1254: Misleading Stats & Value of Labor v Capital with Dr. David Kelley, Ayn Rand & The Atlas Society

Thought the event was amazing. I thought that I knew a lot about real estate. But coming to your seminar, I realized there's a lot of things that I don't know. And one thing that you did, besides teach me a lot about real estate is you inspired me to look beyond where I live and to, you know, kind of shrink down the world and make it smaller so that I can invest in places that are further away and get better returns. So I really appreciate that and I'm excited to be here this weekend. And again for me and from all the people I heard there, thanks for doing these events cause they're great.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's, he's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome listeners from you ready? 186 countries worldwide. Yes, 186 countries worldwide. We're getting up there. I don't think there's anybody listening in North Korea yet, but maybe soon. Anyway, it's great to have you here today. We have got our guest from the Atlas Society and we're going to talk about many things, but one of them is the value of labor versus capital. Which one is more valuable? And it's a fair question and it's a question that has moved nations. It has changed the complexion of the global economy throughout history. It is responsible, that question, literally that one question is responsible for the rise of arguably the most famous and, or I should say infamous economic system the human race has ever known. And it is responsible for this deaths of about, give or take, 150 million people. So we will get into that with our guest today from the Atlas Society. And we'll have that in a moment. But first I've got Adam here with me. And Adam, we wanted to examine the size of some different economies around the world and acknowledge some of our listeners from interesting, very small economies and countries around the world as well. Welcome back. And hey, congratulations. You Just had a client purchase a property just the other day, Right?

Yep. Going ahead and getting one in Jackson.

Fantastic. Well, let's go A little more international in our thinking than Jackson, Mississippi, but, hey, there's nothing wrong with that. So obviously, the largest economy in the world is still the United states with about 24%, just over 24% of global GDP. Now, GDP technically, of course, means gross domestic product, but it's not domestic when you're talking about the whole world. Right, but you get the idea. Okay. And then China, of course, is number two. And, Adam, where's China coming in on the rankings?

They're just under 15%, so, I mean, they're solid 10% behind us now, in that case, 40% behind us.

Right, right. It's not 10%.

You're looking at the world.

Yeah, right, right. You're looking at it the right way by calculating those properly. But neither the US Nor China really surprises anybody listening. Yeah, but what does surprise or what should surprise everybody listening? And it's not the fact that it happened, because that won't surprise people, but it goes back to what I said yesterday about our regular frequent guest on the show, George Gilder, and what he said when he spoke at our recent Meet the Masters of Income Property event in Newport Beach, California, when he got on stage and he talked about what I said yesterday, how really all the resources on Earth are the same as what we had when we were all living in caves, right? The only thing that really changed it, the only thing that really created all this massive prosperity is what's in between our ears. Right? Our brains. And of course, our opposable digits. That thumb comes in quite handy. There's some, Definitely some smart animals, but without opposable digits, it's hard to build things. And what I'm saying here is when you look at the number three economy on planet Earth, and formerly the number two economy on planet Earth, it's a country with really no real or at least significant natural resources, and that's Japan. Because what really made Japan was the discipline, the savings rate, the capital formation, and the ingenuity of the Japanese people. So hats off to them, because coming in at number three of all the countries on Earth, at 5.9% of global GDP, that's pretty amazing.

Pretty good for a small island. They definitely know what to do with computer chips, though.

Yeah. No question about it. And, you know, it's not what it used to be, of course. They've had, you know, the lost two decades and Abenomics and all kinds of crazy Stuff we've talked about over the years about the Japanese economy and they've got massive, massive debt. Wow, wow, wow, wow. Incredible level of debt. It's pretty amazing. You know, China's got tons of natural resources. The US has tons of natural resources. China, one of their big resources, of course is just sheer number of people. I mean, when I was there, what, two and a half, three months ago, I guess I did some shows from China. I was just absolutely amazed at what's going on in China. But really Japan is more amazing. Okay, I guess China is more amazing in the sense that it's technically a communist country. Right. And when we talk to our guest today from the Atlas Society, we'll go into that a little bit. But, but what's number four? We're looking at Sprechen zee Deutsch.

Right, Ze Germans.

Yeah, ze Germans. And you were, you were just there last fall for Oktoberf, weren't you Adam?

Yep, yep. Went to Munich and hit that up and it was a good time. But yeah, they're at 4.5%. So they're a bit behind Japan, but still in solid fourth place.

Yeah, yeah, not bad. And then of course we've got the UK at 3.85%. France just behind them at 3.26%. What's next? India looks like it's next here, 2.83%. And then I guess we're going to say maybe Brazil. Right, at 2.39%. The interesting thing is, look what's next to it. Venezuela. Sad, sad story of Venezuela at.5%. And Venezuela has tons of natural resources in terms of oil. I mean, that's an oil rich country, right?

They just can't do anything with it.

Yeah, they can't do anything with it, sadly. But yeah, anything that pops out to you on this chart of global gdp, we got our friends to the north. And Canada.

I was a little surprised by Canada just because they have so many now natural resources and they're fairly technologically advanced. I just, I would expect something a little bit. I expected them to be higher than 2% when compared with Mexico's current 1 1/2 percent. That surprised me.

Yeah, well, you know, I don't know, of course I've looked at it, but I can't remember the population of Mexico. The population.

Yeah, I know that. I just don't know the number. But Canada really has less than the population of California. So it's. They're doing okay up there. They're doing okay. Our Kanuki friends in the Great White North. But yeah, you know, and you know what's surprising here too is another country I visited just a few months ago is South Korea. You know, you look at that in compared to the just destitute North Korea. And South Korea has 1.86% of the global economy, more than Russia. Wow, that's amazing. That's pretty amazing to me.

Yeah, Russia almost surprised me, but then I remembered that not many people live there either.

Yeah, yeah, Russia. Russia is Russia. Russia, Japan.

Western Europe. And Western Europe's not a country, obviously, but a region. These are all dying places because of birth rates. You know, you can't have a country without people, folks. That's the rule. You gotta have people to have a country. Contrary to leftist beliefs and ideologies that they're spreading, the truth is the world has a population decline problem. Overall, in the world. And I talked about that in an episode a little over a month ago with our economist Thomas. Because in 50 to 100 years, the world is just going to have a population decline. You know, there's that book called Empty Planet. And this is contrary to what everybody's talking about. Right. But when you look at Western countries and add Russia and Japan, you got serious population problems, okay? Decline problems, okay? Contrary to Malthusian, we're gonna run out of everything ideology. It's simply not true. You might say that today, but overall population is in decline. Okay?

Yeah. The only two ways to grow your population are birth rate and immigration. And if nobody's having babies anywhere, you can't immigrate from anywhere.

Yeah, yeah, that's true. But immigration is just moving, you know, the chips around.

Right? That's what I'm saying. It's for a nation. You can only immigrate or have more kids. And if the world population is declining, then you don't. You can't really bring anybody in from anywhere to help boost your economy.

Okay, well, hey, speaking of international stuff, let's just reach out to some of our listeners in small countries. When you look at our. Is it 186 countries or 189? Adams 86. 186. So we got listeners in 186 countries. Just want to acknowledge the places where we literally have a very small number of listeners because they don't get much attention. So welcome our listeners from Guadalupe, Tuvalu, Gambia, the Northern Mariana Islands, Jersey. Now, you may not know what Jersey is, but I've talked about it on the show. It's a little tax and asset protection haven near England. Okay? Now this is Not Kazakhstan. Are you looking at the list, Adam?

Yeah, I think it's Kazakhstan. Isn't it?

Okay. Yeah, I don't know that one. Okay. And then Nicaragua. Monaco. Now, I've been to Monaco several times. That is one rich place. We don't have many listeners there, though.

Next time you go back, you got to talk to more people, Jason.

Yeah, I guess so. You know, the French aren't too friendly, really. Well, you know what?

If you like it there so much, you can go there, talk to people, and write it off as a business expense.

That's true. I'm promoting the show in Monaco. Yeah, that is. That's like a jewel of a place. It's really amazing. French Guyana. And then here's the interesting one. And we don't know what this is, folks, but it shows up as a statistic on our Listener list of 186 countries. Satellite provider.

So it might only be 185.

Or is someone listening to us in the International Space Station? I hope so. That would be really cool. Bragging rights.

And then Somalia, Angola, Reunion. That's the Reunion Islands. Mali, Bolivia, Yemen. How do you pronounce the next one?

It's Djibouti.

Djibouti. Okay. Djibouti. I apologize to our Djibouti listeners. Andorra, Tunisia, Zimbabwe. Seychelles. I want to go to the Seychelles. That's on my list, big time. Libyan, Arabic. How do you say that one?

You got me there.

Jamahira. I don't know that one. Grenada. Okay, of course I know Grenada. And then a whole bunch of others. We'll talk about them in the next list. We won't bore all of our other listeners, of course. Our biggest markets are United States, Canada, and the uk. Australia, Germany. That's our top five in terms of our listenership. And number six, South Africa. Number seven, France. Number eight, Japan. And number nine, the uae. We did, of course, a. A trip to Dubai with our venture alliance Mastermind Group a couple of years ago. That was super fun. Sweden, Netherlands, Mexico, New Zealand, Switzerland. So there's our top listeners. And so we covered the top and the bottom of the list. There's a whole bunch in the middle. So thank you all for listening and telling your friends and family and colleagues about the show. We appreciate it and appreciate your support for the show. So thank you so much for that. Adam, One more quick topic before we get to our guest. That is statistics that are misleading about mortgage delinquencies. Tell us more.

So this one I found really interesting because they're not trying to mislead you, it just kind of happens, apparently. So whenever you see stats from a month that ends in a Sunday for mortgage delinquencies, now these are mortgages that are at least 30 days past due, but they're not in foreclosure yet. So whenever you see stats from a month that ended in Sunday like June did, so then we got our July stats from it, it looks worse than it is. It jumps about 10% on average, they say, because all of the people who make payments on the last day or two to avoid all of the, you know, penalties that can come with it, they're trying to pay on Saturday and Sunday. So it goes through on Monday and it counts. It's still good for them. But the stats have already gone in and they're shown as delinquent, even though at that time they're no longer delinquent. So you might see some stats that say, hey, the mortgage delinquency rate went up 10% last month. It's terrifying. But just go and look and see what day the month ended on because before June, everything had been pretty good. And actually late payments in May fell to the lowest ever recorded back to 2000. So just take a look and see how the month ended because apparently that has an enormous effect on the stats you're going to see.

Right. So in this example, when the month ended in a Sunday, they count the stats differently. So it looks like the delinquency rate went up by how much was it, 11% in that month? Yeah. That might make people watching the market and especially real estate investors think, oh, wow, the next wave of foreclosures is coming, the market is changing. But if you don't look at the month before and after or, you know, even it out over maybe six months or even more, you really got be completely misled by that statistic. Right. But as the old saying in the media goes, if it bleeds, it leads. Right? The media loves to trumpet bad news, and that's a catchy headline, isn't it? So that sensationalism can be very misleading. And you really have to read between the lines, as it were, and understand the way the statistics are calculated. And understand also, as I've talked about many times over the years, that, you know, there's this lag time in the real estate stats that is very significant in the terms of the sales data because the transaction, you know, it goes under contract, the deal has to close, the financing has to get in place, then it closes. Then calling that data from all these various county recorder's offices around the country to actually tell you something. There's always a significant lag, very different than the stock market, precious metals, cryptocurrencies, etc. Real estate is a much bigger beast and it's harder to count and stats are more nuanced, of course. So that's what we will help you with that on the show here. So keep on listening and more on that. Adam, thank you for sharing that article. That's a very interesting thing. Anything else you want to say about that before we get to our guest?

Nope. I'm ready to jump in.

All right, here we go. Let's talk about the Atlas Society and one of the topics, the value of labor versus capital.

It's my pleasure to welcome Dr. David Kelly to the show. He is founder and now retired chief intellectual officer of the Atlas Society, coming to us from Washington, DC. David, welcome. How are you?

Thanks, Jason. I'm great.

It's good to have you. So what is the Atlas Society?

The Atlas Society is an organization I founded in 1990 to promote the ideas of Ayn Rand and her philosophy of objectivism and to do it with a, I think, a greater spirit of openness and engagement with people who are interested in the ideas but not necessarily convinced yet. We also have, of course, a great many people who are, you know, lifelong objectivist as a way of life and way of thought. But we wanted to promote the ideas, to promote scholarship, reaching deeper and exploring the ideas at a fully academic way, really, but also to teach what it means to apply the ideas to your own life and to the political and cultural issues that we have around us. Sure, we published a huge amount of articles and now lots and lots of videos and audio courses and so forth.

Yeah, it is really amazing the movement Ayn Rand started and how her book sales, I guess, especially of Atlas Shrugged, that. Well, give or take 1200 page masterwork. 2 or 4.

How well it sells years later and how, at least when Obama was president, she really predicted a lot of things, many things were sadly coming true. Maybe the pattern is reversed.

We can talk about that.

But what do you attribute that to? Why has the Ayn Rand philosophy, why has objectivism been so enduring?

Well, I think there are two reasons. One is the point you just mentioned that the book was written in 1957, but readers today, readers during the Obama era, and I would say even it continues into the Trump era. So many things are happening around us in the real world that very relatable to the sequence of events that she described in Atlas Shrugged, which is a story About a society in which government is increasingly growing, adding layers upon layer of regulation, wielding increasing power, controlling investments, business, and to the point where growth slows and people start. The economy ultimately collapses. But so many of the steps along the way in the novel are happening. Not exactly. She wrote she wasn't literally trying to predict, she was telling a story. But anyway, that her prescience is, I would say, one big factor. Another one is simply that this is a great book. It's an intellectual thriller. It has a philosophical mystery at its core. It has larger than life characters, but ones that you can relate to as ideals, as heroes. It has a very inspiring call to freedom, both political and economic freedom, but also the human freedom to aspire and follow your dream. So I think many, many people have related to different aspects of it. Atlas Rug was a very big into a huge influence on the libertarian movement. But it's also, over the years I've met so many people who aren't all that interested in politics per se, but they say it changed my life. It gave me the courage to do something that bold, risky, but ultimately really fulfilling.

Sure, sure. You mentioned the characters and I don't know how much of this you want to give away because many people listening probably haven't read the book. Maybe some aren't even familia with Ayn Rand. But the famous question is, who is John Galt?

Yeah, well, we can ask the question because the novel actually starts with that question. It's the first line of the book. But I really hate to give away spoilers, but that John Galt is a character who. The phrase who is John Galt? Is introduced in the book as a symbol of despair and resignation to what seems to be a general decline in the economy, in people's lives. And it becomes increasingly clear that there actually is a person named John Galt. We don't meet him until part three, the last part of the novel, and we learn why. We get the answer to several big mysteries about what's been going on in the story up to that point. So I hate to give away the.

I wasn't actually asking you to give it away.

Yeah, I was sort of teasing the idea there a little bit, so I.

Hope you didn't think I was asking.

For a spoiler, but it's interesting. Let's talk about how this interplays with the economy because so many of our listeners are investors and they're thinking about personal finance and so forth. The age old. Well, maybe it's age old enough, but it's not that old I would argue that the most famous economist who ever lived, sadly, was Karl Marx. Right.

Is that a fair statement, you think.

In terms of the following that he gathered? Absolutely. I don't think he was a very good economist.

I don't think so either.

But he influenced more of the human race than possibly any other non religious figure. Okay. And well, it kind of became a religion, sadly. And that desperate experiment has just failed many places on earth and many times in history. And we see this movement in America from the left, you know, with AOC and Bernie Sanders and others promoting these same worn out ideas that just fail every time. Why is that happening? It boggles the mind. It boggles my mind.

At least I think the answer lies in ethics. You know, Karl Marx wrote Das Kapital, which is, you know, a work of economics. But what really attracted the following is not people who were, you know, reading his economic textbook saying, oh yeah, that's right. No, they were responding to his call for equality, for distributing the goods from the capitalists to the workers. And that is still the same siren call that people have today. You can hardly lose in politics by offering some people something for nothing. And Marx was, you know, his famous statement from each according to his ability, to each according to his need. And people thought, okay, I like that morality, I like this brotherhood, it's solidarity, it's altruism, and those are morally good things. And that's why it keeps coming back. Because, you know, you can point out the economic disasters and the political disasters of the communist era all you want, but you have to get at, and this is what we specialize in, at the outland society. You have to get at the corrupt moral foundation. You have to defend the individual's moral right to live his own life and to deal with other people freely.

That's what people never realize, though. It's like this childish mentality that just says, give me, give me, give me, redistribute the wealth, give me free health care, give me free this, give me free that. But, but they never stop to consider that someone actually has to produce some value in the economy to pay for that, you have to enslave another human essentially at the point of a gun. Because that's what it all comes down to. You know, if you don't pay your taxes, eventually people will show up at your door with guns and handcuffs and take you away. And that's slavery, right? I mean, it can't be anything else.

But this is where Marx was very clever and the Marxists today are very clever because they Say, okay, you can call that slavery, but look, in the capitalist economy, workers are slaves of the owners. The owners are just after profit. They exploit the workers, consumers. And so we're just countering one form of coercion with another form of coercion.

Now that's a validity, that's what they say. And that's exactly where I wanted you to go with this discussion, by the way. That's exactly where I wanted you to go because the, the crux of it seems to be this age old debate between the value of labor versus the value of capital. I'd like to get into that with you, but just finish up your point there if you would, and then we'll go there.

Yes, I think the underlying connection here is that Marx also introduced class analysis, class conflict, and his focused on workers versus capitalists, business owners and investors. Today that's been expanded to, you know, men exploiting women, whites exploiting, you know, minorities. This whole idea of political correctness is essentially about class conflict. And they got that idea from Marx. So once you set up class conflict, it just under completely undermines the idea of a free economy of people who are dealing peaceably and voluntarily with each other. Some succeed more than others, fine. But no one loses out from being part of an economy in the long run that is free. The most productive people shower all kinds of benefits on us way beyond any wealth that they actually get personally.

But some of them do get incredible wealth. But the question is, it's a question of allocation. Look, capital always has some restriction on it and labor always has some limit to what it can earn. So the question is always really just a matter of degree.

Right?

I mean, nobody's going to invest or save to have the ability to invest in the first place if capital formation isn't rewarded. The fools on the left don't seem to understand that. They think investors should get no return on their money.

Right?

But of course they won't invest if.

They don't get a return. They won't bother to form capital.

Everybody will just be living hedonistic, instant gratification life if there's no reward for delaying gratification.

Right, right. Although in that case it will be a declining form of hedonism because it will lead to increasing poverty.

Sure, no argument there. But I'm just saying that the decision we all have to make every day with virtually everything we do is do I want a reward now or do I want to wait and delay gratification for a bigger reward later? We can all just eat till we become gluttons. We can have sex all day, we can get drunk, we can abuse our bodies for a momentary pleasure, or we can just be spendthrifts and spend all our money and not save any and not invest any. But we have to be rewarded for something longer term. There has to be a vision of a bigger future to delay gratification today, right? I mean that's in essence the debate we all have, right as humans. And we make trade offs in both directions for that.

We'll be back with part two of this interview on tomorrow's episode.

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