Jason Hartman starts the show by discussing people thinking about the demise of America. He gives us insight as to why this isn’t actually the case and compares it to other nations. Then he goes into housing inventory and discusses how homeowner equity is at an all-time high and why it may be a great time to start equity stripping. In the interview segment, Jason hosts Dr. Nima Sanandaji, author of the new book The Birthplace of Capitalism – The Middle East. They discuss how capitalism began in modern-day Iran and Syria. Dr. Sanandaji discusses the Middle East’s golden age during their time of capitalism.
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.
Jason Hartman 0:53
Welcome listeners from around the world. This is Jason Hartman with Episode 1028 1000 And 28 thank you so much for joining me today. As I come to you from Naples, Italy still in Naples, visited Positano the other day. That was I guess, Monday Positano day was Monday. What a gorgeous place gorgeous place. But I tell you the weather here is hot and humid. And not that pleasant. Honestly. It’s pretty tough. You know, the problem with Europe is it well, among other things, there are so many problems with Europe, the place where I was born, Europe has lots of problems. It is in decline, sadly, sad state of decline. Sadly, many would argue that the US is in decline. But yeah, compared to what? Compared to Europe, Europe’s declining a lot faster. You know, it constantly amazes me these left wingers in the US that say well, the US should be more like Europe. How is that? Let me see the roads that are falling apart. The places that don’t have any air conditioning the every thing is smaller, lesser and more inconvenient apart. Is that how the US should become? Or should everybody in the US start driving crappy little European cars? You know, it’s so funny. Like, if you think everybody in Europe drives a US level Mercedes or BMW or Audi, you’re out of your mind. Those companies make little tiny tin cam versions of their cars that are German engineered that people drive over in Europe. These cars in Europe are junk. They’re little death boxes. They’re terrible. They have a roll up windows. They have manual transmissions. I’ve been driving around this little diesel opal car or Oh, pal, I don’t know is that how you say it? Oh, pal car. As our rental car here. You don’t stick shift kinds of fun to drive a stick shift, except when you’re on these Italian roads, where everybody drives like they’re psychotic. And the scooters are I mean, it is so dangerous to drive here. can’t even believe it. In this car is this little tiny, crappy rental car with five speed manual transmission, and I do enjoy driving the stick of it. It’s kind of fun. And I know how to drive a stick very well, mind you. But, folks, everything is smaller, lesser lamer in Europe except culture. That’s kind of neat. And the food, it’s pretty good too. But yeah, we went to beautiful poses, so don’t make the US more like that. Okay, Bernie Sanders, are you hearing me? We do not want to be more like Europe. Europe wants to be more like the US. Okay, sorry, European listeners. I know you’re out there. We’ve got many clients from Europe. And I love visiting here. I come here a couple times a year you know that I’m always here. I was born here. But the US is the land of abundance in Europe is the land of scarcity. Your should be more like the US in terms of prosperity, and convenience. Everything in Europe is a roadblock. Just try to get anything done. Hear it’s just a mountain of bureaucracy, book an airline flight, do this do that rent a car takes a half hour for the clerk to check you out in the rental car counter with none other than an American rental car company. But the European version of it is just
Jason Hartman 4:18
super annoying. So yeah, we got a good guest today a European guest who’s going to talk about the economies, while a European Middle Eastern guest today, who’s going to talk about the economies of the Middle East and the economies of Europe. And a little bit about the economy of the US. You’re gonna learn some good stuff today. And it’s a returning guest. Second time on the show. He was on the show several years ago. So we’ll beat our guests here in a moment. But let me tell you a little bit about my trip. Don’t you love it when someone goes on a vacation, and they come back and they want to show you all their pictures and you know, the first for the first like, minute you’re interested and then after that you’re like, Okay, you know, that’s enough. Yeah, I know. I know. So I’ll be brief. So Monday we went to Positano. What a gorgeous place. Wow. I mean, Italy has these islands of rock coming out of the sea, not the ocean. It’s the sea here, okay, it’s the sea coming out of the sea jetting up many, many feet, or shall I say meters because, hey, you know, the US needs to fix a lot of things. But one thing they definitely need to fix is the US should be on the metric system. That is a much better system than this silly imperial system that we have. So the rock formations shed out of the sea, many meters into the sky, and they build houses onto them, because yesterday we went to one of those islands Capri, as they say, and that was just beautiful. And Positano the day before Capri yesterday, and today, a lesson for all real estate investors. For all people who feel like they are masters of the universe, a lesson for us all to remain humble? Because that you famous European, Napoleon? Yes. What did he say? One of my favorite quotes? What is the quote? The most dangerous moment comes with victory? The most dangerous moment comes with victory. Why is that true? Because when we have victory our head gets inflated our ego gets big. We become complacent we rest on our laurels. Someone please tell me go to Jason Hartman calm slash ask and please don’t ask but tell me what the heck is a laurel? Yes I think I looked that up it’s like IV or something. And I don’t know why we don’t arrest on IV but I digress as I do a lot. So we don’t want to do that because today Where did I go? Well, we went today to pump pay yes pump pay pump. He was buried under lava and volcanic ash. An entire civilization, part of the Roman Empire wiped out like they were nothing. Just remember, whatever problems any of us have. All you need to do to get your problems in perspective, is look up into the sky at night away from light pollution and see all the stars in the sky. Look at the Milky Way. Maybe your eye will be seeing the galaxy, our nearest galaxy, Andromeda, which is like I don’t know, what is it? 200 million light years away? Yes. If you travel it 186,000 miles per second, not hour per second, meaning you could circle the entire Earth more than seven times in a second. If you travel that fast, then it would take you four and a half years. Just to get to the nearest star. What does that Alpha Centauri are Proxima Centauri I keep getting confusing the two. But anyway, everything’s really big. We’re really small, our problems are really small, the most dangerous moment comes with victory. So you know, you got your property portfolio, you built a big portfolio, everything’s going along well. And then suddenly, a problem strikes don’t get too complacent. The problems will come, you know, they will we talk about them a lot on the show and how to solve them. And the crooks will come to Yes, the bad people, the unethical people, the sleaze bags that are so greedy. And we’ve complicated webs of lies, when it would be actually simpler just to be honest, good to citizens, and they will rip us off and we got to be on guard for that. So don’t get complacent. That’s the lesson. All those folks in Pompei. They look like they had it pretty good at one time and then boom, it all changed and they were wiped out, completely wiped out. You see bodies of people And dogs. Yes, dogs. My dog. Coco was with us today in Palm Bay. Yes. The International traveler that she is she’s been to nine countries so far. Yes. My dog has been to more countries than many people have. But she’s way behind me. I’ve been to 81. So the dog has a ways to go to catch up. But she’s very tired here laying down because it was a big day in Pompeii. It’s very hot and humid. But yes, three days of I’m a tired tourist, let me tell you, but very interesting stuff in Capri yesterday. Now Capri is this really high end Island. Lunch was a rip off. Lunch was 160 euros. Yeah, we had a few drinks, but that was a ripoff. But it’s expensive on Capri. And when we got onto the island of Capri, we took a ferry over there, this beautiful island, and the first thing we did was we took the funicular, you know, but the way the Italian unsated so much better Finnick you Laurie Finnick you lie we took the finicky Lottie up the mountain you know up the rock, I don’t know whatever to this other place had lunch up there the views were spectacular, stunning, totally spectacular. And then we took a taxi they have these really cool swanky taxis there. And they take the roofs off of these cars, vans, whatever, all these different cars, they just cut the roofs right off and they put a cloth top Way up high and they cruise around in these taxis and, and we took a taxi up to the very top of the island and wow, the views were incredible looking down and then we took the steps all the way down yes all the way down back to the port got on the ferry and came back to Naples last night. That was like 1000 steps. It was incredible. And a not a bad workout, but it would have been a much better workout going up. So that’s kind of my update on vaping I’m heading over to Germany. And then I’m going on a river cruise. So I’ll be reporting from that next week and then coming back home. Time to get back home to the land of abundance, the good old US of A criticize it all you want. But let me tell you, life is pretty good. And we all should be very grateful if we’re lucky enough to live in, first of all the Western world, because all of the Western world has lots of abundance. Well, many places in the eastern world nowadays, too. Of course, we’ve got many clients in Asia, who should join us at our conference in Hawaii profits and paradise coming up in November. Go to Jason Hartman, calm and check that out and get your super early bird tickets. We’ve only had one price increase on that event so far, you’ll definitely want to get your tickets ASAP for profits and paradise, a totally new event, a two day conference that we’ve never done, and we’re going to arrange some fun stuff and some good networking stuff there. Hey, we’ll be in Hawaii. The place is beautiful. We can’t sit in a room all day. Okay, so yeah, and make it a family vacation, we got some great room rates at some beautiful hotels. So bring the kids bring the family, you know, whatever, stay a few extra days on either side of that come and join us for the venture lions conference as well, or the venture Alliance retreat in Hawaii. So we’ll have those almost back to back just a day off in between. That’ll be super exciting. I had things for you. I wanted to share real quickly couple real estate stats before we get to our guests today. Where are they? some news on the housing market. So of course, we’ve talked many times on the show about how inventory is tight, blah, blah, blah, you’re probably sick of hearing that because I know you see it all over the place in the marketplace. Many, many people willing to pay above appraised value for the property because that’s, you know, people take what they can get right. So check this out. Inventory remains tight but could loosen up a bit. Just a little bit in the near future inventory increased by 12.2% in the second quarter, the biggest gain in inventory since 2015. Now, before you start thinking, Well, why don’t I see that all at Jason Hartman, calm on the website and the properties section? Well, I’ll tell you why. Because that’s the overall housing inventory. That doesn’t mean investment properties. You know, a lot of these high end properties in these high end markets are starting to sit. They’re starting to suffer. We’ve profiled that in Los Angeles and New York on the show. So is that a sign of a change a sea change? Well, I told you a long time ago that we are way beyond the point of fundamentals in in the housing market, in the cyclical housing markets, they are crazy silly, but could they go a little longer and nobody knows. And speaking of which, when I share that statistic with you of the 12.2% Increase in the second quarter. Right? I want to also relate that back to another example. I just saw the other day of how to lie with statistics. So I’m reading this little things little article on food and health and foodborne illness, right? Listen to this short little thing and tell me if you can identify the lie with statistics here, right? It’s talking about eating in restaurants versus eating at home. And the article says most restaurants are very careful to avoid problems. Most home chefs are not up to 80% of salmonella poisoning occurs in the home. Protect yourself from foodborne illness. Use separate cutting boards for meats, vegetables and breads. Use a food thermometer to make sure food is cooked to the proper temperature. And by the way, I will add all the way through keep your refrigerator below 40 degrees Fahrenheit to prevent bacteria from breeding. Always wash your hands before, during, and after food prep. Right? And by the way, learn how to wash your hands properly. Very few people know how to do this. You know, surgeons, they know how to do it. But what’s the how to lie with statistics part? It says up to 80% of salmonella poisoning occurs in the home. Okay, fine. But what percentage of cooking occurs in the home? You know, they didn’t never ask the question compared to what? Right? So if 90% of the cooking occurs in the home, but only 80% of the salmonella poisoning occurs in the home, but then does that say that restaurants are safer or less safe than cooking at home? you get my point? Yeah, statistics, you really got to think about them. You know, everybody just takes this stuff for granted, especially in the political arena. It’s terrible. It’s terrible. Okay, one more stat for you. Let’s get to our guest. homeowners have an estimated This is amazing. It’s amazing. Amazing. You ready? It’s amazing time to be alive. homeowners have an estimated 5.8 trillion that’s trillion with a T trillion dollars in accessible Home Equity, the highest ever recorded, despite this, fewer homeowners are taking cash than in previous eras. Well,
Jason Hartman 16:35
did you catch the how to lie with statistics thing in that little report? And this one isn’t that bad? 5.8 trillion. Hey, that’s a lot of equity in houses. But is it adjusted for inflation? Probably not. Didn’t say it was didn’t say it was I doubt it is right, because it says that the 5.8 trillion is the highest accessible Equity ever recorded. And you know, that’s really high. But if you adjusted for inflation, it may not be the highest in real dollar terms, but it’s still very high. And hey, it’s kind of good news that on the whole, those people aren’t taking all the cash out using their home like an ATM machine. However, that doesn’t mean you shouldn’t, you should, as an investor, you should equity strip, follow my practice, I’ve taught you about it over the years, and in the last many thousand plus episodes, you should equity strip, as long as you are using that equity for investment grade projects, you know, you’re buying more real estate with it, and you’re getting good investment grade financing on that equity, or you’re cashing out and selling. That’s what you should do. So hope that helps. Without further ado, I’m going along here as I always do. Let’s get to our guest today. Be sure to go to Jason Hartman comm check out the properties we have for sale there and also Be sure to check out and register for our upcoming events in beautiful, stunning, gorgeous Hawaii. We look forward to seeing you there. And let’s get to our guest.
Jason Hartman 18:17
It’s my pleasure to welcome Dr. Nima Sanna dodgy. This is a returning guest, President of the European Center for Entrepreneurship and policy reform. Author of a few books including the new one, the birthplace of capitalism, the Middle East. Previously, we talked about one of the prior books debunking utopia exposing the myth of Nordic socialism. Also a book prior to that Scandinavian unexceptional ism culture markets and the failure of third way socialism. So check all of these books out there. They’re really quite fascinating. Welcome back, doctor. How are you?
Dr Nima Sanandaji 18:54
Thank you. Thank you. I’m very good. It’s good to have you. On the show.
Jason Hartman 18:57
Yeah. Thank you. A lot of people think of capitalism has kind of a European thing starting in the markets of maybe Rome or something like that. But tell us about the Middle East. I don’t know if you’re going to talk about Egypt or what when you talk about the Middle East being the birthplace of capitalism.
Dr Nima Sanandaji 19:16
Yeah, yeah. And actually, I will talk about Egypt because often when people talk about free markets, and especially the people who are supporters of free markets, they often believe that capitalism is a new invention. And it’s often traced back to the Industrial Revolution, or some people say, No, no, we go a little bit before that the Dutch merchant Republic, or some people say no, no capitalism was born, and is more correct in the Renaissance cities of northern Italy. But this is the modern capitalism. And I say that saying that capitalism comes from industrial revolution or even in Renaissance Italy, is like saying that the iPhone is the first mobile phone because the iPhone inspired all the modern phones. Right, it’s a superior modern phone just inspired all other smartphones. But there were many, many, many phones before the iPhone. Sure. And this is the same thing with free markets with capitalism, the first model of enterprise, the first market economy, the first era banks in the world actually begin in the countries we now know as Iraq and Syria. So it is in these countries and more specifically the Babylonian civilization and Assyrian civilization. The 4000 years ago, we had the first enterprises the first free markets, and I began writing about that in the book and really, I think this story is fascinating because archaeologist you know, they’ve dug up many many clay tablets and they’ve translated them and these clay tablets 4000 year old you know what they are, you know what it says on them what they are receipts do receipt.
Jason Hartman 20:56
Okay? Okay. All right. Interesting. Yeah. Okay.
Dr Nima Sanandaji 20:59
And you know, That’s why people largely invented writing to record transactions. And from these transactions. We know that these guys, they invented pretty market based model. And everything really supports is the first courts of law that exist, coming from these ancient Asian civilizations. They were about protecting private property viciously. They were about protecting the right of contract. And during this golden age of humanity that we have in Babylonia in Syria, all this technology all this world, it was market driven. And it’s just fantastic. How much development that is market driven civilizations had Yeah, and you said something you said Egypt? Well, I recently wrote an essay about the pyramids of Egypt. And these are the pyramids of Egypt are seen as the true wonders of the world. I said they are the best examples of government waste in the history of humanity. Because the ancient Egyptians alongside the Mesopotamians were the first civilization on the planet, the East It was more of a centrally planned economy. So the government directed the resources of Egypt into building the pyramids, essentially building mountains, manmade mountains, to please the central government. Whereas in the Middle East, they had much more free market model, they had a much more private ownership model, private manufacturing model. So what they did was they just invented many, many of the technologies, many of the goods, many of the early manufacturers that propelled human civilization further. And this is really something I find in my book that the Golden Ages of human civilization in in Mesopotamia, in China in India, were very much driven by early forms of capitalism, huh? Yeah,
Jason Hartman 22:45
yeah. Give us a sense of your worldview, if you would. Where are you located? You live in Scandinavian countries somewhere right here in Sweden in Sweden.
Dr Nima Sanandaji 22:55
I am a born in Iran, Kurdish Iranian. I lived most of my life in Sweden. I write In a lot of books for the Swedish political debate, but I’ve moved myself to Malta.
Jason Hartman 23:05
Okay, good. So I find it really interesting, your writings and thoughts about the Scandinavian countries and this sort of myth that they were so successful with socialism. And I’m really glad you’re raising that issue because it is a big misunderstanding I in the world today, I believe. So I want to make sure you get a little time to just comment on that and comment on your other two books, if you would. But take us deeper into this subject of Middle Eastern capitalism. Also, by the way, give us a sense of time, What year are we talking about ancient Egypt? Are we do we go back as far as 5000 years,
Dr Nima Sanandaji 23:42
Dr Nima Sanandaji 23:42
Well, that’s a very good point. So if we talk about the birthplace of enterprise, the first enterprises banks, the first market economy, this develops 4000 years ago, in like Iraq and Syria, and then the Middle East for much of this For thousand years, it has a very market driven economy. For example, in the time of the Roman Empire, you would always see that the eastern provinces like Syria and Turkey, were much wealthier than the European provinces. And the reason is they were more of market economies, they had more of private ownership factories, early factories, producing goods for foreign markets. And the interesting thing is that the concept of enterprise the concept of banking, it comes to Europe, it comes through my cynic and two Greeks, but the Greeks and the Romans never embraced it. So in the in Greece and Rome, the people who would own a business the people who would own a bank, the people who would be captains of merchant ships, they were often slaves, and these slaves could buy themselves free and become rich people or they were Syrians, or Jewish people. That is people from the Middle East, because European culture for many, many hundreds of years, didn’t really buy into Market exchange being a good thing. So Plato, for example, the view that Plato had on enterpreneurship is so hostile that even called Marx it would be surprised.
Jason Hartman 25:12
Wow. Yeah. Interesting. Karl Marx, sadly, one of the most influential economists in all of history maybe the most right? It isn’t that terrible that the worst idea became the biggest idea. You know, it’s kind of like back to the days of videotape VHS versus Betamax. Right, the Betamax was the better standard. You know, many people would argue that Apple was the better operating system than Windows and DOS, but strange alpha best things don’t necessarily become the most popular today.
Dr Nima Sanandaji 25:49
Yeah, like to make a comment. And I briefly write about this in my book, The first socialist revolution in the world
Jason Hartman 25:56
is also in the Middle East. Did you know that? No, tell us about that. And when what you’re getting There’s a context timewise to
Dr Nima Sanandaji 26:01
this happened in Iran so the ancient Iranians had a religion called is Ross rism and rasp ism is it kind of a religion similar to Christianity and Islam? It’s about the struggle of good and evil is very related to these religions. But it’s rust ism is a very much more free market religion so the interest in fate actually specifically says if you’re honest person and you don’t lie, if you make money not only is this okay is a good thing and the ancient Persians were very free market oriented. I wrote that the Persian King Cyrus the Great you know, who freed the Jews from slavery in Babylon who founded the first big world Empire is also the first known proponent of free markets. But then Persian somewhere around 1500 years ago, we have a priest of this restaurant fate who kind of clashes with these free market ideas and he’s name is mass data. And NASDAQ was essentially Middle Eastern, much early version of Karl Marx. And he carried out a socialist revolution. And this, this revolutionary socialist movement actually would migrate in Asia and it would spread even to the Chinese and the mobiles. And why is this relevant? Well, I think it’s relevant because he just shows you that not I mean, many of these ideas of free market capitalism and voluntary exchange, and also socialism, have a deeper historic roots than we believe. And if you kind of analyze them, you see that they influence society much more. Mm hmm. One of the things I wrote about my book is this contrast with the pyramids and the underground irrigation systems of the Middle East because I believe that the true wonder if a word is actually something that almost no European or American know about
Jason Hartman 27:59
what is that
Dr Nima Sanandaji 28:00
Well, it’s underground irrigation systems. So around 3000 years ago in Iran, the inventor cannot cannot sir underwater channels, which run maybe hundred meters underground and they run for many kilometers typically. And they take water from underground to the deserts and they make
Jason Hartman 28:20
the deserts fertile. 100 meters under the ground. That’s Yeah, you know, 400 feet. I mean, that’s very deep.
Dr Nima Sanandaji 28:27
Yeah. Imagine if you were to construct. I told you with modern technology, I want to find underground water you have to find it. First. You have to build a canal that takes this underground water several kilometers hundred meters underground. And you also need to dig a bunch of worlds all along the system. Because otherwise, you know, your workers would suffocate you needed was to maintain this channel. And additionally, it has to have an exact angle. It’s just too steep or then it won’t work. It would be Difficult project, wouldn’t it?
Jason Hartman 29:01
Oh, I can imagine sounds very difficult. I mean, everybody is in major praise of the Romans and what they did with the aqueducts. But this is more difficult than that those were above ground. Yeah. And they
Dr Nima Sanandaji 29:14
actually didn’t build a few of these. They built 10s of thousands of these underground channels. And these channels are the reason why countries like Iran and Syria, I mean, throughout history have been very important places of civilization. A lot of people lived there were important, because they dug up his underground channels. Now, a lot of people think that infrastructure must be built by the state. But these underground channels, which are perhaps the most impressive infrastructure in human history, and they actually watered the Middle East until just a few decades ago, the majority of the water supply came from these channels. These were built by market forces. The government didn’t do anything. They were paid by farming collectives because private property was very strong. If farmers knew that if they could irrigate it part of the desert, they would have ownership of that desert, and that water and his children would inherited. So they invest, they would say, you know, take half of our harvest for 10 years time and dig this shadow for us. And then a group of private contractors would actually carry out this massive project. And this would repeat thousands and thousands of times throughout the ancient Middle East. Wow, wow, that’s really incredible.
Jason Hartman 30:29
What is the connection with capitalism on that? Or did you make it I’m sorry, if I missed it, but certainly you could do massive public works projects with, you know, enslaving people to the government or the king or the Pharaoh. Yeah, you don’t need capitalism without necessarily know about and
Dr Nima Sanandaji 30:47
what you get then is the pyramids of Egypt, the pyramids of Egypt, which are these massive structures, which are built by taxation of slavery. And you know, there’s so impressive that people see people couldn’t have built them, there must have been aliens or whatever. No, they built them with the technology. And they’re worthless because it was state dictate. There cannot be underwater channels were not built by state dictate. They were built by private contractors. And they were financed by farmers. And the only reason that finance was possible was very strong private property rights. And limited by the way, taxation, because the farmers knew that they would keep what they were producing on that soil. And they would use many years future revenue to pay for the arts. So it wasn’t private property based model that financed it. And the work was done by private contractors. The only role the state had was to maintain private ownership. Hmm,
Jason Hartman 31:50
interesting. Interesting, very interesting, and it sounds almost randian you know, with a noted government and so forth. Yeah, very good. Very interesting. What else Do you want us to know maybe a question I haven’t asked you or just any, any thoughts?
Dr Nima Sanandaji 32:04
Well, I mean that many people are interested in the role of capitalism through history because they want to say, listen, capitalism is a good system framework has worked. And they usually bind to this European Western narrative, which says, All right, no, capitalism is something that came a few hundred years ago. But if that is just has always annoyed me, if this is true, then it means all the massive technological development all the massive increase in in you know, better goods, or services that has happened throughout history has been driven by something else than capitalism. And that’s why I wrote this book, largely, because let’s take hospitals, who invented modern hospitals. Well, they were invented in India, China, very much in the Middle East during this golden age of Islam. And they were, to very large extent, private institutions. progress of humanity through history has been very market driven. Another thing I think, is the ideology of free markets. So for example, I cite a story about a great Persian King Cyrus the Great who’s You know, he is known for having written in the early Declaration of Human Rights. If you go to the UN building, you find a Cyrus scrolls when Cyrus 2500 years ago had ideas about human rights. What people don’t write about is Cyrus the Great was a strong believer in free markets. And he essentially believed that the government had no role in determining what is efficient exchange on marketplace. The only role of the government wants to maintain private property and voluntary contract.
Jason Hartman 33:40
Yeah, like iron Rand would say just maintain the court system and maintain rule of law and leave everything else to the free market. Interesting, very interesting.
Dr Nima Sanandaji 33:48
And if you fast forward to the, you know, this age of Islam, so like this is a bit less than thousand years ago, he gained it immediately has a free month. And Renaissance, which actually starts before Islam comes but then continues under Islam, and is very interesting, I cite what these intellectuals were writing. Because when free markets comes as a Renaissance, like 1000 years going immediately is there has to be an intellectual tradition to defend it. When countries move towards capitalism, they have to have intellectuals that defend the model. And it’s fascinating because the ideology of free markets that you find limitless, like thousand years ago in the age of Islam is so radical, if you would have it today, for example, they said, the public sector can do work, like the public sector can be the road, but only if it benefits everybody. If only a certain group benefits from a project automatically, they should pay for it. Right,
Jason Hartman 34:47
right. Well, that’s what we’ve got in the United States and probably everywhere where you have big government, we’ve got the government’s been hijacked by special interest. And you know, there’s that famous quote, and I can’t remember the quote or who said it But it’s basically the concept is when the electorate can control doling out benefits to themselves from the public Treasury, you know, the end is near, essentially, that’s the concept and, and here we are, right, we’ve got these certain groups who can vote themselves the perks in the US, we have these public employee unions. It’s a disaster. I don’t know how you ever recover from this. You know, once these, these golden triangles become entrenched, or iron triangles, they quit as they call them the golden triangles. You can’t watch them anymore. It’s just mind boggling really is
Dr Nima Sanandaji 35:34
exactly. And let me take two examples, one from India, one from China. So in China, we have Confucianism and Taoism, Confucius, this philosophical tradition are still very strong in China. I mean, they’re not very religious people. Instead, they believe in this philosophical tradition of Confucius now. What is valuable to know is first of all, Confucius was a big opponent of heavy taxation. He did not believe In taxation, but more importantly, the second most important, confusing philosopher is mensis, who comes like hundred years after Confucius, and this guy, his ideas are basically like reaganomics economics. He’s a libertarian conservative. He believes that taxes should be low. The government should not intervene in the economy. The government should not intervene in their fruit of contract. There shouldn’t be monopolies. You should attack the marketplace. It’s not a good thing to tax the marketplace. very sophisticated and very free market ideology in one of the most important philosophical traditions, even today, and then you have a Taoism again, a Chinese philosophical tradition, the founder of Taoism, lousy is really without doubt, the first known libertarian, and he would teach the ancient Chinese as many hairs as the oxen has on his body, as many laws does, the government has to plague our lives. Or you know, you can be afraid of a ferocious But you shouldn’t be more afraid of the power of central government. So you it really goes deep. And the ideas there are much more sophisticated than you would think. In India, India also develops free markets on its own. In India, there is a story of the rat merchant. And the story if I just tell you very quickly is, it is it farmer boy who is the poorest farmer boy you can imagine? And he’s that tells him I have nothing on my farm, go to the city, we have nothing. So he has zero positions. He has zero skills. He’s young boy, he started he goes to the city, and he overhears the Ministry of Finance, the Minister of Finance tells his friend, you know, if you’re a good capitalist, you can take anything and become wealthy. If you understand the marketplace. I tell you, you could start with only a dead rat as a position. So this boy listens to this he picks up a dead rat. He goes around the city, and everybody laughs at him. Look at that super poor, charged with a rat. But then he finds a merchant whose cat wants to eat the rat. The merchant says I’ll give you a coin for the rat. So it makes a exchange. He doesn’t buy food, he buys a beacon of like something to have water in. He goes and fills it with fresh water. And he thinks, where can I send fresh water? Okay, I go to the fields where they’re picking flowers when it’s really hot. He says the water, you say you want money? No, give me flowers. He thinks, where do they want flowers? Okay, if I go to that part of city, the young ladies will want flowers. So he continuously analyzes the marketplace, buys and sells invest his money, and he makes other people happy. And ultimately, he’s a super wealthy merchant. Mm hmm. I mean, imagine this is the American Dream is the Indian dream, the ancient Indian dream of accumulating wealth on the marketplace. And if you read the stories, I read read the stories of the thousand or one nights, you know, 2001 nights, vaguely I can’t remember
Jason Hartman 38:53
very well, but certainly I you know, I remember hearing of it.
Dr Nima Sanandaji 38:57
So it’s important because thousand one Nice is a collection of the stories of the Arabs, Iranians and Indians. It’s a story collection, like, roughly 1000 years old, which collects the classical stories of this part of the world. And here’s the thing, here’s the kicker, the capitalists are often the heroes of the stories. capitalists are the heroes of the story 1001 night, whereas capitalist people who are looking for making profit, people whose goal is to make money are very, very, very seldom the heroes of Western fiction. I mean, look at the Hollywood movie. Oh, yeah.
Jason Hartman 39:36
The villain Yeah, right, of course. I mean, we all know that it’s just terrible the way that is portrayed, you know, the big evil capitalists, the greedy scumbag, you know, that’s all was the way it is. But that’s the way it is. You know, what, what can I
Dr Nima Sanandaji 39:50
learn from the east really here? I think the Western world learn from they’re not a current Middle East of course, but from the Golden Ages of development in the Middle East in the India in China, right? Because those were periods when market economy. And one difference is that culturally, I would argue that immediately India and China culturally, they’re still more commercial than Western culture. Culturally, European culture centrally is anti market. Americans are a bit more pro market, but look at Hollywood. So this ton of friction between culture and free markets and wealth creation, actually still, I would argue exists more in the Western world than it does in places like Arab world or Persia or India.
Jason Hartman 40:36
It’s very, very interesting view. I think most people probably haven’t considered that much. So I’m glad you raised it and talk to us about that. We’re gonna have to stop the episode right here due to time constraints. The remainder of this interview will be aired next Wednesday on episode 1031. Thank you for listening and happy investing. Thank you so much for listening. Please be sure to subscribe so that you don’t miss Any episodes, be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.