Meeting People
Amul Pandya converses with independent, adventurous and sometimes courteous free spirits. Creativity is an act of rebellion. Whether they are entrepreneurs, artists, athletes, investors, chefs, or corporate antagonists, Amul's guests all share a common disposition of not just pushing boundaries but re-drawing landscapes.
Meeting People
#31 Fred Harrison - Cheating and the Persistent Collapse of Civilisations
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I'm delighted to welcome back Fred Harrison for a second appearance on Meeting People following the release of his new book Cheating: The Human Project and its Betrayal.
In it he argues that "the withdrawal of Rent from its social function is the root cause of the persistent collapse of civilisations".
We unpack this bold claim over the course of our conversation.
Across history, the benefits of progress (technological, economic or otherwise) have routinely become captured by Rent seekers. Working to earn a living or grow a business thereafter feels like running through treacle.
Optimists of the past would never have predicted that owning a home, starting a family and earning enough to cover a moderate living standard would be this hard in 2026.
250 years on from the publishing of Adam Smith's Wealth of Nations, Fred is optimistic that his ideas can show us the way out of this quagmire. The tiresome debate between Socialism versus Capitalism is a distraction. Cutting taxes, reducing debt levels, simplifying the planning system, deregulating, and promoting trade are necessary for treating the symptoms of this malaise but don't address the root problem. This is the seizure of what Smith termed Economic Rent.
Fortunately, economic collapse, modern poverty, and drudgery are not a foregone conclusion. Unless Rent is socialised, the free market can never flourish and we will be plagued by boom and bust cycles. Fred Harrison has committed his life to educating people on this this reality.
You can find out more about the book here: https://shepheardwalwyn.com/product/cheating-the-human-project-and-its-betrayal/
This podcast was produced by Matt Cooper with music composed by Loverman.
Introduction to Fred Harrison and his new book Cheating
SPEAKER_01Fred. Under the present system, I give that value to the homeowner, and then what happens next? The government comes knocking on my door and says, awfully sorry, but we're gonna have to tax your wages now. Why should we behave ethically if the people in power are not behaving ethically? It's like the highwaymen of the old days who stopped the coach and just simply said, stand and deliver. The planning system was never going to solve our problems. Further separate those who are the ones that are accumulating the capital gains and those who are excluded from them.
SPEAKER_00Hello and welcome to Meeting People with me, Amal Pandia. Meeting People is a podcast where I have long conversations with rebellious, adventurous, and sometimes courteous free spirits. Fred, welcome back to the Meeting People podcast. You are my first returning guest, which is an exciting moment for me. So thanks again for coming along. The reason I wanted you on is you were kind enough to share with me your latest book, which I'm going to hold up to the camera, called Cheating, The Human Project and Its Betrayal. And in the book, you make some pretty punchy claims, one can say. One example I've got open here is the withdrawal of rent from its social functions is the root cause of the persistent collapse of civilizations. And that is a big claim which I'd love to explore and unpack over the course of the conversation. If people haven't seen our first episode that we did together in your leisure, go back and watch it. But I don't think you need to, I think we can sort of cover some familiar ground because I've found with your worldview it's helpful to kind of have some repeat exposure rather than you know it's not one and done. It kind of doesn't stick in the mind easily in many ways compared to what you're programmed to believe or think from one's education. So um first off, let's can we can you start by explaining what is rent? Because everyone knows instinctively or it's in the narrative that rent seeking is bad. Rent seeking behavior is something that we need to stamp out and it's the cause of our a lot of our problems, but no one can really identify what they mean by rent-seeking. What is it that they are seeking? What is rent in the first place?
SPEAKER_01Well,
What Rent Really Means
SPEAKER_01there are two ways of viewing rent. One is in its social status context, and the other is in the context that we now use it. Today we define rent as a transfer income. You guys produce the rent and you transfer it to me. I give you nothing back in return. It's a pure transfer. It's like the highwaymen of the old days who stopped the coach and just simply said, Stand and deliver, give me all that you treasure, or I'll shoot you. And that's the relationship that people who collect rent have with the working population. You're not allowed access to the vital services and the land that you need unless you yield the rent. So the rent, to understand it uh effectively, as I explain in the book, we need to go back actually to our origins as a species. Originally we were part of the primate family and we acted according to the laws of nature, which meant that we worked for the food we needed that day, we filled our stomachs, and then we basked in the sun. That was the end of the labor required to stay alive and to flourish within nature. But one branch of the primate species felt, well, that's not enough. We don't want to just live like that. The food that all species in nature labors for during the course of a day to fill their stomachs, to remain alive and to adapt to nature's opportunities is what we would now call wages. We work for our daily needs, we fulfill them, but this branch of our very earliest ancestors said, well, no, hang on. We would like to create a new kind of sphere of existence. But how could that come into being without working a bit extra every day to generate an extra flow of energy that could be invested? Well, to try and create this new sphere within the universe, first of all, they had to invest this additional flow of what we would now call economic rent, this net income, this extra over and above what we need for our daily well-being, a flow of energy. Our primate ancestors invested it in their bodies, alter their posture, expand their brain. They obviously perceived the possibility of a new kind of universe, a new kind of life. But that all came out of this one organ that was energy hungry. They wanted to expand the brain in their bodies so that they could visualize a new way of life. Well, that required them to work more for more than their bodily needs, their metabolic needs, their wages. That extra flow of energy, which they shared within the group, uh, was what we would today call economic rent or just rent. So it's not like what you pay for when you hire a car or an apartment, because when you're doing that, you're uh actually delivering what I define as rent and extra for the use of the product that you're seeking to borrow, uh a vehicle or an apartment. That's not what we mean by rent. The rent is just the net income, the extra, over and above our daily family immediate needs. Um it worked because by working that extra bit, uh they were able to develop moral codes of conduct. They realized that in order to discipline behavior to avoid cheating by any one individual, there had to be rules. So they they invested in developing these moral sensibilities. Uh and then they they had aspirations come into this big brain of theirs, reaching for the stars. Well, how could you do that without um funding the knowledge that was required? So, bit by painful bit over hundreds of thousands of years, they worked extra. Our nearest primate cousins, genetically speaking, are the chimpanzees and the great apes. Well, if they had the capacity to think about what these hominins were doing, they'd say, What fools you are? Why don't you come and sit back in the sun and enjoy yourself? Why are you working extra? They were working longer than they needed to in order to create this what I call social galaxy, this extra sphere of existence within the universe that would open up their capacity to reach for the stars, which we are now doing. But it all hung on the willingness to work extra to create this flow of resources and to pool those resources for the common good to make it possible for a rule-bearing species with the imagination to visualize a different future come into existence. So that's the nature of rent.
SPEAKER_00So if I to put it another way, you you want, you know, you want to have a realm of creativity, of dance, of music, understanding the world, philosophy. You want you you you a curiosity builds up, and to be able to explore that curiosity and have social relationships and communities, you need to have a surplus to be able to pull together and kind of keep each other safe and help people on hard times. And to kind of accelerate that, you start using equipment, tools, what what economic terminology we'll call capital to help you continue to do that, and you also need an access to nature. So those are the three things: the the what you describe as labour, which is your hands, your working day, you need access to natural resources, and then you also develop the ability to use tools and equipment, and those three things enable us to better expand and have a broader community. Is that is that a different way of putting it?
SPEAKER_01Yes, none of that is possible without that additional revenue. Uh, you use the word surplus, which is what a lot of academics use instead of rent, but it's not a surplus. The people who go out into the fields and work to generate this additional revenue, and they're not doing out of recklessness, out of no point. There's an intention. It's not a surplus to their requirements, it's very much uh a part of what they need. So, yes, we separate it from the stream of income we call wages, the stream of income that we would allocate to create the tools we need to help us to increase our productivity in order that we have this additional revenue which we intentionally create. It's not a surplus that's additional to the body that's up for grabs by anyone. Uh so that's why I think that the words we use is so vitally important. Uh we have to specify the social status of this stream of rental resources. Once those resources were privatized, now they became a transfer income. Now the people who collect that revenue, who are the cheats, uh, don't give anything in return. They sit by back at the campfire, they wait for the others to go off and do that laboring, bring back the resources, and then they just take their share of it. They're cheating. Well, the moral codes that were developed early on were designed to prevent the cheating. We're it we're all in this uh uh project, the human project, uh, to develop us out of nature. We've all got to pull our weight, we've got to pull uh for the common good a certain part of what we produce, and in that case, we can do all the lovely things that you referred to: learning to sing, learning to pray, learning to paint, uh, amplifying our aesthetic sensibilities, all as a result of pooling the rent.
SPEAKER_00And I remember, you know, being a school child playing sport, for example, or working in group projects, if you weren't pulling your weight, you did your your classmates or your teammates would be come on, come on, Amor, you know, you should have done that tackle, or you're you're not pulling rowing hard enough, whatever it is. So you had this sort of the community, the the size of the group was small enough to use the tool of shaming to kind of get people to not cheat or not free ride. That's right. And was that the main mechanism to prevent rent-seeking or cheating?
SPEAKER_01That was the mechanism, it was a personal uh approach to disciplining behavior that existed up to the point of the beginnings of civilization, and it worked, and human beings emerged out of nature uh as Homo sapiens, capable of reaching for the stars one day.
Is Hobbes Relevant Today?
SPEAKER_01They had developed the capacity to begin to accumulate the knowledge. But once they started the civilization settlement arrangement, which began with the uh transition from foraging for food to farming, to producing the food, which meant they had to settle down and uh distribute the land. Uh, that was when they the uh when they were vulnerable to the cheats, because now the cheats weren't in their immediate circle where they could censure them for be misbehaving. Now they pulled those uh net income, those additional resources into the temple or what became known as the palace, and they lost control over them, the direct personal control. And the some of the people that they trusted to look after the welfare of their communities decided to cheat and they got away with it.
SPEAKER_00So there was a pivotal moment, trans you know, the the the movement between near the Neolithic world to the in post-agricultural revolution creation of civilization, where which basically set this motion in train of cheating and cycles of kind of rise and fall collapse because of rent extraction. I can hear people you know going, well, come on, Fred, this sounds a bit kind of Russoyan, kind of noble savage. Actually, the Neolithic times were pretty brutal. It was only until the onset of civilization that we actually started to learn to not kill each other, not you know, not steal, not plunder. What do you say to that kind of traditional classic, maybe conservative uh mindset or of original sin or the hobsy and we're in a state of nature, and until we have some strong centralized government that dictates things, you know, we're all gonna be at each other's throats in this in a state of nature. That's the kind of common, you know, anti, anti-let's say, radical liberalism perspective that maybe you're taking here.
SPEAKER_01Yeah. Well, Hobbes uh wrote at a time uh before the accumulation of the knowledge that we now have. So he yes referred to the early phase as brutish and short. Well, there's a problem with that argument. There is no evidence when we look back in nature through anthropology and archaeology and so on, where we can observe a situation comparable to what we see in Gaza today. There was no brutish behavior of the sort that we are now capable of inflicting remorselessly as Russia is doing with its drones over Ukraine. There's no equivalent back in the pagan times when people were pre-civilized, but they had codes of behavior that didn't allow the cheating that we allow, and it's the cheating that results in the kind of devastation that isn't observable either in nature or in that transitional phase out of nature up to the point of the origins of civilization five to ten thousand years ago.
SPEAKER_00And we like to kind of, as as you know, that kind of interested school kid or whatever it is, lion or lionize antiquity and you know, classical Rome or classical Greece. And you actually, when you when you when you grow up and you learn a bit more about it, and you think the way the Romans treated the Carthaginians and just genocided the entire civilization once they defeated them, or the way the Spartans treated their neighbours, the Helots, by emasculating them, any Helot male that showed any sign of um standing up for themselves or any kind of spark of energy or independence, they would castrate them so that they wouldn't reproduce and therefore encourage the sort of the neighbouring helot city to be um as passive as possible, and in the way the Egyptians as well similarly uh treated their own citizenry. Um so your argument is that we kind of the problems we're facing today in 2026 uh are rooted in that transition thousands of years ago into civilization.
SPEAKER_01Is that 5,000 years ago? We've but we've betrayed the human project, which was built on an ethical behavior that required everybody to pull their weight. Simple as that. You can have what you want as long as you work for it. You can keep what you create, but that stream of revenue that we all cooperate to produce, we need to pull that for the social public services that we all want to share in common. What went wrong at the beginning of civilization was driven by the insatiable appetite for taking revenue that nobody, the the people who were taking it didn't earn. So, yes, uh, when we look at classical times, we see the building of empires. What what what were those empires for, other than to extract the rents out of those populations? When people weren't available to work, what was the point of uh turning people into slaves other than to produce the rents that the rent seekers wanted? So when we correctly analyze our history, it really all does come back to this issue of who controls the rents? Are they for the common good or are they for the exclusive privilege of a few people who want to build pyramids so that they will go to heaven and to hell with the population that actually built the pyramids? Today they don't build pyramids, they build half billion pound yachts, which they anchor in the harbours uh along the south of France. Uh their insatiable appetites, no bounds, and so it's all about extracting the this energy that makes humanity possible for the purpose of conspicuous consumption, which is the term that uses.
SPEAKER_00That's right. And so you mentioned a social galaxy and which is the realm that we create as conscious, um sentient, um and sort of rational, if that's the right word, um, beings. You likened the social galaxy to having properties similar to um Einstein's relativity theory. So you as gravity grows, that you know, an object with large amounts of gravity will affect space-time around it. And similarly, as rent or net income grows, it affects people's behavior around it. Was the temptation whenever that net income became big enough and civilization began just too strong for us to not seek it and cheat? Was it was there an inevitability about this paradigm that we're in of cheating?
SPEAKER_01Well, it was inevitable in the Sense that at the time of the beginnings when people were settling down, they didn't have the capacity, the organization power to control the way that their rents were used by the people that they trusted, the wise men, the holy men of their communities, who previously they trusted but also controlled. So the leaders couldn't get their way. They were answerable to the people. But once the community settled down and expanded, the knowledge for controlling the way this influence, this new decision-making system operated, wasn't available to the people. They trusted their leaders, and their trust was betrayed. The leaders then set about creating the infrastructure of the state, which was the power nexus, that enabled them to control the people, and what happened to that flow of additional revenue, so that they enshrined in the power structure their personal cheating behavior and excluded the people who worked.
SPEAKER_00Yeah, and it wasn't just manual labor, you know, slaves would be used for teaching, for education as well as so they were extracting your knowledge as well to enable noblemen to therefore go on and carry on conquest.
SPEAKER_01And so they pro they employed professionals like lawyers and accountants, but they were subservient to the cheating culture. And uh we've inherited that's the legacy that we've inherited from uh antiquity through classical Athens and Rome through the feudal era into the modern times.
The Rise and Fall of Civilisations
SPEAKER_00So there's all sorts of historians out there, there's pages and pages written about cause the causes of declines of empires. So there's the sort of silk slipper analogy where it's clogs on the way up, hard men breed, yes, tough times breed hard men, which then breed good times, which then breed soft men that create decline decline. So there's the sort of clogs on the way up, silk slippers on the way down thesis, then you've got the you know geography or climate change, population, demographics, migration. There's all sorts of theories abound about why civilizations grow and then collapse. But actually, your argument is that at some point you start with human ingenuity and pooling together of resources and and a common good, and then at some point the cheating becomes so prevalent that it causes an inevitable collapse. And this has happened over and over again, whether it was Rome, Greece, Florentine, or the Renaissance, the age of empires, and now today. Is that right? Was that a fair way of putting it?
SPEAKER_01Yes. The empires are built on accumulation and the use of force, but all the time the moral fabric of society is declining because the cheats are getting their way, uh, and there comes a point where they can't defend what looks like a big empire, an impregnable empire, but the barbarians walk in with practically no uh weapons, just their desperation to find somewhere to live and work. Or in the 12th century BC, uh some mysterious people called we now call the boat people, they sailed down uh the Mediterranean into antiquity, into Egypt and Mesopotamia, and they overran these uh vital, uh seemingly vibrant civilizations, but they were ready to collapse because the moral fiber had uh had dissipated.
SPEAKER_00That bronze Bronze Age collapse that you talk about is feels weirdly similar to where we are today. You had their sort of perfect, you know, it it kind of worked until it didn't. So you had the Hittites, the Mycenaeans, the Egyptians, the Assyrians, and they were all kind of actually traded a lot with each other. They had alliances where no one power was ever too supreme. But within each of those kingdoms, the the temptation to cheat and rent-seek and extract, particularly the priestly class in Egypt, for example, to have that conspicuous consumption get bigger and bigger meant that when you had a change in climate, for example, there was an all-yeah, there was a big volcanic eruption apparently in Santorini, there was a um harvest got worse and worse successively because of changing weather patterns. So you had this huge migration from the sea peoples or the boat peoples that you talk about. And these kingdoms just were not able to, they were not robust enough, they were too fragile to be able to cope with that because they were built, they were no longer producing enough and keeping what they produced. There were there was too much cheating endemic in the system, and it it kind of feels eerily similar to where we are today, where we've got a lot of changing weather behaviour, what causes that, who knows? We've got a lot of migration happening, and we've got apparently very wealthy developed countries, but are seemingly kind of actually, you know, you you had a stat for the UK that there's more tax takers than there are taxpayers now for the first time in a long time, and so that cannot sustain itself. So whining force today um we do now have a better understanding and education about what causes things versus what the Neolithic peoples had back in the day who were not they were not well equipped to be able to kind of mentally argue against the culture of cheating. We can argue against it now. So are we better placed to save ourselves? Well, yes and no.
SPEAKER_01I remain optimistic for reasons I'll explain in a second, but right now the people who are the leaders of the rich world refuse to talk about what is uh ultimately the existential reason for why seemingly powerful civilizations collapse. They will not use that word rent or the net income. They will use any kind of explanation, any description except the one word that enables us to focus attention on the policies that would enable us to recover the situation, to start rebuilding from the inner inside the system the strength, the vitality of society. So the descriptions are multiple about what's wrong with our system, except the one issue, the cheating, as I call it, is not discussed in the language that enables a lawmaker to draft a law saying, well, we're just going to reform the tax system, the revenue system that we employ. No words that are that are allowed to upset the power structure. But the reason why I remain optimistic is yes, we've had for this year, 2026, we celebrate the 250th year of Adam Smith's publication of The Wealth of Nations, where he first laid out the terms of ethical economics that were coordinated by balancing the private sector, the free markets, with responsible governance based on collecting the revenue from the rents. You can only have a free market, a truly free market, not the perverse system that we have today, if you have a responsible form of governance. And by merging the two, you have the power of the people acting responsibly as individuals and as social beings. The knowledge has been with us for 250 years, it's been suppressed every time. But if the people now become aware of the existential threat to themselves, their families, and their communities, they just might decide that now is the time for change. And the modern technology of communication means we can bypass the official media and the think tanks that pretend to be our intellectual communities and the people who are claiming to be our leaders, and we can communicate with each other on a global scale. And that leads me to believe that if somehow this message could be got out to the people, they can start to inform themselves, and once that happens, once there is a sufficient number of informed people, then the lawmakers will panic and they will have to start making the changes. But until then, nothing is going to change.
SPEAKER_00Well, let's spend some time on Adam Smith then. Um he's deeply misquoted or misunderstood by many people today. The invisible hand or the the baker doesn't care about that quote about when people go to work, they're not doing it out of um some altruistic generosity, they're doing it for selfish needs, which is true only if you contextualize that within a system where rent is social. Adam Smith wrote that because he the premise that he based that on was the fact that rent would be socialized.
SPEAKER_02Yeah.
SPEAKER_00And that you know, your wages and your capital investments were for you. So he he didn't mean that as a kind of free-for-all with everything. Can you can you talk about his inspiration, which is the physiocrats? Because there seems to be a kind of a big what-if moment in history, particularly with revolutionary France. If the physiocrats had got their way, we we may not have had the bloodshed of 1789 to today, um, because that revolution was so consequential to where we are now. Who were the physiocrats? How did they inspire Adam Smith? What were they arguing, and could they have got their way if possible?
SPEAKER_01Well, uh, in a sense, uh that was the inflection point between um a successful civilization and the one that we now have, where our leaders simply are obsolete because they don't know what they're doing. The physiocrats were just a group of philosophers in Paris in the mid-18th century who figured out that the sensible way to fund the public services was by directly collecting the agricultural rents, the farmland rents. Uh if that if that had been done, it would have been at the expense of the feudal nobility, obviously, but who owned all the farmland, but it would have uh begun to transform the relationships between the peasants who worked and the nobility who claimed the rents that the peasants were producing. Uh they elaborated a philosophy that made this case. Yes, it was a limited one in terms of their the way they defined value. They were just before the dawn of industrialization, so they still thought of rent in terms of coming from the farmland only, but it was enough of an opening for Adam Smith, the moral philosopher up in Glasgow, to go to Paris to study what they were saying, and then to begin to embroider that philosophy uh in the context of making pinheads in factories back in England and Scotland. Adam Smith was a moral philosopher. He was not advocating or representing the worker as selfish. That is the way that we today deliberately mischaracterize what he was doing. As you've said, he portrayed the relationship between the working people and their social responsibilities on the basis that if the people who worked gave the rent to fund the services that they needed, that they wanted to share in common, then they were free to go about their business without thinking about anybody else, but to look after their own personal needs, because they were simultaneously also fulfilling their social obligations. Again in France the finance minister who wanted to change the financial system, a guy called Turgot, advocated it to the king and was promptly sacked because this would have infringed on the power of the people who were collecting the rents and it wasn't to be allowed. As a consequence, Turgot's fears that the peasants were becoming disturbed, exploited, disgruntled, did lead to what he forecast, which was a bloody revolution. That revolution was based not on understanding what needed to be done, but just construct the guillotine, chop the heads off the monarchy and the nobility, and nothing changed in terms of what happened to the rent because it wasn't being analyzed in the context of the onset of industrialization and rebasing decision making in favor of the people who produce the wealth of the nation. So that model was replicated in Britain and the rest of the industrializing world and then in America and brings us to where we are today, which is people know there's something fundamentally wrong with their system. They call Britain, for instance, a failed state, but they don't actually identify why it's a failed state. They don't explain why our prime ministers keep getting the chop for failing to deliver what people need. All we have is a constant turnover of prime ministers who are simply helpless. They lack the power. We lack this the vitality to protect our nation from the people who are now being driven out of Africa, crossing the Channel, landing on the beaches of Dover. We're repeating history all over again, and it's just because the system will not allow us to discuss the root cause of our problems.
SPEAKER_00I would say they also don't have the ideas or the understanding or the education, the education establishment has withdrawn the knowledge that was, you know, would have been available to let's take Winston Churchill, for example, or or John Stuart Mill. Um there was a few other what-if moments in history.
Henry George, 1909, and the Fork in History
SPEAKER_00Let's Winston Churchill did the budget in 1909, is that right, which um could have set in course the idea of reinstating classical liberalism and the ideas of Adam Smith through funding the state from rent. Um can you talk about that? Because it feels like the leaders today just don't know about that. They're not, they don't have the knowledge, they don't understand classical economics, they're too they're too brainwashed, not brainwashed is the wrong word, but like um they're too narrow in their education of economics and and and philosophy to understand the role of natural resources.
SPEAKER_01Yeah, well, brainwashing is not a bad way to describe it. It's willful blindness. There is no secret about the formula that would enable us to flourish as a society, a free and prosperous society, one that was responsible for dealing with nature and the other issues that are now accumulating as existential threats to our society. What happened late in the 19th century was that an American journalist called Henry George wrote a book which, because most people were tenants, people identified with. He said, Look, the reasons for poverty is not that we're not working, it's just that we're not allowed to keep what we produce. Because there are a bunch of people, the free riders, who are just taking the net income out of society, pooling it for their personal use instead of what was intended, which was for the common good. That book, Progress and Poverty, uh, became a global bestseller, and it created the first global reform movement of people, which ultimately led to the British government introducing uh the proposal to reform the tax regime in 1909-1910. They began to prepare the foundations for the transition to this system, but then we hit the barriers, World War I. Uh people are decimated in the in the uh fields, chopped down by machine guns. Along comes 1920, two years of so-called peace. Uh, the Conservatives say, nope, you're not to carry on with that kind of policy. In fact, you've got to pay back the rents that you've already collected to the people who you extracted it from, and Britain was back on course for behaving like a failed state, which it was. And the 1930s, another world war, so the shift to socialism and Marxist ideology, and the idea that we could have the solution in the workers taking over the world, and we're left with the Soviet Union, which then collapses. Uh, Marxism succeeds in China, which has now been modified to allow a certain element of the market economy, but still the Marxists are in control, and um we've got not just a failed state in Europe, but the whole universal system, a global civilization is failing the people.
SPEAKER_00So there's that fork in the road in the late 19th century, earlier 20th century, where progressives or people who wanted to remove unfairness in the system that was preventing people from flourishing could have gone one of two ways. They could have gone down the classical liberal route of socializing rents, but keeping a free market economy, letting Britain's or the West institutions flourish, but uh also collecting for the public person for people, you know, what they didn't produce. Or you had the the rad the communism, effectively, and we chose one. route and not the other because of world wars and what why why why did Marxism or radical communism succeed as the progressive's avenue of choice for removing unfairness in the world? Because it feels like a big it's the wrong wrong road we chose to go down that way which has therefore made people very suspicious today of people who come along and say well we can create heaven on earth if if only we had the right tax policy.
SPEAKER_02Yeah.
SPEAKER_01Well for two reasons. Yes there were those liberals like John Stuart Mill who accurately described the way the exploitative process worked. Some people got grew rich in their sleep he wrote the rent seekers the free riders and they were wanting to educate the public along the lines proposed by Henry George. But along comes a man with a grudge against the capitalists Karl Marx. He leaves Germany comes to London he sits in the British Museum and what he's looking for is a model against the capitalists. So he frames the language words like value and the working class to fit a model that excluded the humanitarian aspects of what Henry George had written about for instance and what Adam Smith had intended. Yes he had to address the issue of rent he called it shitty rent he didn't want to know about shitty rent uh it was all about profits that the capitalists were taking and we had to now nationalise the enterprises to give the workers the control and uh at first as we saw in the late 19th century we ended up in Britain with an enlightened government a liberal government that was going to actually adopt the Adam Smith model but the World War interfered and the chaos of the 1930s depression the frustrations of people who had now moved away from understanding the nature of rent led um at the beginning well after the during the First World War Lenin goes to the to Russia they overthrow the Tsar who refused to adopt the model that Tolstoy had learnt from Henry George and paid the price by having his head cut off he was shot actually and his family were shot and that created the opening for Lenin to say it's those horrible capitalists we've got to take command of the economy and so it was these elements that accumulated and the rent-based doctrine of a free society a free market and responsible governance was pushed aside in favour of what became the Soviet communist command economy.
SPEAKER_00And where the big problem with Marx or the big blind spot he had as you we've already discussed is that labour exploitation was been happening for thousands of years before capitalism was even a thing before the commercial revolution took off it it's been a feature of our civilization since the beginning.
SPEAKER_01Yes and he used he used his ideology to rebrand the early periods of human evolution as communism but it wasn't communism these people who were evolving out of nature as I seek to describe in my book they they developed personal individual characteristics that were not communal they struggled to develop personalities that were private personalities along with their social personalities this composite of the private individual who had social responsibilities and this complex personality which we don't see in nature was based on individuals empathizing with other people which is why they developed moral codes and aesthetic sensibilities so that they had this social personality that overlay their private personality. Well that didn't fit Marx's idea he he just wanted everything to be communism and so he he pushes antiquity or pre-antiquity aside as well that was a model that we can show we need to reproduce today in the form of the command
The Limits Of "Rational Optimism"
SPEAKER_01economy.
SPEAKER_00Yeah to speak pivoting to very different group of people to the Marxists before I came onto your work and the work of Henry George I was very interested in the let's call it the rational optimist movement or people work people like Stephen Pinker, Matt Ridley who basically said since since the Industrial Revolution or the scientific revolution things have been actually getting better and better. If you look at healthcare standards of living technology we're all much healthier happier than we were 300 years ago when you know there was a lot of feudalism and serfdom and actually we're on this with technology getting better and better we're on a course of kind of future prosperity so let's all be rational and optimistic about the future and how lucky we are today one thing I've slowly you know I that is a view that has its place but I have been able to temper that through understanding economic rent a bit better and exploitation and I was surprised to learn from your latest your your book that actually fertility rates marriage rates our life expectancy is starting to go down now and 200 years ago for example the life expectancy of someone in the northeast of England was 10 years lower than it is today and that's still the case today that you know if you were born f 300 miles north from London you're gonna live ten years shorter.
SPEAKER_01So this rational optimist movement has its has its limits yeah why is it that in in a seemingly prosperous nation like the United Kingdom there are groups of people who are programmed to die ten years earlier than others who live in rich boroughs in London for instance there's something in the foundations of the system that's killing them off prematurely. There's no need for them to die but they are dying and that's been done under the supervision of a so-called rule observing democratic form of governance but while the statistics are accumulated nobody actually gets to ask the awkward questions they just talk about oh we'll go and level up the north but they don't know what they mean by leveling up yeah shifting a bit more money up north build a few more roads uh extend the railway well all that that will do is end up amplifying the problems an additional railway will uh further separate those who are the ones that are accumulating the capital gains and those who are excluded from them there is no uh structural change to the system um yes it's true we've doubled the living span of uh human beings over the last 200 years was that out of the goodness of the hearts of the people who are the rent seekers no so move moving away from Marxists to a different group of people is the crowd the rational optimist crowd people like Matt Ridley Stephen Pinker who argue that since the scientific revolution our living standards have basically gone up dramatically life expectancy's gone up health mortality it's all getting better we just need to make sure we don't get in the way of science technology innovation and capitalism and we'll carry on moving into an age of abundance and prosperity now there is something appealing and rational perhaps uh with a with a capital R about that but having come across your work and the work of people like Henry George it's been quite eye-opening to also see that there is some systemic unfairness against people actually being the best that they can be because of the way we organise our society.
SPEAKER_00And that has become so prevalent that actually mortality rates are coming down in the developed world fertility rates are plummeting marital rates are collapsing as well and if you take one disparity that you talk about in your book for instance 200 years ago there was about a 10-year life expectancy for males living difference between males living in London versus males living in the Northeast. So you would live 10 years longer if you were lucky enough to be born and live in London. Wineford today if that prosperity thesis played out then that gap should have you know merged but it hasn't it's still there prevalent today that if you were born in the Northeast today you are going to live 10 years longer less on average than you are in London.
SPEAKER_01So um why is it that despite all this prosperity technology innovation science we still haven't managed to kind of universalize that prosperity well there is a um myth that the intellectual communities subscribe to which is that yes all the technology all the scientific things have produced wonderful advances and yes we've doubled our life lives since the 18th century we now live a lot longer except for those who die prematurely of course they attribute this to the technological advances but they say oh but technology also has a trap in it. This trap is oh people are rendered obsolete they lose their jobs because of the technological advances and so that explains poverty. Oh okay so is that all that happens with technology that some people lose their jobs and are shoved into poverty? No who is the main beneficiary from the scientific advances over the last 200 years not the working people who keep slogging their guts out to make a bear living some of them not even able to do that and relying on charity having to go to food banks to get food to put on the table for their children all the technological advances which reduce the costs of production also expands the net income, the rents that are available which are not shared equally among the people who work to produce them they are shoveled into tax havens, invested in luxury items nothing to do with ordinary people's lives which is the point that Adam Smith was making that this is a totally unfair way of distributing the benefits of technological scientific advances so yes people live longer that means they've got more years to produce the rents that are then hived off to the free riders in our community and one consequence is that as you pointed out the life expectancy gap has not been reduced and that's because of the fundamental reality at the in the foundations of our system which is if you are deprived of your share of the net benefits of society you end up in despair and you pass that despair on to your children who lose the appetite to aspire to better things they're relegated they're segregated into enclaves and they don't get the benefits which people like me in in the London borough where I live enjoy fully so one indicator of that injustice administered by our democratic governments is a difference of ten years in life expectancy. Where is the justice
What is Ricardo’s Law of Economic Rent
SPEAKER_01in that?
SPEAKER_00Where is the equality before the law in that it's a joke this idea that the that we're all treated as equals we're not um I came across through your work and others David Ricardo's law of economic rent which is a really interesting theory but I struggle to articulate it in conversation or explain it. You've written a book about that which I can see from the corner of my eye Ricardo's Law. Everyone's reasonably familiar with his comparative advantage thesis as to why free trade is important but they're less familiar with his explanation of why economic rent is an important thing to know about. Could you just help us unpack that if possible?
SPEAKER_01Yeah people are rational in the in the early ages of agriculture they didn't go and try and grow food where the soil was infertile they went to the best locations where they could concentrate their energies to maximize their output which gave the largest net income rents that made sense why work on an infertile plot of land when there's a fertile plot of land waiting to be used to grow your food and it's the same with industrialization manufacturers gravitated to the locations where they could optimize their economic activities. The process is called agglomeration concentrating in those locations where you have the lowest costs and the maximum output productivity well that meant that those locations had the highest net incomes rents and as you move further away from those concentrations the productivity declines which means the rents decline. We see this in the profile of house prices house prices in London and the southeast are the highest they're lowest up in Scotland and the logic is that we move about to achieve the most that we can deliver for the least effort. That makes human sense but in doing so we are increasing the amount that we produce collectively that's net of what we need as our wages so if we look at um the wage profile across the national space when you exclude the amount that people pay for their housing their wages their take home incomes are pretty standard right away across the economic space it's what's left after you deduct the wages that is an indication of the net product of some areas compared with others. And so what Ricardo demonstrated was of course location matters. The more productive areas have the highest rents and then they decline to the margin. Nobody goes beyond the margin because not only are there no rents beyond the margin they're not even producing enough wages to look after their daily needs. So the margin is the end of the space that we occupy to produce what we need well okay but that doesn't mean that those living in the privileged the most intensive productive areas are entitled to keep those rents because everybody within that territorial catchment area part of the economy is helping to produce the net income it's not the product of any one individual but the whole group across the territorial space so people in the northeast of England are contributing to the production of rent down in the southeast of England because they're buying the goods from produced in the southeast they're investing any savings they've got in the banks located in the southeast pushing up the location values as a result of their participation so we are all entitled throughout the space to share in those benefits but because we don't do that because we reserve the net income for the privileged people the free riding population well once that starts to happen we don't want to be reminded of the poor people in our midst so we segregate them. We're supposed to be a a a society where everybody is treated as equal before the law and yet segregation happens in our society. We think it only happened once upon a time in South Africa. No it's happening every day in our society where we push the poor people the low income people who are deprived of their human opportunities deprived of the right to achieve their aspirations they're segregated into the districts where we can forget about them where we do not share our net income on an equal basis. We just keep them quiet and that's why we have the poor districts and the premature deaths and why the rich areas in London and the south east are flourishing or supposedly re flourishing but it's more complicated than that.
SPEAKER_00So a a a mental experiment of that would be let's say a depressed area of London somewhere like Hackney or Some East London, whatever it might be, someone decides to open a museum there or start a university. There's some sort of philanthropic or mission-driven behavior that use you know this makes them compels them to do something in that borough. All of a sudden, that museum does very well. People travel to it. Restaurants and cafes start opening about around it, yoga studios, whatever you want to say, right? And there's a temporary uplift in living standards, in uh earnings and prosperity. And then all of a sudden, or over time, the benefits of that start getting captured by the people who own the property in the area. They haven't done any of the work, they haven't started the museum or opened the cafe or decided to design a menu that is interesting for a restaurant. But those people who have done that over time start finding it's getting more and more expensive for them to carry on operating. And the people who were living there and working all of a sudden find it harder and harder for themselves to live there. An example, I've I've had, I was speaking to someone who's a governor of a school in Surrey, and she says one of the big problems we have at this school is we teachers tend to marry other teachers, and teachers only earn so much money, and they find that they just cannot live in Surrey on the salaries that they have, and so they they have a much higher turnover of teaching staff today than they used to have 20-30 years ago when rents weren't so high. And what you're finding with a lot of teachers now is that it is moving to Singapore because they just have a much better lifestyle than they do in the UK. So you're getting this hollowing out as a result of this benefits of capitalism, of science, of innovation, of risk-taking being captured by landowners. Yeah.
SPEAKER_01And that that's the simple fact. And of course, there are a lot of ordinary hardworking people who are in that category of rent claimants. They are homeowners, so they are capitalizing unearned income into their value of their properties. And so up till now, over the last 70 years, since World War II, they've we, I'm one of them, have become part of the class that has benefited from the general uplift in productivity uh which was not shared equally. We c we are claiming the rents that everybody else is producing. So the new generation are desperate, they can't afford to acquire homes where they can start their families. So that creates despair, it it means the demographic crisis is on us, the drop in fertility, and it's all part of the hemorrhaging of the vitality of the social system.
Is Building More Houses the Panacea?
SPEAKER_00I've spoken to classical liberal economists to operating today, um, people from the Institute of Economic Affairs, people from the Adam Smith Institute, and I've talked to them about this. Why don't we why don't you elevate a land value tax as your to the top of your priority list? What is it about the way you're seeing the world that you kind of you speak to them, they're like, yeah, you know, all for a land value tax, you know, it'll help. Maybe we replace business rates and stamp duty with it and then see where we go. But Amal, the real problem is not the fiscal situation, it's the fact that we've got a planning system that prevents supply of housing to grow. We don't we don't build enough houses, we don't build anything. And if only house builders were unleashed to be able to build property, we would then be able to redress the supply-demand imbalance and therefore enable house prices to come down and enable young people to get on the ladder and enable us, you know, then to start families and all the rest. And I kind of find that answer not that compelling personally. But what what do you say to the people who are supposedly free market economists today who view land value taxes as a nice to have, but actually it's all about planning and regulations?
SPEAKER_01It's shallow thinking. It's true the planning system doesn't deliver uh enough housing at affordable prices, but the planning system was never designed to do that. Why have we got a planning system? Because before the planning system, the free market didn't deliver the houses people needed at affordable rates, and the housing that was delivered before the planning acts of the post-war era were introduced, uh the housing that was delivered was shoddy, awful to live in, uh, causing diseases through the damp in the air and so on. And so action had to be taken. Unfortunately, it wasn't the free market, free society solution, it was a quasi-socialist one. Oh, let's try and get out of this rut by having a planning system. And now we treat the planning system as the cause of the problem rather than uh a device that avoided confronting the reality. And so economists and the other uh public commentators uh are just dealing with symptoms.
SPEAKER_00Yes.
SPEAKER_01The planning system was never going to solve our problems. Uh it was a device to dodge the issues, a way of sidestepping reality.
SPEAKER_00And if you're a house builder, you don't want to flood the market with supply anyway, because you're going to crash your margins. You'll you're incentivized to land hoard because you'll probably make more money from the value of the land you're earning going up rather than selling houses.
SPEAKER_01Which is why when they buy land, they put it in their banks and hang on to it for five years in order to let the price go up. Well, the planning system isn't telling them to keep the land uh unbuilt on for five years. They are choosing to do that for a very uh good reason, the accumulation of the net income or the capital gains that are the capitalized rents that are created by the surrounding uh amenities provided by the community.
SPEAKER_00So we've talked about this before, but I think it's worth going through it again, maybe with some more details.
Debt and Taxes - is there a way out?
SPEAKER_00We're in a debt crisis, we're spending too much money to try and address the symptoms of poverty that we have. 400 billion pounds of COVID stimulus that has been spent 2020 onwards, where does that go? Who knows? Um we're also over taxed, you know, as you know, everything from starting a business, your your wages, your your capital, you know, is as high as it could be. Um so how do we fund, how do we fund the state, and how do we fund um you know a welfare system if it isn't through taxing our wages and capital gains?
SPEAKER_01Well, we've reached the point of exhaustion. The only way that we can apparently uh fund what people need, those needs determined by an unfair system, the needs would be far fewer in a fairer society. But the only way to fund the system as it at present is is to borrow the money, increase the national debt, placing the burden on future generations, so that we can apparently provide for the welfare of the people who are deprived of what they're entitled to today. And um, the reason why we use the taxes that are a burden on people, the income taxes, the taxes on their consumption and on the profits they make from their value-adding enterprises, is that the revenue that would not be a burden on people, the rents, have been extracted out of the system. So, what choices governments have other than to use burdensome taxes, which then amplify the problems? People who are going to have enough to cope with under the cheating system, but overlaid on that uh burden is the unfair way in which their incomes are taxed. And um so we're amplifying the stresses all the time, which is why children are suffering mental ill health, why young people are not able to start normal lives by getting married, starting a career, earning their incomes, all of these things are coming together in a system that just isn't going to work.
SPEAKER_00Yeah, so you advocate taxing the site value of what where your la your property sits on, basically. So not the property itself. If you want to add a tennis court or a science lab or whatever it is, that the benefits of that are yours to keep. But the the um just the value of the land that that your property sits on should be taxed at, I don't know, 2%, 3% a year, something like that. And that value is already assessed by various bodies in the state. So it's not hard to calculate what what your land values are, and that can fund the state, and you over time remove the tax, the dead weight taxes, the deadweight burden that's on the economy through things like uh the national minimum wage and um income tax. Is that right?
SPEAKER_01Well, that's the way we used to put the case in the past, but I've realized that people don't like taxes, so if I advocate a land value tax, they immediately think this guy wants to tax my land, and uh they're not interested, they they back away, and I've grown to realize that the language we use is self-defeating. We shoot ourselves in the foot each time we say we want to tax your capital gains effectively on your home. No, that's not what we want to do. All that we're saying is this if you want these public services that you want to access in the locations where you want to live or work, you have to pay your fair share of those the costs of supplying those services. You want to be able to employ more teachers or nurses? Well, yeah, but w who's going to pay for them? You want them, you should be paying for them. We need to change the uh revenue system away from taxes, which people object to, and onto a system of personal responsibility. Well, uh, you see, when we buy a house, what we're pay what we're doing is making a calc a complex calculation. I want a three-bedroom, semi-detached house in this locality. I want it in this locality because I want to access those schools for my kids or the medical services for my wife when she becomes pregnant, or access to the parks, or the local theatre. And I am willing to pay for more than the value of the house for access to those services. Well, fine. So one is behaving responsibly when calculating how much we can afford to contribute to the community for access to those services in the given location where we choose to live. But instead of giving that value, which we're willing to hand over to the community, what do we do with that value? Well, we hand it to the guy who's selling us the three-bedroom house. But he's selling us a three-bedroom house that's depreciating in value through time. He's entitled to the value of the house that was built by people's labor. He's entirely entitled to the value of the building. He's not entitled to the value of the local services that are provided by society. So what we have to do is explain to the homeowner who's trapped in the current system that we need to shift over time carefully so as not to create catastrophes, either personal or social. Shift to a system whereby when we buy a house, we accept this dual responsibility. I will pay you for your building. It's standing on a plot of land, but the plot of land is of no importance. It's the building is plonked on that plot of land. What I'm going to then do is pay for my access to these public services, which are the rents that are generated by the hospital, the school, the park, the highways, the public transport system. But under the present system, I give that value to the homeowner, and then what happens next? The government comes knocking on my door and says, Oh, well, you're not giving the rental value to the community to pay for the public services, so awfully sorry, but we're going to have to tax your wages now because we've got no choice. Oh boy, that's a burden because I've not only paid the rents to this homeowner, but I'm now having to have this invasion of my earned income by government to pay for the public services. This is an insane, irrational system, a corrupted one, a cheating system, and we have to transition carefully out of it.
SPEAKER_00But this is what the Conservatives get wrong, or the you know, which is, oh, we just need to cut taxes and cut spending, because when that happens, great, your wage, you know, your tax on your wages comes down, but what ends up happening is that the landowner then gets a bigger share of that tax cut effectively over time. Exactly. So that that when you're buying that property because of its access to the parks, the schools, the hospitals, the highways, you're paying lower taxes to the government on your wages. So the landowner captures that in the higher charging you more rent or a higher property price if you want to move in. And so you you're tackling the symptoms again and not the root cause of the unfairness. And the statistics that you lay out in your book are just so staggering. I work in the investment industry full-time. Everyone is obsessing about the market capitalization of some of the biggest companies out there. Nvidia, $7 to $10 trillion of market cap, Apple, Facebook, Microsoft, Google, Amazon, whatever it might be, all $2, $3, $4 trillion, Magnificent 7 aggregating to sort of 30, 40 trillion, which is sort of the largest, these top 7, 10 companies have been the largest proportion of global equity markets in history. But none of that pale, that that all pales into comparison compared to the size of the real estate market. So you lay out Savill's, you know, in 2020, the worldwide value of real estate was 330 trillion. You know, that's multiples of global GDP. There lies the source of funding for to pay off this debt burden that we've created for ourselves and to diminish the dead weight burden that we're placing on workers and and innovators and capitalists. And it's just opening people's eyes to that. You know, that there's some double counting in those numbers, sure. But the the solution is just obvious if you just look at the magnitude of these numbers, that just because you're living in London, you're not entitled to sort of those prices of your property going up year on year on year on year.
SPEAKER_01And so that's why I call the book cheating. Human beings do not like cheats. And they don't regard themselves as cheats when they buy a property and then start to accumulate the rents. And they're not cheats actually, it's the system that entraps people into it. What choice do we have but to become cheats by buying a property at the lowest price, sitting in it and watching the value going up, which we are not actually working to generate. That value comes from somewhere else. We didn't produce it. That makes us a cheat. But we don't intend that and we don't like it. We boo uh when we see a footballer cheating on the uh the football field. He's cheating, ref. Punish him. That's our normal human uh disposition. We empathize with people's needs, we want to behave responsibly, but the culture, the culture of cheating traps us into the system, into behaving badly, and we're all in on it in some way or the other.
SPEAKER_00And would you would you maybe I'm getting this wrong, but would you say suppose it benefits cheats or people using the welfare system rather than working? The incentives are to remain on welfare because the death the delta or the differential between staying on welfare and going to work is not enough to justify the the backbreaking labour to kind of replace your earnings that you would get from welfare. Are those recipients of welfare just trying to get in on it? And you know, in terms of there's a pool of rent they don't have access to, it's being kept, and so this is their way of accessing that pool of capital pool of rent, sorry, that has accumulated.
SPEAKER_01Well, if you live in a corrupt society and there's no way to turn it into a responsible society, what choice do you have? When we want to buy a home, we can't do it on an ethical economic basis, we have to comply with the law. And people who are uh rendered um uh isolated, uh, low-income or low productivity workers, uh, if they can see a way to not working, it's all part of the game. The people in London, the people with power, they're corrupt. So what's wrong with me being corrupt? And so that's how the vitality of a society crumbles from within. We weaken it because we destroy the moral fibre of society. And why should we behave ethically if the people in power are not behaving ethically? And so it all crumbles.
SPEAKER_00And it feels like we're because living standards and wages and productivity has stagnated for so long now, that we are triangulating, your cause of optimism that we are triangulating on the problem, albeit tentatively, could have perverse manifestations. So people like Gary Stevenson, for example, I don't know if you're familiar with him, uh very articulate radical economist who's advocating for wealth taxes, saying, all identifying all the call all the problems, but now saying the solution is for a big wealth tax. This is the temptation that you know maybe the Labour government is going to fall into as well if it lurches leftwards, if that's the right terminology. That doesn't tackle the problem from as I see it in terms of the unearned income that people earn from rent seeking. That wealth tax will just cause is more of a sledgehammer that will, you know, trample down on innovation and labour. Is that Is that a right way of looking at it?
SPEAKER_01Yes. The rent seekers love the idea of a wealth tax because they know it's not practical. Almost no government actually uses a wealth tax. When they try to impose one, they end up uh removing it because people say, Well, I'm wealthy, I'm going to take my wealth and go and live in a tax haven. So that's self-defeating. We know from historical examples that when you talk about a wealth tax, you are talking about penalizing not only the people who don't earn their wealth, but penalizing the people who do earn their wealth. Why treat them as equals? Why not discriminate in favor of those who actually add value to the nation and become rich and so are entitled to their wealth? Treat them separately from those who are getting rich by doing sod all. The wealth tax, like let's tax the rich, is language that you can't convert into a law that can administer a justice-based system. So like at the end of the 19th century in Germany, the Prussian landowners, known as the Junkers, they loved the idea that the wealth tax was going to be introduced because that would distract the system from their unearned wealth. And so they actually supported a wealth tax in Germany. Landowners support a wealth tax because it ain't gonna work.
SPEAKER_02Yeah.
SPEAKER_01But in the meantime, government is distracted from what would work.
SPEAKER_00So the government comes in and goes, well, the value of your watch is that, and your furniture is this, and your paintings is so and so, so that aggregates to this, and it's sort of all very complex and convoluted, and they're missing the kind of the actual main source of wealth that's sitting underneath the building.
Denmark, Taiwan, Singapore As Proof
SPEAKER_00Um can we can we pivot to some positive examples in history that have, you know, worked? So you ask the question in your book, what makes Denmark Denmark? For example, there's Denmark, we talked about Taiwan when we last met, Hong Kong, Singapore. Some examples in history where this type of thinking has manifested in positive outcomes.
SPEAKER_01Yeah, there have there are cases where the either out of necessity or because of enlightenment, um a justice-based uh income sharing system has been introduced. So Denmark is the best example where a monarch liberated the peasants, the serfs, uh, by doing away with an landed nobility. That was in the 18th century. In the 19th century they imposed a unique tax on the large manor houses, which were collecting rents. They expanded the educational system for adults so that by the time they were going to introduce the democratic process at the beginning of the 20th century, an educated population understood the basis of fair ways of raising revenue, and they learnt uh about the land value collection that Henry George proposed, and they enshrined it in legislation in the 1920s. So Denmark now is a classic case of a nation that claims to be very happy, they're right at the top of the UN Happiness Index, and the only explanation for that is that they have the social solidarity that flowed from getting rid of the cheating in their midst. And yeah, uh, Taiwan, when uh the nationalists were driven off the mainland by Chairman Mao's Communist Army in the 1940s, they instituted land reform and tax reform, and Taiwan now is one of the richest populations on earth. And that's what rankles with the Beijing Communist Party. Beijing doesn't want the island of Formosa, which we now call Taiwan, for the land. They've got an ideological grudge against these free market uh creative people who are flourishing just off their coast. So it's an ideological battle, not a battle for Taiwan is an island that belongs to China. That's just a cover story.
SPEAKER_00Yeah. Um and there are other examples. Hong Kong and Singapore, you know, Singapore's Prime Minister last year, I think, warned about global property prices becoming a real systemic issue. But Singapore itself was built on there's no land speculation per se, is that right?
SPEAKER_01Yes. When when uh Britain gave up Singapore as part of the British Empire, the first Prime Minister said, Well, uh, we need to invest in infrastructure, we need land, we will pay the landowners uh the agricultural value of their land, not the price that they would want to put on their land as if the infrastructure was already in place. In other words, the rents of the land were kept by the state to invest in the infrastructure that makes Singapore such a prosperous place today.
SPEAKER_00That sovereign wealth fund can then reinvest in the country, which is what we should have done with the North Sea oil, and maybe we can do where we to. Um so how do we it looking at today and you know the future? We might some people argue we're going into an age of abundance with artificial intelligence. Do you subscribe to that or are you quite worried about uh the job displacement that may come from that and this new technology that could possibly uh be quite sinister?
SPEAKER_01You're talking about artificial intelligence. The digital age at the moment is programmed to be a disaster for humanity because um we're investing everything about human beings in this metaverse that has no empathy, no human uh sensibilities of moral uh behavior and so on. So, what is it that we're investing in these humanoids that will soon be exercising superintelligence and acting autonomously? It's autonomous intelligence, not artificial intelligence. We're investing what we are today into this alternative universe. And we're already seeing the consequences. The autonomous intelligence in drones is flying over Ukraine or over Iran and dropping explosives on human communities. Mothers are in their beds with their children, are being uh having their apartments collapsed on them by the drones that are exercising their discretion on where to drop the explosives. That's the kind of world that we are creating because that's what we currently do. Putin uh set out to demolish uh a free nation, Ukraine, and he's now able to use the artificial intelligence to selectively bomb people where it hurts most. That's the world we're creating. And uh this universe, for reasons I won't go into today, is uh going to be pitched against human beings, and I fear that it will be the artificial or the autonomous world that is going to win.
The Long Bet
SPEAKER_00Um as we wrap up, you'll probably remember I ask every guest the same closing question, which is a what I call the long bet, where you have a 10-year view to make a prediction. Two years ago, when I had you on, you talked about the 18.6 year property price cycle and how 2026, 2027 is going to see the peak of property prices and we're going to enter a recession, possibly worse, possibly a depression. I won't ask you to do another 10-year prediction from 2026 to 2036, but just ask you to uh double check your prediction you made two years ago. Is that still on track? Are you still confident of what you said two years ago? Not that it brings you any joy of the prediction you made on this show two years ago.
SPEAKER_01Yes, uh the property cycle, which is only a metaphor for the way the rents are distributed, uh, is on track. We're we're reaching the peak of house prices now in 2026. We've already begun to see the downward slide of prices in London, particularly the high value prices, uh, and the decline in construction of new dwellings. Uh and so that cycle is now still operating, and I fear that as a consequence of the decline in economic activity, this will amplify all the conditions surrounding our societies, like the mass immigration of hungry people out of the global south, which will have existential consequences for all of us.
SPEAKER_00Existential consequences require the desire to reform to be able to survive from them and recover. You quote a contemporary of Adam Smith in your book, uh Edward Gibbon, who in his decline and fall of the Roman Empire was describing the downward collapse of the Athenian Empire or the of Athens. And in it he concludes just quoting from your book, which is quoting Gibbon, in the end, more than freedom, they wanted security. This is the Athenians. They wanted a comfortable life, and they lost it all. Security, comfort, and freedom. When the Athenians finally wanted not to give to society, but for society to give to them, when the freedom they wished for was most, well the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again. I hope that this isn't a repetition of that. I'm hoping that we, through work like this, uh cheating, the human project and its betrayal, that we are able to identify the problem and start unpacking the solutions that you bring about in this book. And that the fall of Athens isn't replicated. Thank you for all the work you've done to date, Fred, in educating people, including myself, and hopefully we can use your work to turn things around. And in 2036, we look back and see conversations like this as a pivotal moment. Do you have anything that you would like to say or close on uh other than what we've talked about?
SPEAKER_01No, other than to express an optimism that because of the desperate plight that we now all face, finally people will demand change on the basis of being informed by what would actually be effective.
SPEAKER_00Here's hoping. Thank you, Maraj Fred Harrison. See you again soon. Thank you. Bye bye. This has been Meeting People. I've been your host, Amulf Handier. This is a podcast produced by Mars Cooper with music composed by Loverman.