Welcome to the Free Cities podcast. My name is Timothy Allen and this is the official podcast
of the Free Cities Foundation.
Hello and welcome to this episode number 171 of the Free Cities Podcast.
This episode is, as always, brought to you by the wonderful Veritas Villages,
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mention us if you choose to do business with them right today's show today's guest is a lady by the
name of Lotta Moberg. Lotta is an economist, author of our, at the Free Cities podcast that is,
favourite book on special economic zones. She spent years studying them, not just as slogans
like many people do, but as real political and economic systems. This conversation starts with
the standard pitch from me that zones are policy sandboxes. Lotta pushes back on that
and we begin to test the claim against incentives.
If the experiment, in inverted commas, is simply lower taxes and fewer barriers,
was it ever really an experiment or just politics in a lab coat?
From there, we zoom out to why zones so often disappoint, actually.
Governments can keep subsidising weak results to avoid admitting failure.
Local legitimacy can matter more than technocratic design.
And the popular story about the success of China's early zones after the communist regime change is actually more complicated than the neat version that certainly I presented in the film, at least.
But many other people believe would say.
Lotta has a lot of views on things like this.
She's very academic about special economic zones and she studied them deeply.
And in this conversation, she doesn't hold back, which is great to have all our ideas challenged.
In the end, obviously, we connect all the lessons learned to the newer wave of zone thinking,
including free cities and charter cities, projects like Prospera,
where the bet is, of course, that clearer rules, contract style governance and more credible exit can change the incentive structure
that makes conventional zones drift into a sort of theater.
Anyway, this is a great episode.
Lotta is one of the most notable thinkers on special economic zones,
certainly in our game.
So take note, lots of alpha here for you all.
Quick reminder before we go, also about another offer
that I mentioned last week for the first time, Alex Martinov.
he's offering pro bono coaching to free city projects if you want to know who alex martinov
is go and check out episode 111 that's me basically getting coached by him in the form of a podcast
you may remember that my chat with alex was pivotal in my decision to go full-time on this
podcast which was obviously a great decision anyway he says um if your project's at a stage
where you can't quite afford paid coaching support that's kind of like business coaching
alex has created a few spots in his calendar for pro bono coaching which is essentially free of
course and this is his way to contribute to the free cities community get in touch with alex at
alex at alexmartinov.com to schedule a call with him everything is of course in the show notes as
normal right top subs this week on fountain here's the top five might make this a new feature
justin bianchi well done mate and this also includes if you're a subscriber this includes
the fact that you're subscribing as well justin bianchi number one bullish mike number two
nicholas number three shadrach number four and new subscriber there darcy number five well done
Darcy and I hope you have a good time on your Bitcoin journey. Darcy contacted me asking for
a good starter point on Bitcoin. If anyone else wants to know about that, just drop me a line.
I can recommend good ways into the space and to start understanding what's going on. Right,
comments. A couple here from last week. Cifrant says the cypherpunks are not bullish enough.
That's about the episode.
Oh, it's going back a bit.
143 with Max Hillebrand, the Praxeology of Privacy.
That's something Max said in the interview, and I would tend to agree with him,
mainly because he's just really a deep thinker and knows about a lot of stuff.
And who have we got here?
Ascot.
Oh, this is rather nice.
If you are interested in real alternatives to the status quo,
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build real world pathways to freedom free cities is top tier high signal content concentrated
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well i should basically frame that and make make it our advert shouldn't i many thanks ascot many
thanks for listening and many thanks for the kind words right it's time for your top tier content
then you lucky things better take it easy this week it's a pretty academic one so you'll
definitely need to sit back relax while you enjoy my conversation with lotta moberg
So introduce yourself and I'll just check the levels.
Hey, my name is Lada Moberg.
I written a book on special economic zones Yeah you have And in fact I got a message from Peter our CEO and he said we were talking about who we going to interview on this trip
And he said, make sure you do Lotto. I said, why? She said, he said, she's written the best book on SEZs in existence.
That's flattering. Thank you.
and I mean I haven't read it obviously I've got a feeling Peter's actually read it because I think
he used it as source material for our film um in that we made zones of progress yeah did he talk
to you about zones of progress when he was making it or no because he we researched he researched
the kind of storyline that we I directed it but he he was basically the main bulk of the the
narrative okay but I know he was reading lots of books about stuff and I would imagine there
aren't a huge amount of books on sez's are there it was wonderful to see the the that video come out
and uh there are certainly a lot of lessons that i recognize that i am that i take both that i took
away from my analysis my book but also that were kind of a little bit conventional wisdom that i
kind of synthesized when i when i wrote my book um so yeah but so what do you think of that film
then and the narrative because the narrative was i don't know it was probably the first time it was
committed to film was the the kind of evolution to places like prospera of sez sez of the old
stuff from like you know shannon airport and and you know maozi and like china and all that stuff
and difc was is well known but the kind of new the new iteration is like where we are now is
wasn't that well known about really i don't think and there wasn't a lot out there i don't think
there were many people making the connection the evolutionary connection of them is that fair to say
yeah and if i if i would take a step back to think about when i started looking at these things so
when i um as you mentioned the question in the beginning like the scholarship of special economic
zones this was something that i wanted to read myself and i wanted to write about free cities
and it was really so this is to take even further back this was in uh like 2009 i think it was when
Paul Romer had his talk on charter cities. So that was the talk of the town, the charter cities.
And I wanted to write about that. And I wanted to use the research on special economic zones to
then draw lessons from what this means, the implication, what goes right or wrong
from a political economy perspective. But that's kind of where I'm coming from in my studies.
So, and I started digging into it and I realized there was no research to really use to do the
studies that I wanted to do. So I just ended up writing on special economic zones. And I thought,
okay, well, I'll take that first step then. And then somebody can build upon that. And that
happened pretty quickly. I'm kind of surprised it's not more both research on special economic
zones, because I don't think my words is the final word at all. But on that topic, and then
we have seen after that, I would point out Mark Lutter, who was my classmate at George Macy
university we both did a phd there and also vera kichanoa she also wrote her dissertation
and that was under mark pennington on this new kind of songs and i know that they both were aware
of my work especially her because she was i think she's a little bit younger in terms of her
educational when she did her phd so but that is when it comes to the lessons and we started talking
about this from that video,
there were tidbits that were out there
of studies of special economic zones
and hints at this might be right,
this might be wrong,
this might be how it kind of happened,
but no framework really out there
floating about how to think about zones,
both the economics of it
and the political economy of it,
especially that I was focusing on.
I'm not sure, Lotta,
that I know what political economies are.
What does that mean?
Can you give me that 101
on what a political economy is.
I mean, that's also the name of the book,
The Political Economy of SEZs.
But you're talking,
you've just mentioned political economies twice.
And I'm not sure I know what they are.
I might be a little bit too George Mason for this,
but I think that you can't talk about political economy
without talking about public choice.
And public choice is basically the extension
of utility maximization to people in political positions.
So in neoclassical framework,
often you have,
there's an assumption that the economic man optimizes perfectly their economic decisions
to maximize utility. The policymaker optimizes to maximize the economic man's utility. The
policymaker in these neoclassical frameworks is not actually a person. It's kind of this omniscient
and well-wanting, benevolent kind of dictator person who then sets the optimal tax rate,
who sets the optimal regulations and everything like that. And of course, what's optimal in that
case might not agree with the people who are creating those models. The political economy
says, the political economy aspect is thinking about it from how policymakers then actually
like taking the political part of our world, which unfortunately is such a big part of where
we're living here now, and saying that's also a part where maximization happens. You can't
understand why decisions are made without thinking about the people who actually make the decision
what they're actually pursuing.
And just assuming that they're trying to maximize utility of you, the citizen,
is just incorrect.
So it has a different axiom.
It's not we used the model and used different data
and then concluded that policymakers have different utility functions.
You can, of course, do that.
There's a lot of studies also.
Usually they support the political economy view of things.
But at its foundation, it's a different axiom that says,
wait a minute, how can you classify people?
these are humans over here they're trying to do what's best for themselves and these are these
benevolent dictators sitting here and they're like not people even though my uncle isn't you know
it might be a senator or whatever and i know he's a person you know is it i mean so that's a function
of um i mean did it always used to be like that thinking about it is that a function of a modern
politics that i mean was there a time when politicians did try to maximize the utility of
people oh i mean because i don't know i maybe i look back with rosy rose tinted glasses but
it seems like maybe they had our best interests at heart at some point is that is that not true
you probably know i don't it it kind of demands an historian to think about the different regimes
that have happened in the past and have they ever been benevolent i mean if you think about why the
roman empire fell it wasn't because they wasn't they weren't benevolent enough for something like
that. They inflamed the currency for their own purposes. So I think humans have always been
humans. We care about ourselves. We care about our family. We care about the people around us.
We're at our foundation. I believe that we're good people. But we're flawed in that sense that
we also do have these models that are not just about, I'm going to sacrifice for being this
civil servant, right? And just maximize everybody else's utility. It just kind of doesn't make
sense um the scholarship of this also goes back hundreds of years there is um and this you have to
ask one of my professors george mason who is now retired with richard wagner is the one who's
written about this there's an italian economist hundreds of years ago who was really the maybe
foundational person of political economy and then way later you have americans like jim buchanan and
things like that writing on on these kind of topics developing the field so to speak
I'm just thinking as well probably it's I mean the misunderstanding that
benevolent actors exist is probably due to the I mean the way people view economics as well I mean
Keynesian economists would probably misunderstand that but maybe
Austrians wouldn't is that fair to say Austrians might see that political people are acting in their
own interest and so are other people that the other the members of the society and stuff I don know It a little moot point I suppose I think it a contradiction in a way of the when we talk about
so Keynesian is kind of an offshoot of neoclassic economics,
but it's not really neoclassic economics
because there's a lot of things built onto that,
which says that, well, you don't get the supply and demand equilibrium there.
You also get excess, often a deficient demand,
animal spirits somehow suppress demand
And therefore, the benevolent government has to step in to rectify that.
And there's a kind of a disconnect between saying, well, people, everybody's maximizing their own self-interest.
But at the same time, so that means that, oh, we have to really like police everybody's behavior then because they're going to walk around and, you know, and shoot each other down and take their money.
But on the other hand, any neoclassical model suggests that if everybody optimizes, then you get the optimal kind of outcome from that.
So then the Keynesians step in and make it a case for big government by saying, well, sure, but the models don't really work out that way.
It doesn't really work that way.
You have deficient demand sometimes.
Animal spirits kick in and distort this neoclassical picture.
So that's how you kind of explain why you have business cycles and things like that.
so I am from the Austrian school so I definitely think that's the more proper way of looking at it
we have most of us reverence for a lot of the insights of Adam Smith thinking about this way
of how the economy actually is self-governing you have Frederick Hayek writing a lot about
the emergent order of things it's he doesn't say that things are perfect he says that when we come
together and we're trying to figure things out and I come up with something I'm good at and I
discovered that if I do this little thing in in a world where our skills are complementary I can
actually live a good life just doing that so Paul Romer got you into free cities right that's
interesting and I mean is it is it free cities all the way or was the SEZ thing just something
that you did because there was nothing out there really to pursue in the in the in the realm of
free cities, which at the time there already wasn't, was there? That's how it started. And then
when I also realized another thing, being at George Mason and being a free market person,
I have biases. Everybody's got biases. And we, in this school, would be more conscious about our
biases than others. But being conscious of bias means that you also are very conscious about
policing those biases and coming from a standpoint when your biases doesn't lead you to a conclusion
that might in any way be wrong from a scholarship kind of perspective.
And I started thinking about special economic zones.
And the more I thought about it, the less obvious it was.
And that's how it actually became a lot of these questions.
Like, why are they even there?
Do they make sense?
I started talking to some of my professors.
I was floating the idea.
How about special economic zones?
What do you think?
And these people who would agree on basically everything
when it comes to economics, you know,
they're for small government and all of that,
they could have 100% opposite views on special economic zones from the, obviously it's a good
thing because if they lower taxes and lower tariffs and things like that, if there's any
loosening of regulation, it's a good thing. We should support that. And the other camp would be
100% by definition. It was all by definition based on the first step from their axioms, right,
of a free market would be absolutely clearly it's a bad thing because if you think that
liberalization is good you should do it for the country as a whole if you in any way have power
over a country and that's kind of per definition what a special economic zone is it's choosing
not to implement a policy over the full territory but instead picking up this little sliver of the
territory um then it's clearly wrong like it's clear something distorted about that and it was
interesting coming out of those meetings that i'm like there is no clear answer now i have some now
i have a kind of a question to answer that it doesn't like that doesn't answer itself from the
What did those people say when you mentioned the idea of a sandbox, an SEZ being a sandbox, like in China, for example?
You know, when you go from communism to a free market, if you tried rolling out some free market ideas throughout China, it would be complete mayhem.
But there was this opportunity.
OK, well, let's try it in a small geographic region, Xinjiang or, I don't know, Zhuhai or something.
And if it works, which it obviously will, you and I both know it will work anyway.
then you get the option to to to roll it out because that's hard to argue again isn't it
argue against isn't it no it's not hard to argue against i don't think that i can i don't think i
really got into that in that early stage because i wasn't really sure myself what i would have
thought would be the strength and then what the real promises was in special economic zones
the argument against saying well it's a sandbox is first well if it's if you're pursuing
policies that amount to just lowering the cost of doing business, such as lowering the taxes,
tariffs. We already know you get more activity. You're going to get, you don't need to test
anything out. Now you're just playing with us to say like, oh, we're going to see what happens.
Like, you know, what's going to happen. So that's just theater. And I like that. I agree with that.
Like that's, I think is a good argument for it. I'd like to take a couple of minutes just to tell
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But what about, I mean, China's a really specific case. They had no property, for example. So they're
going from communism to you know property markets for example i mean there must be a element of
truth to the to the idea that if you tried rolling that out to one point whatever billion people
that's crazy well i would ensue mayhem would ensue whereas if you try it out in a small area
um it's a good political transition or a good maybe that's part of the political economy i don't
a good transition would occur better than otherwise.
That sounds good in theory I have not found good examples of how that actually how it works I don want to like dismiss people make that argument It possible that that happens sometimes but it is a kind of benevolent dictator view of how nation states work
And that's quite uncommon to see that.
And it actually, but when I went in too, that's what was written on special economic zones in depth was mostly kind of World Bank papers, case studies.
And there were some like interesting observations and with some ideas out there.
And Thomas Farol was a person who was at the World Bank at the time.
We ended up co-authoring together later on Special Economic Zones, who was influential in the sense that he'd written things, but without really trying to have an academic framework around it.
In the China case, it might look like that.
It was like, so here is one story.
Deng Xiaoping was this free market person, or he wanted to reform, but he wanted to do it in a cautious way.
Came up with Special Economic Zones, and boom.
He was against Special Economic Zones.
He was just like the other caterers.
They launched it in 78, really 79 kind of is when it got going, the first zone.
And he was against it up until 84, I think it was.
And that's when they kind of allowed for expansion of the program.
What happened was it was a bottom-up process.
It was people, it was businessmen in Guangdong kind of area on the other side of Hong Kong
that wanted to do business across the pond with Hong Kong.
And so they lobbied the local governments to allow for this zone.
And the local governments somehow,
regardless of the gene,
there were probably a lot of brown envelopes
on the table involved.
They said, okay, have this zone then.
Not a big deal.
And then they saw all of a sudden,
there's a trade-off if you're a,
what I can assume in this case,
a lot of, it wasn't this case,
but a lot of countries, it's this case,
we can assume that they are quite corrupt.
And there's a trade-off between,
am I protecting my local cronies
or am I going to allow for less regulation,
not protect them through regulations and other things,
and allow for a free market, which would maybe increase,
which will increase business activity, increase the tax revenues I'm getting.
And all of a sudden they saw that, wow, all of a sudden we have a growing economy here.
And now, of course, we have Shenzhen becoming a zone and growing in that area.
So what happens then is that business starts flowing from other regions to them.
And now this region is saying, wait a minute, this is not working out as well.
my cronies are disappearing. I'm not getting as much pay anymore. So they start looking at what
are they doing right? And it spread like that. So it was very much a local process that was not
because of the communist party were benevolent and thinking they should reform. But they saw that,
actually, this could actually be good for us. So they saw the experiment, but it wasn't really
a conscious kind of, we have a lab, kind of very conscious experiment, kind of became an experiment
that they could observe and then say, okay.
And then like it was 1992 that they allowed
for all the regional capitals to become their own kind of zones.
And that's when they really put their green stamp on it.
Like, yeah, we're supporting this now.
We may have told a little fib in the film then.
Well, at least the way I interpreted it,
the four main zones at the beginning
were kind of like a thoughtful process by the government.
All right, let's do this.
You're saying it's not?
No, I think it's a little bit.
But they kind of cashed in on it.
They cashed in on it.
Yeah, it depends on how you tell the story.
And there's not that much written.
So I'm not going to say that the sources that I have is like the perfect truth.
But there is a book called, I think it's called The Political Economy of China,
Special Economic Zones or something like that.
Oh, wow. Perfect.
Right. And it sounds like, oh, well, you just copied that.
No, it wasn't The Political Economy of it in terms of a framework.
The book was just telling what happened.
And then they met.
And then this happened.
And then these had a meeting and then they decided this, you know, so you can then understand the process and putting your framework around and building a framework around it.
I mean, one thing I did, I have always thought in the case of China is that I think no matter what you would have cited opposite Hong Kong would have done really well inside China.
Doesn't matter. Do you know what I mean? Like Shenzhen was if when you say, well, Shenzhen is one of the powerhouses of, you know, China now.
And that's because of, you know, the fact that it was a special economic zone.
I can't help thinking, well, yeah, it's also right near Hong Kong.
So obviously Hong Kong is going to do business.
Hong Kong is super successful and really does, you know, generate a lot of wealth and a lot of everything.
So I don't know. I'm you're the expert, though.
but that's new i hadn't heard that before so i wonder what else we got wrong in the film
so so um i don't remember that was a lot that i thought that was wrong so well but the thing is
in the film peter because peter spent quite a while in china right and he speaks he speaks
is cantonese or whichever whichever one it is and he talked about a policy that the chinese
government had and he says it in the film and it's like or whatever you know something like that
And it means feeling for the stones under your feet when you're crossing a river or something like that.
Crossing a river by feeling the stones.
Right.
You know this thing, right?
But that was the way they decided.
He connected that with special economic zones, which was they want to reform, but they're going to do it in a tentative way to begin with.
And that involves the zones.
I think that's right.
A little bit later.
It's just that it's not quite how it started.
It was just a messier start than people want to.
It's fine.
We always want to tell a story that is neat so that people don't get too confused, which is absolutely fine.
It's just these first few years, it was a more trembling thing and it did start.
And I do think that it's a good case for bottom-up processes and decentralization, that it actually did happen on a local level.
And this was very much thanks to this.
And here there's a good amount of scholarship about how decentralized, both politically and economically, China was for a period.
It has gone up and down. And I don't think it's that decentralized, as decentralized anymore. But I do think still people underestimate how decentralized China is. And there's quite a lot of papers written on, and I won't be able to cite them now, but about how various reforms came about through, thanks to the political and economic fiscal, I should say, decentralization of China. And both of those are necessary conditions.
because if you can't, political means I can do something.
I can change it and it changes where I live.
And fiscal means I have an incentive to do it.
If I make things better and increase tax revenues in my local area,
it doesn't all flow to the center and I won't see it.
So I have an incentive to make those reforms.
How far back did you go historically then in your research?
Not a lot.
I focused on, I think China is the one that goes back furthest really
when you look deeply into kind of a process that happened.
I mean, I tell the story of special economic zones.
There's a little bit like you can think about the Hanseatic League
as a kind of league of different zones.
But you mentioned Shannon in the beginning of our conversation here.
And that was really the first kind of industrial park
where it's like the government says we're going to have this zone here.
And that was famously because it used to be that
if you're going to fly across the Atlantic,
you have to stop somewhere to refuel.
And Ireland is the perfect place to stop and refuel.
and um so thanks to that there was an economy around that and then technology advanced and
you don't have to stop in ireland anymore and they said oh no what are we going to do
so they created this zone to boost the economy which is a perfect example of why zones work i
think you can get a better version of a zone than that because it's it takes a lot to fly a plane
that you don't you don't need to fly via shannon but oh let's do it anyway because you know there's a
there's a benefit to us, which is the whole point of special
economic zones as far as I'm concerned. How far back can you
go? What do you know, just from my own personal interest here, in
the a lot of people site a lot of different places as I was
modeling SEZs historically and stuff.
Yeah, I haven't looked that far. So so they're probably going
to be better people out there to think about equivalents,
historical analogies. But in terms of zones, like we know
them, and those are traditionally
Additionally, your, you know, your industrial zones.
Before you have industry, it's hard to say that you have industrial zone.
Before industry, then it was more about trade generally.
But trade was free.
Like the transaction costs were still high because of technology.
But in many episodes, it hasn't like trade was disrupted by wars and things like that, invasions.
but I don't I think it's fair to say that the stone concepts that we can actually learn from as a
in the form that we're seeing it now is not as doesn't go back hundreds of years I don't know
if it's helpful it could be helpful if you're a historian to make the analogies and maybe draw
some lessons but that has not been my focus and do you think there's a lot of research out there
now because what there's over 6 000 zones right it's very well tried and tested methodology
behind zones, the kind of, the core.
Is there a lot known and written and said about them?
Not that I know of.
I don't think there's much that come out.
There are specific countries.
There's one scholar that writes about
the special economic zones of India, for example.
I think her name is Agarwal.
And things like that, that I see coming through, but.
Why is that then?
They seem like they're, I don't know,
maybe because we're in this place, in this world,
and it's all about, you know, creating zones and maximizing the zone
and all this kind of stuff.
I'm surprised that there aren't more people talking about it
because, all right, and I suppose I have quite a brutal view of it.
You're a much deeper thinker than me on stuff like this,
but it does seem a bit obvious why zones work
and why you should use zones to do things.
Yeah.
So why aren't more people either doing it?
Well, I suppose 6,000 zones is quite a lot of people doing it.
But why isn't it more commonly understood that this is a brilliant tool?
Yeah.
So why there's not much scholarship?
I think you hit on one.
One is that people think it's going to be obvious.
So if I'm going to have this big, if I'm going to write my dissertation on it or something like that, then you might have, if you have a preconceived notion that you already know your answer, if you're a wise enough scholar, then you might not pursue it for that reason.
The second reason I think is just like I said, in terms of the motivation behind it, a government doesn't really want to have an answer they don't like.
If they are decided that they want a zone program, they are not going to commission people to study, figure out whether the zones is a good idea because they already made up their mind.
They don't want that to come out in any different direction.
And as I explain in my book, zones are often pursued for political reasons.
That doesn't mean it's always a bad thing.
They can still, you know, all the things that we talk about, you know, increase employment and exports and economic activity as a whole.
It can definitely do that.
But it's their pursuit often for political reason that sometimes suggest that had this tool had not been available, they would actually have maybe liberalized more broadly in the whole country.
Now, a third reason I would say, why isn't more scholarship?
Because it would be obvious that it should be in the field of economics.
It's like an export policy.
So economists go out and look at zones.
And there are papers trying to do this, answering the question, is this good for an economy?
And it's actually really hard to do.
There are two ways usually you see people studying this.
One is to compare the special economic zones area with the economic development of the rest of the country over, say, the 10, 20 years after a zone in this area was open.
So that's fair enough.
We have a zone.
We know that it's a zone.
We know people are working there.
So we know there should be some kind of impact.
Is it good or bad?
And they conclude that the zones are good because there's more economic activity here in the rest of the country.
That doesn't answer, in my mind, was the zone a good idea?
Because if the companies that were already in the country just moved from outside the zone to inside the zone,
all you did was the transaction cost of moving from one place to the other.
And yeah, there's a marginal.
Of course, they got paid lower taxes, so they could employ more people.
So maybe on net, but just saying that the economic activity was higher in the zone doesn't answer the question where there was a good idea for the economy as a whole.
Did you get economic development and all that?
The other way that you see people doing it, and I've seen two papers of this, not well cited because they can't be good papers, is to try to compare GDP growth between countries that have some programs that don't have some programs.
Now, anything GDP growth is very difficult, right?
You have to have many decades.
And the more decades you have, the more factors you have to control for.
You know, regime changes and wars happen.
And how many dummies do you want to throw in there?
And once you have your very multivariable thing, you have to then decide what kind of model you're going to use because of the time series aspects of it.
There's a lot of issues with your data.
And at the end, you might come up with a coefficient or not.
And often it's going to be a coefficient in one direction, but not statistically significant, meaning you can't really determine whether this was a random noise or not that we saw that it was a good or a bad thing for the economy.
and you also have to be very careful that the zone program actually was launched in terms of the
were they allowed for the the permits to open the zones and actually have them working because
that sometimes happens too like oh there's a program in this country and it might take 20
years until they actually come into effect um lada you're the first person i've spoken to about
this is making me think they're not a good idea now i mean like i'm glad to hear all this stuff
because you're painting, I like it,
painting a very neutral picture, which is good
because I think we talk always in the positive
about these kind of things.
But it makes sense because we're not in the business
of special economic zones, right?
We should remember when I talk about special economic zones,
I talk about these things that governments start
often for meeting certain criteria,
meeting certain metrics like increase exports
or increase employment and things like that.
And that is not our business, right?
We are thinking about how to create communities from a bottom-up level that actually attracts people in a very different way, right?
We don't have...
Part of our strength is that we don't have the resources that a government has, right?
Because what you often see with special development zones, unfortunately, is that the less profitable or less beneficial they are for the economy,
the more money is being invested in them from the government standpoint.
Why?
because they put their name on it and they don't want it to fail so they want to make sure they
fail so they increase taxes for the rest of the economy to put more and more money into this so
one i wrote one paper on ghana and the temais the port there that um have a zone and people cite this
now as a it was such a great project and all that but forever it was just a dump of money they didn't
there wasn't any road going to it really so they just kept having to subsidize it because
not enough industry wanted to establish themselves there.
So if you look at the whole history of that zone, for example, in Ghana,
it's like, look, of all I can tell, this was a big waste for the government.
And then what happened, this was early 2000, 2006, around there, I think,
World Bank stepped in and said, we're just going to throw money at this.
Well, where does that money come?
It's not because the World Bank is a profitable industry, right?
So they now throw a lot of money.
And now it is its own. It works, absolutely.
But it's like from a very long history of not working,
not working in terms of they have to throw so much money at it,
I would say that was not like,
it did not benefit the people of that country, would be my guess.
What do you think then about the idea or the notion
that governments might create free city type projects?
Sounds like it would be a bad idea.
But really, I mean, by its nature, you're working,
well, most people are working in corroboration
with the government, but for governments to then look
at that in other countries and go,
that seemed to work in say Honduras, oh, that worked.
Why don't we try our same thing?
Do you think that's not a good idea?
No it a great idea in the way that I all the projects that I seeing have these the two components that I think are necessary for it to be successful and beneficial for the
country is, one, there has to be some incentive for the government to keep it running, which
often is some kind of share agreement.
There's some kind of fees that get paid royalties that go to the government where you say, when
we're profitable, or maybe even before we're profitable, we're going to be paying you money.
So you're not going to lose any revenue from this.
you started an area often
where it's very sparsely populated.
So if you're going to say you're going to lower taxes,
you can see how much money
is on the line here for the government.
So it's definitely like,
then you can definitely create the areas
if the government has the right incentive.
And the other part is not having the people on the side
and seeing that it's beneficial,
making them understand what this is doing.
It's that it's not a neocolonial kind of project
or anything like that.
Because that creates sustainability, of course, of, you know, when you have the next election, next government comes in and then paints it in a bad light because it was the prior regime and things like that and convinces the people that, you know, this is a bad thing for you.
If people see that there is money flowing out of it or the people living there seeing that there's more jobs created, that's beneficial for everyone.
Then you actually have a test bed, so to speak, a sandbox, as you said, for a form that could be showcased for others to other companies coming in and striking the same deal with the government.
maybe the government doing a similar thing and understanding that this kind of regulatory freedom and autonomy can be beneficial.
I mean, it's...
But I wouldn't call that special economic zones in the classical sense, right?
We're starting from a very like bottom-up perspective as an outsider for the government.
Especially, I think, in the form we see them now in Honduras as well.
It makes the government look really bad.
And in fact, I was chatting to, oh my brain, it's too late in the day, Mr. Morazan, the guy, Massimo, I was speaking to Massimo, Jesus.
Took me a couple of seconds for you.
Yeah, it's too late in the day, Lotta.
Massimo basically is saying there's actually been a really interesting change in public attitude,
especially in the locale, in the locale, locality of Morazan recently.
Okay.
Because, and as you know, the government there is doing really badly as well.
And I think it seems to be happening quite commonly that they,
it's certainly with regards to the special with regards to the ZAs that people are now looking at
them going wait a minute all that stuff they told us it was crap it was bullshit and he told me that
he said that this is what is known in Chaloma it's spoken about and maybe we should clarify for
those who don't know you said ZAs very quickly so these are the zones for economic and development
that are that the Honduran government set up right in the 2010s I hope the audience knows that
I talk about them a lot well hopefully you're getting new people to listen to this all the time
So there might be new people here.
How far did you go in the book?
Did you touch on any of the sort of modern iterations?
No, it was really in the end where I have a chapter on kind of saying
where are the kind of two things.
One is where are the zones that are leading the way towards
more regulatory reforms as opposed to just fiscal
and pointing at the, you mentioned the financial center in Dubai
and things like that.
And South Korea had some interesting things.
And then I also kind of did a little bit speculation.
but about how the zones of the future can be these more autonomous areas
and how the lessons from the industrial parks kind of point in that direction.
The big thing that I think is common wisdom now that I feel wasn't at the time,
but the World Bank writer on this, Thomas Farol,
I remember mentioning in one publication kind of in passing
was that privately developed zones are better than government-run zones,
government-run and developed zones.
And so that points to a direction that all the initiatives should be on the private basis.
But that still points to, when I make that just a position,
it's still like government initiatives,
but whether the government allows for the private sector to develop and run the zones
as opposed to running them themselves.
Really? So that's commonly understood now?
I think that most people would say that, yeah.
That's a good, I think it's pretty good.
Doesn't mean that all the new zones that are, you know, follow that model at all.
Well, I mean, there aren't that many new zones really, are there?
I mean, are you talking about, you know, real free city type projects or just even new special economic zones?
Special economic zones.
There are new ones that happen.
I mean, there's a lot of governments.
I don't follow it 100%.
I know that there are zones in Africa where you do have a mixed bag between government throwing concrete at a place.
And usually that doesn't go very far.
they run out of money um and or people who understand that you need the private sector and
and you have a developer and people pursuing this is for to make money which means that they
want to invite companies that are promising promising to stay promising to develop and
and hire people and things like that so yeah i think um i would think that there are more and
more private zones and but it's hard to say i haven't seen any like really good surveys coming
at like lately on trying to list them and compare them i feel like there was a drive there was a
greek interest from the world bank side there um in the kind of early 2000s to write a lot about
that and the people who were writing at the time i know have moved on to like other things
part of it being practitioner and setting up zones absolutely so yeah do you know do you happen to
know what people at that level think of say prosper for example and the z8s i don't know i
I don't know in what circles you revolve,
but I certainly don't revolve in anything to do with the World Bank
or anything like that.
Are they considered a cute little experiment?
Or are they like we think of them as probably game-changing projects
that might lead to who knows what?
I'm not in those circles either.
I'm in the private sector, so I can only speculate.
I think most people think of it as a cute experiment
and don't look at that carefully.
It's not, if you're in the World Bank,
you're not paid to think about the new things
that are not kind of, haven't existed on the ground
that long or made a big economic impact.
But for sure, if you're the Honduran,
the economist covering Honduras very soon,
you won't be able probably.
So that would be encouraging, right?
You can't be, you might not be able
to seriously write your report on the country
without mentioning what happens in a big part of the economy
once it is a big part of the economy.
So what do you think about it then?
What do you think about the whole ZA thing
and the new versions that are sort of popping up
and in the pipeline, you know, of a few,
there's some that we can't mention.
What do you think of it?
Cute or life-changing?
No, I think it's, well, per definition,
it's life-changing for the people who are there.
You know what I mean?
I think it's, no, I think it is the way to go.
Like that's, it's exactly, it's really cool
to see that there are so many projects coming up.
And I think it's going to change the world.
But we are still in the early stage of it.
And I do know that, I mean, most people think that it's,
yeah, most people think it's not a big deal.
But that's because, you know, any change happens like this, right?
If things grow by 10% from very small,
you don't notice it until it actually is starting to take off
and becoming very big.
So I definitely think we're doing the right thing.
It's moving the right direction.
I don't think it can move much faster than it is now.
You see how people are working hard to make these projects happen.
I started speaking at these kind of like free cities conferences,
probably back in 2011, maybe, when I started kind of looking into these things.
And at that time, you could never fill a room with free cities people.
It was always blockchain and free cities together like you kind of pair them together to create a conference So it was certainly not you know men in suits sitting in a filling up a room
And now it's like, it's that, you know,
it's people with serious plans and serious budgets,
serious, you know, business plans around it.
When was the last time you came to this event then?
This is the first time.
Oh really?
Yeah, I've done other conferences before this was a thing,
but yeah.
So what do you think?
I mean, was it a surprise?
Did you already know that you might, was it what you expected?
The quality of people, the number of people, the projects talked about, you know.
Yes, you're good at advertising it.
Are we?
And showing pictures.
So I've been looking at the pictures.
Oh, right, right.
No, you know what I mean though.
Yeah.
Like the way you just described it, you would never fill a room with people into this.
I just assumed you would.
I've watched it grow, but maybe I haven't noticed it change as much.
I know there's definitely loads of projects coming online and especially now, like I am absolutely pumped.
I'm so excited now based on just new things happening every day and nothing to do with us even just watching things.
I know what Optiflis are doing and I know what the people close to us are doing.
But just new little things like Destiny the other day, you know, this one in Nevis and some kids, you know, and this is now really happening.
I mean it's weird because it was you know what it's like it was I was a bit like this with bitcoin
you know it used to be a edgy thing to do and now all of a sudden everyone's a bitcoiner you know
and and it's a bit like it's happening with free cities now it's like you're not pushing against
I mean we are still it's still very early but um it's always it's been one of those places where
it's always oh something's something's gonna happen but it's just around the corner you can
feel it it's happening but I actually feel like it's actually happening now I really do and
obviously Prospera and Morazan, yeah, they've always been there. But even their story has been
amazing. They've had a full on socialist government say, you're illegitimate shutting you down. And
then they just didn't do anything about it. You know, that's a that's an incredible win. You know,
all these little wins added to the fact that there are new projects coming up. You know,
that's amazing. Yeah. And that's the progress that you know, that's the process, you know,
things go through. If I think of like three areas, if you think of Bitcoin, I would single out
Bitcoin as opposed to just any blockchain related thing or cryptocurrency. If you think of Bitcoin
and you think of longevity and you think of free cities, I would take them in that order.
And you want to look at it. I think that the game changer is when VCs sit in a room and you're
looking cool and impressing people by saying, well, we put such and such million dollars in
this space, then you won, right? Bitcoin got there a good few years ago now. It was kind of cool to
say they were in this space, not institutional money. And that's, you know, Bitcoin went from
VCs, it's cool to be here. And then the next step being institutional money, it's already there,
right? Now you have pension funds putting their money into that. And at least university endowment
and pension funds talking about it.
So the, and then the next one,
if you think about the longevity space,
which I think is another one,
it's smaller in a way because it's more niche.
It's within the healthcare space,
but still that too, I feel like it was such,
it was a niche, it was laughed at.
And then now they're at the stage
that VC is a cool, cool person
talking about investing in it,
far away from institutional.
Free cities are not at the stage of VC.
cool to talk about it yet that you say that you would put million dollars in it but you show a few
projects that are profitable and people um posting on social media that they became billionaires from
investing in free cities projects and that's part of you know that's how it sounds very superficial
but that's a lot of progression of just like how money starts flowing into an industry and and that's
Well, what's also quite evident about what you just said is that the longevity industry is supremely connected with the Free Cities ecosystem.
Because, I mean, longevity, by all accounts, is a bit of a regulatory quagmire.
And I mean, just before you, I was interviewing Vladimir Leshko.
He runs Unlimited Bio, which is based in Prospero.
They do gene therapy.
and um yeah he he that he could he said we were we couldn't really be doing this
unless prosper existed so they're they're intricately connected by the way he said
you sound like you're into are you into the longevity stuff you you sound like you're into
i know some and i've made some investments in that space yeah okay he said well he said he
reckoned he's a engineer he's a bio and he's a qualified bloke he's a you know he said i will
in my lifetime, and I'm 54, so I think, you know, 35, 40 years, I'm going to live to,
I'd be 90, I think, I hope. I will be able to live forever. What do you think about that?
I hope he's right, obviously.
Yeah, of course, I hope he's right.
I don't know. I can't bet my money on it.
So come on, what have you got into in longevity? Are you into longevity? Or is it a financial
decision do you look at the market and go like you just explained to me there oh look capital's
moving there if i get in good blah blah blah or do you think i'm really interested in that
therefore i want to be a part of it and i want to put my money into it yeah there are two things
right do you think it's valuable and do you think that the market is underestimating how valuable
it is and the answer is yes on both of those for me so yes it is a financial decision in the sense
that I think that it's still underestimated how big this space is going to be.
But it's also something, yeah, and I think it's valuable in its face
and I want to be part of it.
So it becomes a personal thing in the sense that you want to be close to
and touch it a little bit and have that kind of connection to it.
But it's also, yeah, I guess it's a little bit that when you're drawn to something,
you also want to be contributing to see it grow because you like it,
which is not a way that you should make too many financial decisions.
There's a little bit of that.
Is that right?
That's how I make financial decisions.
Do you know what I just thought of, actually?
It's interesting.
You can change your time horizon, investing in longevity products, can't you,
when you think about it?
Because you might have a 10-year plan.
I'm going to put some money in.
You could have a 100-year plan.
If you really believe in that, you could say, right,
Well, all right, I'm going to see the benefit of this when I'm 200.
I mean, really.
I mean, it's an interesting concept because all that, if that's true and all this longevity stuff really does,
then that blows the hot lid off lots of investing plans, I suppose,
because most people wouldn't think 100 years into the future, would they?
People will be holding suboptimally high amounts of bonds because right now anyone who is a wealth manager
will often have a sliding, kind of this gliding scale, where over the course of a lifetime,
where you use the projected lifetime, you load off, you sell off your equities and invest more
in bonds, right, to keep it steady, which I think is not the right way to think about it all.
But that's a great point. People are going to say, but you said I was going to be dead by now,
and now I'm holding 100% bonds. What's going on here? And now I just learned that I'm going to,
you know, live another 50 years, am I going to reallocate? And like, sorry, you kind of have to
recalculate your model there. And it is interesting because I, so I'm in starting a company in the
wealth management space. So I think about this a lot. And it's actually exactly in line in this
topic, because our way of thinking about allocation is not asset classes, but time horizons.
And we think of a, the longest time horizon where you kind of think of the world as being in
equilibrium as a few decades because most people who are seriously placing their money do so when they have a few more decades to live which could be a complete miscalculation right It still you know a good way to go in terms of well
okay, a few decades or more. Okay, fine. But it might be that you end up having too many people
with that kind of passive allocation for sure. Presumably you could have your, you know,
you have your 10, 5% allocation to, you know, 200 years into the future. We're going to put some
money into one of these longevity companies and it's like yeah but it's a very long time horizon
the rest of it yeah we'll stick to the you know i mean i don't yes not a lot i have no idea really
what wealth management is i i don't really know i'm assuming let me guess it's you get a load of
people's money and you allocate it and you make like family offices what they do is that wealth
management yeah right okay so so and you can think of it as when we talk about wealth management
if you think about allocating money, there's kind of two ways of doing it. Either you take a very,
very small sliver of something and you're very specialized. And that's often in the institutional
space where it's like, here's a pension fund. They have many, many billions and you get,
they have allocated already how they're going to do. They have their own office, right? And they say,
like I used to work in Chicago and I was part of a macro allocation strategies team,
which meant that we did macro means top down.
You don't look at specific companies.
You'd look at everything in a country level basis.
So if I like the US, I like the S&P.
I don't like the specific company, right?
And there you will have like an allocation of somebody,
some fund out there have said,
we want something that we call alts,
which is a stupid label for stuff
that we can't put in any other bucket.
And by the way, that alts bucket is very big now
because there's so much out there.
It's real estate.
It's currencies, it's macro, it's everything.
So we're going to call that alt.
And then within that alt, you might have a macro sliver.
And then within that macro sliver, we're going to have an allocation to, we've decided, three or five different allocators.
And then you get the mandate.
So now you know that whatever they're doing with the rest of the portfolio, I'm not touching that.
I'm just going to do my best to do what they want me to do.
Whereas wealth management is generally more holistic.
You might have a full portfolio that you're now allocating.
So now you have to think about it like as a total portfolio and, you know, with the passive or active parts.
And you mentioned, you know, you could have whether it seems silly to have like, should you have the passive or a little bit of this, a little bit of that?
Absolutely, right?
I don't think anybody should have just passive or active.
And there's a lot of people because they're in one or the other space say this is the best and that's the best.
And most wealth managers selfishly want more passive because they can do less work.
but I think that everybody should have some of each
and it's very individual
so that's the individual choice
like are you the kind of person
who wants the long horizon
or the shorter horizon kind of investment
How do you get new clients?
So you've just started a new
We're starting it, yeah
we're not managing money yet
we're hoping to start this
How do you get new clients then?
Do you have to go phone people up and say
you know, businesses, companies, I don't know
and say who's managing you well?
Yeah, I have colleagues who are more in the wealth management space.
So it's a new space for me.
So I'm not the one with the best connections there myself.
But how does that all work?
I'm just fascinated.
Tell me if I'm asking too deep.
No, the wealth management space is an industry of relations.
And it's part of why I mentioned my talk here at the conference.
I can only describe the industry as quite bad.
it's because there's a lot of just money being spent on relation building there's less and less
money spent actually allocating the money correctly so if you ever go to a party this
probably has happened to you if you ever networked somebody's a wealth manager and they're like
starting to ask you and they're very nice then they're not too obvious about it but they're
hoping that you could maybe be a client and they're having hundreds of these conversations a week
and maybe they'll end up with, you know,
they're trying to fill up as many lunches
and taking people out, wining and dining
to make others like them
and eventually get you as a client.
You know, say, I'm going to manage your money.
You're going to help you also, you know, plan your taxes and insurance.
You know, you should probably have some life insurance
and then they get a commission for the people that, you know,
provide the life insurance and things like that.
And when you pay the one, one and a half percent of your wealth every year
for them to do this, you are also paying for all the dinners that they had with the other people,
you know, that never became their clients. So part of it is, it is an industry that
does rely on relationships, it should function in more kind of efficient way. But it's also hard to
say, like, how will it function different way? Well, you can have people who are, you know,
have good reputations, and everybody comes to them. Well, that doesn't maybe work, because you
can't have one person managing everybody and but um yeah but that's that's that's kind of where the
industry is the best we can do at this point is um when you have a client to come up with a more
efficient way of working and and we think a lot about like how to you know how to make things
more efficient like our our macro way of investing um we're working on automating quite a lot of that
so that we can have like value-based investing without having we were 13 people in a team before
And now it's me and a business partner doing the investment part.
And we think we can pull through, do a lot of good work with maybe one other person on the investment side.
And presumably you're using your contacts or your ideas about the world you revolve to specifically allocate to those kind of things.
If the people want.
I mean, how does it work?
Presumably you say, I can get you 8% on all your wealth or something.
Is that how it works?
and they go, okay, good, or whatever it is.
I don't know.
It can't just be about relationships.
There must be an element of this guy makes us more money than that guy.
There's some of that, but there's return and there's also risk.
So managing your risk is, I would say, often more important for people
because it's kind of less obvious to whether you promise a –
one, you can never promise a return.
That's just not in line with the law.
But you can say that we're targeting returns for certain allocations.
So if we're thinking about whether you're looking at your long-term allocation, short-term allocation, the long-term allocation, you might have a projection for the global market to grow at a certain rate.
And that's just going to be what you're expecting for your returns.
If you have a shorter term and more active allocation where you're trading a lot, you have, of course, trading costs of that, but you don't incur more of those, then you know that you can still maintain a good return.
So there you would expect a higher return, obviously, as well.
So there it depends on, well, are you willing to take on the potential risk that comes with periods where if you have a value-based investing, meaning if value is higher than the price, I am going to buy this.
If value is below the price, I am going to sell this actually going short.
And if you want a lot of that kind of allocation, right, you can then, you know, your return profile of your portfolio will be different, will be higher.
But your risk may also be higher, right?
because you are incurring the risk of not wanting to touch your portfolio
as periods sometimes stretch out for a long time of value diverging,
prices diverging from value for a long time.
And you see this, for example, we had a long period,
you probably recall, where interest rates were very low.
All the bonds look so expensive.
And you could keep shorting bonds until the cows come home
and you were not making any money, you know,
and you're losing money, you know.
And after a while, your clients might say, you know,
stop doing a bond thing.
And often that happens right before everything changes.
But so, yeah, that's a little bit,
I hope I've given you a little bit of picture of how it works.
There's a lot to say.
Well, no, I mean, I get the general gist, which is, you know,
marrying risk and return and making sure that you keep your client happy.
But I'm just wondering what they expect, what kind of return you expect?
As a whole.
Yeah.
I mean, what is a good return?
You get 8% from the S&P if you just put it all into that, wouldn't you?
But then you run the risk of, you don't want to put all your eggs in one basket.
Yeah, I mean, I would say, right, like S&P means that you're focusing on only one country.
So you're putting your money kind of in one big basket, but still one basket, right?
And if you're having an active allocation, I would say maybe five real, so five plus inflation,
because it's also an inflation thing, right?
I was going to say.
Yeah.
Right.
So it beats inflation.
Right.
You want to beat inflation.
And over time, you could just put into gold if you want to do that.
But that's not a very good risk allocation there.
Because then you'll have long periods when you might not be happy
and sometimes you want to sell.
So the risk part is very important, right?
And that's something where I would say that a lot of allocators,
a lot of allocators will completely not want to talk about risk
because they know they don't have a really good way of managing it.
And so they focus on only the return part.
And then you can go to a cocktail bar and you say,
oh, my manager made me 20% this year and it's so cool.
And it turned out that it was all like in, say,
one real estate project or something like that.
Yes, you made 20%.
There are a lot of alternatives realities out there
where that project did not go well.
If it's a very concentrated position,
you didn't really manage your risk that well.
and understanding a total risk of portfolio is a very complicated thing.
I am not the one to create the framework around this,
but our colleague who is focused on risk is very, very proficient in this.
And so without a framework like that,
I think we wouldn't have as good an offering, so to speak.
So what's your role then?
What would your role be?
finding good new unusual investments or just you know i don't know yeah i'm bringing in a lot of the
just the macro investing that i've done since i started in finance really and putting that
together like putting our valuation models in place and things like that and then i'm going
to be managing that and hopefully handing over some of the day-to-day on that to
to a new colleague that we're looking for um so but um yeah so so then but i will also be involved
to a larger, larger extent
and a holistic kind of portfolio composition,
which are going to be individual for each client.
Will it have a personality like, you know,
I'm just wondering because, you know,
you're obviously into some interesting things,
as in, you know, I mean, in investing terms, even.
You used to be a cannabis investor, right, in the past.
Yeah.
That's an unusual thing.
I still am.
Oh, you still are, right.
But also the free cities thing, you know, whatever.
So you could argue that you've got
an interesting eye for investments.
is that what the personality of the company would be if you see what I mean like it's not just some
boring oh we'll do that that no we're kind of like we've got an eye on a few things that you
probably don't know anything about yet or something I don't know I I've never really
been into any of that stuff I've never had an I mean interested in it now it was a bit late in
life but um I thought it was boring for the whole of time yeah it can be boring well yeah it can be
It's boring, but markets are interesting, really interesting.
And I didn't realize that for a long time.
I didn't think it could be interesting until I started working a little over 10 years ago in this field.
And I'm an economist by background.
So coming out of economics, and I did my PhD in economics, I would never think that I would even be in the private sector,
especially as writing, we were talking about the special economic zones.
That was my dissertation, the topic of my dissertation.
And doing political economy and macro does not fit well with my thinking of what finance is,
and looking at picking companies, I thought it was all about.
And what's interesting for me, which has been tremendously rewarding,
has just been to bring in all the economics, everything I learned,
and just putting that into our models and our way of thinking.
And seriously, after, say, two years of doing macro investing,
I looked through the curriculum and the syllabi of all the classes that I took at George Mason,
and it was like one that I had not used material from the classes.
It was like everything was useful.
And I bet my professors would never have thought that.
One simple example is just to think about, you might be familiar with the Economic Freedom Index by Fraser Institute.
It's a Canadian think tank.
But it's been run by professors mainly at the University of Florida.
So they rank countries by economic freedom and they see how it's changed over the years.
and their scholarships looking at, well, what's the growth implication of economic freedom?
And there's a lag, right?
You see economic freedom, you see subsequently some growth implication of that.
And just putting that into models in the sense that if you believe that a country will grow faster on the basis of this,
you also believe that that has an impact on the equity market with some scale.
And therefore, you'll have a model where you're seeing dividends from your equity position growing over time, say, faster.
So that can work. I mean, you talked about how the difference between investing because you have a high valuation versus investing because you think that the valuation is underestimated.
And you can still, I can definitely say that I made mistakes in that field.
So let's say when Macri became president of Argentina, I was really, I've been really optimistic about the potential of reforming Argentina.
And even though I visited, I talked to people.
There's a great think tank in Argentina called Libertari Progreso.
And Estebas is his name, Agustin, that I met with.
And he was so skeptical.
And I just want to believe.
And I dismissed his views on this.
And I put money into it.
So that was more, we allowed for a little bit more like kind of the tactical, like not necessary value base.
But I also like overestimated what the probability was that the reforms were actually going to stick.
And they didn't stick.
They failed.
Right.
So things like that, like you can still, you can definitely, we all have our biases.
And it's something just always remember, I'm going to keep making mistakes probably.
Can you notice them in yourself though?
I fully recognize that experience of listening to negative news, but knowing that I really want it to happen and that overriding my opinion on what's going to happen.
Yeah.
Do you notice it when you're doing it now?
Like, can you see when it's you're not being purely analytical or purely, you know, neutral on us on something?
In most cases, I think we all do.
But the fact that you can still make these mistakes suggests that if one out of 100 cases you don't notice it, that can lead you astray.
And I think that you often just have to talk to your colleagues and friends and say, I think like this.
And just like get the pushback.
And sometimes just talking about it reveals to yourself.
In the Argentina experience that you just had there, someone who knew told you something and you kind of disbelieved them.
Is it?
Why?
Because I wanted to believe.
Yeah, right.
That's what I mean.
So the lesson is if someone's a specialist, then just believe them or not.
Probably not.
No, no, no, exactly.
I know we wouldn't want to go that far, but it's more in the line where you were going,
which is just recognize yourself, that your biases can kind of push you somewhere sometimes.
So, yeah.
That would be me.
I'd be a terrible investor.
I'm in the same reason I'd be a terrible trader of anything.
Markets just, I'm that guy.
I'm the person in the market who gets,
well, I just stay out of the market now
because I know that if I,
in fact, I know if I'm starting to,
oh, I want to buy.
I know this is the worst time to buy.
That's my signal, whatever.
Don't buy that thing now
because the fact that you're suddenly animated to buy it
means so is everyone else
and that's the actual time to be selling it.
It's the complete opposite.
But I just do neither
because I haven you know It is hard it is hard and it the equivalent of my experience say the anecdote from Argentina in the market is you buy something it goes up and that confirms that you right
You either hold onto it, you buy more
and you buy more and buy more as it goes up
until it goes down.
And then you are not happy.
What's, I want to talk about cannabis.
Well, not just cannabis, but before we do,
what's the difference between the way you would
invest or wealth manage your own money versus one of your big clients or one of your clients
there's no difference and i as soon as we get online with a with our product i i want to put
the money my money into it um and it would be great because then i don't have to i don't try
to do what i'm we are going to do as a whole because there's too much work for my own money
so I'm just a passive investor mostly myself now like value-based if I know that something
just looks way too overvalued then I would sell it and vice versa but I don't make a lot of trades
or anything like that you know I mean gold has been an interesting one recently for example we
are speaking at a time now where people have been talking about a gold bubble and it was hyperbolic
and then it came down a bit it came down like six and a half percent one day and then it stayed a
little bit and then it went down again and now people are like oh should I buy or sell sell and
so things like that that really became becomes big stories you kind of start having to look at
and often I do kind of think that I want to sell when everybody's super super excited about it like
I go to a networking event and you ask everybody like I was asking actually the day before gold
started going down we were we were having a group together of free market people actually and
I was just asking everybody what do you do now with the gold are you gonna when are you gonna
to sell gold and most people said never i never said and they and i bet several of them will change
their mind too when when it goes down you know well i mean i mean also there were lines of people
on the news buying physical gold literally the day before it started tanking so that those i i
because i'm a bitcoiner i think i've got used to noticing exuberance in in various shapes and forms
and like Twitter, for example, even places like that,
it's a really easy way to notice exuberance.
If you have a network like I do of Bitcoiners,
you can notice when they start talking
in an exuberant way about Bitcoin.
And it's really a good signal.
Not that I care, really.
I'm not buying and selling Bitcoin, you know.
I'm a buyer whenever.
I'm always a buyer of Bitcoin.
You're not a micro strategy investor?
No, no, I'm not.
I'm not.
I
I was a part
of the groups when people were talking
about all that kind of stuff I'm really
don't I just want something
really simple like you said
you put your money in your own fund
and let it
follow what we're doing
I'd be the same
I have no investments
other than Bitcoin and I own
a house you know I don't
care I just
it's too cold I don't want to think about that I don't want to wonder about that I don't want to
worry about that I'm not someone who wants to sit I love watching the markets but you you're
probably consumed by it right because it's your job as it should be like investing should consume
you whole you know like and it but it doesn't I don't want to be consumed by investing I've got
I want to spend time with my kids.
I want to chop wood and spend time in the countryside and stuff.
And I'm not here to give you investment advice,
but you are very concentrated in one asset.
Of course. Absolutely.
Just like if somebody who holds only US dollars and say,
well, I'm safe.
Well, you're not safe because the government can inflate that away for you.
So having something with real kind of asset exposure is often a good thing.
And it's pretty cheap to have some passive equity exposure
or passive on exposure.
I agree.
I agree that the theory of diversifying
should apply to me.
I don't know.
Maybe I'm either stupid
or I think that Bitcoin,
I think I understand Bitcoin
and what's happening.
A bit like what you were saying
about free cities
and ZAs and all this kind of stuff.
What surprises me always
is like amongst us,
Take the 400 people in the room over the weekend.
Amongst us, there's so many of these things, which are so normal.
Like we talk about all kinds of weird shit.
And it's absolutely normal to mention this, that and the other.
You go outside that bubble and people haven't got a clue that this world even exists.
Because I had the same experience with Bitcoin.
Outside of the Bitcoin world, in the older days especially, no one had a clue what was going on.
And even now, you know, biggest ETF in history, you've got BlackRock doing this, you've got sovereign wealth funds buying it, you've got, you know, and still people are like, yeah, it's a bit risky.
It's like, it doesn't appear to be a bit risky for me.
And if you understand the technology, obviously, which takes a lot to get underneath the surface of the technology, you could argue, right, you can just write that part off.
All right, there's never, there's always a bit of risk, but it's a very small amount of risk.
And other than that, it just becomes down to you whether or not you understand it. Like you might say, you understand that the special, you know, the kind of free city model is happening. And we're, but because we have a lot of data to back that up, your average person isn't going to clue what's going on. But we have, we know what's happening. So we can see the market happening.
right right and and i feel the same about bitcoin and now i don't care anymore because now it's just
so mainstream it's it's kind of like and i i i think and also i i i want it i want it i believe
in the parallel system that it's it's forming so i i i don't really want my wealth in a place
where um where's where yeah yeah on the other rails oops on the you know what i mean there's
there's two parallel rails running next to each other yeah i'm not trying to convince you at all
no no no because you you know but so am i and that would be my thesis so there's a winner yeah and
you know it's why why diversify away from the winner if you see what i mean well so there are
two kind of i feel like two senses of what you're saying one is the return versus risk
aspect and the other one is a little bit of social impact investing because you're like
i want to also see it and that and i would be like it's absolutely there absolutely is a place
for that but i wouldn't put all my mind into that so now we have the return versus risk
i understand a lot of things in life that sounds hyperbolic wow that's amazing i i know i lot of
moberg that is not what i mean i mean that i can understand like my neighbor's kiosk around the
corner and how that operates but even if i understand it to its core and i know exactly
what ice creams go through the shelves,
something can happen.
You know, there might be an earthquake.
There might be the government somehow
made a mistake in the accounting
and now they had to shut down
and they have to open there
and it becomes too costly.
There's so many things.
Governments exist out there.
They get involved.
And so, and there are disasters out there.
There is key man risks.
I don't think that even if you understand something,
you can ever,
if you would honestly be able to say,
I know there's nothing threatening this.
And I bet there are Bitcoiners out there who can say that.
Then I would say, wow, wow.
Then I could justify putting all the money into something.
But I think that what you're making a good case for
is both free cities movement, Bitcoin is,
well, one, I understand that the return is higher
than people anticipate and the risk is actually lower.
And I think that the risk part is a really big one
when it comes to the free cities movement
that we're actually seeing,
like we understand what the relationship is to the government.
Most people will say, ah, they're just going to shut it down.
They're going to be going to an election.
So we know that the risk is lower It not zero And as long as it not serious if you would have a good risk model and you plug it in what your expected returns and risk are for the Bitcoin part and the free cities part
it still wouldn't be, I'm going to allocate everything here. You're going to realize that
you understand that the value is higher than others understand it to be. And therefore,
it warrants an allocation. But the interesting thing about Bitcoin and probably to a degree
free cities is there is a there is like i have a belief in for example um my my my culture is a
bitcoin culture and most of my friends are bitcoiners and there is a camaraderie amongst us
which basically stipulates that if this thing goes down we're all going down together like we really
don't care i really i don't care if like if like i say i've got cash flow enough i own a house
there's no mortgage on it so i've got a house and i've got cash flow and if this thing does what i
expect it to do we're all good it's already doing what i expected to do we're all good
but it's kind of a pact of helping each other out like no it's a it's a life-changing technology
just like free cities are i mean the reason i'm so interested in free cities now is is because
i actually think that my my my introduction to free cities was through bitcoin um because a lot
of Bitcoiners are free city people. But what you realize when you sort of study Bitcoin is Bitcoin
is a perfect, not only is Bitcoin perfect property, perfect property, it's basically just nailed the
digital realm for all the things that we want in the physical realm. You get them with Bitcoin in
the digital realm, unconfuscatable, actual property rights, actual property rights. And then you
realize, okay, right, that's done. That's done. We've got it. We don't need to invent anything
new but in the physical world we we still we want this version of it you know there's no such thing
as cryptography of the physical realm if you create a bit of property in the physical world
you've got to protect it you in in the digital world you can crypt cryptographically protect it
it's amazing no you know it's amazing but in in the physical world this is a different totally
different and much gray much more gray area in how do you live free and protect your property and
and make sure that you you know you you have a good life and now i'm interested i'm like the
because bitcoin's a part of that because bitcoin can sort of fund it basically but really free
cities are all about this why i'm so interested in it all is they're all about trying to secure
that freedom, that property in the real world, which is very murky.
I mean, there's no such thing as property in the real world.
At the end of the day, someone can come out with a gun and take your property.
So you haven't got property.
It's about whether you can maintain property.
Whereas with Bitcoin, it's like you have property,
providing you don't leave your private seed on a table written down,
and then someone can take your property.
In theory, somebody can come put a gun on your head and say,
give me your codes.
And what are they going to say?
And what am I going to, when my mouth doesn't open, what happens?
Well, we don't want to think about that, right?
No, but all right.
There's a theoretical aspect to it, correct.
But that's what I'm interested in now is, and so the Bitcoin thing is like, cool, great tool.
Money, it's money.
It's real money.
It's not, it's not, all the characteristics of money.
We've got money sorted in the new world, in the digital world.
like this is this new frontier has arrived we had no access to the digital world until what 30 years
ago or whatever it didn't even exist and now we've got money in it as in you know money as in
this is you know fungibility portability all that kind of crap you know and and this is the world
we're in we're in the world of things moving digitally there you know but physically yeah
Free CDs are a way of us all trying to understand how to protect property rights and to live free in the real world, in this world, not the digital world.
And so I don't have a problem with just like saying, cool, you know, that's what I want.
I want money in Bitcoin.
I want real money in the digital world.
But what I also want in the physical world is what we're working towards.
And that is tricky as hell.
And I don't have an answer for it.
I don't actually think there is an answer for it.
I think.
Well, no, but I mean, like Prosper is a pretty good, you know, like there is ways to protect property that, you know, legally.
Yes.
Like physically.
Which we have outside of the zones as well, you know.
Sure.
That's what I mean.
But I mean, you know, it worked.
It seems the legal one, which I always thought, you know, you know, governments are going to be governments.
They don't often respect legality.
it's not it's not they're not well known for it especially sort of like far left ones but
they kind of did the legal the legal protection worked really well it seems to have if you look
at what's happening in in honduras now and the narratives change yeah they got to rescind the
the law okay which is crazy anyway i mean they had a constitution change and now they've said it's
they've changed it back so the whole thing's a farce anyway but the government which was saying
right, we're going to shut you down, and now not doing that.
And now they're saying, oh, well, we won because there's going to be no new ZAs.
But the ZAs that are there, they're chugging them on.
I mean, I think it's important to point out that, at least my opinion,
is that the big protection of property rights in something like a Prospera,
something like an autonomous city that is run as a business
as opposed to the national states that we're used to,
is just a different incentive structure.
It's not perfect by no means, but you have, if you're running a company, you have the incentive to protect that.
And if you're going to sign a contract and live here, and you might ask, is there eminent domain?
And if the answer is no, then that's a good thing.
And you move in and you don't have those things that, you know, we talk about how governments protect property rights,
but at least you don't have the government being able to infringe on the property rights because you don't have that incentive.
and so that's that's a big win right there so i wouldn't i wouldn't need to we don't need to
necessarily go into are we 100 you know sure that nothing can happen because we know that people
with guns exist that can you know have bad intent and and sometimes it's it takes a while to get
your property back and they destroyed it meantime and things like that that can happen but yeah it's
just how the governance works and just the the a priori incentives of the people running the place
It's just different when it's by contract rather than by birth, so to speak.
We're born into a country often, and it takes a lot if you want to live anywhere else.
Yeah, and I'm one of those people that probably I would have thought the contract idea would have been,
that's not going to work too well.
But Prosper is proving that that kind of seems to work really well.
And now I'm a total convert.
I can't see another way, actually.
I can't see a fairer way.
Like, here's my obligation.
This is your obligation.
Do you want to kind of go into business?
I mean, why wouldn't it be that?
Why have I never thought about that before?
Why have I always assumed that we need this kind of, like,
despotic person with a gun telling me what to do and taking my money?
Because you've never experienced anything else,
and the people governing you are telling you that it's very well good.
But Lotta, that's a crazy thought for a 54-year-old.
Do you know that?
Seriously, it doesn't.
I still wonder about it because no one I know.
All right, I revolve in certain circles now, but I didn't used to.
And my old life hasn't got a clue what's going on.
They don't know any of this stuff.
They don't know anything to do with anything, even finance, really.
Most people are completely financially illiterate.
they they think buying you know bonds means whatever premium bonds or something crap like that you know what premium bonds do You know we have them in the UK It like a lottery ticket
It's called a premium bond.
Oh, my God.
It's so retarded.
But like, you know, all those things.
I think it's changing.
I think people are becoming far more into certain ideas.
Inflation just used to be, oh, price is going up.
Now it's, oh, is it overt government spending?
You know, those kind of ideas are getting out there slowly.
No, they are.
I really do think they are.
Because I live in a village, you know, small one, not a village,
but there's a village pub and people talk about this stuff.
And inflation is talked about now.
But the reasons for it are starting to get wondered about and things like that.
But I don't know where I'm going with this necessarily.
but um but um yeah it's always hard to know when you as you're stepping in as you're saying you
know your accumulated friends who have a certain who are i don't know if i should use the word red
pill but that's kind of what you've been now um and just understanding more and more of it and so
you know is it the world changing around or how much is it you changing or you know the that you're
the people around you that you're inviting in your life but um i i want to you know you could
definitely be right we know that there's a big contingency out there who have no clue about what
we're talking are you red building like or were you red build yeah i think i was written college
in college probably yeah yeah not before that and i was old when i started college by the way i was
23 when i started undergrad what what was it like what what made you realize that everything's a scam
or you know like in loosely speaking yeah and i i think that's when i started when i q when i
adopted my framework of thinking and then realizing how much scam there is there i think
takes a few years probably so maybe it wasn't only there it was probably so i did my undergrad in
sweden and that's when i um when i what was it economics yeah yeah and in sweden you can't do a
phd in economics unless you've done your undergrad economics with at least 60 of the classes in that
in that field and you come to the u.s and you realize you start from scratch where people have
done in other fields. It's a very different system here, there in the US. So I started
just having a good framework of how the world works, I think, in college. So, and again, like,
that's not very, you know, a very young age. Before that, I wasn't that interested in high
school. I wasn't, I was kind of clueless and I was out just working in different places all around
the world and kind of thing. And yeah, I don't know if there was anything specific. I think it
is the kind of people you are drawn to. Like if you're a curious person and somebody says something
outrageous and people kind of turn their head like, and you'll go like, oh, that's interesting.
You know, I want to learn more. What is he talking about? And so I just accumulated those kind of
friends through college. So I then I started reading a lot of like the libertarian literature
And that was kind of my friends.
And people are very free thinkers in that kind of space.
I would say that I like calling myself a liberal, but you can't say that in the US, right?
Because liberal means the opposite, it means socialist.
But I have a lot of liberal values in that way.
The social freedoms is important to me.
And I think that I don't know a lot of people call themselves libertarians in the U.S. also have very illiberal values when it happens to freedom of movement.
And abortion is an interesting one because there you can have different kind of the same axioms can lead to, you know, being for or against and the gender issues and things like that.
I definitely think that anybody should be able to call themselves whatever gender they want and change gender if they want.
And but of course, if we wouldn't be, you know, that people are talking about forcing kids and all that, like, yeah, that sounds like a bad thing and all that.
But so that's kind of where I'm coming from.
I think that I am liberal throughout both on the social and fiscal part.
And yeah, I just have those kind of axioms.
It's very it's very simple.
It's like non-aggression principle.
And, you know, do be good to other people and you can't hurt anybody unless they hurt you or threaten to hurt you.
and from there you can derive a lot of things right and from there you uh if you are a curious
person you accumulate good people who infuse you with new ideas that's kind of my progression in
life i think i think i i can attribute almost everything to just ideas or people that i have
chosen to you know surround myself with and i keep doing that so yeah i think i'm the same except
i had just i just had completely different ideas and they weren't bad people at all they were you
know i i've loved my life up until this point it's just there were there were a number of things that
we all thought at a base level in the background that i i i find it astonishing to think that i
that i didn't address and there's probably a bunch now as well i'm probably working from a baseline
of all kinds of weird things that really i'm not noticing you know like the most common one that
fortunately i've i've kind of seen through is this notion that the government exists and it should
basically be able to tell you what to do and that's a really big one to get over
especially like and this is the one i see most in the uk that people have no idea it even exists
and when you see a lot of people really well-meaning people arguing um against certain
things they're basically arguing in favor of the state without even realizing it do you know what i
mean like i've seen a number of people there's a number of you know people who are noticing like
we this the problems we have at the moment the bad you know like the bad the the way the economy
is terrible the you know the way the this is terrible and that's terrible and you can say you
can see the symptoms of what's bad but the answer then is the get the government to fix it without
even wondering whether the government either might be the problem or is even the right person to fix
it if you see what I mean you know and it's it's so common I was that I would I would have been that
person if I if I even cared whether the government need to fix anything I didn't really think about
any of that stuff until you know I discovered bitcoin and basically that's what turned me on
to all that stuff but what's the cannabis story then talking of yeah the cannabis story I went
into that industry in the spring of 22 um I left the finance world macro and kind of took a break
from that it was together with brian singer is uh was my boss at the team in chicago and we became
then business partner and and started learning the ropes of the industry set up a credit fund
in the summer of 22 we created it did the legal work around it credit fund meaning that we lend
money we we set ourselves up so that we can raise money and then you charge a management fee and you
lend it out to companies. Cannabis has been on a wild ride. And there was a huge bubble in cannabis.
There was a time where everybody wanted to be in it. And we were kind of on the other side of that
bubble where it was still a lot of excitement at 22. And what happened was that you had COVID,
right? Spring of 2020. The story started emerging throughout that year about, well,
we're all going to be in lockdown now for a while. So everybody's going to sit at home and smoke pot.
and then Biden won the election
so now it's like oh
Democrats now increase probability
of federal legalization
because cannabis is legal in many states
but it's still this like weird thing
where there's not been a law passing
on a federal level that it's legal
so then you got this bubble
it peaked around like September 2021
where
and it just went hyperbolic
and it was a bubble in like private
it's a lot of like equity
But it's like this was that magnified.
And so that made for kind of a good story.
That was not obviously why we got into it, but it became, it was a lot of real things happening on the ground in terms of like in each state, you could see more and more states allowing for cannabis or passing laws to make it worse.
medical and then recreational. So those are the kind of two levels where you can have cannabis
legalization in a state in the US. So we thought this was very interesting. And we thought, wow,
this is a more inefficient market. Macro is a very efficient market. So this is going to be
something very different that, you know, will be very interesting to start doing business in.
And problem was that we looked around and saw, you know, a lot of people were very interested
in throwing money at, you know, anything having to do with like a credit fund in cannabis space.
but it still looked like valuations
that the industry were going to consolidate
and it was going to be on a rough ride
even though the peak of the bubble had passed.
So we were like, okay, we can raise money easily
but it doesn't look like a good time
to really create wealth with the money that we're raising.
Like, can you do it?
Yeah, maybe, you know,
but if you have the probability against you,
you shouldn't go into it.
So we decided we shouldn't go into it
but we kept just learning about the industry.
We thought, well, we can learn more
and be wiser about it.
So we went around,
we made our personal investments in the space
and we decided now recently to,
we found some good people to work with to launch this.
So it's part of alleviating people's fear about cannabis
is we're actually taking a real estate focus on it.
So our CEO really has a real estate background.
So it's always going to be a collateral,
which a real estate collateral of alternative use.
So not the cannabis use, but if you have to sell this, you know, I have to close down and, you know, somebody is going to, instead of this dispenser, it's just going to be a regular corner shop.
Like what's the value of this property?
So, and then you lend, lending on the base of collateral means that if you default, you know, we can take the value of that, of the collateral.
So that's where we are now.
And we just started launching it now and raising money now.
And so you're investing in properties that are connected to cannabis.
Yeah.
Not like cannabis farms and stuff like that.
It can be, yeah.
So the three areas of cannabis you can think of is like grow, manufacture, and then sell.
And then that would be like the last one is dispensaries or what it's called where you can sell cannabis dispensary.
And it's a different, you know, universe in different states.
In some places you can just go in.
Often you have to show your idea, but you don't have to have any special like card or anything like that.
Some states will have, you can have a medical card and then you can not pay a certain tax on it.
So you have a bigger payment up front to get the medical card.
But if you're a big consumer, that might make it worth it.
But you can also walk in and just show your ID and then you pay the full price with all the taxes, for example.
And then in some states like Florida, there's only medical.
So then you cannot go in.
They want your medical card and you cannot enter if you don't have the medical card.
so you get the medical card by just paying the right people does it sound funny to you discussing
like running a business it sounds like my mates when i was like 17 in a but not in a you know like
you're you're saying it in a very in a very upmarket way but it's like well we need to
grow it and then we need to get it out to the people and this is how you can get it but it does
seem weird isn't it like cannabis is for me has always been something that's illegal always you
You know, I don't know.
Where did you, of course, Sweden?
Was it legal in Sweden?
No, 100% not.
No, I grew up with like, we have a word for all drugs that is not alcohol or coffee or sugar.
You know, like all these other drugs that it's like, you know, that word is like, you know, cannabis would be in that bucket.
And it would be as bad as like heroin, you know, like whatever, meth, whatever, like all this stuff.
I would never have seen it.
No, I never.
The first time I saw cannabis was when I was 17.
And I went to Australia as an exchange student.
Yeah.
And I didn smoke it though until I was 18 because I promised my parents not to smoke No it just seems it just seems funny hearing you discuss basically a grow It like I say it a program for growing cannabis and then selling it
which I've never thought of it.
Well, no, but I mean, it is mostly illegal.
I mean, even in the States, is it relatively recently?
so it was in in the 90s where you start it was like california and colorado were the pioneers
i think colorado was first like with medical and california first recreational the other way around
but that's kind of it starts it starts growing by now most states have cannabis either i think it's
40 or so states have either recreational or medical and so most of the country you can you
can buy cannabis. It's important to note though that because it's not federally legal, it's the
interstate laws don't apply. You're not allowed to ship cannabis between states. So that also
makes an interesting investment case. You can, each state is its own country that has 100, you know,
complete sealed off. You cannot import export. It's not like with very high tariffs. It's like,
no, it's like complete restrictions. So that means that you have to grow it everywhere,
that you're also going to sell it,
which means that you're going to have to grow it
where it's very cold, like in Alaska.
I think Alaska is recreational
and you grow in maybe greenhouses,
but often like indoor.
So basically like a box, a warehouse.
And you're just putting the lights in there.
And yeah, it's definitely an industry.
It's a serious industry.
When I went into it, it was less serious.
You go to the conference
and everybody was kind of hippie, you know?
So it was a scene, it was interesting,
but it's also a time where everybody thought
thought that you could just print money by setting up a cannabis grow and that was part of our
apprehension of like going into it with other people's money but now it's really grown up
in just a few years and you have you go to conferences you're it's serious people people
realize that you can't just wing it and swing it it's more and more companies are cleaning up their
their finances and looking more kind of similar in any way to the free cities movement in the sense
that it's maturing a little bit?
Well, you haven't had the kind of the silliness
that has been going on in Free Cities mode.
I think we're starting on the right side already,
which is small, you know.
I know what you mean, is that there are some,
I don't know.
What do you think about the idea
that the Free Cities ecosystem
is a bit of an umbrella term now?
You know, like it kind of began
as the free private city thing, didn't it?
And now it's more about,
it's the marketplace of governance.
is like from, you know,
intentional communities right off the end to Liberland
or somewhere like that,
looking for complete autonomy and stuff.
Do you think that's a good move?
Because they're part of,
in a way that you could argue
they're not part of the same system.
But you come from very sort of,
you know, the kind of SEZ part,
which is very business-like
and very like pre-private city, I would imagine.
The intentional community stuff is completely different.
And a lot of the time it's just people coming together in one place
and saying, right, let's just live here.
But we are interested in all of them,
and we kind of created this umbrella term in a way.
Yeah.
I think, oh, there's so much in there.
So one, like the word, what word to use for the umbrella terms,
it's something I've had discussions about during this conference,
and I don't have a good answer to it.
I would say the first, the more original word for this was,
there was a, there used to be an organization around this.
It was we refer to as startup cities So there was a startup cities institute I think it was called It was based out of UFM the university in Guatemala And that is no longer an assistance
but most people in this space
have been affiliated or know about them
and talk to these people one way or the other.
And what is a better word for it?
Because at its core,
my philosophy is that
I think the world would be better
if everybody could live in a,
have a more decentralized world
where everybody can sign a contract in the kind of society you want to live in.
Everybody's not going to want to live in what we would think of
as some kind of libertarian utopia or anything like that.
I think that if you're a Marxist and want to have a Marxist utopia,
you should be able to have that and run it like that.
And should we then call it free cities?
It's a freedom to join, but it's in a way...
So I'm a little bit on two sides.
In a way, we can say it's startup cities
because we're all just saying this is something new.
On the other hand, if the movement grows, we can't call it startup cities anymore, right?
So I don't really know.
Decentralized cities.
I think intentional communities, just like you were going to, it sounds a little bit too much maybe like we're just a bunch of hippies putting out some tents in the forest.
So I think that in terms of attracting the serious money investments into the space, we do need a good word for it.
And I think maybe free cities is as good as anything I can think of.
But I think it's interesting to juxtapose to the startup cities goes more into this kind of, look, it doesn't have to be any specific.
It's not ideologically driven.
It's just us realizing that if people can choose to live in a place and start learning from birth that just because you're born in the place doesn't mean you're governed by that place.
And if you don't have kids and think you're going to have kids, I would never sign papers saying that your kids are hereby governed by this.
It has to be that after the age of X at least, you can always exit.
you know um then you know that's kind of what we want to capture right that it's more of this
voluntary community voluntary cities or something like that contractual the startup cities monica
has really been adopted by the kind of network state people that's where you sit well that's
where you hear that's spoken the most a lot of you know like the sort of longevity people those
kind of you know pop-up cities startup cities you know it it's definitely a um a personality to those
you know i think on the on one end you get the free city people which tend to be more bricks and
mortar and on the other hand you get the kind of network state people who are a bit more like
online dreamers i know i don't know i don't know what you think is but it's very much a personality
thing it's like it's like feet on the ground head in the clouds kind of thing yeah okay yeah i never
thought about that i'm just thinking from the perspective of if you want to pitch this as an
investment to somebody yeah right now it's not like i'm investing we talk about the investment
of real estate in these places that's where it's at right it's real estate maybe with the land value
as well um but the economics of it the risk profile is more like an equity investing investment
could be really high returns if this take off,
but it's also a big risk that, you know,
it is a startup project in that way.
So that's why I'm thinking the label of startup city
is more of this, hey, there's exciting return here.
Like, look at this.
Hey, VC, bro.
On the other hand, right?
Again, if it grows up,
then we don't want to call it a startup anymore.
So, yeah.
Well, also it might not be a city.
That's the other thing that bugs me.
Yeah.
But I think it happened naturally.
And I think all of those things they turn into, you know,
it's like when you name your child, you, it sounds weird at the beginning,
but then once you've called them that for 10 years,
you would never want anything any different, you know? Um, but, um,
a lot of, we've been speaking for almost two hours.
So I think we should wrap it up maybe but I like to finish with some kind of positive looking to the future type
You know, put Lott's eye on where we're going,
what's happening and where you think.
Give us a positive future.
I mean, actually, maybe not.
Give it your analytical eye like you did at the start.
I enjoyed that because I'd like to hear the truth
rather than my sort of fairy story.
No, I understand.
Ending on a positive note too.
No, I think, I do think it's interesting
that you took the parallel to the cannabis space
and the startup space.
I think that the overturned window
of what is acceptable to talk about
and say that you're involved in can move quite rapidly.
And I think we're going to see it.
The focus on creation in the space
is completely the right thing.
I'm an advisor to TIPOLIS and Titus Gable there is doing a tremendous job and like really is professionalizing this conference and helping with that of course together with Peter Young and really just thinking about it as a business very serious how that project is being like pursued and how that company is going.
So just, you know, when you have the right kind of people and the right kind of image, and then you have some case studies of not the founders, but other people who came in who put their money in and made a good return and also the political stability, you know, it just kind of beat a little bit of time.
You know, it's people going to sit and they're going to wait and going to see just like we see in Bitcoin.
We know that the Satoshi paper was published in 2008 and now we really have the adoption.
It takes time.
But I mean, we are we'll keep fighting the good fight.
I mean, it's we are we haven't had big setbacks, you know, like we haven't.
Jesus, don't say that out loud.
I think the whole world is going to collapse now.
That just made me clench.
Oh, I'm not like that at all.
I'm like, this is awesome.
there's a lot of things that go forward at setbacks when you say something like that out loud though
that's dangerous we've not had any major setbacks i'm not superstitious like you then no i am so no
i think we're i mean i think we're in the good track i think the right people are here i'm really
it's been super exciting to be here and see everybody who's involved and talk to people
and there are people coming through so many angles so the investments of in the longevity you mentioned
but general health care is is something that you have an opportunity to pursue so much faster and
it's so important for the whole world of course the longevity but it's also just to get the longevity
right we have to have more people who you know survive the the diseases that are out there and
we're seeing more and more there we know how how hard that is to and how long it takes you know to
go through the the passage of of acceptance in in legalization all that in u.s but really anywhere
in the world just to see how many fronts that come together yeah it changes the world and it
starts with the steps that we're taking now wonderful right i'm back i'm back thank god
i was getting despondent momentarily no i wasn't thanks lotta appreciate it i've been looking forward
to speaking to you and it's been it's been exactly what i expected so thank you thank you thank you
and um good luck on the way you're going back to america to do whatever so good luck and good
luck with your wealth management company might bung you a bit of money if you want put some of my
money in there no and yeah thanks for coming in it's been awesome thanks thank you