← New Books Network
New Books Network
Mike Bird, "The Land Trap: A New History of the World's Oldest Asset" (Penguin, 2025)
00:51:28
Loading summary
Transcript58 lines
- [00:03]
Depop Advertiser
Kids, they grow up so fast. One day they're taking their first steps and the next they don't fit into the tiny sneakers they took them in. You blink your eyes and their princess dress is two sizes too small and their dinosaur backpack isn't cool anymore. But don't cry because they're growing up. Smile because you can profit off of it. For real. There are a bunch of parents on Depop looking for the stuff your kid just grew out of. Download depop to start selling.
- [00:33]
Rumchata Advertiser
Toast the holidays in a new way and raise a glass of Rumchata, a delicious creamy blend of horchata with rum. Enjoy it over ice or in your coffee. Rumchata. Your holiday cocktails just got sweeter. Tap or click the banner for more. Drink responsibly. Caribbean rum with real dairy cream, natural and artificial flavors. Alcohol 13.75% by volume 27.5 proof. Copyright 2025 Agave Loco Brands, Pojoaquee, Wisconsin. All rights reserved.
- [01:01]
Vanguard Advertiser
Take the next 30 seconds to invest in yourself with Vanguard. Breathe in. Center your mind. Recognize the power you have to direct your financial future. Feel the freedom that comes with reaching your goals and building a life you love. Vanguard brings you this meditation because we invest where it matters most in you. Visit vanguard.com investinginyou to learn more. All investing is subject to risk welcome.
- [01:32]
Mike Bird
To the New Books Network hello and.
- [01:37]
Reed Schwartz
Welcome back to the New Books Network. My name is Reed Schwartz and I'm here with Mike Bird, the Wall street editor, the Economist, to discuss his book the Land Trap, a new history of the world's oldest asset. Published in November with Portfolio Penguin, the Land Trap gives a fascinating financial history of land from the Bronze age to the 21st century and how countries can escape or get caught in the tichoy wan trap. Mike, thanks for joining me.
- [01:57]
Mike Bird
Thank you very much for having me.
- [01:59]
Reed Schwartz
To get started, could you just tell me about your path into financial journalism and how you decided to write this book?
- [02:04]
Mike Bird
Sure. So I actually studied history at university rather than econ or finance, which I think may may show itself in the book. But the my first step into journalism was I went to university immediately after the global financial crisis and the topics around that were extremely popular at the time. I was lucky enough to study under some great economic historians, became really interested in economic history and after university I went to go and work in a pretty sort of unusual way at a small London based free newspaper called City Am. It's a financial free sheet basically handed out on commuting routes. I was contacted by someone, now a friend on Twitter, who suggested that I apply for the job as an economics reporter, which again, no, no direct experience with. Despite doing a bit of economic history, I really, really enjoyed it and I stuck around doing that. I worked for Business Insider when it expanded in London for about a year and then I went to work for the Wall Street Journal covering financial markets. Stayed there for about six years, during which time I moved to Hong Kong. While I was in Hong Kong, I moved to the Economist, where I've been for the last five years or so. I moved to Singapore after that and spent a few years in Singapore and I moved to New York at the beginning of 2025. So it's been fun moving around. I've now done most of the major financial centers, which is. This is a shame. It's a shame I'm running out of them. I'll have to. I'll have to head towards sort of second tier ones next. But yeah, that is basically the potted history of how I got into it by accident, more or less. But it's a very, very fun job.
- [04:13]
Reed Schwartz
And then how'd you come to write this book about land?
- [04:16]
Mike Bird
So I guess the very earliest interest for me would have been in the UK, living in London from sort of 2013-18. House prices, big subject matter in the UK at the time. London's house price dip after the global financial crisis was actually quite brief. Things started coming back very, very rapidly at a time when UK income growth, and certainly real income growth, was essentially zero and affordability for my generation was a big topic. But I think my interest sort of went from housing specifically on its own, to land. When I moved to Hong Kong in 2018, Hong Kong's got this fascinating relationship with land as a fiscal tool. It's got some of the highest apartment prices, house prices in the world relative to incomes. Just an astounding relationship. And it's also had this unique role in providing ideas and frameworks for the development of the housing system and land finance system in modern China. So I guess, yeah, moving, moving to Hong Kong was really the tipping point for me for thinking about things in terms of land. I've always been very interested in the modern Japanese economy, which I think you can't understand unless you read around the land bubble and the land price collapse that happened in the late 1980s and 1990s respectively, and sort of digging out the themes of those episodes and the places I'd lived and thinking about what are the constants here? What are the themes that come up again and again and noticing that some of them were relatively little discussed, but seemed quite prevalent, quite important. That was probably the genesis of the book and how I got interested in land in general.
- [06:13]
Reed Schwartz
Sure. And so the book starts at the end of the Bronze Age, but then really starts to dig in colonial America. And so could you talk a little bit about what makes land unique as an asset and, you know, what is the history of its initial financialization?
- [06:30]
Mike Bird
Absolutely, yeah. I always worry with the stuff around I start the book with, you know, it's basically a couple of pages about the late Bronze Age. I always worry that I'm suggesting to people that there'll be. There's not much covered between the late Bronze age and about 1600, you know, 1650 or so. I find the. And actually the colonization of North America aspect is something I only really came to while doing research for the book. So I was already very interested in how land interacted with banking globally. I was already very interested in how it was used as a fiscal tool in Asia in particular. I was already interested in the political consequences of very high house and land prices in the western world. I wasn't so familiar with the colonial history of land. And digging into it, you find what I think are the roots of, of a lot of things that are very common in the modern world, around real estate, around finance, and around the way we think about land. So basically, English colonists arriving to North America in the early 17th century encountered a world that was very unlike the one they were leaving. It was unlike the one they were leaving both in terms of the changed social structure of the place. So there was a lot less aristocratic heritage, there was a lot less class based politics, and most people could own land. Lots of the writing about the experience of English settlers in the 17th Century, written at the time, expresses this sentiment that, you know, you can be a landless laborer in England and then become the owner of your own plot in America and how sort of liberating this was. But it's a part of the world that had in many ways very little else going for it. So you arrived in North America, you're settling these relatively small, relatively close to the coast settlements. You know very little about the. The rest of the continent that you are expanding into. You know that it has an existing population and there's a constant friction and tension and regular bouts of violence with the native inhabitants of North America. But you're short of everything else that would have been normal to find in Europe. So you are short of labor. For example, there's very few colonists in total labor is extraordinarily expensive. If you're trying to get something done, it's very, very expensive to do that. You're also short of actual physical cash. So this is an era where parts of the world, parts of Europe, are experimenting really with fiat money, early forms of fiat money, IOUs, bills of credit. But most exchange is still done in specie, in physical precious metal coins, right? Gold, silver, etc. Etc. There is just very little of that in North America. It's not a part of the world that's very rich in gold or silver mines, the parts that were being expanded into. So there are no local mints really. And this frustrates commerce quite considerably. And at the time, the obvious relationship for these colonies is just as export machines, they import finished products, everything they could possibly use, everything, you know, as simple as fairly basic tools from Europe and they export back raw materials. That is the means of exchange that changes over time. What they are incredibly rich in is land. They have enormous volumes of land, more land really, once they have forced the existing inhabitants off it or bought it from the existing inhabitants and they know what to do with. And it leads to a very rich vein of thinking that starts in England and then spreads very rapidly around North America about how land can be used in finance and how land can be changed into money. There's one thinker in particular, English thinker, but he's picked up much more aggressively on the other side of the Atlantic called William Potter, who writes a book in 1650 called the Key of Wealth. And he writes about the idea that if coins are essentially backed by the value of the precious metals, if you can have a gold based currency or why can't you have a land based currency? Because land is the most valuable asset. He talks about this and he's essentially spitballing, I would say, the modern system of banking that exists in the world today. He's spitballing the idea that owners of land mortgage their properties, receive a new form of cash, that cash circulates and you see what we now call the velocity of money increase and you'd see commerce increase on the back of this. This is incredibly sort of forward thinking stuff for the period in which it's written. And you see this bubble up in colonial America because it's clearly so useful. So you see lots of efforts to create public and private land banks that would work in this way. And the British government in large part seeks to frustrate these efforts because to the British government, the relationship that the colonies provide as essentially just supplies of raw materials is what they would rather continue to exist. So I think land and the thinking around it is really bubbling up that the modern world that we live in as relates as it's related to land, is coming into existence there. And it also plays, I think, a quite understated part in the friction between the American colonists and the British government that eventually results in the American Revolution. So that stuff I found incredibly fascinating.
- [12:34]
Reed Schwartz
Writing about it and fascinating reading about it too, of course. So this open frontier that's unique to the US or at least to North America in comparison with Europe, is obviously a great shaper of American national identity. Could you talk a little bit about how reformers, especially Henry George, who you spend a lot of time on, react to kind of the perceived closing of the frontier in the latter half of the 19th century?
- [13:04]
Mike Bird
Absolutely. So crucial element of the first, basically 250 years of American colonization in, in large part is that there's an open frontier. It's the only thing that stops. And you can read Benjamin Franklin and anyone else writing about these things, the necessity of expansion to the American psyche at the time. Because if you don't expand, it's just Europe remade. It's just you're going to end up with landless people laboring for the people who own the land. You're going to end up with urban destitution of the type that you really don't have in the Americas. Even by the middle of the 17th century, certainly the. The late 17th century onwards, America seems incredibly prosperous relative to Europe on a per capita basis. And Americans are very aware at the time that this is tied up with the fact that they have this endless expanse to continue pushing into. By the end of the 19th century, or really by the 1870s, 1880s, you are seeing this start to come to a formal end. It's ended in practice a little while before, but you see the push into places like Oklahoma, this sort of final frenzied land rush to capture the remaining plots unaccounted for by white American owners. Basically, this is psychologically changing the US and it's changing US politics quite a lot. You're seeing railroad expansion. So the ability to reach parts of the US that you couldn't before reach them relatively quickly is changing dramatically. Henry George really sort of comes into the picture at the very peak of this. He writes Progress and Poverty, his Magnum opus. In 1879, the frontier is just about to formally close. It's already functionally closed to any meaningful degree. And he writes about the fact that land monopolies are chewing up the technological and economic progress of the era. And he captures the public imagination, I think, because there is a sense that there's nothing yet still to be gained.
- [15:24]
Reed Schwartz
Right.
- [15:24]
Mike Bird
The gains have been mopped up by fortunate, enterprising previous generations and that new immigrants arriving to the United States, whether that's in Manhattan or anywhere else, are left with a world that is much less easy to sort of dive into, that the opportunities are mostly gone. And I think it's a fascinating moment precisely because you suddenly have a fairly widespread sense of exclusion that is both urban and rural in nature. Henry George is able to pick up support from huge proportions of the American population in, in different parts of the country. So this is also an era of sort of political populism. It's an era of labor disputes as well. There's a lot going on. Henry George, I think, is the, the person who's able to present a version of this that isn't narrow in its appeal. It's quite broad. You know, we can go through the sort of the, the details. For anyone who doesn't know George, but he's, he's probably the most popular political thinker in the world at this point. There's a serious case to be made for that. Progress in Poverty sells absolutely enormous volumes of copies on both sides of the Atlantic. He is really an international superstar. And what he's proposing to address these land monopolies is a 100% tax on the value of land, which really means 100% tax on the, the value of any income a landlord could get from the land. He sees a world in which he believes the boom and bust cycles that the US is continually going through in the 19th century, loads of financial crises, loads of financial triggered recessions. He sees all of these being linked very closely to land. He thinks there's a sort of unusual. He has what I think is not a very good model of how land busts and booms happen, relating to landowners deliberately holding the land vacant. That hasn't stood the test of time. Time that he was clearly able to identify there is something happening here with land causing these financial crises, which there was. So he's enormously popular and it comes to this point of huge political influence. He runs for mayor of New York, he loses. But the real influence is found everywhere across the US where he has supporters in municipal and state and even national government. And really, I think this is the root of why US property taxes are so high now relative to the rest of the world. The U.S. government gets about 10%. This is at every level of the U.S. government. So talking about from the local level to the federal level, about 10% of all that revenues from property taxes, which is much higher than anywhere else in the rich world. It's really, really distinct. And I think the root of that mostly is people who are big fans of Henry George who couldn't get steep land value taxes specifically passed in their cities and settle for property taxes that would capture some of the land value as a next best. So yeah, enormous influence at that point.
- [18:37]
Reed Schwartz
Sure. And can you just specify what's the difference between a pure land value tax and a traditional property tax in the US Context?
- [18:45]
Mike Bird
Absolutely. So basically the land value tax, you are aiming to only capture the value accruing to the landlord through the land. Right. So if you have a land with a piece of land with a building on top of it, the idea is that the tax only captures any rents. You're deriving from the fact that you own that plot and not any improvements that you make on top of it. So this is, you know, there's a long and drawn out endless conversation about the. Whether this is administratively simple, as many Georgia's would have it, whether it's an administrative nightmare, as many opponents of land value taxes would have it. But the overall idea is to do that. The property tax obviously captures both elements of this. If I build an enormous hotel on top of a piece of land, it may well be that the property tax I'm paying mostly reflects the value of the structure.
- [19:38]
Reed Schwartz
Right.
- [19:38]
Mike Bird
Whereas if I have a, you know, a one floor bungalow in Manhattan, the value of the property tax overall, it's mostly land value that it's taxing. So that that's the main difference. People found it constitutionally very difficult to pass Lambo value taxes in the usa. They always have. And the property tax is seen as a, you know, a decent enough replacement. It's not ideal, but it's better than not capturing any of that land value.
- [20:08]
Reed Schwartz
Sure. And the land value tax is. George is not. Is maybe the most famous proponent of it, but it's in Smith, it's in Ricardo, it's in both Mills. George's real strength is that he's just such a powerful communicator of it. And so could you talk briefly about the influence of George, especially in Ireland and the UK and then why the movement, which is so powerful around the turn of the century and so significant, basically evaporates by the end of the First World War in the English speaking world at least.
- [20:36]
Mike Bird
Yeah, absolutely. I mean, by 1906 through 1914, George, you know he. He died in 1897. But the ideas and the trickle through of ideas have effectively captured the Liberal Party as a whole in the uk.
- [20:53]
Reed Schwartz
Right.
- [20:53]
Mike Bird
So the the governing party Ask and and David Lloyd George, the Prime Minister and Chancellor of the Sheker, are huge land value tax advocates. You've seen George have huge influence at Cappella University.
- [21:06]
Capella University Advertiser
Learning online doesn't mean learning alone. You'll get support from people who care about your success, like your enrollment specialist who gets to know you and the goals you'd like to achieve. You'll also get a designated academic coach who's with you throughout your entire program. Plus, career coaches are available to help you navigate your professional goals. A different future is closer than you think with Capella University. Learn more at Capella Eduardo Deck your home with blinds.com.
- [21:42]
Mike Bird
Diy or let us install.
- [21:48]
Blinds.com / Liberty Mutual Advertiser
Free design consultation.
- [21:53]
Reed Schwartz
Plus free samples and free shipping.
- [21:57]
Blinds.com / Liberty Mutual Advertiser
Head to blinds.com now for up to 45% off sitewide plus a free professional measure. Rules and restrictions may apply.
- [22:05]
Mike Bird
And I think that actually he had huge influence in Ireland, but also the Irish radicalism around land, and we're mostly talking about rural rather than urban land there, spills back onto George as well. He's got a very sort of back and forth relationship with Ireland and Irish thinkers on land. But in the uk, you end up with an actual national government attempt to bring in a land value tax under the Liberal government. Now, the land value tax they attempt to bring in is not very steep. It's hugely political, politically controversial. It causes one of the biggest constitutional crises ever in the UK up to that point and frankly ever since, because the House of Lords tries to block the budget that this is in repeatedly, it is required for the King eventually to step in and sort of try and resolve things. The land value tax isn't eventually implemented in the form that the government wants. And that is for two reasons. One, because, as it turns out, Edwardian Britain is not a particularly strong central state in terms of its capability to do this. It is administratively difficult. The valuation process is a nightmare. They set up the valuations office, but it's a course of constant sort of stress for the government. It's not being implemented very well. And then in 1914, the First World War rolls around, which not only devastates the Liberal Party as a political force in the uk, but also means that the country cannot afford to be pursuing an administratively complicated valuation process for the entire country. This is essentially put on hold until after the First World War, at which point it is no longer politically relevant, really. And I think more broadly and internationally, the real thing that happens towards the end of the First World War and afterwards is the rise of international Marxism through the victory of Russian Bolsheviks in the Russian Revolution, the civil war that followed the win. That Marxism gets through that and that international Communism gets through that really displaces Georgism as a political movement. Georgism in the late 19th and early 20th century is a pretty radical movement, but it's also an unusual one in the sense that Henry George is a free trader. You know, his advocates are advocates of what they call the single tax. They really think that if you get the land value tax, right, you won't have to have any other taxes. He pushes a lot of young people and there's loads of interesting writing about this. He's basically a lot of young people's first introduction to left wing radicalism. But rather than stopping with him and saying there's something special about land and this should only apply to land, they see it as the sort of jumping off point for them and they become much more left wing over time. They become sort of bought up socialists, communists and really the Russian Revolution and the emergence of these political movement as, as the major left wing alternative to the status quo globally just ruins Georgism. There's no room in the middle for this movement anymore. You have the right, which is primarily anti communist, which goes in much more for property owning democracy. There are huge movements on both sides of the Atlantic to try and significantly increase home and land ownership rates in the early 20th century. After the Second World War. After the First World War, sorry. There are huge movements to do this precisely because they think it will be a bulwark against communism. And yeah, there is just no room for a form of. It is populist, but a sort of liberal progressive populism. It just doesn't find a home in the new political world. And that means by really the middle of the 20th century, it's a sort of non entity. And in writing the book, the fascinating thing is how many people have just never heard of any of this. They don't know that any of this happened. They've never heard of Henry George, despite the fact that he was, I think for several decades probably the most important, you know, political economy thinker in the world. He has just collapsed from public knowledge. And I think there's some people who are, you know, very interested in political philosophy or particularly interested in housing or real estate that do know who Henry George is. And they might be surprised to hear hear this, but it has been an endless point of Discussion with people who are picking up the book for the first time, and they've never read anything specifically about land that they'd never heard of Henry George. So, yeah, really sort of total collapse from this enormously important position within a very short period of time, a few decades from the peak of everything to relative insignificance.
- [26:59]
Reed Schwartz
Sure. I think one theory that I've also heard Christopher England put this forward, but I think it's pretty intuitive, is that some of the problem that George is diagnosing, the closing of the frontier, is kind of solved technologically in that the automobile, at least in the US starts to push the frontier back again. And you can. It opens up more land. But I think that's. That's exactly right. This is in England as well. But he describes Marxists coming to Georgia as kind of junior partners, at least in the United States. And by the end of the First World War, that's. Yeah, exactly. Entirely flipped.
- [27:36]
Mike Bird
And also, you know, Marxism's not a. It's not a philosophy that has room for junior partners. There is no room for a Georgist and a Marxist setup. Whereas the movement that Henry George aspired to lead was deliberately broad.
- [27:49]
Reed Schwartz
Right.
- [27:50]
Mike Bird
There's a lot of Liberal Party English stuff from the very early 20th century on this subject more broadly, which is there were lots of Northern English liberals who thought that the Liberal Party was being far too inviting, of the Labour Party, for example, who being far too friendly, not seeing the threat that this would pose them eventually by making electoral packs and standing down liberal candidates where labor candidates were likely to win. And they were right. This was a sort of scorpion and the frog thing for them eventually. And that's true for Georgism and Marxism in general. And I think you're totally right on the technology side as well. You know, streetcars and rail and more than anything, the car really open up the frontier again in a functional way.
- [28:38]
Reed Schwartz
Right.
- [28:39]
Mike Bird
The commutable frontier, as it were, changes. And it does, you know, changes very dramatically.
- [28:47]
Reed Schwartz
And so let's maybe let's shift, shift east from the kind of declining Georgia story in the West. So what is the role of George in the developing world in this period? So you talk about how George's theories of land reform were somewhat influential, although ultimately not entirely successful, as pushed by figures in the U.S. state Department. And then I'd love to come around to what the land titular land trap is. So primarily, what role did George play in land reform in the developing world? And then we'll come to the role that land has played in development and stagnation in East Asia.
- [29:30]
Mike Bird
You know what, this is actually a tough one. And one thing I found in the writing of the book is that the land reform is really the movement of the push for significant redistribution of land in, in the developing world after the Second World War.
- [29:48]
Reed Schwartz
Right.
- [29:49]
Mike Bird
And it gets a huge lift from figures like Wolf Larsky, US Bureaucrat really, who becomes a sort of international policymaker, huge proponent of land reform for the same reasons that conservatives and people on the center right became proponents of proponents of property owning democracy in the west because they thought it would be a bulwark against communism. Yeah. But in the developing world. So this is pushed very aggressively in, in Japan, in Taiwan and South Korea, where it's enormously successful. It's rolled out across other parts of Asia in a much more limited way, in a much less successful way. And we can go into that a little bit. But the, the role of Henry George here is actually, I suspect, the significant drip through ideological influence. I suspect it's there. It's actually quite hard to find the direct links. I thought when I started the research of the book that they would be there. You know, Wolf Ladyzhinsky, I think on his Wikipedia and elsewhere is listed as a Georgist inspired by George figure. If you actually dig down into the source material that supposedly proves that to be true. It's one of those nightmarish circular things that you discover when you research anything in depth, which is that these are references that link back to each other constantly and refer back to each other constantly. And there is nowhere that I could find, you know, a really, really strong core. I'm Wolf Ladyzinski and Henry George is an influence of mine. Right. Reference. Now we can say certainly that George was a huge influence over Sun Yat Senior, the first President of the Republic of China, very briefly and more importantly probably the philosophical influence behind the Kuomintang, the Chinese nationalists who ran China and then subsequently lost the Chinese civil war and ran Taiwan. So there's a reason that Taiwan is the only country with a land value tax constitutionally, and it's because of Sun Yat Sen. And Sun Yat Sen was very clear that he was massively influenced by Henry George. But the movement for land reform, I think in many ways is sort of. It's no surprise that it came out of America because to an American policymaker at the end of the Second World War, the bulwark of American democracy, the reason that America is able to work as a society is bound up with these ideas of relatively sort of not totally equitable, but relatively widespread land ownership. And so I'm not surprised it was such a popular idea, regardless of whether it was directly coming from. George and I can talk a little bit about what the land trap is more broadly, if that's useful.
- [32:45]
Reed Schwartz
Yeah, that'd be. That'd be great. And then we can segue into the bubbles that you describe in Japan, Hong Kong and China.
- [32:51]
Mike Bird
So the nature of the land trap is that when land prices are relatively high, when land is a large proportion of national wealth, it is very, very difficult and dangerous for land prices to go in either direction. So if land prices go up, you see the inherent nature of land as an asset that you can't move around, you basically can't create more of and lasts for a very, very long time, create these additional unmeritocratic inequalities. Right. The people who own land already, where it's becoming more valuable, benefit everyone else sort of suffers, really. It's quite zero sum in that, you know, if you want to use the land and the rents are going up, it's more difficult for you if you want to. If you aspire to buy land in the form of housing or use it for a business, it's more difficult for you if land prices go down. The relationship between land and finance is so intimate through the use of land and real estate in banking as collateral against loans, that it seriously does risk financial crises. We saw these sort of crises over and over again in the 19th century in the US mostly around the financing of the railway system, which made land in some places extraordinarily valuable very, very quickly when people reassessed and decided the land was worth less, you saw collateralized lending collapse. We saw this obviously in 2008 in various parts of the world, the US but also large parts of Europe. We saw this in Japan in the late 1980s. We are seeing it to some degree in an interesting way in China now. But the nature of the land trap is that once land becomes an important part of national wealth, it's very, very difficult to move in any direction. And there are huge drawbacks to doing so. It's a much more zero sum asset and it has those sort of dangerous attributes. That's the nature of it.
- [34:51]
Reed Schwartz
And then what is the root of the. I mean, you tell a very interesting story about how the British colonial influence in East Asia has led them into various different land traps, specifically through the usage of various very long term leases. So how did that, how is that imposed in Hong Kong and later in China? And then what is the kind of alternative story In Singapore?
- [35:17]
Mike Bird
Yeah, absolutely. So both Singapore and Hong Kong start out with very similar land financing systems. So Stanford Raffles, the sort of British founder of Singapore, he is very clearly influenced by Adam Smith on this. As we discussed before. You know, Smith is a land value tax guy. Not as steep as George, he's much more moderate. But he writes extensively in the wealth of nations about this. Stanford Raffles, big Adam Smith guy, was clearly influenced by that. And I had this idea that you could, you know, not have any other taxes and you would simply lease the land out for, you know, 75, 50, 99 years, that the length of leases varies, but that you would have everything you needed in terms of the revenue to run a free port like Singapore or Hong Kong through doing this. And this is the main way that those two free ports under the British Empire are run, those crown colonies for a very long time. It's the main source of revenue. You can see the appeal from a British imperial perspective. It's very easy to administer. You can tell who owns what. These are not enormous places. They do not require colossal administration in terms of working out who owns what. You don't need to employ anyone who could levy direct taxation in any way. It's too simple. It's much simpler than that. So this is extremely appealing from that side of things. The interesting element, I think, comes when you get into the 20th century and into the middle of the 20th century when Hong Kong and Singapore start to go in different directions. And more importantly than that, mainland China, as mainland China emerges from the sort of the Maoist era and as Deng Xiaoping takes over and starts to reform the Chinese economy. So much of the way Hong Kong runs its land system was adopted in China. So Hong Kong still today makes a decent portion of the government budget through these land leases. China has adopted that in large part and for a number of different reasons. It's been accelerated in China. It's been accelerated in part because people don't have very much to invest in because of the financial repression in China. The stock market, for example, is a very poor investment. It's not a good long term investment at all. People have driven huge volumes of money into real estate as their sort of future security. So that's a huge deal in China and it's made land even more important in China than it has been in Hong Kong, which is, you know, this, this crucial role. It also allowed mainland China to continue even under a relatively capitalist system. The, the core Marxist communist element, that the government owns all the land as it does in Hong Kong. So this was a very easy hop, skip and jump for Chinese reformers to bring in in the mainland and bring it in from Hong Kong. What that's created in China, which is a colossal problem, is enormously high land prices. Essentially, local governments have had huge incentive to boost land prices as much as they possibly can. And at the same time, you've had households that can't invest in very much else and which save enormous amounts of money. So the result of this has been, yeah, enormously high house prices. China has, in many ways, the worst symptoms of a housing glut and the worst symptoms of a housing shortage. In the tier one urban Chinese cities, you know, Shanghai, Shenzhen, Beijing, it's not uncommon for house prices to be somewhere between 20 and 30 times incomes. Now, to contrast that New York or London, we're talking about maybe 8 to 10. So these are ludicrously expensive markets that require lifetimes of saving just to afford deposits on. They're left out of the reach of the vast majority of people in the country. At the same time, China is also a country that manages to have urban vacancy rates of 20% nationwide, which in a country as large as China, is ludicrous. This is the sort of vacancy rate that you'd associate with a holiday town on the Mediterranean coast, maybe. This is an astounding waste in many ways, right. Oceans of concrete and copper that have been put into building properties that people are essentially using as investment vehicles, which they have no actual use for. And Chinese families that can, up until relatively recently, invest in property have done that and bought second homes, third homes, fourth homes, even if they're left vacant, because it's the only real way of trying to capture a chunk of Chinese economic growth in an investment product. So more than any other country today, I'd say China is sort of land trapped. And it all comes through this system that they picked up from Hong Kong, which was in itself developed in sort of British colonial thinking. And I think it's. I don't think it's well understood in China that this is the route through which it emerged. And the problem they've got themselves into is, I think, pretty, pretty tough to get out of. It's been a few years since the government tried to seriously pull the plug on a lot of the heavily leveraged real estate developers that has been broadly semi successful. China's left in this sort of strange frozen position. House prices have dropped quite a lot, but the sort of leverage consequences of this haven't been able to play out because it's a very state oriented financial system. So you're left, you know, five years down the line now and things are sort of semi reformed. This had a chilling effect on the Chinese economy in many ways. So they haven't found their way out. They haven't sort of made a decision, I would say, as to whether to really crush the speculative energy in a land system, which would almost certainly cause a sort of genuine depression in China, or whether to sort of hang on to elements of it in the effort of keeping the economy propped up. And this is, this is a problem that anywhere with a land system and land prices as they are in China, would, would fall into.
- [42:02]
Reed Schwartz
And your book, it's not exactly a way out, but your book does provide a way not to go in to this land trap, which is the Singaporean case. So how does, in the second half of the 20th century, how does Lee Kuan Yew steer Singapore, you know, out of this, this trap? Yeah.
- [42:19]
Mike Bird
So Lee Kuan Yew has some very interesting thinking on land. So the Singaporean government doesn't own all the land in the way that the Hong Kong government does. But the Singaporean government, on becoming independent, owns about 40% of the land in Singapore. About 60% is privately owned. Lee Kuan Yew has a very, very clear. Though he doesn't say at any point he's directly influenced by Henry George, he does make clear that he has very similar thinking. He says that he intends to invest in a new and independent Singapore. And it can't be right that investment in schools and roads and infrastructure flows into the pockets of private landlords. So one of the first things newly independent Singapore does is pass a law called the Land Acquisition Act. This essentially allows for the what in the Western world, we would call the expropriation of land. It essentially allows the Singaporean government to pay pennies on the dollar for Singaporean land and offer very little recourse to the people who own it. Currently. This has changed over time. You know, they now pay relatively close to market rates. They're still probably a little bit stingier than you get in the west with a compulsory purchase, but much closer. Now, essentially this allows the Singaporean government to, over a period of decades, buy most of the country's land back. So the government owns about 90% of the country's land now. Now, what it does with this is quite distinct from what happens in Hong Kong. So in Hong Kong, the emphasis has always been on raising as much money as possible for the financing of the government. It's been, you know, a criticism of Hong Kong by opposition groups that Hong Kong has a high land price policy, that it's deliberately raising the value of land to benefit the government's bottom line in Singapore. The reason that they do this is primarily to change the housing system. Lee Kuan Yew also wants to push a sort of very, very interesting public private crossover model of housing run by the Housing and Development Board in Singapore. His idea is that the government is going to build large scale housing mostly in the form of apartments, but it's going to sell these apartments to people in Singapore. And this is still the basic model in Singapore today. It's a public private hybrid system, not just because the government builds it, but because the market is very closely managed. If you're a Singaporean citizen or permanent resident, you can buy one HDB, flat, housing development, border, they're known as HDBs. You can buy one, you can rent it out if you want, but then you've got to find private accommodation. You can't have to. There are limits on who can purchase it from you in terms of the racial makeup of the estate you live on to prevent sort of ghettoization. If you can't afford, because you're on a very low income, one of these properties, there are grants to assist you with making the down payment. You can borrow from the government provident fund. Extraordinarily low interest rates. You know, we're talking about sub 3% at the moment at a time when it would be twice expensive. Also in the us so basically if Hong Kong has gone for a high land price policy, Singapore has gone for a maximized home ownership policy with this extremely managed system that has meant that house prices in Singapore are far, far lower than they are in any other international financial center. Again, if you're a Singaporean citizen, it's basically a country that has decided to treat land as a distinctly different form of asset to other assets. You know, property rights and other assets are very, very strong in Singapore. It's a fairly capitalistic place. It's associated internationally with, with, you know, free markets and low taxes and open trade. But when it comes to land, it's taken a much, much more restrictive, managed, non market oriented approach that again in the, in the west would be considered expropriation. But I think it's very, very hard to argue with the benefits. I think that the upside in Singapore is that that line between land and other assets has held, which I'm not sure it would or can anywhere else. It's very difficult to imagine hopping from the system of widespread home ownership under a private model to the Singaporean model, that the benefit to Singapore in the mid-1960s is most of the people you're expropriating or a very large number of them are a small handful of rich people. And some of these rich people, even better, are Europeans who are relics of the old order. Right. So it's not that difficult politically to expropriate them now in the Western world. I think this would be almost impossible to do anywhere. But it is clearly a model where something has been changed significantly from the existing one. And I think people should spend a lot of time thinking about how could we get something closer to this even if we can't hop, skip and jump to having it tomorrow. Even just looking at it and saying, okay, this works really well would I think be a good starting point.
- [47:41]
Reed Schwartz
Sure. I think that that's. So this book has come out kind of during a flurry of new scholarship on George and George's own alternative land ownership models. There was Christopher England's Land of Liberty on the American Georgist movement, Andrew Femeister's Land Liberalism on Georgian Ireland, Daniel Wortel London's Menace of Prosperity on Georgia New York Mark William Palin's Pax Economica on left wing Visions of Free Trade which had a lot on George. James Lynn's in the Global Vanguard which has a lot on the use of Georgism and George's rhetoric in Taiwan, even when, as you say, there is not actually a clear, you know, one to one route. Land value taxation seems to generate more buzz today than at any time since the Progressive Era. I think you've, you've done a great job in arguing for, you know, the relevance of this kind of work today. This, you know, renewed look at George and renewed look at land as an asset more generally. So I guess my final question is what's next?
- [48:48]
Mike Bird
Oh, great question for me for land.
- [48:52]
Reed Schwartz
For you, for what you're working on next.
- [48:55]
Mike Bird
So I'm definitely going to take a break from writing quite as much. You know, got a full time job as well, which I did not take off very much time to do the book. I do feel like this is sort of sated and urge. Everyone always says anyone's first novel is autobiographical. I think a lot of people's first non fiction book is sort of more like scratching an itch that you've had for a very large portion of your life. Right. What I'm actually looking forward to is eventually at some point working on something that is probably a bit less of an itch, working on something that sort of comes to me as suddenly particularly interesting. I don't know what that'll be. I will say that one thing that I think really came out from the work, the research on the sort of more finance oriented side was the importance of functioning capital markets, dynamic capital allocation, the way businesses are financed and the difference between bank dominated and market dominated financial systems is a big thing that came out and I feel like I got to sort of just dip into it and then had to come back out again. The book had space for some of that as it related to land, but on all of it I'm pretty interested in that now and I think with my current job, you know, previously I was covering Asia business and finance which is a little bit more broad. Now I'm covering U.S. finance. The success to the American system of financing growth and innovation relative to countries that have more land oriented financial systems I think is really interesting. So something I work on in the future may be related to that. Yeah, it's possible.
- [50:47]
Reed Schwartz
Okay, great. Well, I'll be looking forward to it. Thanks again for your time. Mike. Birds the Land Trap is available from Portfolio and Penguin. It's excellent. It's highly readable. Highly recommend you check it out. Yeah. Thanks again Mike.
- [51:01]
Mike Bird
Thank you very much for making the time. Foreign.
- [51:18]
Blinds.com / Liberty Mutual Advertiser
Here we have the Limu Emu in its natural habitat helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug.
- [51:32]
Mike Bird
Limu is that guy with the binocular.
- [51:34]
Blinds.com / Liberty Mutual Advertiser
Dealers watching us. Cut the camera. They see us.
- [51:36]
Mike Bird
Only pay for what you need@libertymutual.com.
- [51:42]
Reed Schwartz
Savings very unwritten by Liberty Mutual Insurance Company affiliates.
- [51:44]
Mike Bird
Excludes Massachusetts.