Jason Hartman and investment counselor Adam discuss several issues in the real estate world. First, they discuss how average FICO scores re at an all-time high. They discuss the reasons for this trend. The go into how credit scoring will be changing. Later on the show Jason and Adam look at an event in France as its related to employment. They end the discussion with thoughts on freelancers and the gig economy.
When we found you and your podcast was like, Okay, this is what we should have done the first time. It’s like the properties make sense the day you buy them. Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors. Welcome to Episode Two 1284 1284 thanks for joining us today. Adam is here with me. Well, he’s not here with me, personally, but virtually or physically, I guess what’s the right word? But he’s here virtually coming to us from Austin. And I am, of course, in Palm Beach, Florida, and headed to Chicago today to the Windy City, Adam. I’m going to go hang out with our client, the Rabbi mafic, who is been guest hosting some of my Solomon success show episodes. He’s doing a great job. Hmm.
I have to admit, I’ve never really listened to Jewish sermons before. But good stuff. Yeah, he’s
Jason Hartman 1:39
really good. Yeah, I enjoy it. And the Solomon success show, of course, is one that I started, oh, maybe 10 years ago, give or take it’s biblical principles for business and investing. So that’s good. And, you know, half the Bible applies to the Jewish faith. So the rabbi came forward and volunteered Do that. And now he’s got some good stuff up there. So I’m going to see him in Chicago. I’ve got a meeting there should be fun should be fun. I want to remind everybody, please continue sending me your real estate spam, and you’re investing spam. You’re getting spam from these various real estate promoters investment promoters, and send it over. We appreciate what you’ve said so far. You can forward it to reviews at Jason Hartman, calm reviews at Jason Hartman calm and if you have a question about any of that spam you’re getting from these guys type it in there and we’ll answer it for you too. If we can if we can’t, a lot of these guys are shady, shady, shady. And we just want to see what they’re doing out there. I tried to subscribe to some of their spam myself, but it’s always nice to have more spam, right?
It’s what everybody loves what everybody loves.
Jason Hartman 2:59
Yeah, yeah. Like being a hoarder, you know the disease of being a hoarder? spam hoarder over here, right? Okay, well, there is a vehicle, not a automobile but a financial vehicle that I have been investigating deeply and you know, when I start looking at something and I get intrigued with it, I go down the rabbit hole and I’ve been going down the rabbit hole on this one. And this vehicle use properly used properly, could be better. Well, it’s certainly better than the opportunity zone. The overhyped opportunities on the that has never impressed me. But hey, if I’m missing something, telling me what a fool I am, go to Jason Hartman comm slash ask and tell me why I don’t get it about the opportunity zone. We’ve done some shows on it. I don’t get it. I think it’s highly overrated. So it’s definitely better than that. And by the way, I’m going to be talking about this profits in paradise in Orlando coming up next month, but I think it’s also better than the 1031 tax deferred exchange. Now, that’s a tough one to say, Adam, because I think the 1031 tax deferred exchange is like the Holy Grail. Pretty sweet deal. It’s pretty awesome. Yeah, pretty darn awesome. So if it beats the 1031, tax deferred exchange wowza wowza wowza. I am impressed and I think it might. I’ve been talking with tax advisors. I’ve been talking with attorneys. I’ve got written documentation. I’ve got a retainer agreements sitting here on my desktop, and I’m thinking of pulling the trigger on this personally for my own use for my own account, and also thinking it would be good for a lot of our clients and listeners So we’ll be talking about this and taking a deep dive into it at profits in paradise. Get your tickets for that at Jason Hartman Live, Jason Hartman live.com. And we’ve still got early bird for a few more days. And that’s a great deal. So check that out. Adam FICO scores, FICO scores maybe a year ago now it was going to say quite a few months ago, maybe a year ago, we announced that FICO scores were the highest they’ve been in a long, long time. I can’t remember the exact amount of time, but it was on a prior episode. So you can go find that go to Jason Hartman calm, always use the search engine on the website, very handy tool to search anything on our past podcast or in our blog or anywhere on Jason Hartman. com. What’s going on with the FICO scores now?
Well, a year ago was apparently a long time ago because nowadays the average FICO score is at a new record high. And over 700 notes at 706 is the average FICO score, which will get assuming you have the money for a down payment, that will get pretty much anybody a investment property loan. But we’ve talked about it before, it’s not too surprising because people are coming out of the great recession and haven’t been able to get big loans. But the good news is the really good news is the fact that people who are 90 days or more late on a mortgage payment is all the way down to 2.8%. And people who are 90 days or more past due on a credit card is down to 8.6%.
Jason Hartman 6:42
So in other words, 8.6 of the people in the country with credit cards are slightly delinquent, right or no more than 90 days delinquent. Right, right.
Okay, a decade ago, it was 13%. So it’s a pretty, pretty good that’s very significant. Yeah, and mortgages. Everybody’s paying their mortgage mostly right. So the great part is, you know, obviously they haven’t been able to take out mortgages. Yes, that’s one thing. But this would suggest that consumer spending is more in line with wages. You know, if you’re not out spending your income and you’re able to start boosting your credit report, you know, that’s a really good thing for society, you know, even as people are fearing a looming recession, you know, we’re seeing all that talk start spring up again. But this is good news. It’s very good news.
Jason Hartman 7:34
Yeah, yeah, that’s really good news for the stability of the economy. Now, certainly, the economy is not without its debt problems, though. So let’s not get too overconfident because we’ve got a huge $1.5 trillion student loan debt problem. We’ve got auto loan debt problems and credit card debt problems, but so far, they’re being managed, you know, and when I Say problems. I’m talking in terms of overall balances. But debt is high, There’s no question about it. debt is high. But it’s being very well managed. And consumer confidence is very high. Consumers are spending. They’re optimistic. And, you know, by and large, I don’t know. I mean, there are some theories, significant concerns about what’s going on in China. The Chinese economy is very problematic. And of course, we notice this little thing called a trade war, or a trade negotiation is I think it should be called entering more towards the war these days. You think it’s more of a war? Okay, fine. And there are lots of, you know, I’m not trying to paint some rosy picture here, but it’s good and bad. But on the things that we’ve talked about here in terms of the FICO score, and such, wow, I mean, very, very good for the overall economy. And what is really interesting, and maybe we’ll call this millennial tech to some extent, I was hearing the story on my al x a news flash, because the thing is always listening. And of course, they’re abusing our information, and so forth. But that’s another subject tangent alert. But I was listening to one of the flash briefings, talking about this new credit scoring move. I’ve been following this for maybe three years or so now. And I think it’s being pushed a lot by millennials entering the workforce. I heard this one. Yeah, it’s interesting. I think it’s very valid. You know, I think they’ve got a good point. The FICO scoring model. It’s pretty lame, actually. And, you know, I experienced this myself, going through the Great Recession, when I was doing loan workouts and strategic defaults on some of my own properties. You know, the lender would tell you, listen, we’re not going to negotiate with you. If your paying the mortgage. So you got to stop paying. I pondered this. And I thought, Okay, let me see, my credit score has always been fantastic. I’ve always enjoyed great credit up until that point when I literally made affirmative decisions recommended by my lenders to get better loans, okay, and I did short sales on some properties. And I thought, Okay, well, I’m over my 10 loan limit already. And at the time, they had reduced the loan limit to four loans were for a while, you could only get four Fannie Mae loans, and I’m like, I’ve got way more than that I’ve got way more than 10. So it’s not like, I can go get any more financing. Even if my portfolio was absolutely 100% perfect. They just weren’t offering more than 10 loans per person or at the time for loans per person, and then later increase back to 10. And then, as we came out of the Great Recession, and another apply for credit. I was thinking
Jason Hartman 11:02
this is so ridiculous. I’ve got tons of money in the bank and every other credit account I’ve ever had easy, like, stellar, perfect condition, except for the mortgages that I strategically defaulted on in order to do workouts, short sales loan mods. And I thought, this is a pretty dumb scoring model of never declared bankruptcy. I’ve always all my life had a great credit score, except for these couple of circumstances where I intentionally did that, along with, you know, 12 million other people in the country. They’re losing out on a good borrower. And so now what they’re doing is they are looking at ways to really improve the way they do credit scoring. And some of it could be unfair. Some of it is got some real concerns because We’ve talked on the show before about the way China is doing this social scoring, where if you write something on social media, maybe you’ll be denied credit. Or maybe you’ll be on a no fly list for airlines really scary what they’re doing in China. But a the US is not China. And what they’re doing now is they’re trying to look at about 1000 data points for borrowers when considering extending credit, and all kinds of funny things they’ve discovered in in looking at just mountains and mountains of data, doing lots of data mining, contribute to whether someone is a good or a bad credit risk, including crazy things you think would be crazy Adam, like do they fill out an application with all capitalization all caps versus upper lower case. They found that borrowers that fill out applications in all caps apps are bad credit risk, they’re more likely to default than people who use upper and lower case letters. How do you like that one
I was hearing and they look at I think they also look at your social media accounts to see if you’re doing kind of what they consider risky things and they look at you know, you’re
Jason Hartman 13:20
like what picking fights or
skydiving, it’s like looking for like, if you’re spending a whole lot on travel, or if you’re doing this or that and they look at your energy bills to see if you’re using energy efficiently or not at ridiculous levels. And I mean, that’s whatever I was listening to it. I was like, well, this could be very helpful, but it’s also kind of creepy, just how much of your life they’re delving into to get the score.
Jason Hartman 13:47
Absolutely. It could definitely be creepy and it can definitely go bad and I’m sure it will, and I’m sure in future years on show number 4283 is Well, maybe we’ll be talking about this and how it’s being abused. Yeah, I
mean, just think about if the Experian hack had happened when they had all of these data points, I mean, it’s gonna, it’s going to be open season on whatever company starts doing this. But one of the things whenever I was reading this article about credit scores and everything, this I think has a lot to do about not being 90 days or more late, has a lot to do with the fact that people have actually seen wage growth on the lower end of the scale. last couple years, or in the past two or three days, hey, you know who you can thank for that. Adam. I’m where your favorite president. So once they’ve seen Donald Trump is his name.
Jason Hartman 14:41
Okay, go ahead.
Yes, since they’ve seen the wage growth, as long as they haven’t gone into a lot more debt, as you know, if they continue spinning at the same level, obviously, they’re going to be able to pay off the amount that they have, but also things that were passed to before. So I think the wage growth has had a lot to do. So hey, all we really need is for the US economy to continue providing wage growth. Yes, yes.
Jason Hartman 15:05
We’ll see if we get four more years and if our rather at times in mature president can pull that off, he’s certainly good for the economy love him or hate him. It’s certainly good for the economy. No one can argue with that.
And the good far not he says, are getting wage growth and they’re not late on mortgage payments or credit card payments, they have more income to actually pay their rent. So hopefully, foreclosures will be going down too. Right. Not foreclosures, but evictions.
Jason Hartman 15:35
Yeah, one of the things to do you have to consider is that credit management or you know, making payments to creditors, right. It’s not just always a matter of having the ability to pay or having the money. Some of it is just being organized and responsible. And look, you know, the creditor doesn’t care why you’re not paying them. They just want to get paid. There is an element of that to it. I think certainly there will be abuses of these new credit scoring models that are emerging. And they are definitely creepy. But certainly, if someone has, you know, a couple million bucks in the bank, and they’ve got some dings from some mortgages, when the whole country was basically defaulting to get loan modifications, why wouldn’t you make them alone? That’s crazy. I mean, that’s a good borrower that’s going to be able to pay that’s going to be forced to pay if they have to, okay. It’s just very unlikely a creditor would lose money on that borrower, especially if their prior history is good until this certain point, like during the Great Recession, right, but you know, most of this stuff has just fallen off people’s credit reports by now anyway, so
yeah, well, a lot of it they whenever I heard the story about it this weekend, a lot of it was due to millennials not being able to get credit. That’s one of the big reasons they’re looking at To the other data points,
Jason Hartman 17:01
right? Well, you know, that’s the problem. You know, if you don’t buy a car, which a lot of millennials don’t, they don’t really care about driving because they have ride sharing services. And scooters in every city. I’m sure we’ll see a lot of those in Chicago, I have a feeling. If you live at home, and don’t participate in the economy, it’s going to be pretty hard to have a good credit score and build credit. So you got to get out there and do things. And then once you don’t
have credit, it’s really hard to get credit. What does that mean? Oh, if you don’t have a credit score, and you’re over the age of, you know, a college age person. Yeah, getting credit is really hard. Like I mentioned, somebody to give you a credit card is brutal. I mean, I had friends who’ve come over from overseas, they moved back to the United States and their mid mid to late 20s. And they had a job, everything was fine. They’d been fine back in Australia, where they were from, and couldn’t get any credit here in the United States.
Jason Hartman 17:53
Right, right. I was just hearing a story about that and a very successful person living overseas and could establish credit in the US when he came back and American and HSBC, you know, had a banking relationship, they made an accommodation loan to kind of get his credit score started in the US. So look, for better or worse. This is the system we have in the US, and you gotta live with it to some extent, Adam, we got to switch gears, we want to play another great example, we’re going to play the soundtrack of one of the videos that was submitted in the five year plan contest, because we’ve got our contest right now. So submit your videos, they are really easy to do. And you’ll learn a lot just by going through the exercise yourself. You might win free tickets to profits in Paradise, you might win a free cruise. So we got some good prizes for you. After we play this video. We got to come back and we’re not going to have much time to do this, Adam, but we got to talk about sex and the gig economy
Jason Hartman 19:00
Sort of combine a little bit. It’s not what you think, folks. So I’ll just tease you with that. Anything else you want to say about the audio we’re about to play or the contest, Adam,
just that you can find all the rules and everything at Jason Hartman comm slash contest.
Jason Hartman 19:18
So go there and enter the contest and check out the details, check out the prizes. And let’s play this clip for our listeners. And we’ll be right back after this. Hello, my name is Jeff. And this is our plan five year plan for retirement. We’re actually the Joneses next door. Let me introduce you to them. On the left is my son Harrison, then Nathan then my beautiful wife, Christie, myself and grace. We are the Joneses next door. And we’re planning for retirement. Because we’ve spent a lot of money over the years. We have to get a plan going. Let me tell you first about my experience with money. I was raised by a father, who was a school teacher landlord, he invested in small houses and in commercial real estate in the 70s and 80s. And even though he was a schoolteacher and had all sorts of time off, to raise us, he was able to pay for my middle school, because he didn’t spend anything. He was really the Millionaire Next Door. And he was my dad. But the other influence I had was my wife. She’s beautiful, but she likes the good life. We send our kids to private school, we have a big house, we have a fancy car, we enjoy finer things. I’m a little bit conflicted because of my upbringing. But when it comes to my wife or my dad having the most influence in my life, regarding money, I must admit, I’ve sided with my wife. So we have a lot of expenses. And few years ago, we started getting serious about looking at the bottom line and how we’re we’re going to ever retire. We’ve always put money away and 529 plans and We’ve paid off our primary residence. Additionally, we’ve had money going to foreign K’s we’ve maxed out our 401k is and we’ve invested in our post tax account. And even after 15 years of working as doctors, we aren’t even close to meeting our goal retirement number. In fact, if we were to retire right now and just went through our post tax account, we would only have 15% of that number. Actually, that was in 2014. Now it’s up slightly, but we needed another plan to get to retirement early instead of just keep working another 15 years. Hence, we had a plan to buy rental homes just like my dad did, and to use the cash flow to help fund retirement. I started listening to Jason Hartman his podcast, and after doing so, and pulling some money out of savings, and refinancing our cabin, my wife wouldn’t let us touch our home but refinancing our cabin. We were able to start Making income from rental income. In fact, after two and a half years, we now have 25% of that goal number for retirement coming out each monthly by cash flow, because we bought 18 rental homes, and I purchased an office where I practice our post tax account, it’s gone up a few percentage points, and 401k has gone up a few percentage points, those percentages, the 17th up top are basically what we can expect to make from those accounts, if there was a 4% yield each month. So now we’re at the point where it’s 2017. And we are thinking about what we’re going to do the next five years to get to retirement, or at least an option of retirement. Right now we have 42% of that money available. 25% is coming from rental homes and the post tax account is yielding 17% so that produces money that’s available of 42%. So that’s up from 15%, which isn’t bad, but we’re not yet close our future money if we wait until we’re 59 and a half and start taking 4% yield from our investment accounts would be closer to 76%, which doesn’t sound bad, but we’re not 59 and a half yet. So our next plan is this. And that is to pay off one mortgage every eight to 10 months and buy a new home on mortgage every eight to 10 months, we’ll pay extra mortgage to our cabin to have that paid off in five to seven years, we’ll stop funding 5.9 and five years and Christie will be given the option to retire in five years, and maybe me as well. And this is how we are going to institute that plan. Basically, from my job on the left, I will fund all of our expenses from my job. I’ve actually made a profit account in my business and from that we’re going to pay extra towards the cabin, our second home so that in five to seven years, the capital paid off and then Christie’s income, we’re going to use investments and I’ve broken down the percentage of her income every two weeks will take 50% of that money and put it towards rentals. 30% of the money will still be going into investments in the stock market 10% will go to our nest egg and 10% will go to a frills account. We have extra savings other places our nest egg is this is an estate that we use just for emergencies on a month to month basis. By doing that over the next five years. This is hope is what we hope to achieve. 50% of our goal income will be coming from rentals and 26% will be coming from the post tax account producing now money of 76% which isn’t bad and probably will be able to cover our expenses. I may still need to work part time but I won’t have to work full time at that point. If we look at future money, however, though, and include our 401k plans, will be able at 59 and a half a half 120% of our income. Additionally, shortly after the Five years, our mortgage on our second home will be gone. And our 529 plans should be fully funded to cover college for three kids and at least one, if not one and a half graduate schools, education, the car lease will probably be gone. And when our credit cards may be higher for travel, and or etc, but I think we’ll have enough money by that time. It’s exciting for us. And if we go back and think about five years, we were in 2014, with only 15% of our money coming from our post tax account. It’s hard to imagine after 15 years of working that we only have that amount needed for our gold retirement. But I think this shows that rental investing has been so far good to us. And it is a good option for us to supplement our retirement money. And it gets us to our goal much faster than if we were to continue investing in the stock market. Hello. I want to thank Jason Hartman for all his insights and helping us, even though we’ve had some bumps in the road in Chicago, we’re going to weather the storm come out ahead. And I also want to thank everybody else who’s helped us get to this point. So Adam, I saw the most ridiculous news story, I thought only in a socialistic, left wing country. Could you have anything like this? It’s so absolutely ridiculous, but it applies to states two states within the US. This is the drift of the things employers have to risk. It is really bad news. So this guy goes on a business trip. He’s French, okay. An employee of a French Railway Company. Okay. goes on a business trip, I guess to a conference right. And has an adulterous now. Hey, it’s France. So everybody’s into adultery. There, right?
Jason Hartman 27:01
Everybody has an affair in France, I guess, sexual encounter with a quote, perfect stranger unquote, well out of town on assignment and dies of cardiac arrest. And guess what? The employer is liable because it’s considered a workplace accident. Just when you thought you heard everything. Adam,
thoughts? Oh, man, this is there’s so much wrong with this.
Jason Hartman 27:31
It’s even you think so?
Oh, yeah, it’s the creep. And the potential ramifications of that are huge. And I mean, like we were discussing off air. It doesn’t even necessarily just reply to that. It’s everything while you’re out, you know, if you’re on a work related trip, anything, you know, this wasn’t even during work hours. Of course, yeah.
Jason Hartman 27:51
It wasn’t part of the assignment. It definitely was not strangers.
Yeah, but I’m saying like he didn’t sneak off into the, you know, hallway and This was you know, 10 1112 o’clock at night, you know, and still expected to be covered by the insurance company. I mean, it’s just, it’s insane.
Jason Hartman 28:10
So this is what has happened to one degree or another in principle in places like Detroit, California, New York, the US in general leaning this way, Canada, Germany, you know, all of Western Europe, France, obviously, where employers have such incredible risk. All of this burden is being laid on to the employer for ridiculous things. I mean, since the 90s, and Anita Hill now every employer has to be responsible for people flirting in the office right and, you know, I I freely admit, some of it is really completely uncalled for and people need to be fired, but the employer has To be the police man, right? Not just that an individual has rights against another individual who harasses them, for example. It’s the employers responsibility. So the employer is responsible for this guy who goes and has an affair while on assignment. You know, during off hours, you know, the employer is responsible for this, that and the other thing. It’s absolutely ridiculous the drift of this stuff, and employers, I mean, look what happened in Michigan, right? In Detroit, you had a city that was like this world class city, leading the world. It was one of the top cities in its day, right in the heyday of the auto industry. And, you know, Motown, I mean, Detroit was a big deal in the past, and it just decayed into absolute disaster. And there are many reasons for this, obviously, Japanese auto industry, etc, etc. The Americans were blindsided. Whatever. But one of the big reasons is the rise of the labor unions. And it’s funny, I’m saying that’s what the auto workers are on strike now. Right? And they just pushed too far. And the employers just, they just couldn’t deal with it. So they found alternatives. They went offshore. They did all sorts of things, right. And what you see with employers generally, and especially in places like California and New York, is they just unwilling to employ people. And they will hire contractors, and it’ll be the gig economy. Now, we just had last week and attack on the gig economy in California, meaning you can’t be a freelancer in California to some extent anymore. And that’s going to hurt. I mean, who knows what I you know, it’s just too early to tell what that’s going to lead to. But, you know, this stuff does not happen in a vacuum. And it’s very bad for the economy and the real estate market. When these rights are expanded just way too far. And at some point, the employers just say, look, we can’t do it. We can’t afford it. You see this in these anemic economies, which I would argue California has an anemic economy. You may not notice it. But it’s been going on for years. France, Germany, very anemic economies, first world countries for sure. They’re not Greece. They’re not, you know, Zimbabwe. Okay, they’re not disasterous countries. But all this burden, this regulatory burden, just slows everything down. And eventually, everything just collapses under the weight of all these regulations, and all these expanded rights and all these liabilities. So in California now, Uber and Lyft, I guess they’re going to have to make their drivers employees, wow. It’s going to be impossible for them to operate under under that kind of requirement. You’re not going to agree with me on this. But I think that’s a good thing. Honestly, when it comes to companies like Uber and Lyft, because Uber and Lyft are trying to get away with it and saying, oh, we’re not a taxi service, but taxi drivers aren’t employees either. Basically, the way taxis work is they either lease their car from a taxi company, or they own their car, right? And they, they basically run their business, but they’re not paid a salary.
Well, if you run your own business, that’s one thing. But the thing is with
Jason Hartman 32:25
me, I mean, but we, you know, like, think of it just for a moment. Why is it that when you run your own business, you shouldn’t get a salary? I think someone should pay. I think the government should guarantee me a salary for running my own business. I’m working hard. why don’t why don’t I have that? Right. You know, I’m part of
part of the problem I have is the gig economy. I have no general problems with the gig economy. The problem that I have, is that the way our society is set up, you can’t survive on just the gig economy because you can’t get you know, you have the healthcare and the other benefits that you get through a full time employment. You can’t really get health care if you don’t have a full time job. And you especially can’t get affordable health care. Yeah, yeah, yeah.
Jason Hartman 33:06
So so let me tell you something, I’m going to come to your side of the aisle, your side of the political aisle for a moment here, Adam, the one thing that I was really very much in agreement with, you won’t believe it about Obamacare, is that we have this absolutely stupid thing that health care is tied to employment. That is the dumbest idea ever and needs to just go away. Okay, why should my health care have anything to do with my job? Okay, now, granted, I don’t think the government should run the health care. I just think that the insurance marriage with employment is absolutely silly. And you know, it makes the market stagnant because people won’t leave a job to get a better job because they don’t want to lose their insurance. Like your career choices should not be centered around your health insurance. It’s just absolute We’ll be silly. Your career choice should be centered around, where can you make the most contribution work in your in the most money? Where can you be the most stimulated intellectually? Where can you grow as a person in your career? That should be your career choice, not the health way who has the best health care? I mean, that’s just absolutely stupid. That concept, that unholy alliance needs to end forever.
Yeah, but that’s the problem is since it’s still here, it creates a serious problem for the people who are trying to survive with just the gig economy. And some of the studies they’ve done show that most of the people who have jobs and gig economies really want full time jobs, you know, for the security, and for all the benefits that come with it. But some of the problem I have with companies nowadays that are employing the gig economy is simply that they’re doing it to avoid having full time employees. So they’ll hire somebody as a gig economy, but they’re calling the freelance, okay? they’ll hire for freelancer, but the only thing that person is responsible for doing is something that is integral to that business. At that point, you’re basically a full time employee, but they’re not giving you the benefits.
Jason Hartman 35:12
Right? And so right right after Obamacare went into effect, you saw all of these headlines that all of these employers reduced their workforces to what under 32 hours a week, so they wouldn’t have to put them on the plan. There’s always a reaction, none of this stuff happens in a vacuum. So we as a society, we need to separate healthcare from jobs, those really shouldn’t have anything to do with each other. But healthcare should be private, and so forth. And then it wouldn’t matter if you’re a freelancer, or if you’re employed full time. These are just arbitrary rules and they have nothing to do with it. But let me tell you something. If you want to summon a lift or an Uber in California, if these people have to go on salary number one, there’s going to be a massive shortage of cars, because they’re just not going to do it. I mean, Uber is losing money like crazy, which you know, that they can’t afford to operate now, how are they going to operate?
Even if they can’t afford to operate now? Why should they be allowed to exist? If you can’t make money? Yeah, you don’t deserve to be in business.
Jason Hartman 36:23
It’s okay. If you don’t make money for a while. Okay.
Right. You know, if you can’t, but if you can’t get the investors and you can’t turn a profit, why should I care if Uber exists at all?
Jason Hartman 36:32
Fair enough? I agree. And the reason they can’t make money is because they’re trying they’re undercutting the market, the pretty it’s too cheap. They can’t operate at those prices. You know, they’re trying to put the taxis out of business, which is a whole nother discussion. You know, we’ll see how that one goes. But part of the dysfunction in our our marketplace with tech companies, especially it’s almost always tech companies that create this dysfunction in the economy. Or I should say distortion, right? Is that all of the investment capital, the venture capital rushes to these companies that are silly companies that are not operated like a real business should be operated. As I’ve said many times, guess what? Real businesses make money. Okay, that’s what a real business does. They businesses are funded by massive amounts of venture capital, and they don’t make any money. Now, sure, it’s okay to be like that for a short period of time during a ramp up or r&d phases. I get it. Okay. You don’t have to make money right away. But, you know, the fact that all this money chases these tech companies, you know, the tech companies a whole bunch of other beams of disasterous problems that we discussed a couple of days ago on the show, just a total distortion in the economy. It’s crazy. You know, if I got to run the world, it would be different. There we go. There we go. So, Adam, what else you want to say about this and let’s wrap it up. If you’re going to have a gig economy and rely on it, that’s fine. But you need to make it to where the people who want to work in just the gig economy can survive. You do. And one thing we got to do is we got to end the healthcare tied to the job thing. It’s just a silly idea. And it needs to go away. It’s the time has come to see those two part ways. They shouldn’t have anything to do with each other. They should be separate. Okay, healthcare, lots of insurance options, let insurance companies sell across state lines, make the market more competitive. You know, there’s a lot of stuff you can do to fix the medical system. Very complicated discussion. I’m certainly not an expert, but I have some ideas. Of course, everybody’s got lots of opinions, including me, even though I’m not an expert, but you know, it shouldn’t have anything to do with your job. So that’s that. Okay, Adam, let’s wrap it up. Thank you all for listening. Go to Jason hartman.com slash contest and get your entries in. We can’t wait to see them. And Adam, anything else you want to say
today? No. Everybody has a great one. Happy investing.
Jason Hartman 39:22
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