605: Move: The Forces Uprooting Us by Parag Khanna

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Welcome to the Holistic Survival show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary to survive and prosper? The Holistic Survival show is your family's insurance for a better life. Jason will teach you to think independently, to understand threats, and how to create the ultimate action plan. Sudden change or worst case scenario, you'll be ready. Welcome to Holistic Survival, your key resource for protecting the people, places and profits you care about in uncertain times. Ladies and gentlemen, your host, Jason Hartman.

It's my pleasure to welcome a returning guest back to the show, and that is none other than Parag Khanna. He's the author of seven books and his newest title is Move. It's all about the forces uprooting us and the global mobility situation. So we're going to dive into that as well as some discussion on real estate and climate. You know, we've all heard about potential problems with climate change, but what about opportunities? So we're going to talk about those things. And Parag, welcome back. How are you?

I'm great. Great to see you again. Jason. Thanks so much for having me on again.

It's a pleasure to have you. Where are you located?

I am presently in Singapore. Other side of the world.

Yep. Beautiful place. I've been there several times. So, Parag, tell us about move. You know, the prologue is where will you live in 2050? Back in February of last year, as things were just kind of starting with the pandemic situation, I predicted there would be this mass migration to suburbia and even a little bit to rural markets, and was right about that. As soon as the lockdowns lifted, there was a mass migration and in, in the U.S. you know, I don't have actual data on this, so it's all anecdotal what I'm going to say, but I would argue that it might be the biggest migration on a per capita basis since the Dust bowl and the, the Great Depression. And it reminds me of John Steinbeck in his book Grapes of Wrath, you know, almost, almost.

Remember that sort of, you know, with the, with the interstate highway system and the kind of great westward expansion of the. In particular, there was, that was the highest rate of American per capita population resettlement. But what you're totally spot on about, and your premonition was completely accurate, is that we'd be getting back towards those levels, at least temporarily right now. So Americans are getting unstuck. We spent the 80s and 90s and to some degree the 2000s being stuck in place, being really wedded to where we were living, accumulating obviously large amounts of housing mortgage debt and not being nimble enough to move to the new geographies of opportunity where the jobs are. And that is now changing because those skilled workers can move to where the jobs are. Those that are unskilled are at least realizing that whether you're in a zone where there are no jobs or where climate change has a devastating impact, you need to just go, you need to think about what are the places that are going to be growing that are affordable and those are the places that are attracting people and those are the destinations in this new inward migration that you're talking about and that this entire book is about.

Right. And you know, another thing that's interesting about that, and I said this kind of right in the thick of the Great recession, so maybe 11, 12 years ago, is that the best thing you can have on a resume is mobility, you know, being able to move to where the jobs are and for the people who aren't that type of worker. And you mentioned that the second type, you know, they can move to lower cost of living places and effectively geo arbitrage, right? Where, you know, they don't need to live in a coastal city that's just outrageously expensive. They can, they can move. Maybe they're not moving for opportunity, but they're moving to improve their lifestyle and reduce their living expenses. So there are opportunities there. But you know, tell us about where this new geography of opportunity is.

Well, saving money and you know, accumulating savings as an asset does create opportunity. So it is intimately tied up with your economic fortunes and your, and your sort of, you know, your long term financial well being. So, you know, there are entire young movements around this. And again, let's remember this began before the pandemic with young people saying, you know, the cost of living in San Francisco and LA is just too high, it's not worth it. I interviewed employers, economists and others in major firms back in the mid-2010s and they said, I can't get people to move to San Francisco, they all want to live in Pittsburgh or whatever. So today we have a clearer picture because we've run this experiment and like you said, the lockdown ended and people decided to go wherever they want. So now we have real data and that could be Miami, which has been A winner. Austin has been a winner. Denver has been a winner. Boise, Idaho, Nashville, Atlanta, places like that. And now among those winners, not all are climate resilient places, right? In this book, I talk about the climate oases. What are the places that not only are affordable and attracting young people and have a liberal lifestyle, but are also climate resilient? And that narrows things down a bit. Or it just raises questions that you need to ask yourself. If you're going to be a property investor, especially as a young person, you want to be committed to a place for 20, 30 years. Look at the climate model first. Are there places where if you buy cheaper today, they're going to appreciate quickly because they're in climate oasis zones? Well, maybe that will lure you to those places. As far as you're concerned, you just need to have a house with Wi Fi and Starbucks nearby, because that's kind of the young person's lifestyle, right? And what I applaud young people in doing is again, getting unstuck, doing the math around these different locations and then very wisely picking their destinations.

So tell us what your premise is on the climate element, because you've mentioned that several times and of course, I've seen the studies about Miami, for example, and how the flooding there is definitely an issue. What is your concept here with climate issue? I don't want to pretend that I know, so you tell us.

Yeah, America is a very big country, so there's different climate. There's climate risks and climate opportunities and climate risks fall into different categories. You could have too much water. If you're talking about coastal sea level rise in Miami or the Carolinas, or it could be flooding along the Mississippi river, or it could be too little water, which is of course the case in the Southwest, which is experiencing a mega drought. But people are moving to Phoenix and other parts of Arizona.

And New Mexico anyway. So many different kinds of environmental challenges affect the country and people need to be mindful about them. Now, if you look at what FEMA has done, FEMA has just issued something called Flood Score 2.0, which is their updated guidance around the, you know, by county, at the county level across America, the risk assessment for those, for those counties, and obviously it's a very grim picture for many places. And even if you may or may not care about, you know, what your flood risk is and you're happy to just stay in your home, your insurance premiums are going to go up very substantially. The same thing obviously applies to people that are in areas that are prone to forest fires. Which is yet another kind of environmental risk that many people face, especially in California and other places. Many different kinds of environmental factors. You want to be mindful of whichever ones affect either where you are or where you're going. Again, what we do, what I map out in the book, and what my company also does with our product, Climate Alpha, is to try and synthesize all of these variables, the economic variables, the fiscal variables, the socioeconomic, demographic variables, and the climate variables, into an integrated picture of the kinds of places you want to be.

Okay, so name some of these places you mentioned. You know, for example, millennials are moving, and I don't think that was any surprise to us. But what are some of the other areas?

Well, so let's look at it. Not from the same. So, you know, we've named a whole bunch of cities already that are growing. We could also talk about, you know, places that are not growing, but should or will, you know, like.

And by the way, sorry, I know, I know you have visuals, so feel free to pop your slides up if you'd like to show us something also. But go ahead.

Oh, absolutely. Let's do that. So, you know, what we've been talking about just now. First of all, the global picture for climate change is pretty grim, right? The most populous countries in the world, China and India, and the dense countries like Iran or across Africa, these are places that are really going to experience devastating effects of climate change. Whereas we in much of North America, particularly the northern part of the United States, around the Great Lakes region, much of Europe pretty much remains. What I call a climate oasis, is going to continue to be livable, and populations are shrinking, so will be actually very attractive for migrants in the U.S. things look a bit like this when you project out to 2040. You don't want to be one of the lighter colors on this map. Actually, these are the places that, according to what's called a climate impact study.

Are going to experience the largest GDP loss in their economies as temperatures rise and sea levels rise and so forth. Again, look at the exposure of New York, Miami, Houston, San Francisco, even Los Angeles as well. Those are, of course, America's biggest cities economically, among the biggest cities economically. So you want to be looking at some of these darker areas by county. But this is only climate. It doesn't take into account economics. So right now you'd be saying, well, from a climate standpoint, let's all go to Detroit.

What's the timeline here, though?

This is 2040.

Okay. So again, you know, of course, we do have to say this, projections like this have certainly been incorrect throughout history. Right. So no question. Yeah, okay. Okay.

This is the scenario. So I'm not using this as determinative, but I'm saying that you can already see some of this happening. So in this. So some of this is not disputable because, well, it's already happened. Right. You know, if you think about, you know, where there's a wildfire, where a wildfire has happened, a fire has happened, I'm not sort of, you know, projecting that a fire will happen. It's happened. You know, my parents live in a fire prone area in Northern California, for example.

And it's amazing how expensive these areas are and how much people there have suffered with air quality due to wildfires. You know, it seems like a real gyp.

You know, one of the things that we can do with Climate Alpha is to run the algorithm to bias towards places that have the highest clean air rating. So you could say, hey, look, just find me the places in America the cleanest air or find me the places with the most abundant solar power potential or wind power potential. Because I don't trust my utility grid. Right. I don't trust PG&E of California or whatever the case may be. So there's lots of ways to think about the geographies. It's not just climate. Climate is not the most significant factor always in driving where people go. Again, look at Miami. Its population has increased during the pandemic. A climate model would not tell you to move to Miami, but Americans are moving to Miami. Right? So you've got to look holistically. You know, I look at this again, broadly, regionally. There's no question that you're certainly going to be less susceptible to Gulf storms and hurricanes like Ida or Katrina if you are in the Great Lakes region and obviously you're proximate to one of the largest supplies of freshwater in the world. So it's a resilient geography, more resilient than others. However, right now the economic situation is relatively under sort of developer deprived. You might even say Michigan is losing people right now. Even if climate models say go to Michigan, well, what are you going to do in Michigan? Because the economy has not rebounded, it hasn't recovered, hasn't been revitalized. It could be, but that's going to require nudging people to move there and investing in better infrastructure and creating jobs and so forth. So, you know, let me, let me get to the point around, you know, and this is what we do at Climate Alpha. You asked, you know, you can't be sure. Right. Of something. And you and I absolutely agree, you can't be sure of any of these variables and where it's going. So what we do is something called scenario based forecasting, which means that you can make a guess and you can test your guess and make up and generate a forecast around the price of a real estate asset into the future. It could be 20, 25, 20, 30, 20, 40, whatever you want based upon that change. Could be temperature. You could say, what if Illinois decides to abolish income tax, state level tax, Would that really attract people? And if it did, what would that do therefore to government revenue and expenditure to population density, to the price of real estate and so forth? So that's what scenario forecasting is, and that's what we do. So climate isn't the only thing because again, as you know, it's very American society or any society is quite fickle. You know, we move and relocate and buy and sell assets for very, very different reasons. And real estate is very personal choice, just like geography itself is also a matter of our identity to some degree. It took my parents a long time to leave New York and to move to California because after all, we are New Yorkers, right? I think of myself as a New Yorker and now I'm like, oh, wait, am I a Californian now? Now that my parents live in California? And I'm kind of wrestling with this.

Okay, yep, I agree. It's part of everybody's identity. And I want to make sure we talk a little bit more about the book too. So. But you know, we're on the climate discussion, so what else can we know there? And when you talk about opportunities, because of this, you're talking about places that have sort of the characteristics of, you know, low cost of living or at least reasonable cost of living, good climate scenarios. You know, Richard, Florida calls them creative class cities. You mentioned a lot of those. I'm sure you're familiar with his work.

He blurbed this book, actually, so his name is on the back of the COVID Back, cover.

Good, good stuff. So anything else there you want to say? Because I've definitely got some things I want to cover with you, you know, based on just looking at the contents of your new book which just came out. I haven't read it yet, but anything else you want to say as far.

As just to generalize, so, you know, a good climate, good political climate as well. So young people are looking for a liberal culture, a tolerant culture, that kind of thing. Cost of living is absolutely crucial. Every young person today is making that cost of living calculation, that purchasing power kind of calculation about where they go. And again, I want to applaud them for being clever about that and being confident in making their decisions in that way. So. And then the rest comes down to nuances of place, because country, you know, for example, Oklahoma is paying people $10,000 to move there. Right. Vermont is switching to a sort of tax free policy, I think, for digital nomads. So there's nuances there that you can't really account for just by looking at climate.

Sure, absolutely. Absolutely. You talk about how mobility is destiny. I love that. By the way, one of the things that I found interesting was, and I'm sure you probably looked at this article, it was maybe 10, 11 years ago, and I think it was on Newsweek. Not that new Newsweek is a big force anymore like they used to be, but it had this big sort of new line of thought that, you know, this, this old thinking that ownership is great, you know, that people should own a home, that that's better for society and all this stuff. And what they found is that a lot of these areas with really high homeownership rates had economies that were in atrophy states because people couldn't move for the jobs that easily. Right. They were stuck. If they were renters, it was much simpler to move. And I agree with that. Now listen, I love real estate, but I don't think you necessarily need to own the home in which you live. I think own investment property for sure. You know, being a renter does give you a lot more flexibility and the ability to move makes a society just much more dynamic. You know, it helps the economy allocate resources to the right places when people can make those choices easily, doesn't it?

Well, I think you're articulating it brilliantly, and this is very much the thesis of the book. But it does call for something of a restatement of the American dream. Because the American dream, according to you and me, is not just owning a home and having a degree. It's actually about being mobile and accessing the shifting geographies of opportunity and building skills that are relevant to those markets where you live and work. And that's again, mobility and skills, not just homes and degrees, is basically what I am saying the new American dream should be. And hence mobility is our destiny. And I also say that more broadly about mankind because we have been a nomadic mobile species. It shouldn't scare us. We have all the technologies at our disposal to move individually, voluntarily, or to relocate in Large numbers if we want to, like herds of buffalo. And to live in new kinds of housing. You know, Elon Musk has made famous these boxable homes for $50,000. He's worth $220 billion, and he lives in one boxable home.

So, you know, we have the technologies. We should embrace them. We should allow people to be sure that, you know, that they can survive when disaster strikes, that they don't have to be stuck in harm's way, that they don't have to rebuild. Why rebuild when you can just move and not have to rebuild? Right. Not have your principal asset be destroyed. And then the other part of it is, you know, if homes are too expensive for you, don't take on the debt because that's trapping money that you're not spending in the economy. And America is a services economy. Right. What we do for each other, buying, selling, trading. Right. That is what drives the economy. But if everyone is locked into debt in a home that they can't afford, that's actually taking money off the economic table.

Yep. No disagreement there. So this new American dream, you talk about that, but also the European Commonwealth. Can you address some of this stuff around the world and what are you saying about Europe?

I'm very bullish on Europe. Now, if you look again at the climate map and let me just go back to that so everyone can see. Sure.

And by the way, if you're just listening to this, you know, this is of course on our YouTube channel, so you can see the visuals there. But I don't think anybody'd be terribly surprised about these maps. You know, we've seen them. They've been out there. That's interesting, but bullish on Europe. Are these migration patterns you're looking at?

No, these are potential migration patterns, but the more important thing is just to look at the geography of the color green. Right. So it's a reminder, by the way, that Europe generally occupies a much further north latitude than America does. Europe is at Canada's level of latitude, and that presents a huge climate opportunity. It means that there's going to be fewer heat waves. They do have an abundant water supply. They're investing a lot in renewable energy and in kind of social resilience, mobility for populations and this kind of thing. And because their populations are shrinking, because they aren't really sort of mass migration societies, though Germany is kind of becoming one. It's a big opportunity to be buying assets. So if you look at, for example, the sort of famous case today is Italy selling homes for one euro. Right. And Spain doing the same thing. But actually Spain and Italy have a fair bit of climate risk other than in the Alpine region. Whereas if you look at Eastern Europe, that's where you could potentially be buying. Well, I mean you can literally buy castles and you know, many, many hectares of property for the price of a typical suburban home in America right now, in Eastern Europe.

And by the way, I've looked at those castles and I've toyed with the idea of maybe I should buy one. Right. But let me tell you something, that is a huge commitment.

Yes, no, good.

It's a lot of work and the issues with those properties are extensive.

Oh, obviously, yeah. But my wife and I sometimes just enjoy looking at those websites for castles in the proximity of Hamburg and Berlin. Those are two cities I've lived in in Germany. And you know, I'm partial to the area. Again, you can see, just make sure.

You see that movie the Money Pit before buying anything.

It's a client. Well, you know, I, so I live in Singapore, which if you know your geography, if you look at peninsular Southeast Asia and the sort of tippy, tippy tip of Malaysia, that's where Singapore is. And that is, you know, not necessarily from those standpoints. We're right on the equator, I live at 1 degree north latitude. We are going to experience sea level rise, not necessarily, you know, unbearable heat waves because it's all in.

A lot of Singapore is reclaimed land.

You know, reclaimed land, you know, it's a jungle out here, but we have a lot of rainfall and that's actually a good thing. Right? Better to have rain than not have rain, let's put it that way. Right. But in terms of money pit, so I've already made my investment. We own our home here. It's our kind of multi generational permanent home. So I'm hoping for the best.

So you know, what's kind of interesting about your theory is pretty much an alternative theory because a lot of people would say, for example, you look at the Americans south, which you're saying, okay, it's got climate issues, but that's where everybody's moving. That's where the governments are very friendly and you know, business friendly. They're attracting businesses, they're attracting. I mean, I live in Florida now, I used to live in California and wow, it's just an amazing migration toward Florida. People leaving the Northeast and you know, the States with, you know, big government, heavy handed government lockdowns, high taxes, landlord on friend, business unfriendly, etc. And you know, many would argue the same Is true with Europe. Right. Western Europe, its population is basically dying. You know, they've got massive immigration problems. The weight of government is very heavy in Europe. So this is kind of another way to look at it. It's, it's interesting because I think most people are thinking of it the way I'm talking about. Would you, would you agree with that?

Well, so, you know, the thing is we can't hold equal the current migration policies of these countries. Right. You know, Europe or States, we are realizing, they are realizing right now that they actually genuinely face demographic collapse if they don't increase migration. And their dependency ratios are much higher than our dependency ratios. So their demographic challenge is far more acute than ours is.

And just define dependency ratio. You know, not enough young workers and go ahead and.

Exactly, exactly, exactly. So it's the number of young people whose tax payments are necessary to finance the Social Security payments for the elderly and retirees. So, you know, the European dependency ratio is even worse than America's.

But Russia have that problem too.

Yeah, but ours is pretty bad. We don't need to really gloat at this point in time. You know, we have fiscal called logjam up ahead. But.

What is happening in Europe is that countries are. Germany is starting to again, import a lot more people. A government study just came out saying they should absorb 400,000 migrants a year, which is a huge number. Other countries are realizing that as well. Despite their cultural inhibitions, they are going to need to absorb the next generation in order to have workers, taxpayers, caregivers, entrepreneurs and all of those other functions and roles in society. So point being, policies are changing. We're not all going to become like Canada overnight, which is taking 400,000 people a year. And it's not even controversial, but it's going to be a struggle. But really our economic survival does depend on it.

In chapter nine and ten, you're talking about, you know, the Asians are coming and retreat and renewal in Pacific Asia. What's. What do you want to say there?

Right, well, so, you know, the largest concentration of people in the world, of course, is Asians. Right. Asians in Asia are the majority of the human population. But it could be that in the future that Asians migrate outward more given climate change and other issues, political issues as well. So if that happens, the countries that actually attract the young, mobile, cash rich, dynamic, entrepreneurial, industrious Asians are going to be winners. And America has historically captured the best and the brightest Asians. My own family, I was actually born in India. My family moved to America. When I was six years old, we lived in Dubai in between. But I actually remember immigrating to America. And there are 25 million Asian Americans today. Now, guess, Jason, how many Asian Europeans there are, which is probably a term you've never heard. I invented it.

I have not heard that term.

So I coined the term in this book, Asian Europeans. Guess how many Asian Europeans there are.

Oh, I have no idea.

There are only 4 million.

Wow.

So I predict that in the coming 10, 20 years, there will be another 10 or 20 million more Asians moving to Europe. Right.

What's interesting about that, too, is if Europe's going to have immigration and totally change its culture and societies, which it's obviously doing. And, you know, people can argue about that till the cows come home, but the fact is, it's happening. I mean, the Asian immigration seems like it would be. Be really better for Europe because a lot of the African immigration is just not as educated. It's not as skilled. You know, a lot of that Asian culture is very educated and super ambitious. I mean, the work hours in China and Japan are staggering. I mean, it's like a very productive cultural mentality.

Well, even if they're not productive in terms of output, you know, per hour, per unit, you know, of labor, they're. They're certainly industrious and hardworking, and that's obviously the immigrant ethos that they bring to every country that they go to. And you can see this with Chinese or Bangladeshis in Italy, with Turks and Indians and other nationalities in Germany. You know, you're seeing this kind of all over Europe. So I think people who travel to Europe today will be quite surprised by how much more, you know, sort of how the complexion is changing. And it's not happening without backlash, but it hasn't happened in America without backlash, but it is happening nonetheless.

Yeah. Okay, so Quantum People, Pax urbanica, and civilization 3.0, wrap us up with those.

Right. Well, let's start with Civilization 3.0, because it fits very logically on what we've been talking about, which is how do we sustainably relocate the world population? And even within America, as we were just discussing, Civilization 3.0 says, is the argument that we as a species, as people, need to be more mobile for our own survival and resilience, but also more sustainable. Right. When we do housing and build new cities, there should be solar power, wind power, battery packs. When we do agriculture, we should be collecting rainwater, doing wastewater treatment and recycling, hydro and aquaponic agriculture, this kind of stuff. And we can do that. We have the technologies today. So that's part of what I mean by Civilization 3.0. But I also include in that again, rescuing people from climate risky areas and giving them a more productive life as productive economic agents in places that are not climate risky. And I think that that's a worthwhile investment for our economies. Now, Quantum People is the section of the book where I talk about the fact that the extreme of mobility is people who are, you know, maybe have multiple passports or changing citizenships, live in, have different homes. You know, they're, they're everywhere and nowhere. They can be multiple places at the same time. And they're, they're the ones who, because they're very wealthy. They are, they're playing the arbitrage game, right? They are. You used the term geo arbitrage earlier and you were actually referring just to domestic young people in the United States who don't have a lot of money. Well, there's a global arbitrage game going on, of course, and that's in that chapter. I talk about the trends, the key countries, the winners and losers, the legal reforms, the passports, all that kind of stuff. But I'll leave you hanging and get everyone to read the book so they can figure out where they want to be if they want to be successful. Global quantum people.

Yeah, you know, it's all changed too in the past year and a half with COVID You know, people just aren't traveling. It's obviously just not the same. You know, I have many friends who lived or are living the digital nomad lifestyle and it's not what it used to be. But hopefully that'll be a temporary setback and that opportunity will resume. Parag, do you have a website you want to share?

Excellent. Thank you very much for joining us again.

So good to see you again, Jason. Thank you.

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