the residential areas are dark because the owners aren't there their empty apartments same thing in Manhattan whole sections of Manhattan's work there are been developed largely to sell to foreign millionaires our dark at night well that is the danger that Vancouver faces as more and more foreigners buy for speculative purposes or for investment purposes the real estate in the center of the city the local people the Londoners the New Yorkers and the Vancouver rates can't afford to live there anymore they're actually forced out of the city in London if you look at job offerings in the British press the job offerings come with a guarantee st. Loup including tickets and one friend of mine in Latvia thought they were tickets to soccer games with their tickets with a railway so that they can afford to get into London for the job because they realize that they can't before the people who get jobs that will understand afford to live there and what kind of a city is it that essentially lets all the benefit of its growth all of the increase in the wealth at least the asset value of the real estate rise and somehow the city doesn't benefit it's it's turned into a kind of curse and you have that not only here in Vancouver you have it in all continents like Australia the price of housing has gone up so high that Australia is unable to be a manufacturing center it's unable to produce goods and services because if you can afford to pay for a home to live in Austria you have to earn such a high income that your employer and not compete with exporters in other countries and I discussed this in Canberra with the head of the Australian central bank and he said well we really don't need industry we actually don't need ninety percent of our population because we're very fortunate we live in a nice neighborhood the neighborhood of China and they're buying our iron our they're buying our others and we can balance our payments and pay the banks really without that industry at all and I said well what's good after the Australians he said well that's not in our equation and I guess you could say that's not in the equations that economists I use when they say the Vancouver must be rich look at its real estate and they don't see how rising real estate prices can actually make an economy poor and if that happened in the United States it's happened in to such an extent that the United States if the workers done everything that they consumed all of their food and clothing and transportation for nothing they still couldn't compete the foreign countries because in the United States the governor of all of the mortgages our government guaranteed otherwise the banks won't make them because banks don't take risk ask that government guaranteed the government will guarantee a mortgage up to 43% of the borrower's income over and above that you have about maybe 10% of the income spent on other bank loans credit card debt student loans car loans you have 15 percent of wages taken off the top for Social Security and Medicare and maybe 10% mark as income and sales taxes so only about 30 percent of the average homeowners family's budget is available to buy the goods and services they produce so no wonder there's a shrinkage in New York City the situation now the main street's is much worse than it is in Vancouver in their New York University and grant trilogy what was long the main industrial street 8th Street more than half that the commercial properties at ground level are empty for sale that nobody's in them at all because people are not able to buy the thing is to buy the restaurants in New York are offloading the figures last month you know for business bankruptcy simulators in the United States and they've risen very sharply so the economy is not ever really recovered from the financial crash that occurred in 2008 the promise was to write President Obama was running was to write down debts to the real value of the real estate so that people could afford to live in the homes that they'd taken out that the banks it with much too much menu instead Obama saved his constituency the banks not the economy and that's the story of the economy since the rest of the economy cannot function with the level of debt that is occurred you can look at groups as an example of a country that's completely doesn't dress and if you understand the dynamics of debt deflation then you can begin to see what's happening in Vancouver I was asked today by the CBC do we have a real estate bubble here because usually many people think that if real estate goes up it must be because banks are lending learn more and becoming more reckless but that's not the case in Vancouver I think there are a number of reasons the properties going up so much one reason is people throw Europe Asia and the American hedge funds are buying property for all-cash because they can make a much bigger return on real estate than they can make in the stock or bond markets so if somebody has 100% equity no doubt at all there's not a chance of the bubble being pricked by defaults on mortgage tabs that lead to a general crash but what you have is something much worse than a bubble you have what I call debt deflation you have the price of real estate going up so high that in order to live here people have to take on so much debt that they can't afford to go to your restaurants or shopping your stores or to spend money and what's supposed to be the circular flow in the economic textbooks where workers will spend the wages they get on buying out what they produce this is the idea of Henry Ford paying his workers five dollars a day in the 1920s so that they could afford to buy the Model A or Model T Fords he was producing that's not the case anymore car sales in the United States are way down people are buying used cars banks are cutting back on automobile loans because the rate of default on automobile loans is soaring almost as much as the rate of default on student loans so you have the economy is stretched like that and instead of a depth reflecting the ability of the economy to pay it's taken on a life of its own the financial system is decoupled from the real economy and people tend to think that it's it just that helps grease the wheels of commerce but it's not greasing the wheels of commerce it's not only sand in the gears but it's just a heavier and heavier burden it's like driving a car with a foot on the brake and every recovery since World War two in the United States or Canada has been weaker and weaker than the previous recovery because every it recovery has resulted in a much larger death overhead and people have to pay more and more of the deaths in the gas port really to help by the economy recover so the problem is of what how do you what convened Coover do to make this value of its real estate a benefit instead of the kind of curse that it is instead of instead of squeezing family budgets what can you do to help well an example is I come across recently is the discussion in Vancouver about how to finance a public transportation system and I'm appalled to say that Vancouver may make the same mistake that New York City and London made when London built the Jubilee Line which was the tube line that goes from the center of London to the financial district it cost about 6 billion pounds of profit building these to the stations all of a sudden increase the value of property along this of the routes by tow billion dollars so London could have recovered all of this value by issuing a bond against and capturing the windfall gain to the property that occurred all along on the Jubilee Line same thing in New York in January they opened the second Avenue subway most expensive in some way in the world six billion dollars for four stations along the very crowded Lexington Avenue on the upper risk Upper East Side where all most of the wealth that young people leave live now this six billion dollars almost immediately the landlord's raised the rents on people living on 2nd Avenue 3rd Avenue 1st Avenue and the property values went up new specs new buyers would buy condominiums or buy whole buildings financed by the bank loans the banks got rich making larger and larger loans to people who wanted to live where they could get us subway to work and not be all crowded in on the old outline that with the Lexington evident line that was near the city could have financed all of this out of the out of a windfall gains tax on this property levied over a 10-year period or longer instead what they did the city borrowed money and paid the bondholders for going into debt and they raised the prices of subway fares for everyone else in New York City so if you're in Queens or Brooklyn or on the west side of Manhattan you have to pay higher and higher fares to pay for the extension of a subway that has made real estate developers and landlords along the second Avenue Line much much richer that's not fair there's no concept of who are the beneficiaries of the real estate boom and who are the victims because if you have a 5th page a rising real estate price this is not a win-win game it does not mean that people are getting richer because now they can sell their houses for more because look at the position from the children of the generation of the sellers how are they going to be able to afford to buy a house or afford to live in the city they're essentially being expropriated from the city in order to create benefits that accrue to a few large banks and a few real estate developer and promoters that's why if I look you look at the skyline of Vancouver the tallest buildings are the bank buildings they have the position that used to be performed by temples in all of us of Western civilization from Sumer and Babylonia through the Middle Ages but instead of the temples of the past you have temples of Finance now and it's obvious to look at the prosperity that somehow all of this wealth that people think is making a sign of Vancouver's richness isn't a sign of that at all it's a sign that the banks have been willing to make larger and larger loans against property and the basic rule of thumb is that property is worth however much a bank will lend against it and its banks loosen their living standards it lends more and more there then people are going to have to pay the price or else not buy and live off further out or and spend a few hours a day in added transportation and having driven in Vancouver traffic I can see that that might not be the most desirable thing to do so that's part of the curse of a rising real-estate bubble another thing that could be done to slow things is a capital gains tax of Vancouver or Canada and England are different from the United States is there's no tax on the windfall game so in the United States if you look at the national income and product accounts Donald Trump other developers the real estate sector as a whole pays all of the rental income to the bank in other words suppose you want to buy an office building you're you go to the bank and there are other people who also want to buy an office building and people been each other to buy an office building justice homebuyers will go to an auction for us and the winner of the option is the person who's willing to pay all of the rental incomes to the bank to cover the mortgage charge now why do they do this they're willing to do it because they're in it for the capital gains capital gains and America are taxed only in a fraction of earned income so the tax system favors people who make their money not by earning income but by getting a free lunch on asset price inflation on on on banks lending more and more indenting the economy more and more because that's what banks produced they helped reduce loans as much as they produced debt and the production of death is what's of increasing the prices and creating the increased price of the capital gains if the government doesn't collect the capital gain then this is people are going to spend much more than they're actually the rental value with the property and that's what was happening in the year 2008 people would actually pay more than the rent because they were looking for for the proverbial greater fool and that's a dynamic it's been occurring for over a hundred years in 1923 norstein government wrote a book absentee ownership and you know Manuel Goodman from the concept of conspicuous consumption and the theory of the leisure class but he was also an analyst of how industrial capitalism was turning into something different in the finance capitalism and he saw as the root of of of people call finance capitalism is real estate and he said that every small town in America and he could have said every big town to can be looked at as a real estate project the objective of the real estate developers is to tax the population as a whole to spend money on increasing amenities on public services of public transport systems water and sewer parks museums schools and all of this the public booster is to increase the price of property so they can create a booming neighborhood and sell it at a higher price and it's all an exercise in finding is government put in finding a sucker to buy but it's really trying to convince people that they can make money by going into depth and treating properties treating housing and treating real estate not is a place to live not is a place to do business but really an investment to it now last month United Nations came out the whole record on that saying that this is transformed real estate into something very different from what text books talked about they've transformed it into a vehicle for saving so if you if you're a Russian kleptocrat and have managed to buy natural resources oil gas diamonds electric utilities aluminum companies virtually for nothing but being part of it an insider gang the first thing you want to do is get your money out of the country so that it'll be safe and the government can say wait a minute you stolen that get it back so all of this money floating around the world and offshore banking centers and elsewhere they want to buy property in various places and this is the money that's coming into New York central London Vancouver bidding up the prices and if there's any group of people that does not deserve to be enriched at public expense it's that class and yet that's the class that of an Coover's tax was our favorite and that's that's the class that the that is being pushed here and the question is how do they ever get so many wage earners so many union members so many families to think that somehow it's the job of of city government to make the real estate speculators and investors in the bank's richer and richer and richer because that's what they're doing well what they've done is what I call junk economic it's a kind of Orwellian vocabulary that makes white black and the vice versa and they somehow convince people like I think the Republicans said in the Republic in the presidential campaign last year that well no poor man ever gave me a job now the implication is that these the rich people the speculators call themselves job creators because they're so rich but they're not job creators if if a corporate raider buys the money that a one or two percent from a bank to buy a corporation whose stock as it yields seven or eight percent he doesn't want to employ labor he wants to lay off the labor force he wants to lose the company he wants to either take the pension fund and I use a pension fund to pay the bank or to threaten the workers saying I'm going to declare bankruptcy and wipe out the pension fund unless you agree to give up your pension plan and shift to a much lower pension plan that's been happening throughout the United States and company after company industry after industry and somehow the labor unions have not fought back against this as it's as if they've they've talked about identity politics the one a kind of identity that's left out in identity politics they're people who have to work for a living and the earn a wage and actually are workers and I think that's one of the reasons why the last American election went to Donald Trump he was the only person who was saying look the economy's in a mess and everybody knew that and there's a tendency to think that if somebody knows the economy's in a mess they must want to solve it unfortunately that logically following tonight and he wanted to make money off the mess and there's a lot of money to be made off a mess you have at 10 million Americans have their homes were closed Blackstone made a fortune by buying up homes all throughout the country and thief it has been defaulted on turn them into rental housing and double the money your year after year so the way to make money fastest is on an economy that's being looted and that's why Emma Smith said the rate of interest is often highest in country's going fastest to ruin and you could say I guess that the the rate of the rate of property gains are and real estate gains that somehow our left in private hands are often highest in economy is going to ravage the road because that's what ruins economies there's no imagine what could bank over could be like if it would say ok our were fortunate enough to live in a very good location we our province British Columbia is rich in natural resources we can we can somehow charge a land tax on this rising value that foreigners want to buy here they want to buy here because we're under pricing our real estate and we don't taxes and banks are lending here because so much real estate value is available to pay is interest instead of paying tax many people think that all taxes are bad because they don't like to pay their personal income taxes and personal income taxes are a burden but some taxes are good and even Milton Friedman the free-market er said that one kind of tax that was good was a tax on unearned income on economic rents and on capital gains and instead the tax system is favoring exactly these games so it's as if the whole economy is being created backwards and it doesn't have to be this way the Hong Kong is the main example of a city that finances all of its city revenues from the real estate tax and yet the real estate prices are going up so rapidly there that one Chinese billionaire I know said that he was too embarrassed to go to Hong Kong anymore because all the people in that had 6 billion dollars and it just made them feel small and and yet the whole city is so financing by a real estate tax now the fact is as this real estate it's called a land tax but it doesn't capture anywhere near the value of the land rent suppose Vancouver were to detect to do what countries for thousands of years did and base the whole tax system on on real estate there would be so much money coming in that not only could the city pay for public amenities to to make Vancouver just a gem of the city to live in but it would have a dividend the vast increase in commercial real estate property prices would produce such state a property tax dividend every year that it could be a citizens dividend and you can distribute it to the lower-income citizens so that they can afford to pay the rents to actually continue to live in Vancouver there are a number of other technical solutions to this that I have that I could go over in the question time and I want to give basically just the basic principles of what I want to say and that is every kind of a gain in wealth or a gain in property prices there are beneficiaries and their victims and the question is who's going to be the beneficiary of all of this rising real estate prices and who are going to be the victims it's easy to see the victims Stephanie mentioned that the beginning when she said their homelessness there are people who can't afford to live here there are people who are having to live in the suburbs and drive-in and there the stories that I saw all being empty along are the commercial streets so the fact is that the banks and the real estate developers have gotten together to somehow convince the policy makers that their state and local and national policy should favor the wealthy investors not the population at large and that can only occur because the population at large doesn't really have an alternative and it doesn't have enough alternatives because the whole way of teaching economics has changed radically since I was in school now at least they had the history of economic thought when I went to school fifty years ago for the PhD they don't have that in the economics curriculum anymore all they have is mathematics basically so you can mathematize unrealistic economics and is if you look at the textbooks of Nobel Prize winners like Paul Samuelson or bill Vickrey they say we're not talking about reality the judgement of the criterion for judging the excellence of an economic theory is the reality it's whether the assumptions are internal inconsistent well there we are in the movie theater that's that's the what one should do to judge of moving I'm sure you can you go to movies and you see wait a minute the plots been they have in that way whether something's wrong the character wouldn't have done that you're not allowed to ask that of economics because they say that's exogenous that's an economist word for that's reality it doesn't fit into our theory we're talking about theory not how the world works so how are people to be trained in thinking about this the fact is that you guys out there are the only people that are able to look at your own living conditions look at around you and say here is how the world works here's how reality is it's not in the textbooks and somehow you have to translate what you see into enough economic action so that it becomes political because ultimately this is going to be political a hundred years ago it was political in England the whole fight was over whether to tax the landed aristocracy that live generation after generation on land that the Warlord's had conquered and that you may know the Norman invasion email invaded in 1066 by William the Conqueror and the first thing that the Norman overlords did was to create in 20 years they created the Domesday book and that was a list of how much land rent in the form of across every farm and every sector of England could could carry and they spoke French they look down on the English speakers and essentially they use the rent was for paying the from the cost of the crown so they could go to war and conquer more land and more lands and that's how they conquered Canada and Australia and did the same thing of in America and is the same thing over here always in the North America there was always a massive corruption insider deals and if you look at the great American fortunes there were all insider political deals and if I look at the Vancouver and I'm looking at Holmes make month can really get filthy rich in Vancouver you make an insider political deal you have wonder if you have a huge forests and people have been explaining to me that the winner of the forest is even a way it's just it's very much like Russian privatization which they call a gravitation over there they you have to increase the English language once in a while to take account of the new developments and so you're giving away your natural resource instead of using them as the fiscal base that could make all of us all of you citizens of Vancouver live in a wonderfully high style the money's there I shouldn't go to you instead of going to the banks and the real estate developers it just doesn't make make make sense to me maybe I'd rather deal with a lot of questions because I think I've said enough controversial things so I'd rather leave the rest of the discussion of the question [Applause] hey I won so I'm fast I'm with Canadian Center for Policy Alternatives with batik Ivanova here thank you it started to get a few of the cue cards and more of them are going to be collected and we're going to share the tasks of moderating their questions with Michael I maybe just while we're waiting for the cue cards to arrive I want to just make a couple quick comments I mean I think there's there's so much and what you said and in your work they capture these trends that we're experiencing here when you talk about the curse of of rising real estate it's certainly true for a long time for those who are lucky enough to be property owners here you know year after year people would get the property assessments and they'd they feel terrific that they were becoming richer and richer and then in just the last few years something shifted it started to become apparent to people that something was wildly out of control and that their children were going to be able to live here and it had become a curse in some way in the zeitgeist it is not a natural law it doesn't have to be that way it's a result of policy um well let me just start with that as a first question that so we have an election in a month imagine there's a new government and they pull you back to town to advise them on how to cool the real estate market and what the policy instruments would be well to tell them well the first time I was in Vancouver was 40 years ago and I came with the Science Council of Canada I was a financial adviser to the Canadian government at the time and we got to they had the big meeting and what was at that time I was told Canada's a cultural center the aquarium and that would call that the way to rise in Vancouver Society was to endow a fish tank and get your name after the fish tank they had a big bar for all of us very well stopped right in the middle of a big pool with sharks and the mayor of Vancouver welcomed us and he said there's just been an election here and before there were socialist sharks and now there are capitalist sharks and then he was great and we were almost lying lying on the floor but peers coming up we were laughing so hard and that's really what happened the election you have capitalist sharks now not socialists charge and the question is how do you get those socialist sharks back into the tank some of the mechanisms that you will recommend for a moment number one a land value tax and Vancouver made great strides that is 40 years ago and we have one of the authors of that Bob Williams here as a matter of fact and if you would have had the tax policy that was in place then everybody in the world would want to live in Vancouver you would be the model along with Hong Kong of a city how to do it right and you would have so much money from this rep tax that the housing prices would not have gone up that keeps the rest of the rental value would go up people would be more able to pay a higher rent rental income in Vancouver because they were there was such a prosperous City but instead of tanked visit this rent to the banks to pin up the trace of property it would be paid to the government and if the government got a land value tax it wouldn't have to tax your income you wouldn't have a sales tax and the city could spend this money on urban amenities and probably pay a citizens dividend and you'd be the model for the world okay I will come to some more concrete questions from the audience the first one I have here is about commercial real estate so in commercial real estate land owners reach all the increases in property value and then pass on tax increases on tenants and this is going to be getting small retail of the small retail sector that's where you're seeing ng store firm what are some steps that we can take to chasten the that kind of contract should not be permitted very simple if this means if the tenants have to pay all of the taxes you're giving a free lunch this law is it should be called the free lunch law it's how to make millionaires who don't have to work is that what you want to produce I mean that's I don't think any religion the world any social theory any political parties ever would have dared to come through with that but that is exactly the policy that every political party and this big nipper name liberalized these days is from promoting so that shouldn't be there and the attacks should of course be be levied on the owner not on the tenants why would you want to to kick out the tenants out and empty out the buildings for every seven there used to be book store on eighth Avenue that I talked about New York University in Greenwich Village around the 1970s all the bookstores were replaced by shoe stores because bookstores couldn't make enough money to pay the rents and the shoe stores quit and now they're all vacant there are no stores so that's there are certain kind of store businesses that you don't want to charge a very high rent for and you want to sort of fix the limits just like in almost every city of America certainly New York you have subsidized housing for artists you should have subsidized housing for maybe drug stores for essentials you want to provide the essentials is lower price as possible you don't want to leave opportunities for price gouging and that's what's happened I don't ask them about how we refuse to be like we're trapped in this paradox and I'm looking for some advice about how we politically find their way out and we have all of these people who loved avid as property owners who have become unearned millionaires and yet and when you look at our property taxes than our taxes overall in British Columbia compared to the rest of the country they're low we should have lots of room to and yet nobody feels that way they don't feel that way precisely because of what you are describing before which is that they're so in debt on their mortgages and paying so much in their housing there's their squeezed they don't feel like they have any room to move and if their property taxes went up they wouldn't be able to afford to live here and would have their where else to move to so how do we get out of bluer stock well there are two answers to that number one if you have a property tax then you don't have to impose an income tax every dollar that is collected in a land value tax you can cut for income tax so most families would end up the beneficiaries of this yes they'd have to pay higher homeowner taxes but they'd be paying so much less in income taxes and in local sales taxes that they'd come out ahead now of course this is true of all families there would be some retirees and older people we had this discussion in Latvia about ten years ago and the solution is somebody's retired if you don't want to kick anybody out of their home because they can't afford to pay the tax so you're saying okay you know for a given period a decade say or however long you live there we're good we're going to leave the tax exactly as it is that you have to pay every year however we're going to levy the tax as in arrears so that when you when you die or to move to Florida or do whatever Vancouver uns do when they get old your we're going to then collect the back tax that we didn't collect out of the sales proceeds of the house so it'll all be you can handle it that way you don't have to kick anybody up you can adjust it to various conditions you can have a layer text you can text Afghan owner-occupied property lower than the speculator absentee owned property because you don't want to encourage absentee owners to sort of be what the old British landlord class was in the old feudal times you're becoming a feudal society and somehow people think they can get rich while they're becoming a society but it's not the kind of society that other children are going to be able to afford to live in our house we want the bills on that's idea of paradox because you're right there are many problems with the way infrastructure is our home residential market real estate market so that real estate is become an investment vehicle but it's not just for millionaire migrants it's the same for local property owners so many homeowners they are counting on the land value of their property for their retirement that's a very generous one so how what would we say to them as with a for the world where that work is over it worked for 50 years after World War Two it doesn't exist anymore everybody would like a world that gives them a free lunch without working that's everybody's dream it's only available to the to the top ten percent of the population who our insider dealings with the politicians unless you contributed a lot of money to your local politician that world is not open to you anymore so here's a question I'm going to get the person asking of it was looking for your lessons from the 2008 experience in the state so they're asking if Vancouver's housing market crash what could or should the government do to bail out the people well what they could what was promised in 2008 two things one was the banks in Overland you had whole new words added to the English language junk mortgage that didn't exist before ninja borrowers no income no jobs no assets banks would not just write loans knowing that the there was no way the loans could be repaid but they could find somebody really dumb enough to buy the loan some food who trusted the banks German local banks did the Germans trust and pension funds or they could just do crooked deal so so they so they essentially sold this to the pension funds meanwhile these families had signed the mortgages that had exploding interest rates that they couldn't pay the idea was that the properties would be the mortgage would be written down to the existing market value or and that was the market value defined as what was in line with the existing rental value of the property so the homeowners of who couldn't afford to pay would sell property and what it's supposed to be sold for in all the economics textbooks is that you pay the mortgage pretty much the same price that you would pay for the rental value the the junk mortgage mainly fraudulent mortgage we're talking about what the FBI already in 2004 called the largest crime wave in American history the crime wave were the banks the banks in the United States are what my colleague billed lacked at the University of Missouri at Kansas City called criminal genic another new word that's been added to the English language to describe how banks operate and the banks would have taken a loss secondly the most crooked bank was the most well-connected bank the bank that controls the Democratic Party it was a Citigroup Robert Rubin was President Clinton's Treasury secretary and he headed a Wall Street gang essentially to come in and loot the banks and introduce makes the business plan basically fraud and you can go to the University of Missouri Kansas City Economics website and rebuild lacks description of how the fraud worked he was the prosecutor in the savings and loan scandal of the 1980s what Sheila Bair who is that all bank deposits in America are insured by the Federal Deposit Insurance Corporation that was headed by sheila bair she wanted to close down Citibank and preferably throw the managers in jail but Obama said wait a minute that's the Democratic Party her bank account eight campaign contributors if they go to jail who contribute to me on this yeah he invited the banks to the warehouse to the White House and said and said I'm the cause trust me I've got the blacks I've got the workers I'm the only guy standing between you and the crowd with the pitchforks but I'm your guy and this is posted on the what he said on the White House site for 48 hours before it was taken down so you know he his loyalty was to his campaign contributors Sheila Bair wanted to take over Citibank and use it as a public bank imagine if it was bankrupt it was broke it had negative equity and she said look what it could do it could issue credit card rates and not Church 29% late fees it didn't provide basic banking services a public owned bank wouldn't make corporate takeover loans a public owned bank wouldn't make junk mortgages thinking that he could sell it to to pension funds and driven bankers and the bank meant for Obama and the Democratic Party was Tim Geithner it was a secretary of the Treasury who was a protege of Rubin and he opposed everything that Sheila Bair was trying to do and so Obama let the crooks get away with it and write the American economy and it amazes me that more Americans don't realize what a gangster us Russians are sort of similar one I had when I was reading your book so progresses historically have railing a tie interest rate know that a wrapped-up government dad and discouraged you no growth in higher unemployment so on but you write about how it's actually low interest rate that have encouraged well in the past you have a user economy high interest rates meant that borrowers had to pay much more interest to the banks and that was when people thought the whole economy was based on income and expense on national income but after about 1980 everything changed with Margaret Thatcher in England and Reagan in the United States that wealth is now gained not by earning interest but by making capital gains the financial sector that is true the banks make money on interest but the financial sector as a whole makes money on capital gains and these capital gains are financed by running deeper and deeper into debt paying more and more interest until all of the economy's economic surplus is paid in the form of interest in capital gains when I went to work at Chase Manhattan Bank as their balance of payments economists in 1964 my first job for them was to look at the how much money the bank to lend to Argentina Brazil and showing and I had to calculate how much can the exports over imports how much of a balance of payment surplus could they generate and the idea of the bank was that the seven largest banks in America other group of banks would all lend Argentina Brazil and Chile enough money so that the interest would absorb all of the balance of payments growth the bank's premises that all economic growth should go to the bankers this is neo feudalism this is finance now today's playing the role that are the landed aristocracy hereditary she played from the Middle Ages for a thousand years in British history and it seemed perfectly normal the objective of economic growth in Latin America should be to pay Chase Manhattan and Citibank and a few other banks all of the growth and interest leaving nothing for the people as a whole they were treating a Latin American population like the government's treating you Vancouver citizens today let me ask them a specific question this person asked about no sort of happening that so they're saying low interest rate to help people get home and mortgage because you're pointing out it has these harmful impact so can you comment on where you see interest rates going or where they should go but out adds that if they go back up how do what do we do about the people who are nobody any way in which interest rates can go up normally in every crash before for the last 200 years in American every other country the benefit of a crash has been that it wipes out the bad debts but in this case the depths are kept in place so the prime directive of American financial policy is the banks have cannot the banks must be saved and they're willing to make the entire economy be destroyed in order to save the banks and the only and the banks will lose money if interest rates go up that lowers the amount of money that can be capitalized into a bank loan for the mortgages if interest rates go up bond prices will go down stock prices will go down corporate takeover loans will slow down housing prices will come down and banks will go broke so if they raise interest rates the banks will go broke so they leave essentially interest rates near zero so that you continually to let hedge funds borrowed cheaply from the banks and borrow to take over corporations and end up looting them that's the business model of the financial sector you can achieve financially today but it took an army in the past every committee of a country England France Germany they all sought to conquer other other lands but you needed an army to do that but now you don't do that now you're able to do but with purely financial leverage getting a country into that what it used to take an army to do so the European Union for instance can go to Greece and say you owe us the money and we will bankrupt you you know will cut your banks off from the banking system and currency if you don't sell off your ports sew up your roads sell off your museums so off the islands so all the property you have to pay the port the foreign creditors and what's happened to Greece is a model for what's happening to every economy as a whole not quite to the Greek position yet I have our questions as those on your example about the subway lining may have and it's a great more Vancouver Center in Vancouver we have a strategy and so we won't be the greenest city in the world and aware of their substantial benefit Asian and fielding transit but if you were saying the transit oriented development is actually driving wealth inequality and it's driving displacement unless a proper equitable vexations then should we first flakes in the tropics should we support expanding transit before fixings back system or should be they nose around with expansion health we handled well every dress every transit system has to be financed the question is how do you finance it now you should find out if the transit system is going to do what it does in every other City and increase property values all the way around along the route then either you if you must borrow you issue a bond to be paid out of the increased tax revenues and property values that the transit system creates otherwise there's no need to raise the transport prices ideally transport should be provided freely that's I concur to your traffic problem and pollution would be much easier if you provide free transport this can all be paid for out of the increased value that the transit will create in real-estate prices is a circular flow so there's one question here that I think of ignorant people probably have and it is why does our federal government not borrow more to meet its needs infrastructure needs from its own Bank of Canada rather than to the private bank another requires the Bank of Canada to do what it did in the 1930s and 1940s and at that point the Canada could have just created its own money this period this is exactly the problem that I wrote my book Canada and the new monetary order for the Institute for Research and public policy in 1979 the provinces of Canada wanted needed money for their infrastructure and so they were advised by the banks especially what's the most crooked back in Canada Nova Scotia they were told that you could save a half a percent if you borrow in Swiss francs and German marks and I said that's crazy okay you'll borrow a few billion dollars in francs and Marx what are they going to do they're going to give to the Bank of Canada the primes and Marx and what's the Bank of Canada going to do is going to print Canadian dollars to give to the provinces because the provinces are going to spend their money in Canadian dollars now if the Ganesha if this is what happens why do you need the German and Swiss bankers at all why don't you leave them out have it Bank of Canada to it they're just no more inflationary to print the money without getting the foreign exchange loan but it is I think if Cologne and scotia bank had a wonderful example our answer to that is that well we're honest well when the bags are honest brokers you know the politicians are corrupt that argument was the selling a thing I can think of I did look the provinces decided needs the money the bank the government's going along with it they're not honest brokers they're trying to do business they're trying to rip you off by giving you a fake economic idea so the result of that was I was removed from my position of financial adviser and main cultural adviser for the Department of State to talk about how do you make Canadians nothing like Canadians and we did a survey and one of the survey was how do Canadians perceive the world there you have a wonderful natural resource that I don't know you realized that almost all the comedian's in Hollywood in North America come from Canada and that there's a reason for that it said how do you cope with a society like that without developing a sense of humor you know otherwise you get depressed many of them are depressed but they also become comedians it's to go with that actually let me admit this follow question somebody else but again to the politics playing why you know why it unfolds the way you just described why do they let the private banks tell them bribery campaign contributions their driver e blackmail and crime so okay so then this person that diagnosis the diagnosis that you know that you have a say your diagnosis to private feelings is caused by the parasite economy to a class but given the futility of the political system and that is no revolution okay all right below your pre-emptive the answer so given these frustrations with the political system the vested interest of the point one percent a hand-to-mouth existence at the bottom 30 what's your is there what your it is there there are all of you to understand how the economy works and to make that a political issue and take I mean all I can do is what I'm doing trying to make it a political issue so people will realize it doesn't have to be this way Margaret Thatcher before I guess this one is around trying to understand our current house rollin came browser or why many of these issues were talking about today around video is a speculation our fairly recent decided in the last William Vancouver here the last ten years probably is where we see the most video estate price increases but what was fourteen have what happened in the last in the world of program the whole world has been criminalized in 1967 when I was still balanced a famous economist of the World Bank someone from the State Department who joined the World Bank showed me a memorandum and this is during the Vietnam War and the United States has a balance of payments deficit that it was trying to cure and the I they asked me to calculate the amount of criminal capital in the world because criminals are the most liquid people they are the drug dealers keep their money in currency and the State Department says we want to make America the center of all the flight capital so of the State Department and the Pentagon went to chase and they asked that David Rockefeller can you please open a branch in the Caribbean because that's where most of the drugs of trade traded and this will help the dollar it will help us win the Vietnam War it will help us pay for it cover the balance of payments deficit because we will option we will win from England it didn't work but they tried will win from England and Switzerland and get all the money displaying this pursuant all the money going into England could come to us to fight the war so I calculated the criminal capital and it sure enough most of the wealth in the world is held by crime and that was what the United States is set up the system of offshore banking centers to support the value of the dollar of sterling it's bankrupted the Swiss economy that cannot do production anymore see Maggie that I was a consultant for ended up going out of business because so much criminal capital was going into Switzerland that had pushed up the value of the franc and see if a guy he had to couldn't that produce anything for sale because the cost of living was even higher than it is in Vancouver so another example for you to avoid so the amount of criminal capital in the world by Russian kleptocrats post-soviet economies drug dealers it's all spilled over to where can we put it safely we want to diversify our holdings because they want to be prudent and not decriminalized their their children and create a crime family and that's like the Norman invaders in the warlords who used to become the rulers of every country so they buy property in New York Miami Vancouver London they they spread their uh spread it all over so do you really want to be the hosts to the world's criminal capital I can get on to you there's a lot of foreign money coming in here was not earned by working in a factory this question I think is just looking for some more clarity on the mechanics of how we would capture of that real estate right so how can dividends on the rise of real estate property values be collected and distributed simple you can every study in the United States has property appraisers that appraise the value the market failure of buildings and property you can go online though and their online sites that can give you the value of property it's very simple to base a tax on on this value I think that I'm told that the British Columbia has a wonderful database on any values they keep it to themselves and apparently do not share it with Thank You ver unless you pay through the nose and of course that shouldn't be the case but that you once you know the value of the property is very simple to do just what America does and every other city of the world except of course England and tax on the property value using the BC Assessment Authority yes okay this one is more educational how do you know or how can you separate the influence of increased demand for housing for because of growing population and beauty and amenities in Vancouver from the impact of speculation it's not the population for many years China was the most popular of highest population in the world and India and a property was housing the saw the lowest price there it's not the population that creates the property value it's a what a bank will lend again a property is worth as much as the bank will win and they have to lend against what the borrower can pay so it's how much the banks are able to squeeze out of the population that determines property prices not population okay here's the question of the things going to be some comedic relief any advice for a first-year economics PhD student some schools are better than others but my most imaginative students all drop out of economics because they couldn't fit reality into the curriculum it should probably be a little more optimistic can you give us more detail about what's happening in Hong Kong because what people kids are no how did they manage to to put in Self Realization abruptly was waiting happened and whatever lesson we can take here they did it as a colonial authority they simply there wasn't much else they could basic attack system on it's an island it's a commercial island and for the last actually ten thousand years most trade of every country spent done in Islands because almost every country has always wanted to keep trade and finance and commerce away from the domestic economy so in Germany the the amber trade was done through L : Hong Kong was an island separate it was a a commercial island so there wasn't anything else to do and it seemed logical in China Sun yat-sen was a follower of Henry George who believed that China should introduce a land tax and he was one of the most popular political leaders he he headed the Kuomintang for many years unfortunately the hardest with in 1921 between the Communist Party and Zhang Kai shek who then ended up massacring the Communists in Shanghai 1927 but Hong Kong was able to even want to get off the track essentially do it because it was the most obvious thing to do at that time given given what they saw in the West and they they saw that the the trend of reform throughout the West in the late 19th century was all for land tax from China Adam Smith and John Stuart Mill in England to Henry George in America went to Australian England the whole idea realized is the and Marx also by the way there's the role of industrial capitalism was to free society from the legacy of feudalism you want a the economy is no longer needed a landed aristocracy has lived without working just off land grants they no longer needed banks that simply made user is user alums and ones that were not productive they were going to bring banking into the industrial era by industrializing banking is done in Germany of the late 19th century and the whole a part of the world thought were now entering a century that will finally free society from feudalism and world war one changed all that the ron tas the landlords the bankers the monopolists all fought back and were able to replace this egg not classical economics with the kind of junk economics opposed classical economics of Paul Samuelson Krugman you know that ilk Kyon's can follow a question and that's it relates to you know how to point you right about as well I mean there's so much wonderful economic history and your your books and one of the things I loved reading was if you go back to what all of these classical liberal economists actually wrote about the rent GA class now we can die spend our time battling other think tanks claim to be the legacy keepers of the Adam Smith so the requirement when people speak for them they give you an addict Smith ty are they just willfully ignorant of the rentee aid and could look at that and Smith and so on there's a reason that the history of economics is not taught in the curriculum anymore because if you read Adam Smith you realize that he's saying exactly the opposite of what the people who cite his name is now that's why I wrote J is for jump economics under letter A you have Adam Smith and you putted a dismiss a he said the natural he went to France visited the physiocrats and so the natural tax should be a tax on rent this up if you don't exit the rent and housing prices are going to go way up and enrich a class of landlords and the aristocracy by the way is sponsor in the trip was a Duke of black flow which is the largest landowner in England so it's ironic that Smith said wait a minute I'm going my fees are being paid by the largest landowner and now I'm saying get rid of him get rid of all the landowners so Smith was against it John Stuart Mill said what is economic rent it's what landlords make in their sleep is what they make without working and simply get a free lunch well now instead you have Milton Friedman saying there's no such thing as a free lunch and the reality is that the economy's all about having getting a free lunch that's what's made Vancouver real estate so expensive it's a free lunch and so you can the people who support who you say support Adam Smith are basically University of Chicago boys and what they realize is the first thing they did in showing when they overthrew the government was in addition to assassinating every major labor leader every land reformer they closed every economics department in showing except for the Catholic University where the university University of Chicago theory you cannot have a free market unless you have a totalitarian educational system and a totalitarian state that that's the genius that the free market is realized that their system is so fake so much of a distress call safai on the word world works that you you have to block any discussion of the idea of rent or interest being a free lunch and that's why the chicago graduates in their school control all of the major refereed economic journals in north america now suppose our graduates from Kansas City want to get a job you're hired if the jobs they want are being a professor you can't get promoted as a professor in the United States and I'm sure it's and - unless you publish in a refereed journals and the refereed journals are all controlled by the free-market totalitarians so you're out if you do anything to introduce reality into the curriculum I'm afraid we're going to make faces back to - very practical Canadian policies which is apparently Malaysian but during your talk use per 'grill several different mechanisms for governments to do to capture the real estate and its price increases why was the land project another one we'll start from capital gains and then I noticed that here in answering your questions you're you're focusing everything on the land value tax that's because eighty percent of capital gains are in the land even for corporations the lens in the corporate stocks are mainly capital gain sole and is the largest resource in every economy and as I said eighty percent of bank loans in North America are mortgage loans so because land and real estate are the largest assets in every economy that's where most of the capital gains ever do you imagine the lens acts as sort of a capital gains back you very often felt you know effect times actually in effect if you had a land tax that wouldn't be the capital gains in in land and then so that eighty percent of the capital gains would all be captured the rest of the stock market gains are where are you know chunk art gangs and they wear holes and things like that so um so you've talked about and written about how the the banks are basically the lending that they're doing isn't about new productive investments it's primarily financing the transfer of property that already exists so I'm gonna have to controversial question from somebody that controversial given who some of our co-sponsors are which is that is what you say about banks equally true of credit unions and other finance classes well credit unions don't create money of banks to raise money on our computer keyboard if you go into a bank and take out a loan the bank will have you sign an IOU so you have a bank has created a deposit for you and you've given an IOU to the bank so it has an asset against this deposit that it can been borrow from the Federal Reserve or hold so basically it's loans create deposits now this is very hard to explain the most people money in banking for most people is a kind of a psychodrama and it's about the tendency is to think other thanks you know people deposit the money in the banks and they lend it up that's not the bank's do this with credit unions do is what savings banks do but a bank will simply create credit on its computer keyboard and a lot of nothing now the fact is the government can do this just as well and but it creates the money for something else it doesn't a government public banking would not create a corporate takeover loans junk mortgages or predatory lending and they wouldn't charge monopoly rates for credit cards or interest rates as that they do so I've got a question here from someone who's not feeling very hopeful from what you're asked to say Michael so how do you educate the masses with corruption and wealth and greed if they all drive the message and people like Donald Trump's end up getting elected how do we actually challenge all of that at PS thanks for the pen you only public education can do it in the in the late nineteenth century it's amazing if you read the newspapers in the pamphlet literature people had to work much longer hours from the 19th century it was really hard to be a wage earner back then and yet they were much more political and politics is all about economics and somehow the political parties today don't talk about economics and Trump didn't really talk about economics except to say you're worse off than you were before throw the bastards up and the result is people can keep throwing the bastard pardonne the party be out but as I think the president in the era of Antonia said America is so rich that instead of just having a single party rule like we have in Africa they can have two parties but essentially they do the same thing so you have to have an alternative to that that's very hard because the media are not going to cover you cover you that's why Bernie Sanders didn't want to start a third party to be is ignored as the other people so it's the Internet is a great help but there has to be some popular base popular movement that is going to make economic policy and especially tax policy and financial policy a political issue where it's not into the illegal discussion today you have an agreement of all the parties that the 10% should benefit at the expense of the 90% a surprise so all this council piling into realization records is because regular normal investments like on the stock stock is investment in up the works so we see more about well they're saying that there isn't so much higher on real estate so that's what people are planning on financing that environment since buying a house so why what is going on with the economy that people feel like they can't really make money the interest rate basically so low that saving doesn't pay off and the only thing you can do is straighten gamble and video is based in the hopes of getting a pension you put it in a nutshell one of my students at Kansas City did a research in the families that have gone bankrupt in Kansas City and almost a multiplied far the bulk of examples of they went bankrupt gambling because in the river on their Kansas City there's a gambling boat and that actually was is the first glance you think we'll wait a minute don't they know that the casino always wins and won't greets a casino by the way aren't they stupid to gamble but the fact is they know that they're stuck there's no way they can get out of the situation unless God intervenes and helps them and now they think I'm a gambler and I one person even told me that that he lived a good life he deserves something you know God couldn't come and give him a bank full of money but if he would buy the lottery tickets then God could sort of help me win that way and they're so desperate that that is the only way they could get the fact is the the free lunch is over the economy that made your parents rich does not exist for you you have to realize that it ended the economy expanded to its limit of the ability to create more wealth because you're driving a car with the feet on the brake and the brake is the volume of debt that is siphoning off all of the certain all of the economic surplus and creating debt deflation then my books go into all of the details have charts and you'll spell it all out but that's the whole problem it's hard to realize that you can't live as well as your parents and grandparents live and it seems unfair that you should have to work so much harder when productivity is going up so high and the economy somewhat richer why aren't you doing better and that's why so many people are feeling depressed why so many people are going on opioids and drugs getting bad but now you have to realize the game is over and that's very hard for people to realize that it's not going to get better that's part of reality economics and it's all off of that then I guess this suggests to me that we need a more fundamental rethinking I'm probably economy constructors besides just taxing real estate like what else we need to look on for a house in the way we start our econ natural resources especially here in British Columbia water the forests all the natural resources you have are just like lands you really want this to be privatized and just given away the natural resources are your patrimony as they're called in many countries the natural resources rent the value of your forests and your your water and your oil and your gas and your minerals should be used to make the economy rich not simply to let it be siphoned off by a financial ranvier class and that's what you're letting happen and just look at what happened under Yeltsin in Russia and you'll see you're creating the same kind of kleptocracy here that the post-soviet economies created all in the name of free markets we only have time to a couple question should there be an additional tax on homes that are are at our absentee overed yes absolutely because you don't want the economy to become an absentee owned economy that turns the rest of you went to the equivalent of what serfs were in the medieval period the difference is that that serfs retired to the land and now you can live anywhere you want but wherever you live you're going to have to pay all the income over subsistence for housing so your situation is not that much different I guess I want to ask a question that kind of wrap a bunch of the questions together because a lot of them are about are looking for political advice rather than economic advice you just lived through the u.s. election where no interest only you had Trump and the Albright speaking to a lot of these exiles about about wall street and and so on I've been taking it in a particular direction as well as in no I don't think they voted for Trump the most unpopular but yet you had the American election the two most unpopular politicians in American history running at the same time I don't think they voted for Trump I think they voted against telerate because when she said aren't you better off than you were in 2008 Trump said look you're not better off her constituency is better off but not your white men and that struck a chord do you think did you think of Sanders ago in the nomination what if Sanders had won the a patient then and is absolutely with one and I guess a bunch of these questioners are really asking me about you with every poll done every Cola was done from January to June showed the Sanders would defeat Trump and the Hillary would lose so Howry then spent a billion dollars getting full throughs that would say mirror mirror on the wall was the most beautiful of all that saying that she would win and change it all but the fact is all these early polls were right and the Democratic National Committee knew that she would lose they would rather lose with Hillary than win with Bernie Sanders because they're the finest they're the Robert Rubin ring wing the Wall Street wing of the Democratic Party so a number of the questioners are ultimately asking about what faith you have in the political system can this actually be achieved through education and democratic protest versus in the time that we have I don't see an alternative I mean you can't you can't have an armed revolution because the state has the monopoly of force there's really no alternative but to act politically I guess you're in the position of the Christians in Rome when the the creditors had bankrupted the Roman economy and that if you read that living in the odorous and Plutarch they all blame the decline of Rome of the creditor class and there wasn't any solution except to withdraw and the religion this generation is well we um we're going to have to wrap this formal part because we actually have to clear out of the Rio theater entirely but they're there and go on enough service well we're not moving I'm not sure what the next movie is but they do have another movie um I wouldn't I just I want to thank you on behalf of all of the postponed shows I wouldn't first of all thank PCG you which really happens even bringing you here all the other convention co-sponsor is with us and I you know the timing of your visit is good you you're here you're identifying a bunch of stuff that we're wrestling with which is we are living at at this odd time where our taxes are historically and relatively low and yet everyone feels squeezed and your work is capturing how much what we pay in rent afford in mortgage payments is squeezing out both the productive economy and our capacity to pay for things together as well as driving up these housing prices and constantly long-term long-term trend Sona I want to thank you for making the trip and sharing all of this with us and I wanted to end just enough times that people have time to we have a number of Michael's books on sale just through that door and if and we may have time to Michael to sign some of those but we gotta clear out of here by 9 o'clock so thank you all for coming thanks for your interest the again to the co-sponsors and [Applause] you

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Length: 95min 46sec (5746 seconds)

Published: Thu May 25 2017

Reddit Comments

[u/candleflame3]

Really good lecture and Q&A session with economist Michael Hudson. It's from 2017 and it pretty much nails everything we discuss on this sub. Some pretty grim commentary at the end though.

h/t to /u/Drifter3434 for bringing this video to my attention

[u/[deleted]]

Honestly, this is the only resource you need to watch through and through to understand the canadian economy and real estate dilemma. As well as to understand what the future holds.

[u/TerranXL]

I watched this for the first 20 minutes thinking this was commenting on the current pandemic property rise. This lecture is from 5 years ago.

[u/[deleted]]

Great lecture, but he lost me at one point where he spoke of land taxes not being passed through to the end consumer (renters). How the hell do you stop that? A tax on rental income just raises rental rates until equilibrium is found.