At the beginning of the show, Jason Hartman is joined by investment counselor Doug to talk about portfolio makeovers. They share how to determine if you’re ready to utilize the equity in your investments and when cap rates can be helpful in single-family investing. Afterward, Jason interviews Rohit Talwar, founder of Fast Future Publishing and author of A Very Human Future. They talk about exponential thinking, pooled insurance, body hacking, and the changes we need to make to have a more optimistic future.
Investor 0:00
Well, I like real estate just because I like the benefit of being able to have a mortgage pay off real estate over time so that when I retire, I have something I like the fact that it’s boring. I want to be able to be entertained and travel and do a lot of things in my retirement. And that boring investment of real estate allows me to do that.
Announcer 0:24
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 multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer, and entrepreneur who’s owned properties in 11, states had hundreds of tenants and been involved in 1000s 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.
Jason Hartman 1:14
Welcome to Episode 11 137 1137. This is Jason Hartman, thank you so much for joining me today. I’ve got one of our investment counselors on the line today. And that is Doug, you’ve been hearing him on the show for the past 10 years or so, Doug, how you doing?
Doug 1:29
I’m doing great today. Jason.
Jason Hartman 1:31
Good. I know, you’ve been busy with doing a lot of portfolio makeovers for our clients lately, haven’t you?
Doug 1:36
Yeah, in fact, a part of the portfolio review and the portfolio makeover, as we like to call it, that is actually been really insightful to a lot of people has been the idea of looking at a before and after return on equity for a portfolio. Because what I’m finding is that there’s a lot of clients who have properties that have appreciated quite a bit. And of course, that’s good. But what they’re doing is they’re thinking about their rate of return relative to the amount of cash that they initially put into the property.
Jason Hartman 2:06
Right. So here’s the thing I want to say is that as the money becomes lazy, as it becomes sleepy, as you create equity in a property over time, which is great news, your return on investment declines, and sometimes it declines rather dramatically. And a lot of people don’t realize the hidden cost here of that loss of return on equity. And I’m gonna talk about my opinion of return on equity as a metric period in a moment. But go ahead, Doug.
Doug 2:36
Exactly. And so because I think the way that you’ve trained a lot of investors to think is in terms of return on investment, which is an excellent metric, which is where you say, Okay, how much do you have to put into a property? What are you earning from it? And then what’s that rate of return that you’re earning? And I think that’s most appropriate when you are evaluating whether to purchase an asset. Once you’ve already purchased an asset and own it, and it starts appreciating, then return on equity starts becoming a more appropriate metric, because you say, how much equity do you have in the property? So in other words, if I sold it, and extracted the equity, how much would I have, what is the new invested capital I have that’s locked up in that asset. And as your equity increases, the return you’re earning on that equity position starts going down. So the way that you keep your money working for you, is, you know, you either potentially sell but ideally, not just because you incur transaction costs, and you sell that really expensive, or potentially refinance. One way to refinance is with a new fixed rate mortgage, or like one of the things that I’ve been working with one of my clients with, is to actually look at a line of credit to refinance because he has a fixed rate mortgage that’s at a really attractive rate. So if you pair that with a HELOC, now you can keep that asset of having a low fixed rate mortgage, and then pair that with a way to extract the equity. And in this case, he’s looking at a HELOC where he can pull up to 80% of value, and then reinvest that into more properties. So now what he does is he extracts some of the equity from one property and reinvest it to create equity and other properties that are generating new returns. Because the amount of revenue is generated from that property doesn’t change. You know it regardless of what he does with this equity position, it has no impact on the price of the property, no impact on the revenue performance of the property.
Jason Hartman 4:26
Okay, so I just want to say a couple things here. So the thing you have to realize is that whenever you own an asset, stock bond, mutual fund, piece of real estate, gold coins, it doesn’t matter what the asset is, every day that you do not liquidate that asset that you do not sell that asset. You’re essentially buying it from yourself. And so if you’ve owned a property for 10 years, and that property has appreciated and you still have the original financing in place, You’ve gained a lot of equity on that property. So the way you have to look at it is that now 10 years later, you’re buying the property from yourself. And because you have this additional equity in the property, you’re essentially putting a lot of money down, and you’re not getting as much leverage as you might otherwise when you think of buying a new property. So that’s the thing you have to think about is you’re, you’re not renegotiating the deal, if you will, you’re sticking with the the current deal, which is today, if you’ve got $50,000 of equity in the property, whereas if you bought it today, you might only put $25,000 of equity in it in terms of the minimal downpayment, that’s causing you to lose money, you’re losing return on investment. And, as I’ve said, For the last 15 years that many real estate investors either think they’re winning, or they think they’re losing, and many times they’re doing the exact opposite, they’re completely wrong. Because they don’t know how to do the math, they look at it from the point of, well, I’ve got good cash flow on the property. But the reason many times they have such good cash flow is because they have way too much equity, stuffed up in that property. Right?
Doug 6:21
Exactly, I’m actually going to differ in opinions with you a little bit. So we can have a little bit of conflict. That is actually one of the things that the cap rate is useful for. Because I know you’re not a fan of cap rate. But one thing that cap rate does tell you is how effectively you can leverage a property. So for example, if I’m buying a property that has a 7% cap rate, with a five and a half percent loan, that tells me that I will be able to arbitrage one and a half percent on every additional dollar I can leverage. On the other hand, if I’m buying a property that has a cap rate, that’s say 5%, and I’m at a 5% loan, I don’t really gain a whole lot by leveraging them more, you know, similarly to what you’re saying is that, you know, if you want to create a high cash producing property, the best way to do that is to buy it with all cash and don’t leverage it at all. But that’s not going to give you your best overall performance, the best overall performance is going to be when you optimize your leverage. And the way that you do that is you make sure that you’re earning that arbitrage spread, that the amount you’re paying for the loan, if that’s less than your cap rate, then you’ll benefit from levering up the property.
Jason Hartman 7:36
Hmm. Interesting. So that isn’t completely giving you the whole picture, though, because it actually could be better than that, when you put into place, you’re just comparing cap rate to the interest rate you’re paying on finance, right? Correct. Yes,
Doug 7:52
I’m looking at this from a cash from a cash performance perspective.
Jason Hartman 7:54
Right. Right. Right. And so that’s a lot of people do that. And you know, it’s a decent metric. It’s a simple metric. But because you and I both know, it doesn’t include the arbitrage on leverage, it doesn’t include inflation to do this debt destruction. And,
Doug 8:12
yeah, Jason, you always accused me of being an engineer. So I’m just acting like an engine. Okay, got
Jason Hartman 8:16
it. Got it. Got it. Got it. And the funny thing is, you’re not an engineer, but you’re not analytical creature, you have an MBA, and you’re a corporate america type guy. So you’ve got a lot of that very analytical stuff, folks, if you ever want to look at a really confusing spreadsheet, just ask Doug to create one for you. First of all, it’ll take him like four and a half minutes to create a 36 page spreadsheet that you will never be able to understand unless you’re like him. He speaks a different language.
Doug 8:45
I haven’t even shown you the complicated stuff, Jason.
Jason Hartman 8:49
Wow. I am in fear of that. But finish up on the topic of portfolio reviews portfolio makeovers, and let’s wrap it up and get to today’s the rest of today’s show.
Doug 9:01
Sure. So basically, the thing that I like to do with my clients that every one of our clients should be doing with their investment counselors is just do a regular review of your portfolio to see where do you have equity that you can redeploy to make it continue working harder for you, that’s the way that you’re really gonna win the game is when you can start compounding your properties into more properties. And just continue getting that high rate of return from your equity,
Jason Hartman 9:22
no question about it. You know, folks, if you have a business, and if you have a lazy employee, you would be wanting them out, right? And that’s the idea. You don’t want lazy employees. And similarly, you don’t want lazy equity or lazy money, or sleepy equity or sleepy equity or lazy, sleepy, whatever. The concept is the same. It’s kind of like that employee example, Doug. So as the employee maybe becomes more comfortable over time with their job, you know, they kind of just natural human nature sets in they kind of lose their edge. They’re not as motivated. as they used to be, everything’s working out. They’re making money, they feel secure, and they get a little lazy, a little complacent. Your Money is doing the same thing to you folks. It’s getting complacent. It’s becoming ungrateful. It’s not earning as much return for you as it could.
Doug 10:18
so ungrateful money, ungrateful money, ungrateful
Jason Hartman 10:20
money, lazy money, sleepy money, don’t let it happen. Be forever vigilant to make sure your money is working for you. So Doug, that was a great little talk about that. Thanks,
Doug 10:32
telling him I need to go out and get a job and don’t let him come back home and live in your basement. That’s
Jason Hartman 10:35
right. No over entitled money allowed here.
Doug 10:40
All right. All right. chocolates, Jason. All right.
Jason Hartman 10:43
Likewise, happy investing. Let’s get to the rest of the show. Hey, I’d like to introduce someone whose voice you’ve heard on the show before and that is Chad. And we have a fantastic little YouTube raffle for you, Chad. What’s it all about? Yes, we have an exciting opportunity coming up for you to be able to win a free ticket to meet the Masters coming up in March or a $500 travel allowance. Here’s what you need to do to be able to win one of those things. We will be selecting a winner on March 4 when the contest ends. And all you have to do is go to the YouTube channel, which is youtube.com. slash Jason Hartman real estate. Subscribe if you haven’t already, then pick any video to watch. There’s a variety of categories everything about real estate investing from finding the right markets, analyzing real estate deals, the economics of real estate investing, property management financing, there’s a whole wide range of videos that you can choose from, and choose one that you think would be interesting to you watch it, and then go to the comments section. And comment just a quick one sentence comment on something that you learned from that video. And make sure to include the hashtag JH live in the comment and that will enter you into this raffle. Okay, so that’s really easy. Just go to youtube.com slash Jason Hartman real estate, subscribe to the channel, and then watch any video you like. And make a comment below the video of one thing you learned include the hashtag JH live, and that will enter you in the raffle to win a free ticket to meet the masters or a $500 travel allowance. This ends on March 4, so be sure to get it done before March 4. We look forward to seeing you at meet the masters. Thanks for joining us, Chad. Thanks.
It’s my pleasure to welcome Rohit tower to the show. He is a futurist a global futurist and founder of fast future publishing. He works with global businesses to help them understand and create the future. He’s an award winning speaker and noted for his provocative content. His latest book is entitled A very human future. He also has a few others including the future of business. Let’s dive into some fascinating conversation today. Rohit welcome. How are you?
Rohit Talwar 12:59
I’m very well. Thanks. And thank you for having me on the show.
Jason Hartman 13:02
pleasure is all mine. Are you coming to us from London?
Rohit Talwar 13:04
Yes, in London, which is very cold and dark this afternoon? Yeah, well, that’s
Jason Hartman 13:08
the London weather for you. Greetings from sunny Florida. In my case, so sorry. Sorry, if I make you envious there. When we look at some of these issues about the future, I think a fundamental question that I’d like to start with is that the concept of value, what creates value in an economy is a changing shifting thing, isn’t it? Because when we look at what will be the opportunities of the future? First, we need to examine what is value, maybe defining it understanding how it’s changing, etc.
Rohit Talwar 13:42
Absolutely right. And I think there are so many different perspectives on value as well, depending on where you’re coming from. Right now, there’s a philosophy if you like in investment markets, that if your company is investing in technology, then you’re definitely creating value for the future. But what we can see is that there isn’t a totally direct correlation between firms investment in technology and their performance in the future. So that I think it’s much more about are you investing in the ideas, the business models, the processes that will in a sense, create value for your end customers in the future? Can you show that what you’re creating will stand out and we’re seeing this right now we’re seeing in retail, we’re seeing in financial services, that a lot of what we thought was future proofed investment is actually turning out to be not that effective. We’re seeing, you know, around the world, retailers closing at a rapid pace, we’re seeing financial services firms saying they’re seeing no growth or a shrinkage in revenues. And this is largely down to the fact that they haven’t really thought about how to align what they’re doing with what really enhances the life of customers, which might mean doing it cheaper, doing it faster, providing a better service, taking away the pain from me, and then I think the final one that I want to talk about for today is this sense that the technology players themselves have found that by being present in everyone else’s activity, they’re pulling away from the pack in terms of value creation, particularly in terms of share price appreciation. So you see, the big five in Amazon, Apple, Google, Microsoft, and Facebook are worth more than any other company on the planet. And largely, that’s because then are present in everything everyone else does. Whether you’re, you know, listening to the radio, watching TV, having a conversation with someone performing a business transaction, making a purchase, you’re touching one of those companies,
Jason Hartman 15:41
would you call that maybe the platform concept? I mean, in essence, there are platforms Amazon provides web services they provide stores, they you know, they do so much. It’s it’s mind boggling, Apple Same way, right? They’re, they’re present in all of these different things. And technologies allowed them to scale so nicely into those areas, right?
Rohit Talwar 16:03
platform was part of it. I think the other part is mindset. They’ve managed to, if you like impregnate themselves in into everyone’s mindsets, that saying, what we really need to be working with one of your products or buying one of your products or using one of your services, you know, whether it’s brand quality, whether it’s product quality, whether it’s just ubiquity, that everyone’s using it, there’s this sense that we need to be working with their products. And now with the rise of AI, they’re going to be penetrating even further. So the game has changed in the past, you know, we had railroads, we had banks as the leading businesses in society, but they weren’t necessarily present in what everyone did. These players now literally all pervasive. And I think we’ve, because we’ve never seen that before. We don’t know how it will play out. But what we can expect is, government’s trying to break them up, we can expect other financial players deliberately trying to derail them, because they don’t want one single dominant player in each of the sectors that these guys dominate. So I think that they’re central to value creation today, certainly, in terms of share price, appreciation, it isn’t definite that they’re creating any value for all the customers they work with. But certainly, the markets are treating them that way. And then the markets tend to over exaggerate any move in share price up or down, when they get any kind of information that shows just how relevant these companies are, how central they are, to trade and commerce today.
Jason Hartman 17:32
I mean, that is really creating a concentration of wealth, isn’t it? Is it a winner take all society, I interviewed the author of that book quite a while back, and I liked the title. I didn’t think the interview was that great. But it was on the show before. But is that what we’re facing with this kind of thing where, you know, since they can touch every area of life, they have the platform, they have the scalability, you know, nobody’s going to compete with these companies, are they? Or maybe they will, we can be surprised sometimes, right?
Rohit Talwar 18:00
Right now, there’s a feeling that winner is taking almost on certainly in terms of the shareholders in these companies doing incredibly well, on the back of these companies and the executives. And there’s a sense that they might be pulling away from the pack. There are some Chinese companies that are, you know, obviously snapping at their heels, but a very similar model. And then there’s the regulator’s certainly in the European Union, trying everything they can to break these companies up to break up their power, and to really challenge them. And a desire to see other companies step into the same space and challenge for the provision of those services. One big hope for many is that we’ll see a new era of blockchain based open businesses with different models that really challenge the likes of Google and Facebook in particular, that’s to be seen, there’s certainly a lot of activity in those spaces, some very interesting ventures coming through some very different business models. So we could see the power of these businesses challenged. And obviously history has shown us that whenever an empire rises, there are a lot of forces come together to try and bring that Empire down, whether it’s deliberate or inadvertent. So you’re constantly hearing people say, you know, in 10 years, there could be 10 Amazon’s, who knows, I think that it would take a lot of skill, a lot of clever marketing and a lot of support for new businesses to come up and truly rival those, you know, certainly Amazon, apple, Facebook, Amazon, Apple, Google, and Microsoft, Facebook, I think is, you know, is more at the whim of the consumer. If we all stop using it tomorrow, you know, its business model wouldn’t survive, whereas the others, it’s unlikely we’d stop using them, but just because of how deeply they penetrated our lives. Well, and fit and Facebook and Google especially, I
Jason Hartman 19:48
think, have breached trust so many times. You know, I think with those two companies, most specifically, I’m actually in favor of the regulator’s for a change I usually find myself on the opposite side of the government. But this time, I want to see one of three things. And I’ve said it many times before, these companies are so ubiquitous that they either need to be broken up under antitrust, or they need to make their algorithms public and open source. So everybody knows why we see the results we see when we search something, or they need to be regulated like utilities. I mean, you know, the fact that they can censor people, and that it just really concerns me, these companies are bigger than most many governments, why shouldn’t they be treated like a utility, one of those three things have asked to happen, maybe all of them, I don’t know, maybe you would disagree.
Rohit Talwar 20:39
There are different views on this out there. One is these are now the axes of evil, if you like, these companies know what they’re doing. They’re very deliberate about it. And they’re making as much money as they possibly can, through the surveillance economy, and having our data monitoring our lives manipulating our lives. There’s a second view that says they’re slightly more tactical than that. They know what they’re doing is wrong. But they’re trying to maximize their return for as long as they can. The third is no, they’re misunderstood. They’re just trying to do a good job. And every now and then they make a mistake. But really, they’re there to benefit the whole of humanity. And we need to cut them some slack. And then there’s a fourth year is they’re just incompetent, and they don’t know what they’re doing. They’re so big now that you’ve got lots of relatively young people with less experience of the world and less understanding, if you like a public morals, who were just working on their individual projects that turn out to invade privacy or whatever, every day, I kind of flip between all four as to what they are. Fair enough. But I think ultimately, you will need some regulation from regulators who understand what they do. And that’s the worrying thing. And, you know, we’re surrounded by incompetent if you like politicians who, who haven’t invested the time and effort to truly understand the forces shaping the world, how the global economy works, sort of like
Jason Hartman 22:06
the academics in the ivory towers, they don’t, they don’t get a lot of time. So yeah,
Rohit Talwar 22:11
it’s so important that, you know, I think they have to sit back and really understand these technologies and how powerful they are and how much potential they have the good, but also how they can be misapplied. And and only then can you do truly smart regulation. Absolutely.
Jason Hartman 22:27
Most of our listeners are investors, the vast majority of them are investing. And a lot of them are investing in things like real estate, particularly they own businesses and so forth, too. But let’s take this and maybe shifted into the economy a little bit to the broader economy, the US economy, the world economy, what does the future look like? You know, in your book, anticipating 2025 write this, it’s right around the corner. I mean, everything is changing so quickly, self driving car technology, is going to change the real estate game. Just all of these shifts, the bio hacks and the possibility of tremendously extended longevity, not only lifespan but health span. These things have huge implications for the broader economy. I mean, what will be the retirement age? How long should people collect the equivalent of social security? What do you make of all this? There’s just so much to digest. It’s, it’s mind boggling.
Rohit Talwar 23:26
There is and and, and I think you have to split this really into three timeframes. One is the sort of far future, the five plus year horizon, let’s call it far future, because the world will just change so much in that timeframe, that any investment in something for that timeframe really is purely speculative. Then there’s the near term, if you like the next 12 to 18 months where we wouldn’t even pretend to give advice. That’s, you know, usual rules apply about how to invest for the near term. The most interesting piece that we’re talking to investors about right now is that 18 months to five year window, where we’re going to see some truly disruptive change coming that will reshape markets will reshape the way businesses operate will reshape business models, reshape value chains. And for us at the core of that what you can latch into if you’re doing your analysis, is this idea of exponential thinking people who are doubling or more the performance of whatever they’re delivering. And you see three types of exponential thinking really. One is the people who are coming up with exponentially different ways of doing business. So you’ve seen these construction companies like broad group in China, building these 57 storey buildings in 19 days, turn the model on its head of how you do construction, they prefabricated the factory. They put it together on site like Lego and they manage the whole process. I mean,
Jason Hartman 24:52
I’ve been studying some of these advanced construction technologies, especially 3d printing, but by I did not know that they built a 57 storey building and how much
Rohit Talwar 25:04
time 19 days, like built for occupancy
Jason Hartman 25:07
in 19 days where people actually moving in
Rohit Talwar 25:11
lots of these, you know, just check out broad group in China, they’re among the leaders in this whole rapid construction thing. But it’s not just rapid construction, you’re seeing 3d printing in construction, but you’re seeing 3d printing of cars in the automotive world, bringing in an exponential improvement in terms of the speed of design, the speed of manufacture, and dramatically dropping the number of cars you need to produce per factory. So as a general principle, it’s looking at the sectors where the operating model can be enhanced exponentially. The second is where people are looking to bring about an exponential improvement in the value delivery to customers. And quite often that’s either in speed, or in price. So they’re bringing technology to bear. And you’re now seeing people at Western Union who used to charge you eight or 9%, for a money transfer doing it for free. And that’s because internally, they’ve gone through a process of radically rethinking the way they do things, relying on technology much more taking people out of the process and slamming down the timeframes, and the cost of delivery. And then the final one is where people are coming up with exponentially different business models for how they do business. So other results are exponentially different. And you’ve seen that for a little while now, where people like Rolls Royce don’t sell you an engine anymore, you basically rent maintenance from them, the revenues have been improved dramatically because of that through the scription
Jason Hartman 26:47
model, right? The SAS model, and then in the future, they will call it the CAS model car as a service. Right?
Rohit Talwar 26:55
Yeah, it’s where people have taken the traditional business model and just said, here’s a totally different way of delivering that service to you. So vehicles on demand, you know, we’re starting to see those models work now. And you know, power on demand, lighting on demand from Philips, where people are only charging the end customer, if you like a fee for usage or a different way of charging for the service, that seems to benefit the end customer because they’re moving from, you know, lumpy purchase costs to rental costs or whatever. And for the organization, it means we’re getting a more continuous flow of revenues. And then you’ve got the threat of new entrants, who are just bringing a different way of thinking. So if you take someone like the insurance company Trove, what they’re doing is they’re applying the model from websites like Tinder or apps like Tinder and Bumble, where you swipe right, if you like, someone swipe left, if you don’t, they’re applying the same model to charging you for insurance. So when you take your watch out of the safe or the cupboard, to wear it, because it’s such an expensive piece, you swipe right to start insurance. As soon as you put it back, you swipe left to stop.
Jason Hartman 28:06
But again, it can still be destroyed in the safe, obviously. But you do this in your own with your own safe,
Rohit Talwar 28:12
I mean, your own safe, or it could be you’ve got it in her, you know, it’s expensive enough, it might be in a vault somewhere. But it’s basically you decide when you swipe right to start ensuring something. And when you swipe left to stop, instead of having a just in case insurance policy, I now have a just in time on where I only pay where I need the service. Right? Interesting. And you’re seeing this happen with the rise of the so called decentralized autonomous organizations. So you might have seen Team brela in insurance, where instead of charging you a premium, they’re charging you a tiny transaction fee, you put your money in, you join a pool with other people, if someone has a claim, you collectively in that pool agree what you think their claim is worth. And at the end of the year, if there’s any money left in your pot, you get it back. So we’re seeing
Jason Hartman 29:02
what’s the incentive with that be for everybody to say, oh, nobody else’s claim is worth anything. So there’s more in the pot. I mean, they must have figured out a way to work around that. But you can
Rohit Talwar 29:14
a bicycle, it’s in my interest to agree a reasonable price for the replacement of your bicycle. Because if I don’t then when it comes to my bicycle being stolen, yeah, you’re not going to support me. The other thing is because we’re in a pool, you know, and there’s only 50 of us, I think in the pool. I’m incentivized to say, Well, actually, I know a local bike dealer. Let me see if I can get your bike. Oh, that’s interesting. So we’re making these kind of bringing social features into these new business models.
Jason Hartman 29:45
Yeah. And you know, the incentive is look at if you think long term enough, you don’t want the person with a claim to quit next year and leave the pool because you need their premium right now this is happening in healthcare in the US with things like Liberty share. And Medi share and these aren’t really insurance programs, their health share programs, right? They seem to be working pretty well. I don’t know the jury’s out. But from what I hear I hear good things.
Rohit Talwar 30:11
Yeah, I think the thing is you have to invest in these sorts of things, the longer term, with a lot of these players really only coming to market in the last 12 months or in the next 12 months, you can’t be investing in them expecting them to be delivering you great returns, between now and the next 18 months. But longer term, as they build up traction, suddenly, these businesses start to throw off a huge amount of cash. Sure. And it’s this classic thing that you know, only a few players do survive in any sector. So it’s a winner takes almost all at the moment. And the ones that kind of make their way through then generate supernormal returns because they built the infrastructure. They built the networks of suppliers of customers, and then everything really starts to pay back in quite a significant way.
Jason Hartman 31:00
Yeah. Okay. When we look at the broader economy, which is where I was going with this, with all of these incredible efficiencies, and this new thinking about business models this new thinking about From where does value really come? You know, the famous saying we’ve all heard is about the railroads, right? They thought they were in the railroad business, when really they were in the transportation business, and they realized that sooner they’d still be around, right? Is the future more prosperous? Is it inflationary? Is it deflationary? Is it I mean, what does the future look like for you know, that average person? Or are they going to be better off or worse off? You know, because a fair part of this discussion it has to be is, you know, will the robots and will AI take everybody’s job, that’s a sort of a whole nother angle on this.
Rohit Talwar 31:50
So there’s a separate conversation about the impact of these disruptive technologies on job creation, and on wealth. And right now, we don’t know there’s a lot of great jobs being created for educated people who have some sort of tech background to work in AI and data science and blockchain. So there’s an explosion. But if you’re being replaced as a lawyer, as a shop assistant, as a check in Clark and airline, then it’s unlikely that you’re going to walk straight into one of those jobs doing data analytics in an AI firm, you might retrain for it. So what we could see is a distortion that some people do very well that the highly skilled people moving into those sectors could do extraordinarily well. And an awful lot of people who are used to having a good living, will struggle for a while, while the economy recorrect will probably need something like guaranteed basic incomes, guaranteed basic services, to see people over the hump. But we’ll probably have to tie that to an accelerated retraining program to move people up the value chain. If we do that, then longer term, things look reasonably rosy for most people. If we don’t address the Education and Skills issue, then we’re in deep doo doo. Okay, so
Jason Hartman 33:03
let me ask you about that. Because the skeptic in me says, Well, how are you going to train, the person who had that job in a restaurant that’s now been automated, or that have that job is any type of driver, whether it be a Lyft, or Uber driver, or a FedEx driver, or whatever truck driver that’s now been automated out of the job? I mean, they’re not going to become, you know, an AI programmer, right?
Rohit Talwar 33:30
Like, what a proportion will, you know, because the technology is getting easier to train people to do things with it. But for the majority, I’d say if you’re your drivers, then they’re not. But we’re going to have to have them learn new skills that have them either create their own job, because there will be new businesses created or to work in other new industries where we won’t necessarily need the heavy lifting jobs, but we’ll need people still. And that’s where we need to really go through an accelerated learning process that isn’t based on their past, but based on their potential, and you see, accelerated learning programs do tremendous things. And we need to be teaching them skills like collaboration, problem solving, design, thinking, scenario thinking, the skills that will allow them to move from job to job, and we want what we need to do is get over ourselves, we tend to not pay enough attention to the experiments that work and try and recreate them or create new ones. So if you look at places like you know, bidwill training center, Manchester craftsmans Guild, Pittsburgh, for years now they’ve demonstrated how to take you know, unemployed steel workers, illiterate single parents, and retrain them by building faith in themselves first and then giving them the skills skills, they can go out and work for Dow Chemical as a development.
Jason Hartman 34:46
Hiring now very inspiring. You didn’t even mention one other thing. Is that the biohacking that is likely to take place in the future that will make that will literally accelerate learning all of this stuff. We’re learning about the body and the mind. is going to be amazing, right? You know, we may be able to take people and literally make them a lot smarter, right?
Rohit Talwar 35:08
I’m pausing there because maybe not. There’s a lot of investment going into this whole area of human enhancement biohacking, human augmentation, whatever you want to call it. And we know that with certain drugs already nootropic drugs, like Ritalin, Adderall, modafinil, that are meant for sleep disorder and attention deficit disorder, those have consequences,
Jason Hartman 35:29
though.
Rohit Talwar 35:30
They can enhance mental performance, but they have consequences. Definitely. Similarly, with the electronic stimulation techniques, everything we’re talking about the new release to put sensors into your brains, all those things. They’re either unproven, you know, as to their genuine long term functionality. And they’re certainly unproven as to their consequences, right. And so what we don’t know is whether that this idea of hacking our brains, is really going to work long term, or are we going to do irreparable damage? Fair enough.
Jason Hartman 36:01
But that’s only the drug discussion, obviously. And those drugs I’m, I’m no fan of pharmaceutical drugs. Believe me, I’m a huge detractor from that world. But things like functional MRIs, right? Who knows what that will lead to? Right? The amazing. I mean, we can literally read minds now almost, we’re almost at mind reading stage,
Rohit Talwar 36:21
we’re over egging the pudding in terms of what we can read in terms of people’s brains. But we are making progress, which is great. That’s a good thing. But again, the ability to read someone’s mind isn’t necessarily going to make them more productive.
Jason Hartman 36:33
I know, I’m just saying, if we can do what we can, there’s going to be just who knows what’s going to come out of that. That’s all I mean,
Rohit Talwar 36:40
I can hack my body to make myself stronger to run faster, those things. But then the question will be, will you choose me as an employee? Will you choose a robot that doesn’t get angry, that doesn’t have days off, you know, so actually, some of the areas where the body hacking could really enhance humans, or areas where humans might not need to apply in the future. So very true. I think we need to give the brain science a chance to see if it can really work to enhance mental capacity. And that would be a really brilliant thing. If, you know, if I could upload into someone’s brain, the knowledge of how to code, you know, an AI application. And they previously being an Uber driver, you know, that would be fantastic. But we’re a ways off that.
Jason Hartman 37:28
Yeah, no question. Let’s wrap it up with the future is the future optimistic? I mean, everybody wants to be an optimist, right? But is the standard of living going to just get dramatically better in the future or with all the stuff that’s going on in the economy, and the debt problems and the derivative bubble, and you know, all of that stuff, which may not be directly your area? I understand. How do you feel about the future, give us your take.
Rohit Talwar 37:51
So my feeling is, it’s not an either or it’s not good or bad. The reality is, we have a really optimistic future in front of us where people could have a better living life or living standard, where communities are more connected, where we’re doing less damage to the planet, we have less toxic politics, and the financial system is genuinely there to serve the economy. However, in order to get there, we have to change a few things. One is, the level of education across society needs to be ramped up massively, so that people can make better choices, we need to change the whole way in which we recruit politicians, we need to have them go through some real training and how the world works, before they’re allowed to take their seat, you know, a parliament in Congress,
Jason Hartman 38:36
you’ll get 100% agreement on that one role.
Rohit Talwar 38:39
But you know, you watch now we’re watching this slow motion car crash in the UK called Brexit. And what we see is that, largely, it’s a failure of competence that people don’t know how to deal with things, how to create workable solutions, how to bring people together, how to do things on the basis of where the world is moving to. And so you end up with the nightmares we have, if we change that, then we can use our resources more effectively, we can put in far better governance, we can have much smarter solutions, to avoid overshoots on anything, whether it’s debt, or you know, the workings of certain derivatives, we can put far more enlightened mechanisms into control that, and the big thing I think, is around regulation of industries, you know, what will destroy us is industries that run rampant. And the best way of doing that regulation has to be to bring players from the industry, into work with the regulators and technology to create really viable solutions, and have the members of the industry, you know, effectively pay up on fines or whatever, if they go outside the bounds of the industry, but have fast, smarter technology tracking, whether they’re doing that, and then we keep everyone within bounds, and we move along nicely. We need to make sure we’re making the investment in the industries of the future at the r&d level and at the sort of venture creation level. We talked about skilling. And we would need to look at, you know, the role of media and all of this. How do we engage the media in having healthy public conversations about a brighter future where everyone participates?
Jason Hartman 40:13
Good stuff, give out your website and information about your books.
Rohit Talwar 40:16
So the latest book is called a very human future, which is all about how do we enrich humanity in a digitized world. We have three others out called the future of business, the future reimagined, and one about artificial intelligence, which is called Beyond genuine stupidity. And you can find all these books and more about us and the work we do and the speaking and consulting we do at fast future.com.
Jason Hartman 40:42
Well, that’s very interesting. I think the future is a fascinating topic. I’ve always loved it ever since the 80s. When I started following john nisbets work and mega trends and so forth, and you were probably doing the same back then I assume. As Yogi Berra said, the future ain’t what it used to be. No question about that. It’s an amazing time to be alive. Rohit. Thank you for joining us today. fascinating discussion.
Rohit Talwar 41:05
My pleasure. Thank you.
Jason Hartman 41:09
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