People are one of the world’s greatest resources – if they’re smart enough and mature enough to make their own way in the world. But failed policies and bleak predictions undermine the very real contributions people make to the economy and to the world. That’s just one of the key points made by host Jason Hartman in a wide ranging discussion on Episode 536 of his top rated investing podcast, The Creating Wealth Show.
Greece’s Collapse and the Failure of Socialism
The debt crisis in Greece continues to make international headlines, most recently with a run on the country’s banks that saw long lines at ATMs as accountholders rushed to get their money out. As Jason puts it, the country’s financial crisis is an “epic socialist disaster” that points up what happens when the government hamstrings business and the accumulation of wealth, and creates a dependent class of citizens.
The Greek disaster provides yet more evidence that socialism “does not work, and has never worked.” It’s a system that “enslaves” the rich and forces businesses to flee, and prevents people from taking responsibility for making their own way.
While it’s fashionable to point to the Scandinavian countries as models of successful socialism, Jason notes that the circumstances in those countries are very different from those that obtain in the United States, such as widespread immigration and large numbers of undocumented residents. That’s now changing, though – and countries like Sweden are now beginning to reel the strain of a large influx of immigrants.
Chicago’s Property Tour: Three Markets in Three Days
July 15, 2015 marks the start of Jason’s upcoming Chicago area property tour, an opportunity to meet with local market specialists and tour potential investment properties in Chicago, Grand Rapids and, possibly Detroit.
Jason reminds listeners that the event is open to a small number of participants, who will be able to view properties, meet investing advisers – and sample Chicago’s hamburgers, recently dubbed the best in the country.
What’s a Material Fact?
Some facts carry more weight than others. In contractual situations involving real estate and other transactions, a material fact is one that plays a deciding role in a decision. It’s information that, if known, can make or break a deal.
Jason illustrates this point with a recent news story involving a New Jersey family who bought what they thought was the house of their dreams. But it turned out that the property came with a chilling accessory – a mysterious watcher.
Three days after closing the deal, this family began receiving ominous, anonymous letters from the watcher, who made a variety of veiled and not so veiled threats. The sellers knew about this before the sale, because they had gotten letters from the watcher just before the sale was finalized.
The buyers sued the sellers, claiming that they’d withheld that one material fact – a sure deal breaker if it had been known. They got their purchase price back, with interest – a common practice, but one Jason questions.
The Cost of Opportunity
The question of awarding not just the purchase price of the “watched house’ to its reluctant owners speaks to a larger issue – one of opportunity. If a purchase such as a car, a vacation home, or other dwelling sits unused, they represent an “opportunity cost” – in other words, untapped revenue. And what is that worth?
As an example, Jason offers ac house worth $2 million. Left vacant, it has a $2 million “opportunity cost” that’s only partially offset if it’s rented out. But that amount could be turned into several investment properties with the potential for yielding much more over time.
The Dangerous Malthusian Model of Scarcity
In 1788, the Reverend Thomas Robert Malthus proposed a gloomy economic model that stated that population growth is exponential, while the growth of the food supply is arithmetic. That means that checks on population growth are essential to keep resources in balance.
It’s a model of scarcity that, as Jason says, makes people the problem. That was the principle behind a 1977 article that quoted then President Jimmy Carter’s prediction that by the year 2000 the US oil supply would be depleted.
Flash forward to 2015 and that clearly hasn’t happened. But the statement points up an erroneous belief about blaming people – and particularly the US and its wasteful and destructive energy industries – for many of the world’s ills.
The Malthusian model is a pessimistic one that discounts the very real contributions made by people to the economy and the world at large. People are a resource too, Jason argues. They’re potential tenants in income properties, and their intelligence and drive improve conditions in the world.
And while the US is bashed routinely for its energy industries, it’s important to note that even new technologies come with their own dangers and potentially harmful consequences. And if people are a resource, and not the source of the problem, then overpopulation ceases to be an issue, and certainly not, as Malthus proposed, a liability.
The Creating Wealth Show offer new podcast episodes every week with Jason Hartman and a wide-ranging roster of guests from the worlds of finance, real estate and personal development, all designed to help you build wealth and find the financial freedom you’ve been dreaming of. (Featured image:flickr/mikhailchuryakin)
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