2470: Economic Bubbles, Housing Shortages, Politics of Labor & How Partisan Media Manipulates Voters

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This is Jason Hartman, your host, and every 10th episode we do something kind of special, kind of different. What we do is we go off topic. So regardless of which show it is on the Hartman Media Network, whether it be one of the financial shows, economics, real estate investing, travel, longevity, all of the other topics that we have, every 10th episode We go off topic and we explore something of general interest, something of general life success value. And so many of our listeners around the world in 164 countries have absolutely loved our 10th episode shows. So that's what we're gonna do today. And let's go ahead and get to our guest with a special 10th episode show.

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Hey, Jason, this is Scott Crook.

I was on the Empowered Investor Zoom call last night.

I'm just so thankful for the value that's created inside that group.

And, you know, you just consistently bring subjects that are so important and relevant to what I'm needing, and I believe other investors need. So, thank you so much for all that you do. I appreciate you and all that you've done for helping us become better investors.

Thanks, man.

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 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.

Good day, empowered investors. Did you know that the stock market today is just as expensive as it was at the dot-com peak? Now you remember what happened if you were around. You know, that was what, 26 years ago? I certainly remember it. People were giddy with stocks and dot-com and all these crazy stupid business models. You thought if you could put .com on the end of anything, it was going to make you money and your stock was going to be— you'll get investors and then you can go public. I remember being caught up in that whole thing. Remember Webvan? Remember the sock puppet from, uh, I don't know, Pets.com, I think it was? I mean, these, these businesses weren't even like real businesses. They weren't sensible businesses. Real businesses actually make profits. You know, it's so funny because years ago, probably circa 2018, I was thinking of I should take on some investors in my company and expand and grow and do the big thing. And, you know, I remember thinking to myself about how people will sooner invest in a tech company that has no revenue, that makes no sense, that has no path to revenue or path to profit at least. You know, there's a difference between profit and revenue, obviously. Yet my businesses, every year they make money. Like every year, you know, those are real businesses if you ask me. So hey, if I offer investment opportunities, sometimes you should take me up on it. But for the meantime, we'll stick with real estate. And, uh, yeah, just look at the stock market. It's just crazy. The question is, when there's any bubble at all— oh, there's my dog— when there's any bubble at all, We always have to ask ourselves, how long can they keep inflating the bubble until it eventually pops? Pop it must, but the question of when and how far it can go is unknown, right? It is an unknown thing. So, uh, we'll see. It'll be interesting to see how this stuff and this talk about this stuff ages, right? You know, some people say this won't age well, and I remember people telling me that years ago as I would make YouTube videos or be a guest on someone else's show, they would say that. And all my predictions about the real estate market, they were right, and the other people were all wrong. The only thing I've been wrong about in any real way— interest rates. Yes, I'm bad at predicting interest rates. I'll admit it. If interest rates were a market phenomenon instead of a central planning phenomenon, I would be good at predicting those too. But they are not really a market phenomenon. They are run by the central planners. As a secondary step, there is the bond market to help keep the central planners in line, but that's only secondary. It's not really the first thing, right? So, and the bond market is doing kind of funny stuff right now. So we'll see what happens. We shall see what happens. Okay, so that's the stock market. Let's talk about housing for a moment, and then we will get to today's guest. So Freddie Mac Home Price Index increased. This is as of July. Okay, so they probably had a new one by now. But remember, these housing stats always lag a little bit, you know, they're not super fast. So as of then, we were up 2.3% year over year, 2.3%. But a couple of markets like Punta Gorda, Florida, and Austin, Texas, They are down about 16% from recent peaks. So it's spotty. You know, all real estate is local. Some markets are up, you know, 8, 9, even 10%, I think. But overall, nationwide, we are up 2.3%, which is actually better than what I talked about on a recent episode where I said we were only up 1.5%. I, I believe that was the number. But 2.3% for the Freddie Mac Index. So that's, that's not bad. And there are many contributing factors, of course, to this. By and large, it's the housing shortage, right? And there are those deniers— I guess we should call them COVID deniers or Holocaust deniers— they're housing shortage deniers, right? These are the people that love to publish the doom videos. You know, they make maybe $5,000 every time they publish one of those doomer videos. I don't make that much on YouTube, but they do. Because those videos get a lot of views because they are exploiting people's psychology, and it's truly evil what they are doing, right? They are exploiting people's psychology. They know that the human mind loves to focus in like a laser on bad news because that's what kept us alive for eons since the beginning of time, right? And that's just not the world we're in. I mean, there's a bunch of stuff to be negative about, but the housing market ain't one of them. It's, uh, it's much better than anybody has expected except, uh, for yours truly and a few others who have been right, right, right, while the doomers have been wrong, wrong, wrong. Now, one of the other contributing factors to this, and if you're watching on video, it's on the screen. This is a recent HousingWire article. Immigration enforcement tightens the squeeze on homebuilders' job sites. The end NAHB, National Association of Home Builders. We've had them on the show before a couple of times over the years. Says the industry must recruit.

Get this.

You ready for this number? 723,000 workers annually. Wow! That's a big number, folks. They're saying they must recruit almost one million new workers. Per year to construct houses, right? As builders push the Dignity Act and trades training, people training for trades, right? Stop doing these worthless college degrees and learn how to frame a house, learn plumbing. That's where you're going to make real money, right? It's going to be weird in the future. It's already here, really. But, you know, can you imagine single guy at a bar talking to an eligible bachelorette? Now, what do you do for a living? In the past, that woman always wanted to hear, I'm a lawyer, I work on Wall Street, I'm in finance. Nowadays, I do construction. I'm a plumbing contractor. Right. Those are the trades that are making the money, and they aren't going to get replaced by AI like those Wall Street folks and like those lawyers. Right. It's a different world. It's a different world we're in. But I mean, this is just crazy. Residential construction has grappled with a shortage of skilled frontline workers since the mid-2000s, and the problem worsened after the Great Financial Crisis and never fully recovered. According to Home Builders Institute, HBI, the industry needs to recruit roughly 723,000 workers each year to meet current demand and close the labor gap. Immigrant workers have long been a vital part of that workforce, making up 1 in 4 residential construction workers. So can you imagine the immigrant impact on the construction industry is literally 25%. It's one quarter of the workforce. Unofficially, that 25% share is widely regarded as an underestimate. But the reliance on foreign-born labor has come under renewed pressure this summer as a surge of immigrant enforcement and job site raids have left workers fearful. According to some homebuilders, further strained an already limited construction labor pool. In some markets, homebuilders say the impact has been significant. In others, it has been an existential threat to their ability to continue operating as businesses and complete homes and repay construction loans.

Wow.

Okay, first of all, I want to disclose my own interest. This is what I voted for. Yeah, clean up the country. Let Americans take these jobs.

And you know what?

You're going to have to pay the Americans more money. Okay? The people who are legally here are going to demand higher wages. So what these companies have been doing is exploiting immigrants, exploiting cheap labor for their own greed because they don't want to pay fair wages to American workers who are here legally. Right? That's what they do. And so you'll see every CEO from every tech company and every homebuilder get out there and say, oh no, we need all these immigrant workers, we need these illegal people here. Yeah, right. Just because you're fucking greedy is why you want them. Pay Americans a fair wage. But what's that going to do? It's going to push the price of housing up. And you're going to say, well, Jason, that's not good. Well, let's think about that. If people are making higher wages and housing costs more, that's okay. There's always an equalizing factor in every marketplace. You know, the partisans and the idiots, they love to paint everything as though it's a one-sided, lopsided thing. Now, I'll be the first to admit that this stuff in a dynamic market takes time to work through the system. So at first you might see higher housing costs if there's more immigrant crackdown and they got to pay fair wages to American workers who are here legally, right? But then that money, that higher— those higher wages trickle through the system and they make housing just as affordable as it was before. And guess what? The immigrants aren't putting such a burden on the public sector. So governments can spend way less money and the crime rate goes down and so on and so on and so forth, right? Nothing is a closed system. Okay. If you pay the Americans more, they can afford more. This is like the Henry Ford thing. Okay. Remember when Henry Ford unilaterally just increased wages? Right. Just look up the story of Ford, right? He thought, you know what, I'm building these Model T cars and everybody wants a car. The car is this revolutionary consumer product that everybody just wanted it, right? Rightfully so, obviously tended to work out that way. But he thought to himself, gosh, you know, I could really increase my market if I could create a customer base. And I had tens of thousands of people working at Ford Motor Company. So what if I just raised their wages? Well, that's going to push the cost of the car up. The car is going to get more expensive. True, but I will suddenly create a new market of consumers that can afford to buy my product. What is different about builders and paying American workers fair wages instead of exploiting cheap labor and taking advantage of them than that. Okay, now look at the other side of the immigrant thing, right? People will say, well, Jason, it's just so xenophobic. You, you— this is xenophobia, right? You don't like the immigrants. Okay, first of all, think about it. If you are a company and you are looking for more workers and you hire a recruiting firm and you tell that recruiting firm Go call my competitors, go call their workers and steal them, poach them, take their best people because I want to hire them at my company. Well, that's exactly the stated thing that the left wing in the United States is doing to other countries. They are crippling other countries by stealing their people. How is that not different? Right? You know, they like to say that all these immigrants are great, they contribute so much to society. Well, okay, so you want to steal them so they can't contribute to Mexico or Latin America or China or wherever, right? You want to steal them from Somalia, right? You want to, you want to steal the people that are contributing to Somali society and making their economy grow, which I doubt it's even growing, but you know what I mean. Okay, maybe it is growing, I'm not sure. I don't know what the GDP of Somalia is. Or if it's up or down or sideways, I just do not know. I'd have to look it up. You want to steal their people and bring them over here. You want to poach people. You want to poach the employees of another company. You know what? That's dirty pool. That's unethical. Okay, you're intentionally draining them.

Think about it.

That's why they built the Berlin Wall. And I'm no fan of the Berlin Wall. Okay, when I first visited Berlin in the '90s, I spent 6 hours at the Checkpoint Charlie Museum, and I was reading those exhibits, and I will— I'm not gonna lie, I was crying. Yes, I was. I just could not believe the cruelty of a government that would imprison their people. Well, why did they do that? Why did they erect the Berlin Wall in one weekend? Because there was a brain drain. Because all of the people were leaving the East, East Berlin, to go to West Berlin because the opportunities were better.

Fine.

That's different than poaching people. Okay, so this logic does not hold up, right? Let the countries have their people. Stop stealing people and crippling these other countries so they stay third world countries forever. Stop exploiting the cheap labor. Stop being so Fucking greedy CEOs. You know, they're just greedy. They're just stealing people.

It's just greed.

That's all it is. You know, when they get up there and say, oh, we need to be more fair and we need to be, you know, treat the immigrants with dignity and respect. You notice this is called the Dignity Act, right? Well, how much dignity does it do for the country you stole those people from? And how much dignity does that give those workers knowing you can pay them subpar wages to what you'd have to pay in the normal marketplace? It's just completely corrupt. The whole thing is totally corrupt. So that's fine with me. Let the home builders pay more for their workers. Let them charge more for their homes and let the higher wage workers be able to afford their homes because they're getting higher wages. Let's onshore our manufacturing sector again that we have just been sold down the river for years. Really mostly starting with Bill Clinton and NAFTA, but many other steps along that terrible path that has just basically screwed over America and at the same time screwed over all the other countries that we stole all the people from. So enough of that. Okay, sorry, I went on a rant. I didn't mean to. I meant for this to be a short intro today. We're going to talk about politics today. That's what our guest is going to talk about because there is so much political division. I thought this was an appropriate topic originally aired on my Holistic Survival Show. Yes, I have many other podcasts. You can look those up under my name on any podcast platform. But of course, this is the main one. And we're happy you're here. We just finished our masterclass today. We have a fantastic new financing product, 10% down on investment properties, and another great product that's super easy to qualify for, only 15% down. No, you don't have to put 20-25% down anymore, folks. We've got some great new financing products for you that massively amplify your return on investment. So go to empoweredinvestor.com, fill out any web form, get on our newsletter list, have our investment counselors do a free portfolio makeover for you. And the other thing you must do is go to propertytracker.com and get a free Property Tracker account so that you have the best deal analyzer in the entire business working for you, and you have a fantastic tracking tool that will help you track your investment properties as you go. A calendar that manages your leases, your insurance policy renewals, property management agreements if you're using a property manager, and helps you self-manage if you're self-managing. It's all there, propertytracker.com.

And guess what?

It's free, so you can't beat that deal. I mean, what's going to be the next deal for those of you who haven't opened a free Property Tracker account yet? Do we have to pay you to do it? I know it'll be good for you, so maybe I'll even pay you. Just kidding, not gonna happen. Okay, let's get to our guest and talk about the partisan divide and how to think for ourselves. Here we go.

It's my pleasure to welcome Eric Fogg to the show. He is author of Wedged: How You Become a Tool for the Partisan Political Establishment and How to Start Thinking for Yourself. Eric, welcome. How are you?

I'm great, Jason. Thanks so much for having me. I've been a longtime listener and big fan.

Good to have you. Where are you located?

So right now I'm in the beautiful Bay Area, but I live in Boston, Massachusetts.

Oh, okay. So both sides of the country there.

Oh yeah.

You know, this has long been a thing that I've thought and talked about of how It's like a false narrative that we have these 2 sides, right? In other countries, sometimes they have lots of sides, you know, it's not just 2, right? I don't know, maybe the American population has become so dumbed down that we can't handle more than 2 choices. I'm not sure what it is. But to me, it seems like we ought to just have like these runoff-style elections where we have a whole bunch of voices and people and philosophies, and we do one round and cut a bunch out the way you do a beauty pageant, right? And Yeah. And then you do another round and cut a bunch out, and then you're left with a couple, and then one wins, right? You know, that seems like a better, better system to me. It's like a fake thing. Uh, it's like a wrestling match, right? Everybody knows that's fake, but they still watch it. What's going on here?

So what's really interesting is you pointed out exactly what is the structural underlying reason for why the United States has 2 parties, which is how we vote. So we have a first-past-the-post system in which You vote once for one candidate, whoever gets the most wins. And what I really like about your beauty pageant example there is that it's a good model for how some other countries with many parties vote, where you have these runoffs. It changes the incentive structures and allows people to have either vote for multiple people in ranking or vote multiple times during a runoff, which allows 3rd, 4th, 5th parties to bloom. And therefore you get more than 2 angles on something. And it's a little bit harder for candidates to just win by slagging their opposite candidate because you can't win by slagging 6 or 7 people. You actually have to show that you have some good ideas that are going to help people, that are going to move the economy forward.

What is that word you're using, slagging?

Oh, slagging just means ripping on or throwing mud at.

Oh, okay. Got it. Mudslinging. Yeah. Okay. Got it. Okay. Which is all too common in political discourse. Why does it make it so the best ideas win rather than the mudslinging? Like, explain that dynamic to us a little, drill down on that if you would.

Sure. It's a little bit of game theory and a little bit of human psychology. So humans can be very fear-driven, right? So a great way to get someone to come out to vote is to make them afraid of something. Great, someone, you know, you get people to go to war and put their lives on the line and abandon their families, abandon their homes when they are afraid. Fear is a very powerful motivator to act. When there are only 2 candidates, you can get people to vote by making them afraid of the other candidate, right? The Democrat can make you afraid of the Republican, the Republican can make you afraid of the Democrat, and that becomes the narrative because it's such a powerful motivator. When you have 6 candidates, 7 candidates, it's very hard to have a unified message around making someone afraid of 6 other groups. It's just too burdensome. And so you have to revert to a campaign strategy of putting forward something positive instead.

Okay, good. So the best ideas win. I think we'd all agree that that's a good thing. But let's kind of back up. We kind of got off on that tangent of how the election should be held. But let's talk about some of these tools of the political establishment, and that's the subtitle of your book.

Why they want this this way.

Maybe, you know, tell us your opinion of why it's this way, why they play it this way, and who benefits, what's to be gained by it. And then, you know, maybe some examples of it. And then next we'll talk about how we can start thinking more independently.

Absolutely. So yes, who benefits is the key here. And what we need to think of the kind of political media complex as one big group with a lot of different players who are interdependent on each other, right? Media depends on politicians. Politicians depend on media. All of them depend on viewers and voters. And ultimately, the same principle about getting you to vote, getting you to go to war, getting you to put up money, driven by powerful emotions such as fear, applies. And so there's a lot of literature on this. We cite it in the book that shows that people who are afraid or angry are much more likely to donate to a campaign. They're much more likely to vote. They're much more likely to go door knocking. They're much more likely to continue watching a television program if that television program is making them afraid and angry. They're much more likely to share an article on social media if that article has made them afraid or angry. And therefore, we just need to think about the incentives for each of the people or each of the parties, each of the groups in the system. So media wants the, you know, they're desperate to stay alive, right? They're falling apart as an industry. They have to play this game or else they die.

Right?

They have to get you to share stuff, get you to keep watching, get you to keep clicking.

So it's just, if it bleeds, it leads? That's it?

It's a little more complex than that. It's less about it being a sad story. If we think about how this ties into politics specifically, it's more about it being a story that plays into a narrative of fear and anger. There's a feedback loop going between the politicians and the media where Politicians will say something, it will be outrageous because it's designed to get you afraid of the other side. Media will play that up because it's going to, you know, because they're in a competition to see who can get the most likes, who can get the most views, whatever. And that amplification of the most anger-inducing and the most fear-inducing messaging by politicians, it works for the media teams and therefore it's going to work for the politicians who get amplified by it. And the politicians who have positive messages that don't create fear and anger, media is not going to amplify them because it's not going to pay off.

Okay, okay. So it certainly seems like it benefits the media, right? You sell more newspapers, you get more ratings, you clickbait. If it bleeds, it leads. You know, the bubble-headed bleach blonde comes on at 5, she can tell you about the plane Crash with a gleam in her eyes. Old Don Henley song, right? Which is great. We love dirty laundry. But I don't know, it doesn't seem to have a direct benefit to politicians because, you know, maybe the guy that's— I see how the positive guy doesn't get amplified, but I don't know, why wouldn't you just be a positive guy?

So you're right, it doesn't benefit the politicians, and here's the— that's the real tragedy of it. is that we need to remember that politics is a zero-sum game. Media, at least the media industry, can expand its total revenue year over year. It can expand its market. So it has an upside and it can go get that upside if we think about it economically. So they can win through this. Whereas in politics, there will at any time be 535 people in Congress. There will be one president. And therefore, for them, politicians can ultimately never win as a group because it is a zero-sum game. It's a fixed game for them. What they want is to be in power. And therefore, in this zero-sum game, a group of 535 people can't win. It is who ends up in those seats. Those are the folks that win. And therefore, what we're seeing here is not that politicians as a group group win over other people, but the politicians who happen to be elected, the ones who win the elections—

They stay.

Yeah, they stay in power. So it's those individuals who have won by using fear, anger as campaign tactics.

Yeah, we, we need term limits for sure. You know, the, the founding fathers never thought politics should be a career. They viewed it as just something you do, you go and serve, And then you go back to your business. But we're in this era where it's just a career. It's ridiculous. So you have some interesting graphics in your book. Tell us about the fog curve.

Sure.

Or the green fog curve, I guess.

Yeah, I got to give a shout out to my co-author, Nat Green, who came up with the original notion of it on a whiteboard, and then we refined it. Ultimately, there are 2 curves on there. One of them is a normal curve, a bell curve, and then one of them is a bimodal curve where instead of a lump in the middle, You have lumps on the side. So if we think of that, that lump in the middle, that is how Americans in fact feel about most issues. So if we look at a given issue, let's say for example tax rates, or let's say for example, you know, a particular economic proposal of, you know, how do we stimulate the economy, or how should we handle labor laws or unions, Americans actually have many, many different opinions that are all a little bit nuanced. Sometimes internally contradictory, sometimes moderate, sometimes not. But it's very rarely the case, or there are very few Americans for whom it's the case, that they have really extreme views, right? So very few people want to, for example, jack up taxes to, you know, 92%, where they were in the 1950s because of the war. And very few people want to have, you know, low taxes or a flat tax. Yeah. We can think of all these different issues where people have their own position that sometimes changes, that's not all that well-formed. And that's how Americans actually feel. We see this over and over again when we poll them in the right way. But what gets amplified because of what we talked before are those extreme positions, right? So if you think of immigration, it's either open borders or, you know, deport everyone who's here without documentation. And there's a lot of options in between. Most Americans would want those options in between, but because of the process we've talked about, those voices don't get heard. They don't get talked about in the narrative.

Okay. Yeah. Interesting. What else do you want people to know about this? Maybe any questions I haven't asked you or areas we haven't discussed?

I think the most important thing in particular for folks who are thinking not just about how they will vote, but how they're going to operate in the American economy, how they're going to invest their money, how they're going to use their time, is that if you can start to recognize some of the signs of a media group, of a politician trying to manipulate a group of people to pay attention to them using fear and anger, you can then start to sort out the BS from truth.

Right.

Because the most dangerous thing for each of us individually is to get caught up in it. Is to look at something, see something said, and let our emotional response drive our reaction. When we have, you know, a fear or anger response, we don't really think through what's being said. We believe it. We want to believe it. And it's ultimately, if you do start to believe it, it's not only going to change how you vote, it's going to change your own behavior and your own life to your detriment. So the book and a lot of other great literature out there is about how to spot when this manipulative messaging is being directed at you so that you can become more resistant to it.

Okay, good stuff. Give out your website and tell people where they can find out more about you and your blog. Great.

So you can come to reconsidermedia.com where we help you reconsider the false binary narrative. So reconsidermedia.com, you can find our blog, our podcasts, And you can find the book there as well. Jason, it's been a lot of fun. Thanks for having me on the show.

Eric, thank you for joining us and keep getting the word out about this, folks. This is an important issue. It's not really just about 2 things. And if you want to think about it even from a more conspiratorial angle, you know, divide and conquer, right? That's how they do it. They keep everybody divided while they go run roughshod over whatever they want to do. So this, this is an important issue to understand, and there's lots of great graphics in the book as well. So Eric, thanks for joining us.

Thank you again, Jason.

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