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Chief Economist of the California Association of Realtors, Leslie Appleton-Young

Jason Hartman welcomes Leslie Appleton-Young, vice-president and chief economist for the California Association of Realtors, in this episode. Leslie shares details about the movement in California’s real estate and the buyer/seller trends due to the Covid-19 impact. They also discuss predictions based on the Q2 hit in 2020 and the lack of supply and building restrictions that caused a reduced number of new homes being built.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Announcer 0:12
Welcome to the American monetary associations podcast where we explore how monetary policy impacts the real lives of real people. And the action steps necessary to preserve wealth and enhance one’s lifestyle.

Jason Hartman 0:29
It’s my pleasure to welcome Leslie Appleton Young. I have been following her work for a long, long time, I’m talking decades. She is the chief economist with the California Association of Realtors, and a senior vice president with him as well. And I have been to so many of her speeches over the years when I lived in California. And she just does some great work talking about the housing market the economy. And I know I mentioned the chief economist for the California Association of Realtors. But as I’ve mentioned before, California is the largest state in the country, it is probably the sixth largest economy in the entire world if it were a country. So it’s a big deal. And as goes California, so goes the rest of the nation, sometimes not always, but not always. We’ll talk about that. But that used to be the saying at least. So it’s my pleasure to welcome Leslie Appleton Young, welcome. How are you?

Leslie Appleton-Young 1:25
Jason, I’m great. Really great to see you. Thanks for asking me.

Jason Hartman 1:29
It’s good to have you. I’ve wanted to have you on the show for a long time. So really a pleasure to have you here. Maybe we’ll start off I usually ask people where they’re located. And you have now moved to Sarasota, Florida. Is that correct?

Leslie Appleton-Young 1:41
Right. I’m living in Sarasota. I flew from Los Angeles on March 12. And got here, just in time, I was actually planning to be bi coastal this year, because I’m retiring from CAR at the end of this year. But with COVID. It just made a lot of sense to just do it. And everyone in the company at the association is remote. So we are just all zoom all the time. And it’s we haven’t missed a beat really.

Jason Hartman 2:09
No, I’m curious, you know, when it wasn’t remote. Where was your office? Was it in Los Angeles?

Leslie Appleton-Young 2:14
Yeah, absolutely. Downtown LA. We were in downtown LA, and then our lobbying offices in Sacramento.

Jason Hartman 2:19
Good stuff. So Leslie, we are definitely living in interesting times, you know, counter intuitively, you know, so many people in February, March, we’re predicting the end of the world, there’s going to be a giant crash. That may still come, I guess we’ll talk about that. But the Fed and the government have come to the rescue is I think is the new way. It’s just going to always go that’s what everybody expects now.

Leslie Appleton-Young 2:45
Well, we learned to fight the last war, right?

Jason Hartman 2:47
Right. Meaning the Great Recession, right?

Leslie Appleton-Young 2:50

Jason Hartman 2:51
Yeah. Yeah, with stimulus.

Leslie Appleton-Young 2:52
So a lot faster and a lot bigger this time around?

Jason Hartman 2:55
No question about it. I mean, GDP, down, what, a 30 ish percent or so this is truly a remarkable time. And it’s, it’s pretty crazy and scary time too. But in the midst of that there are definitely a lot of opportunities. You know, I predicted very early that there would be this mass migration to suburban markets back in early February, if you can believe that. I think I might have been the first person to, to make that prediction. And it’s certainly happening now. People are leaving high density urban areas. And that trend was already underway, because most of those areas are business unfriendly. And, you know, so there was a migration, but I think COVID accelerated it, you know, give us your take on things. I know, you’ve got some great slides, charts and graphs to share. For those of you listening via audio only and not seeing the visual, of course, it will be available on the YouTube channel. But we’ll try and elaborate on the visuals so that you can relate to them even though you’re not seeing them. Leslie, what do you think?

Leslie Appleton-Young 3:52
Hey, well, why don’t I just start with the with the sharing my screen? I mean, it’s a very big question that you’re you’re asking, and I guess I’ll just say there’s a tremendous amount of uncertainty out there. And the housing market has been incredibly strong, given the constraints of very limited inventory and, and new construction, right. So we’ve seen a very hot market, if certainly once the initial first round of the lockdown was lifted. So that’s really been the been the story. And looking forward. You know, we can talk about a couple of scenarios and I’m sure we will, but let me start with sharing my, sharing my screen.

Jason Hartman 4:33
Excellent. You always have such fantastic charts and graphs. So

Leslie Appleton-Young 4:39
You know, I have a great a great team behind me with Jordan Levine and Oscar Wei and Samantha Oles and George I mean, they are just so I look good because they are the ultimate kind of professional, incredible people. So, listen, one of the things that we we’ve started to do like everybody is pivot towards more high frequency data. And we’re doing weekly reads of the MLS actually daily reads and calculating weekly averages of key metrics. And we’re also serving our members every week. And I use this slide when I start speaking just to make a point about giving each other some grace about this pandemic, there is no consensus view on what it is and how it ought to be handled. I think our membership and the realtors are no different than anyone else. So way back in April, and may we asked, Is it too long? And are we taking too long to loosen up? Not long enough, or we don’t know. And it’s about a third, a third, a third. And then I also start out with just the summary of where the major forecasting financial, academic and governmental entities are with respect to what 2020 is going to look like to make a point of, nobody’s got the same numbers, but everybody’s got the big drop in the second quarter, which you just noted, was at an annualized rate, a drop of over 30% on a quarter

Jason Hartman 6:09
So just to elaborate on this slide a little bit. Yeah, Q2 being the second quarter being the really bad one. And, and the predictions go from the worst being UCLA predicting a 40. I’m going to round off here, a 42% reduction in GDP for the US economy

Leslie Appleton-Young 6:31
In an annualized rate. Right.

Jason Hartman 6:35
Yeah. And Bank of America, maybe being the most optimist or no, sorry, JP Morgan Chase, being the most optimistic at a 25% decline. So it’s kind of all over the board. Goldman Sachs has been a really, you know, a lot of people quoted that when they’re saying 39%. So this is pretty incredible. I mean, these numbers are staggering.

Leslie Appleton-Young 6:55
They all have the same trajectory, though, right? They all have the Q2 being the big hit, and then a gradual recovery after that, with the decline for the year as a whole, between five and 11%. So there is a lot of leeway. But there’s a general story, that at the time, and these this is, as of the end of June, all of these forecasts was the assumption that there wouldn’t be a second wave, and there wouldn’t be a second lockdown. And that is not clear at this point, right, as you know, states like Texas, or are backing back down and the whole confusion over schools and all that. So it could be worse, and hopefully it will be better. But I just again, want to make that point that a forecasting is always dangerous, but it’s particularly fraught, right now. One of the things as I mentioned, we’re doing weekly surveys, we’re doing polling. This is a monthly poll that we started in the fall of 2018. Just a Google poll once a month California consumers, is it a good time to buy Is it a good time to sell, and the buy side is really strong. It’s currently above what the norm was, until the pandemic. And to that I think you can attribute a couple of things but certainly record low rates, right with a 30 year fixed rate conventional mortgage under 3%. It’s an incredible stimulus coupled with the Coronavirus fear, and as you mentioned earlier, a flight to the suburbs and a desire for homes with more space around them. And then the work from home work from anywhere world where you don’t have to live within a horrible commuting distance from where you work anywhere for some jobs, right for white collar jobs. So I would say the buy side is definitely out of the COVID calm, I mean, the buyers are ready to go I describe it as let’s pretend it’s January, again where the buyers are ready to go. And on the sell side, you’ve had not only more hesitancy, but you had a huge drop between March and April in the perception of the desirability of selling and I think that was I don’t want people that might be sick. In my home. I’ve heard prices are going to soften. I don’t think this is a good time for me to go put my home on the market. But you can see over the last couple of months that started to heal and come back I think and reflective of that hot market that I described in the introduction.

Jason Hartman 9:31
So Leslie, let’s parse this and I don’t know if you have data on this. So you know if you don’t, just you say you don’t. But can we parse this up at all? When people talk about the housing market, it drives me crazy. I’m sure it does you too, because it’s more than one market obviously. Right so it’s it’s you know, geographically it’s by price segment, housing style, but you know, price segment might be a good one to really look at. The market is booming. It’s, I mean, these interest rates are so so low, it’s just literally negative interest rates are all segments of the market doing this, you know, what about the extreme high end the middle market? You know, the low end, certainly necessity, housing is booming. We all know that. Can you drill down on this at all?

Leslie Appleton-Young 10:17
Yeah, I think it’s really important to talk not just about the demand side, but the supply side. And the low end has been constrained because there’s literally almost no inventory. I mean, if you look in California, you know, under 400, under 300,000, there’s just very, very little there. And the upper ends been interesting, because the last two months of data have shown a resurgence of activity, at what I’ll call the high end in California, maybe the ultra high end in other parts of the country, but in the over 2 million. And it’s one of the reasons why in the June data, which is unfortunately, the last monthly data that I had, we had an all time high in our median home price of 625,000 highest monthly highest annual median home price in California. And again, it was two parts, it was more home sold at the upper end, and it was price appreciation in every single category. So I would never disagree with what your point about real estate being local. But I will tell you that my experience over the 30 plus years I’ve been doing this is that there are common themes than tell that tell a story, right, that it’s hard to evade. And certainly one of the really interesting things that we’re seeing in California is just really hot activity in the Central Valley, you know, the people from Los Angeles looking at, at homes in Bakersfield, right? And it used to be just an affordable housing driven migration story. And now it’s also a quality of life, COVID generation story.

Jason Hartman 12:01
Social distancing story,

Leslie Appleton-Young 12:04
right. Yeah, let’s move on. So just add up at a glance, here’s what we saw in June. And I’ll I won’t go in any detail. But we’re running a year to date in California down about 12% from 2009. And meaning down sales for your sales, your sales, you know, number of transactions. Yeah, sales volume. Okay.

Jason Hartman 12:29
So the important thing, I just want you to make sure, and you alluded to it a moment ago, it’s inventory. So you know, what people commonly, I think are misled by some of these stats, because they think, Oh, well, sales volume is down. That must be the market is bad. But the especially in the housing world, when you don’t have inventory, you can’t have any sales, okay? So it’s not that people don’t want to buy, you know, sales volume being down might be a sign that it’s a seller’s market, and everybody wants to buy, but there’s just nothing to buy.

Leslie Appleton-Young 13:07
Absolutely, it’s, it’s, it’s not even a nuance, that’s a huge point. You’ve got to look at at both sides. So we have 2.7 months of inventory in June,

Jason Hartman 13:19
What would be considered like a normal month supply of inventory,

Leslie Appleton-Young 13:25
Up until 2013. Looking back a couple decades, I would have told you six to seven months supply as normal

Jason Hartman 13:34
It’s like an even keel market,

Leslie Appleton-Young 13:36
Right? Since 2013, I will tell you, it’s three to four months of supply. In fact, in other words, we had an ad in California, and this is a national phenol, not just California, we have been at unusually low levels of of inventory. So 2.7 months is a very rapid market. So I think that’s really all and then look in June how low rates were and they were headed, headed, even lower. And then we also look at price per square foot as just I’m very I’m very agnostic. When it comes to data, I just want to understand the methodology. So people talk about median price, they talk about average price, they talk about price per square foot. And typically things track right typically you don’t see a different measure and oh my god, the story is totally different. It’s it’s typically not and, and we were seeing that with the price per square foot data, as well. So this is a history lesson in 15 years of looking at sales in in California and what’s a little bit sad is to look at the first two months of 2020 and just the anticipation that this was going to be just a banner breakout breakout year in real estate because we were above sales from 2008 19 and really looking forward to a great year. I also want you to see the V shaped recovery during the Great Recession. And then eyeballing this starting in 2011, we have essentially had a flat trend in home sales at a time when we have had job growth, income growth, household formation, growth and very low rates. So this market has been held 20 to 25%. below what you would expect inventory, expect sales volume two be because of two reasons, inventory, and affordability. Right. And so there’s just a lot we can talk about about those two things. But I just want, you know, everybody to understand that we have not had a breakout market over the last eight or nine years because of those two constraints.

Jason Hartman 15:55
Right. So what Leslie showing here, if you’re not seeing the video is a graph showing sales volume, you can see that the volume went down precipitously from 2005, bottoming out in late 2007, I guess, and then it started going up. And so that’s the V shaped recovery, you know, until 2009, and then it sort of stays relatively flat along the way, until maybe this is I’m gonna guess that is about February, where really or

Leslie Appleton-Young 16:28
April was when it dropped. Yeah.

Jason Hartman 16:31
Okay. Yeah. And now it’s going way back up. But, you know, we can only go up as much as there is inventory to supply the demand.

Leslie Appleton-Young 16:40
Right. And I think that the hesitancy in the market today is, is on the sale, the sell side. And that’s kind of where we are. So we have, as I mentioned, pivoted to what I’ll call high frequency data. So we are looking at the MLS data for the state of California on a daily basis and calculating a couple of averages. So this is a look at what’s happened to average daily close sales in the major regions of California and for the state, state as a whole. And you can see they, they can be a little noisy, right, these are like week to week changes. But in a market like we have today, set in the economy that we have today, we don’t have the luxury of waiting till the middle of August to know what happened in July, right, we need to kind of track things. And what you can see. And I’ll just focus here on the set of bars that describe the state as a whole, that when we were in the first week of March, we were looking at 631 average daily close sales in the state. And the week ending the first week in August, we are looking at 774 average daily close sales, which is down pretty sharply from from the week before. And I’m going to move ahead here to show you the drop in closed sales was almost 26% on a week to week basis. So that’s something we’re watching very carefully in terms of its relationship to the resurgence of cases and the you know, tighter lockdown regulations that can vary from county to county, right. And there’s a one, one situation. So we came back, this market is ready to go. It’s being fueled by by low rates and a change in how people want to live. And yet it’s really the virus that is setting and it’s the virus and the reaction to it by by the government that’s determining, I think the path of the overall recovery. So you asked me before about price points, if you will. And I made the point that the low end of the market is constrained by really tight supply. And the high end of the market in June, was up almost 7% on a year over year basis. Properties under 300,000 were constrained dropped on a year over year basis by 21 and a half percent

Jason Hartman 19:26
Amazing. You know, maybe it’s a good time to ask, you know, kind of our previous conversation off air. Just about the the general vibe with California. I mean, people have been leaving the state for many years. I left the state, you left the state. I mean, what what does the future look like for California just as a kind of a general comment, you know.

Leslie Appleton-Young 19:49
Yeah, I think in general, the country’s rebalancing towards the middle and the south and we’ve been tracking net domestic migration that you get Through the Census Bureau, the American Community Survey for for many years. And there’s kind of a myth out there that it’s our tax structure. And the reality is we’re not losing millionaires. There’s actually a net small net gain in terms of people that are making higher incomes into California. But the story has been that we are losing young people and we are losing the working middle class, you know, working class because they can’t afford housing in California, be it ownership, housing, or even a rental housing. And I think now overlaid on top of this is going to be an obviously it’s too early to see in any any data. Certainly, we have anecdotal stories, but I think you’re seeing an acceleration of this change, fueled by the work from anywhere, environment for for white collar workers.

Jason Hartman 20:57
Yeah, no question about it. And if you’re a billionaire, or a deca millionaire, or a centimillionaire, it doesn’t matter. You’re just gonna live where you want to live,

Leslie Appleton-Young 21:06
You can afford to live here. They’re, they’re not the people that are hurting. Right, right. They may not be happy. I know, they’re not happy about their taxes, but I just look at the data.

Jason Hartman 21:16
Right. And they have all sorts of teams of accountants and lawyers to get them out of the taxes because they can do all sorts of special sophisticated things to try and cope with with the tax burden. But you know, if someone’s just a you said, millionaire, and I think we got to revise our saying on that, because a millionaire, anybody used to be adjusted for inflation, it’s really no big deal to be a Millionaire anymore.

Leslie Appleton-Young 21:38
Let me tell you this, there’s a lot of people who just love lost their $600 employment supplement today that would see that as quite a quite a big amount of money. I mean, I know what you mean. But

Jason Hartman 21:51
No, I agree with you. I’m just saying that those people at the lower end of the socio-economic ladder, they don’t have a very high tax burden. Even in California. Yes, the cost of living is high. But the taxes are not that high. Where it hits people is those people making a million bucks a year? That’s the ones that really just get creamed tax-wise, you know,

Leslie Appleton-Young 22:13
I’m just saying that there’s a net inflow in that category. So

Jason Hartman 22:18
Yeah, in the in the higher end, and so that, is that an inflow, Leslie? Or is it a is it people that have risen to that level of economic achievement? I’m wondering,

Leslie Appleton-Young 22:30
We can’t tell. We, we essentially just know the income of the people, right, coming and going. So in terms of what their journey to that income level? We have no idea.

Jason Hartman 22:39
Yeah. Okay. Okay, good. Go ahead.

Leslie Appleton-Young 22:41
You know, this is just a chart that looks at the various price segments, it’s the 2 million or more price category that actually had the the increase in in June and added to that, that price number. Here’s a look at the kind of distribution of home sales by by region. And you might be surprised to know that the San Francisco Bay Area is only 19%. of the total state, even though they’re a huge part disproportionate share of the economic activity compared to the home sales and population numbers, Southern California is about 45%, Central Valley 23. And all of the major metropolitan areas had dropped on a year over year basis from June of june of 2020. The other kind of other counties, categories are very rural, and are benefiting again, from what you talked about earlier, a flight to less density and more open space. So looking forward, we felt very confident about our June numbers, because pending sales, and April, I’m sorry, in May, we’re so high. And then looking at the data that we’ll be getting in the next couple of days, pending sales increased by 22 and a half percent, not the 60 plus percent we saw the month before. But still pendings is going to tell you where where sales are, are headed. So what you see here is just a big, a big bounce back in housing, once the regulations were lifted, and you’ve had a huge adaptation of technology in the real estate industry. And we’ve been kind of tracking this with, you know, using zoom calls with clients and using virtual staging and doing virtual tour tours and all of the tools that have been available for quite some time, all of a sudden became a not an option, but a necessity. And that I think has been a huge facilitator, as

Jason Hartman 24:49
And I think that’s really good news for the economy overall. It’s so convenient. And the funny thing is, none of this technology is new. You know, we, it’s been here for many years. I mean, people I’ve been making Skype calls for many, many years.

Leslie Appleton-Young 25:02

Jason Hartman 25:03
And WebEx was around, I think 20 years ago, you know, but, but now everybody’s been forced to adopt it. So Necessity is the mother of invention. And it’s great news because there’s a certain amount of creative destruction going on, in all these old inconvenient, it’s making things a lot more frictionless. And I think that’s good for the economy, it’s going to increase the velocity of transactions velocity of money in many industries, you know, I’m looking for a new car now. And I haven’t even been to a dealership, you know, it’s great. They’re they’re doing like, you know, showcases where they give you these really detailed online tours via zoom. And it’s, it’s incredible. It’s really convenient apartment. A lot of apartment leasing offices are really adopting this technology really nicely. Yeah, it’s good.

Leslie Appleton-Young 25:49
Yeah, I don’t think there’ll be any any going back. And certainly the younger generations are so comfortable in a virtual world. And this is just kind of for, for sale stirs to get with the, with the program. So a couple of them, I think, have indicated caution going forward, about 40% of our members last month said they expect they were noticing a slowdown in activity. And again, this was correlated with the kind of resurgence of cases. So the price side is a whole nother story. As I mentioned, we were at a historic high median home price in June, the specific number was 626,001 76 and a half percent up from May, and two and a half percent on a year over year, year over year basis. So that has been really incredible. And as we look at it across all price categories in the state, every every price category, you know, is seeing is seeing a gain, and the biggest gains are at what I would call the top 20% of the market. And most of the pain of job losses is hitting people that are not homeowners, right, it’s hitting renters more because they’re in the service industries, which are lower paid, it’s and it’s really the white collar. And you can see that in these statistics that they are the ones that really are the lucky ones and all this that are able to take and take advantage if they need a mortgage. And and really,

Jason Hartman 27:28
I think society will reevaluate. And you know, this is just something that happens kind of slowly but reevaluate the amount of pay people get that you food service and grocery stores. I mean, why are these people so underpaid? It’s kind of strange, because these are the people that as we’ve realized society has depended on. I mean, you know,

Leslie Appleton-Young 27:51
Yeah, they are the essential workers

Jason Hartman 27:53
They are the essential workers. These are the heroes of course, they healthcare workers, too, but you know, they’re mostly paid pretty well. But, you know, the people at the grocery store and the people making your food at a restaurant, and it’s probably takeout food, why are they so underpaid? I mean, it’s just just kind of strange out that sort of came about that way? I don’t understand it sometimes.

Leslie Appleton-Young 28:11
It’s called pricing power.

Jason Hartman 28:14
Yeah, pricing power. Well, you know,

Leslie Appleton-Young 28:16
Lack of minimum wages in many, many areas. So it’s a, it’s something to look at, for sure.

Jason Hartman 28:22
It is. It is. Just as a society, but the skills needed to do those jobs are not rare. So that’s obviously the reason, you know, the demand is big now, but the skills aren’t, you know, they’re easily You know, a lot of people have those skills. Okay. Go ahead.

Leslie Appleton-Young 28:37
So just I thought this was really fascinating. This was the weekly survey of our members. And we asked, hey, were the people that you talked to last week, the buyers expecting prices to go down? And in the initial stages of this, when we started asking this at the end of May, early June 63% 67% said, Yes, my buyers are expecting to see lower prices. And now you get to the first week in August and less than half are so you’ve just had a gradual realization that that sellers are not with the program in terms of reducing their their prices, right, they’re not seeing a need to do that in in this this market. So a gradual, I think shift in expectations about what’s what’s happening with prices on the, on the fact on the part of buyers, and

Jason Hartman 29:33
So buyers are feeling a sense of urgency, and they’re not expecting any deals.

Leslie Appleton-Young 29:39
Well, less than half of. Few are expecting deals today than were 10 weeks ago. Okay, but it’s still a loved it’s just a little bit below half. And 15% of the realtor said they had a buyer who tried to renegotiate a purchase price before the close of escrow. So there’s still Some of that going on. So here’s a look at you asked me a question earlier about what was normal inventory. And I said that up until 2012, if I took a 30 year average, it would have been between six and seven months. And if you look at this inventory index that again goes back 15 years to 2005. You can see starting in the beginning of 2013, the average has been between a three and a four month supply. So we’ve just entered a new normal, if you will, and 2.7 is low, but it’s nothing we’re not we haven’t encountered before, during this period. And again, I mentioned all of the factors that were growing, but what hasn’t grown is new construction, at least in our in our state. So that’s that’s been an issue. And boomers are staying in their homes longer, right. There’s a financial incentive, they don’t want to pay the capital gains. Gains Tax is certainly one of the reasons prop 13 is another but when I started in the 80s people moved in California about every seven years. And now it’s about every 18 years.

Jason Hartman 31:18
Wow. Staggering

Leslie Appleton-Young 31:21
Yeah, a huge shift. And we’re becoming a little bit more like the European model.

Jason Hartman 31:27
That’s exactly what I was gonna say Europe has this very stagnant market where there’s just not much trading going on.

Leslie Appleton-Young 31:33
Okay. Kids inherit their parents homes.

Jason Hartman 31:36
Yeah. And I attributed that, Leslie to, you know, the fact that, obviously, prop 13, I think, actually hurts the market in a lot of ways, because it makes people stay put to some extent.

Leslie Appleton-Young 31:48
Yes, absolutely. I mean, just do the math. Right?

Jason Hartman 31:51
Yeah. So prop 13 is the Howard Jarvis, you know, from back from 19 1978, the thing that kept property tax increases in the state of California. So, you know, people won’t trade their house, because they’re gonna have to pay such a higher tax bill and the new property, because, because of the higher prices, but also, you know, the very low mortgage rates, you know, I think it’s kind of another thing that it’s not as big because people can always refi but, you know, sometimes the mortgage rates encourage people to trade houses when they’re really cheap, because they get an automatic refi when they trade and they get another house that they ostensibly like better, you know, if if those mortgage rates are higher, it really keeps people stuck and makes the mortgage market more stagnant. Because, you know, you just don’t want to lose that great mortgage you have. And I think that’s one of the dangers of these very low interest rates in the long term, is that it really causes the market to just be less active. What do you attribute a this dramatic rise from seven to 18 years to? Is it mostly prop 13 issues? Or what?

Leslie Appleton-Young 33:00
I think it’s, it’s just doing the math, you know, there’s, there’s certainly societal factors, right? I mean, 70 is the new 50. You know, people are more active, they don’t want to move to Sun City or Leisure World like their parents did, and, quote, unquote, retire and sit on a golf cart all day. So they’re just more with the mix. But, you know, what you find is there’s a lot of people who really don’t need a five bedroom home anymore. But the math just doesn’t work out for them. And what we hear over and over again, is it’s really the capital gains issue. Now we are, we have a proposition on the ballot in California coming up prop 19, that’ll help people over 55 to to move and take, you know, their tax basis, and so on. So that might, might help a little bit. But we can’t do anything about the fact that people have no huge gains. I mean, if someone’s been in their home, 30 years in Palo Alto, you can imagine there just is not going to be a way to to have it worked out in terms of the numbers.

Jason Hartman 34:09
They could always rent it for a couple of years, which will never make sense in Palo Alto, and then do a 1031 exchange. But yes, I totally agree with you. It’s

Leslie Appleton-Young 34:16
Yeah, yeah. So anyway, moving on. Here’s just a look at active listings, which have been declining on a year over year basis for the last year. And in June, they were down almost 44% from June of 2019

Jason Hartman 34:35
That is, that is staggering.

Leslie Appleton-Young 34:37
I know. Right. So when we focus when you mentioned the need to focus on the supply side, I could not agree more.

Jason Hartman 34:45
So let’s talk about that for a moment. So a massive supply shortage. And do you think California or you know, it’s really up to various municipalities, but we’ve got it well, it’s not not completely, but you know, they’ve got to loosen up On these these building requirements, say, you know, and maybe make it a little less expensive for builders to build homes and and loosen up on the environmental restrictions. I mean, the Coastal Commission in California, you can’t build anything if you can see it from the ocean. It’s it’s absolutely crazy. Do you see this happening? Or is the state just gonna say no, sorry, you know, tough?

Leslie Appleton-Young 35:24
I think it’s, it’s that and it’s also, neighborhood attitudes, which you find over and over again, are just simply opposed to anything and everything. And one of one of the things I’m really proudest of at car is a couple of years ago, we created a legal foundation called Californians for housing, and we are writing letters and then going in and suing cities that essentially are forbidding a project that meets all of the qualifications. And you know, every municipality has housing goals, right, there is a housing rent, you know, requirement that they’re supposed to meet, and none of them do. So it’s really time to play hardball a little bit and have people understand that this is something that can actually be a huge, huge benefit.

Jason Hartman 36:22
So here’s the thing about that. I mean, you would think that the municipalities want the property tax base, right, because that’s brings in revenue to

Leslie Appleton-Young 36:30
They want commercial property taxes, they don’t want the residential property tax nice.

Jason Hartman 36:34
That’s where I was going, Leslie. Since nobody’s gonna build any retail properties anytime soon. And nobody’s gonna build much office space, because we COVID has just creative destruction, you know, the home is the center of the universe, as I’ve been saying. And so you know, they’re just not going to have that they might have warehouses and distribution centers, but they’re not going to see a bunch of retail construction or office construction, right. Also, there is some light and maybe the the the alternate use of like hotel properties, turning him into residential, and the possibility of even converting flirting offices or shopping malls, residential. I don’t know, to me, this is a pretty complicated, expensive venture, but the hotels for low income housing, you know, turning hotels and a little condo units is pretty doable. What do you think?

Leslie Appleton-Young 37:24
I couldn’t agree more, I actually have that point at the end of my presentation, that that could be a real silver, silver lining, and even a mall, you know, it could be come of senior housing village, or affordable housing village or a homeless village, it’s got plenty of parking, you know, and there’s going to be more and more of these, because people’s behavior has has changed. And it’s been changing for a long time, right. The department store has been an endangered species for decades. But this has really been kind of the end of the line for, for some of them.

Jason Hartman 38:01
No question.

Leslie Appleton-Young 38:02
So we’ll see. I here’s kind of looking, again, at the weekly data, just show here, the average daily pendings. It’s been going up and down. But going down a little bit lately. And then I wanted to also say there’s been some changes that our members have seen that I think are really interesting. So 28% said they had noticed an increase in clients looking for second homes. And again, that’s rarefied air right now. But it’s indicative of the kind of work from home opportunity and less density, desirability. And then the other was Have you increase interest in selling investment properties? And in the first week, in August, about a third of them said, said, Yes, so I think that’s a whole nother topic about owning rental property. California right now that is, and the eviction wave. I mean, there’s, you know, people that are looking to get out. And then just in terms, we talked earlier about utilizing the tools. So over half of the realtor said, Yes, I’m doing a lot more virtual tours under COVID. In the first month of August 17%, said, I’ve actually put a buyer into contract who never saw the house. And, again, that’s something we didn’t see before. And almost half of them said they had a vacant listing. And in the world of COVID, it’s a lot easier to show show homes that don’t have a homeowner living living in them. So we’re seeing more of that. So those are just some of the threads that we’re following. In terms of the forecast. You know, everybody’s got a letter

Jason Hartman 39:50
You got the square root on there. I’ve been talking about the square root.

Leslie Appleton-Young 39:54
There you go. There’s just a lot to talk about here. I’ve been list originally in the swish category. And now I think I’m probably in the W category. But again,

Jason Hartman 40:05
So what she’s referring to, for those listening to the shape of the recovery is going to be a V and W. A square root, a swoosh, a Nike swoosh. So that’s what we’re talking about. Go ahead.

Leslie Appleton-Young 40:17
Alright. And then I’ve just got a, the forecasts from NAR, Fannie Mae and NBA that really mirror the trajectory of the GDP forecast that we saw in the very beginning of my presentation with the big drop in sales on a year over year basis, in the second quarter, and then recovering after that, okay. And in terms of prices, very little impact, certainly a bit of a softening, but everything in the low single digits with a delayed impact, right prices are typically sticky on the way down until they’re not. But here, you can see the big, the big hit. And again, the biggest drop was an IRS projection of a drop in the fourth quarter of 3.1%. And then by the middle of 2021, definitely back on track, and well above where prices were a year ago. And then this is just a look at where we are with the California Association of Realtors kind of looking at where we are now to the end of the year, ending up and I believe I put in the I didn’t put in the chart. But essentially what we’re looking at is about a 12% drop in home sales 2020 compared to 2019. And at this point about a 1% drop in the median home price. And we’re revising our forecasts every month, just because more data is very helpful in a in a world like this. But I would just say, you know, housing is a leading force coming out of the engineering recession, this time around. And we’ve seen that the last couple months. And while the future looks a little bit choppy based on how we do with the virus, I think the housing market is is just ready to, you know, ready to run. And then I’ll close with just a couple comments about what I think the future is going to look like. And just noting and we’ve talked about this the the work from home work from anywhere New Order, I think it’s going to be huge for housing. It’s not only one type of house do I want to live in and and how many of these white collar workers are now looking at meeting not just one home office, but to home, you know, to home?

Jason Hartman 42:49
What about the kids? The kids’ needs?

Leslie Appleton-Young 42:53
You know, a house isn’t just a house anymore, it’s where you work out. It’s your restaurant. And one thing we didn’t really talk about? What’s How many? How many more houses are multi-generational, right, you know, thinking twice about putting your parents in a system

Jason Hartman 43:08
Where they’re gonna die? Yeah.

Leslie Appleton-Young 43:10
Right? You know, exactly. So this was a really funny exercise that someone initiated on Twitter a month or two ago, asking people to post a picture of their home office. And for anyone who’s listening, I have six pictures that show a laptop on top of a washing machine, a laptop in a closet alcove, a laptop at the end of life that’s about three feet wide a laptop, in a kid’s room. And at the kitchen table and on a trash can outside. In other words, there were a lot of people that simply don’t have the type of home that makes working from home. easy to do. Right. So I think the winners coming out of this will be in as I’ve already said, residential real estate. Absolutely. The tech enabled agent has a huge advantage. And the good news is there are a lot more tech enabled agents today than there were six months ago, an agent who is able to leverage technology to enrich relationships with with clients, and the transition of commercial and retail. And as you mentioned hospitality spaces into into housing. So those would be the four kind of closing points. I would make kind of looking forward.

Jason Hartman 44:39
Good stuff. So Leslie, I have to ask you, thank you for that. By the way. I have to ask you, when we look at what’s coming, though, we still have some definitely some clouds on the horizon, right? I mean, we’ve got forbearance, we’ve got foreclosure moratoriums, we’ve got eviction, moratoriums are these chickens going to come home to roost in here at some point Because the economy is definitely, it’s very uneven. Okay. It’s very uneven. Some people, like you said, doing great, some people really suffering. It’s very sad and uneven in a lot of ways. What about next year or the year after? I mean, I don’t know, from from looking at this kind of stuff, it would seem like we’re all in the clear for a long time to come, but maybe not.

Leslie Appleton-Young 45:24
No, I mean, it really, I think all comes down to the kind of relief that the government is going to grant to the unemployed over the next six months, or however long the economy remains essentially paused. And that it all depends on that when you look backwards, I would say the government did an amazing job of getting relief out quickly. And were there people that got PPP loans that shouldn’t have, of course, are there people that are getting more in unemployment than they did when they were working? Yes. But you know, the, the general tenor of what was done was to support the economy, when it was shutting down by providing people with an income necessary to pay their rent and in and eat. And that’s what was done. And it was fabulous. And it’s it’s one of the reasons why we haven’t seen these things that you’re talking about, you know, coupled with the eviction moratorium and so on, going forward from today, I don’t know, I think there will be some type of relief. But how long can that go, you know, half of the rental properties are owned by small landlords that also have mortgages to pay. So there’s a lot of levels of levels to this. And it certainly is the thing that’s keeping me up at night. And I think we’re all watching the monthly corelogic data to just see how many people are 90 days behind how many people are 30 days behind. Now, I know not sure what the exact number is, I think about a third of the people that got forbearance are still paying on their mortgages, many, you know, they took it out as an insurance policy. But that’s the date I think we need to keep keep a really big, big tabs on because we know from the Great Recession how quickly this can shift when people start losing their homes.

Jason Hartman 47:23
Yeah, very interesting stuff. Leslie, do you want to share a website or just you know, wrap it up with a closing thought for us?

Leslie Appleton-Young 47:30
I really appreciate being here today. I’m extremely optimistic about real estate going forward with a tremendous amount of concern for keeping the economy going long enough that we can just hit the hit the ground running. Our website is CAR dot ORG and we do have information there on on the market and on the virus and we just try to keep our members informed and being able to be the best possible advisors to their to their clients

Jason Hartman 48:01
And stuff. Leslie Appleton Young, thank you for joining us.

Leslie Appleton-Young 48:05
My pleasure. Thanks for having me, Jason.

Jason Hartman 48:12
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out this shows specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

How Money & Debt Built the American Dream by R. Christopher Whalen

R. Christopher Whalen, the Chairman of Whalen Global Advisors LLC, joins Jason Hartman to discuss mass migration due to Coronavirus. He shares that not only are people leaving big cities because of COVID-19 but businesses are also forced to move out of the ‘old way’ and adapt to innovations in technology and communication. Jason and Christopher also talk about the difference between inflated and inflation, quantitative easing, and the consequences of creating money and bailouts.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Announcer 0:12
Welcome to the American monetary associations podcast where we explore how monetary policy impacts the real lives of real people, and the action steps necessary to preserve wealth and enhance one’s lifestyle.

Jason Hartman 0:29
It’s my pleasure to welcome our Christopher Whalen. He is chairman of weyland Global Advisors LLC, and works as a consultant and analysts focused on financial services, mortgage finance and related technology companies. Christopher edits the institutional risk analysts, he’s author of several books, including the best selling inflated how money and debt built the American dream, Chris, welcome. How are you?

R. Christopher Whalen 0:53
I’m doing great. Greetings from New York City.

Jason Hartman 0:55
Yes, the epicenter of a lot of the stuff that’s going on now. And you know, since you are in New York City, we’ve been talking a lot on the show about this mass migration, that I think I was predicting before anybody, at least anybody in the real estate space, out of cities? Are you finding that to be true? It’s just beginning, really, but are a lot of people talking about that? I certainly, you know, I know a lot of people are in the Hamptons, and such and the outlying areas, any thoughts on that?

R. Christopher Whalen 1:24
I think there were different waves when the city shut down, you know, the hospitality and, you know, restaurants and entertainment, and Fine Arts, all those industries were shuttered. So all those kids, many of them had to go home and live with mom and dad, because they don’t have a job. We’re very big supporters of American Ballet Theatre, they’re not gonna have a season this year, Ryan, those kids aren’t working. They don’t have to go home. So that impact was initial, and then you have others, families, businesses, who are thinking about precisely the question you just asked. And I gotta tell you, there are several very large employers in New York City that are going to relocate, partly because they want to, they want to put their people in different locations. Goldman Sachs, for example, they have now split their entire investment banking team into three, and they’re not going to let them visit one another. Wow, completely partition them. And I think that’s prudent. But how do you manage a commercial building when you have to waiver everybody who walks in the door?

Jason Hartman 2:27
Yeah, it’s just it’s just impossible, it really is. You’ve got to have them sign a waiver and take their temperature too. So it’s really, this is an epic sea change in the way the world operates. It’s just unbelievable. But long term, there are some good things coming out of it for sure. I mean, companies are creating a lot of efficiencies that they didn’t have before. You know, Joseph Schumpeter is one of my favorite economists and, and that creative destruction he talked about is happening, lickety split, it would have happened over the next five or 10 years. But now Necessity is the mother of invention. And, you know, everybody’s really been pushed into it. And you know, those, those efficiencies will last far beyond the pandemic. And I think they’ll just be ingrained in the whole system. And that that’s very beneficial to a lot of things, and in probably deflationary overall, right?

R. Christopher Whalen 3:22
Well, I’ll give you example, residential mortgages, which are gonna have a great year, this year, by the way, yeah, they’re gonna do a record issuance two and a half trillion dollars this year, they sent everybody home. They sent them home with printers and scanners and PCs, and whatever. The technology was already there, right to enable that. And so what we’ve really done to go back to your your comment is, we had the capacity to change, work patterns and behavior and all of that. But we were still doing business in the old way. to a large degree, the technology was helping, and it had certainly increased efficiency in many ways. But we’re still coming into the office, we’re still commuting every day, this is going to blow that up. And it’s going to result in a change in behavior that I think is going to be long permanent. Unfortunately, when you look at things like commercial real estate, in urban centers that were built for density, and very dense usage. That’s going to change. Either by preference or by by force, or both. Right?

Jason Hartman 4:24
No, no question about it. And the other efficiency that I didn’t mention is that I think we will see a some reduced pressure on wages, as people move to the suburbs, they’ll find their cost of living drops. And of course, employers will take advantage of that by, you know, either freezing salaries or even lowering them. Maybe they give an allowance for home office or something like that. But yeah, overall, I mean, think about it. You know, I have many friends that live in New York City, young professional types, and you know, they’re paying four grand a month rent, they got a 600 square foot condo or apartment they’re renting. And you know, if they go move to the suburbs for $1500 a month, they can get a nice home in the suburbs with a yard and a two car garage and, you know, 1500 square feet for, you know, $1400 $1500. I mean, that’s just

R. Christopher Whalen 5:19
Yeah, pretty much. The other side of this story, invoking something or another economist, is that, you know, the Dutch built New York City is a grid for efficiency, right? They wanted to pack as many people in as possible. If you read short those book about New York, the city at the center of the world, and that dynamics is important to commerce. It’s very important to organizations, you can’t run everything remotely.

Jason Hartman 5:44
I agree with you. I think it’s a high-tech, high-touch professional accommodation. That’s the best Yeah,

R. Christopher Whalen 5:50
For the rank and file. I mean, if I have to train people, if I have to supervise people, you know, it loses something

Jason Hartman 5:59
It does

R. Christopher Whalen 6:00
Along the way.

Jason Hartman 6:01
And conferences too. The conference business, it does lose something, but it gains some things too. So you know, it’s a mixed bag,

R. Christopher Whalen 6:08
Better quality of life, you have a family, you don’t have to commute every day. I think what you’ll see, by the way, is they’re going to rotate people in and out of offices. They’re going to give them the choice to come in when they have to. I work on a trading floor with some of my colleagues. So we’re spaced out. That’s fine. Yeah. Do I have to be there every day? No. Definitely not. Yeah. Right. And I think that’s what’s gonna happen because of liability. How can employers and buildings and cities deal with that aspect of this? They really can’t,

Jason Hartman 6:39
You know, I’ve really been puzzled about that one. And you mentioned, you know, I mean, you come into the Goldman Sachs building in in New York City, right. And you got to sign a waiver. I mean, are you kidding me? But, you know, I don’t I don’t know how Trial Lawyers could even substantiate liability for catching Coronavirus. I mean, how can you prove where you got it? Or didn’t get it? You know, I mean, that’s, that just seems impossible to me.

R. Christopher Whalen 7:06
Well, fortunately, the courts are closed, we’re gonna have to worry about

Jason Hartman 7:13
The reopening. But I know i think i think that kind of thing. You know, you can’t attribute liability to you know, how do you know you got into the office building versus the grocery store versus from your spouse or your significant other? I mean, you know, that’s just, that’s impossible. Anyway, that’s all interesting. But your book is super interesting. And I know you’ve got a few books, but I’d like to ask you a little bit about inflated how money and debt built the American dream. This is a fascinating topic, because what I love about your book, as you really look back into a longer historical perspective, the Bank of the United States, you know, free banking and private money, many people don’t really even think about it. But before 100, a little over 100 years ago, we had some other versions of central banks, right. Tell us about that history. And, and you know, how Lincoln was a money printer, and then, you know, bring us up to the robber barons in the guild in a gilded age. I was I was watching a really interesting little documentary about Andrew Carnegie last night. So this is fascinating.

R. Christopher Whalen 8:16
Well, what am Abraham Lincoln took office, the US government was broke, the soldiers were headed home because they only serve for a set period of time. So he had to figure out a way to finance the war. And one of the ways he did this was by creating a new class of banks, national banks, that could compete with the state chartered banks around the country, which were really the powers at the time. And they did not support the war. By the way, the bankers in New York and Boston, were very happy with the slave trade and the cotton trade, and they were not at all supportive of Lincoln. So national banks were able to issue paper currency that was partly levered by having treasury bonds in their vault. This was something that state chartered banks could not do. State chartered banks had to have gold in the vault, and then they could issue paper. This goes back to the great economist Badgett, and his writings about low interest rates and the need to get money out of the hands of private individuals into banks so they could create leverage, right. So through the war and the period thereafter, the US was growing very rapidly. And you had both traditional hard money, gold and silver coins. You had bills that were redeemable in gold and silver coins. And then you had these unbanked greenbacks, these new paper dollars that were issued by national banks. And these circulated for a while they were at a deep discount to hard money after the war, but then they trade it back to par.

Jason Hartman 9:51
And just to make sure. Just to make sure we catch this, Chris, what is hard money? Define hard money, if you will for this conversation. It has different meanings.

R. Christopher Whalen 10:01
Well, traditionally, it’s it’s gold and silver coinage. Could even dealt with Platinum today, I think.

Jason Hartman 10:08
Okay. Sure. And would you count a silver certificate?

R. Christopher Whalen 10:14
Yeah, because it was it was exchangeable, it could be paid at the option of the holder in hard currency that has now gone away, right? FDR seizure of gold in the 30s. Other changes in the laws have slowly but surely, detached money in the sense of legal tender dollars from precious metals. And it said evolution that, you know, is basically created the inflationary situation that we see today. But you know, before the creation of the Fed in 1913, JP Morgan, was essentially the central bank. In 1907, the great crisis, Theodore Roosevelt handed JPMorgan a pile of cash, and he said, go fix it. There are a lot of busted trust banks, what we would call non banks today. And Morgan triage them, and the ones that were insolvent to get rid of and the other ones he kept. But that was a little unseemly politically, and that helped Woodrow Wilson and members of Congress eventually create a second central bank in the United States. So the history is important. But ultimately, it was driven by the need for liquidity, and flow of the commercial sector of the agricultural sector, and traditionally caused problems. You know, in times of harvests, everybody was flush, but for the rest of the year, they had to live on credit. And the credit of banks was not reliable. In fact, the funny story your listeners will love is that JP Morgan was never a member of the New York clearing house, they always made the members of the clearing house wait in the lobby, to do business with them. Because they saw themselves as better than that. But the bankers were not really willing or able to stand up when the country needed liquidity. And that’s why they created the Fed. And that’s why they created many other agencies during the Great Depression, total housing agencies, or the Small Business Administration, all of these came from a need to somehow put more juice in the system to prevent contagion and prevent, as my dad would tell us to keep people on the streets.

Jason Hartman 12:26
Okay, so. Right, right. And just take us to the sort of the overall premise of inflated, when you use that title, you’re not talking about inflation per se, right? You’re you’re talking about this in a different way, just how the whole economy is levered, right?

R. Christopher Whalen 12:46
Well, that’s right. It’s the inflation of the currency. But it’s also the inflation of assets. Because as you create new ways to add debt and add liquidity to the system, you naturally allow price speculation, you’ll have growth, you will allow all sorts of activities that would not occur in a system that was rigidly fixed. In other words, if you had a rigid gold standard, there would only be so much money, right. And the competition for that money would be intense, depending on what was going on in the economy. So that was really the thesis it was to try and explain to people that you know, America, of course, but any society has this dynamic. And particularly for the United States after World War Two, Bretton Woods, when the, you know, the current currency system was set up, the dollar became the world’s money, it became the means of exchange and became the unit of account, for better for worse. And so what that means is that the US can behave very badly when it comes to fiscal issues and inflation. But the rest of the world is essentially short dollars. And they’re in a bad state. Look at Argentina, the Argentine peso is now 75. This morning, my wife is from waterboy, which is around 35. Argentina used to trade at a premium. To give you some sense of what’s happened down there. And anybody who can or has the means to do so is going to leave the country. So it has grave consequences, where countries are forced to fund themselves in dollars. They can’t manage that they would have been a suela an example. Right? The whole country is basically been destroyed. So does that make sense? Even China have this problem? The Europeans have this problem.

Jason Hartman 14:36
Sure because, and you know, that’s what’s so interesting about all the detractors of the dollar, all the people saying Oh, the dollar is going to collapse. It’s fiat money. Well, compared to what I you know, I mean, they just never seemed to ask that fundamental question. And that, you know, the dollar is backed extremely well. It’s backed by the biggest military the human race has ever known. You know, that the US is not going to like voluntarily relinquish its reserve currency status that it enjoys

R. Christopher Whalen 15:08
It’s a job that finds you. You don’t choose to be the reserve currency of Britain, for example, during the colonial but

Jason Hartman 15:15
I like that. So wait wait, that’s an important point. It’s a job that finds you. So meaning that the US didn’t volunteer to be written in reserve currency or the dollar didn’t, you know, volunteer, the world found it and said, this is the this is the best thing we can find. So you were talking about Britain? Go ahead.

R. Christopher Whalen 15:36
Well, the rest of the world was bust after the war. I mean, the most European countries, they were in horrible, horrible strain, where you’re talking where you want to, of course, that’s right. And you know, I think to some degree after Korea, but really World War Two, and we spent the money, we lent the money, we forgave money to get the world back on its feet. And those countries in turn, traded with us, and they accepted the dollar as the means of exchange.

Jason Hartman 16:03
So what’s the Marshall Plan? Was the Marshall Plan really like a great business plan to create the almighty dollar reserve currency? That’s interesting

R. Christopher Whalen 16:14
It was but they didn’t see it that way. At the time, I don’t think Americans in that era realized what they had happened upon, right? I don’t think they they kind of knew that they had taken over for the British after World War One, the Brits were broke, and they handed us the ball. And so here, we are now the world power. But it was only after World War Two, when we did rebuild Europe, and we didn’t rebuild much of Asia, that we took that role. And as I say it evolved over time, it wasn’t automatic. But today, the dollar is the only currency that’s big enough to support global trade. You can’t do it in euros or yen. And those are the only two alternatives. The ruble, now the Chinese currency, absolutely not. So you know, we are the de facto means of exchange and unit of account for the world. But we a store of value. It depends. It really depends on the perspective, but I would say no, I think the dollar is the default means of exchange unit of account for global trade, global investing.

Jason Hartman 17:19
Very interesting, very interesting. Where are we now? And what can we expect in the future? I’ve long said that I think the dollar and the US government can just sort of continue to defy gravity, in that they can keep creating more money, keep doing bailouts, you know, everything from the stuff we saw during the Great Recession to you know, now that the PPP and all the rest, are there any consequences? Or is this just sort of like this fantasy land where they can just pray more money and just have more bailouts?

R. Christopher Whalen 17:53
You know, I think the first consequences that we do have real inflation, the statistics don’t measure it very well, I agree. But from the perspective of an individual, prices are pretty consistently going higher. And this is partly because the Fed has decided that deflation is bad. They don’t want to repeat that. So they are constantly injecting funds into the system. Since Ben Bernanke and Janet Yellen, were on the Federal Reserve Board, we’ve adopted this thing called quantitative easing when they basically buy bonds from the banks, and thereby inject cash into the system. The trouble is, you can’t go back. So today, we have $7 trillion in the system, open market account. And I would tell you that the Fed is not going to be able to let that go down very much we learned in 2018 2019, then we left the balance sheet shrink, bank deposits shrink, too, and liquidity in the money markets shrinks. So what does that mean? It means that the Fed is going to basically going to have to maintain that size portfolio, and they will be monetizing trillions of dollars worth of Treasury debt. So to your point, yes, this is kind of a neat deal. If we could just make trillions of dollars for the Treasury that goes away. That takes the pressure off the fiscal side, but I don’t think it takes the pressure off individuals. I think that’s one reason why stocks keep going up. It’s definitely a reason why real estate keeps going up in a manic sort of fashion.

Jason Hartman 19:24
Yeah. And it really makes the distribution of wealth very uneven, then it just keeps getting worse and worse. But you said that individuals are experiencing much more inflation than the you know, the official stats would say and I couldn’t agree more. Any idea what that real inflation rate is? I mean, you know, John Williams from shadow stats has been on the show before, and I know that he keeps track of that it varies from person to person, of course, but you know, just fine. Throw the question out there for you.

R. Christopher Whalen 19:54
Well, the cost of housing is certainly galloping along at double digits. That’s obvious just from the data When you look at CPI and some of these other measures, what I would say is that you ought to just double them. And that will give you a better idea of what the man on the street the woman on the street is seeing when they walk into a grocery store. There’s all sorts of indexes you could use. But I think, you know, when you increase the amount of currency in the system, it does have a long term effect. And it forces people, the competition for assets, whether it’s for investment purposes, or just a place to live or work intensifies. And even though rates are low, that doesn’t seem to be helping a whole lot. It helps debtors. And it helps indebted governments but it doesn’t help people who save, we have to penalize those who who do the right thing, right. And you’re constantly bailing out those who do the wrong thing. So for example, you see the Fed buying corporate bonds, which is pointless. Buying somebody that’s existing dad is not going to help them if they’re insulted. But explaining this to people in the Board of Governors is difficult. I do try periodically, right?

Jason Hartman 21:05
It seems it seems

R. Christopher Whalen 21:06
like they, they have a Keynesian view that says they have to do something,

Jason Hartman 21:10
Right, right. And we have this culture that nobody wants to have any pain anymore. It’s like the Fed and the Treasury, they have to insulate us from all pain. So they create these zombie companies. They keep them going when they should be destroyed, and someone should start a new company, right. But that’s a

R. Christopher Whalen 21:27
There’s a bank that should have been bound up 10 years now, why? The German government doesn’t have the money. They don’t have the will. And frankly, US regulators have dropped the ball to you know, they’re the biggest custodian and residential real estate, by the way. Wow. But you know, it’s just politically impossible for the Europeans because they don’t have any growth. There’s no money, so they can’t fix their banks. That’s the one word you’re not allowed to mention. In Europe. By the way, if you’re in government circles as bank our banks are relatively in good shape, but they’re gonna really take a beating next couple of years.

Jason Hartman 22:08
Yeah. It’s a crazy time in history. It really is. Hey, Chris, you’re a fascinating guest. I’d love to have you back. You know, on a regular basis, give out your website and tell people where they can learn more about you. Of course, the books are available in all the usual places.

R. Christopher Whalen 22:23
Yeah, that’s, that’s correct. My website is RC Whalen w h a l e n dot com. And of course, you mentioned the institutional risk analyst which is my blog. I am also a contributing editor to National Mortgage News if you really like geeky, hardcore mortgage stuff. And then I write for the American Conservative and some other publications. Message me on Twitter under RCWhalen. Come join us. We have lots of fun.

Jason Hartman 22:50
Excellent Christopher Whalen, thanks so much for joining us.

R. Christopher Whalen 22:53
Thank you very much.

Jason Hartman 22:59
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

National Right to Work Committee with Mark Mix

In today’s show, Jason Hartman is joined by the President of the National Right to Work Committee, Mark Mix, to talk about the impact of labor unions on the economy. Mark shares that you are forced to join a union in some states if you want a job. They also discuss the Right to Work in one of the 27 Right To Work states, the amount of union dues, and if there’s still a need for labor unions in the workplace in the US.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Jason Hartman 0:12
Welcome to the American monetary associations podcast where we explore how monetary policy impacts the real lives of real people. And the action steps necessary to preserve wealth and enhance one’s lifestyle. It’s my pleasure to welcome Mark mix. He is president of the National right to work committee, and national right to work legal defense foundation. And we’re going to talk about the impact of labor unions in the economy and the real estate market and society in general today, so I think this will be a fantastic conversation. Mark, welcome.

Mark Mix 0:50
Jason, good to be on with you. Thanks for the opportunity.

Jason Hartman 0:53
Where are you located?

Mark Mix 0:54
We are located just outside the Beltway in Springfield, Virginia. We can blame everything on those people inside the beltway back here in Washington, DC, and I look to the west for for economic opportunity and freedom.

Jason Hartman 1:06
There you go. There you go. So maybe not everybody understands that in some states, believe it or not, in this modern era, you are literally forced to join a union. If you want a job, you don’t have a choice, you don’t have a right to work. Explain what a I guess there are 27 right to work states in the country where you don’t have to join a union, but elaborate on what that means or right to work or not a right to work.

Mark Mix 1:36
Yeah, Jason, it’s a really simple concept. Unfortunately, going back in 1935, in our country, the United States Congress under Roosevelt and the New Deal, decided that they were going to federalize labor policy, and they were gonna bring labor management relations back to Washington create a government board that would adjudicate disputes and and use Congress to impose rules and regulations and statutes on the American workforce. Well, for 1935, when they did this, they basically said that you could be forced to join a labor organization as a condition of getting or keeping a job in America. And that was kind of a novel concept. In fact, they tried it back in 1933, in the Supreme Court ruled this type of industrial policy was a violation of the Constitution. But Roosevelt in his wisdom decided to threaten the court pack the court with six additional justices. And believe it or not, in 1937, this new Wagner Act, labor Policy Act for the country was was ruled constitutional. And from 1937 to 1946. The union movement grew dramatically, of course, because this is really an unbelievable privilege. In 1947, the new Congress came in and passed what was then known as the Taft Hartley Act, which allowed states if they could, by voluntary and affirmative action, to pass What are now known as Right to Work laws, meaning they could get out from underneath the compulsory unionism aspects of the National Labor policy. So from 1947, to today, workers in 27, states have the ability to choose whether or not to financially support a labor union instantly enough, Jason from 1935, till a Supreme Court decision in 1963, you could actually be forced to join a private organization today, you can’t be forced to join, but you can be forced to pay up to 100% reduce your fees. So it’s a very interesting novel concept. And, and that power has been a unique power for labor unions in the country. And just in the last eight years, we passed five new Right to Work laws in states were here to four people would have thought, gosh, you can’t do that in a state like Michigan or Wisconsin, which we have. And the law is extremely simple. You have the ability to choose whether or not to financially support a labor union, and you can’t be fired if you don’t.

Jason Hartman 3:43
Okay, so. And we may disagree on this, I don’t know. But let’s just stay back in history. And then of course, we’ll bring this to the modern era. But I think that in the beginning, labor unions really did have a place I think they were needed, I think in the big industrial era of the Carnegie’s and the Rockefellers and the melons, you know, employees were pretty weak. And it seems to me at least in looking at history, like they did need to form unions to equalize the level of the playing field a little more. Now, today. Sadly, I think that unions are completely overrated, and unnecessary in so many ways workers have so many rights now, you know, it’s, you know, do you even need a union anymore? Right, and especially my God, public employee unions, that is literally the most illogical thing I’ve ever seen. But what do you think about that? Now that I’ll get off my soapbox?

Mark Mix 4:43
No. Jason, I agree with you. And you’re right. There was a place for labor unions in the American workplace. There is a place for labor unions in the American workplace and there will be a place and should be a place for unions in the American workplace. The fact of the matter is if you’re an employer and you’re not taking care of your employees, He said you’re doing things that are, you know, antithetical to to basic, you know, behavior when it comes to your employees, you should get a union and workers should be able to join together voluntarily to amplify their voice, what there’s no place for and the American in American labor policy is compulsion. There should never be any law that says you must be involved in this organization, you must pay money to this organization. And you must fall under or be pushed into this union collective if if you say no, or don’t want to be part of it. That’s that’s the problem with labor policy. It’s not the idea of unions per se in the private sector. Now, as we unpack what you said, up on your soapbox, I agree with you in the public sector is an entirely different animal. We should never stand in the way of teachers joining associations, whether they be unions or not. But the question is, Do you recognize that private organization to negotiate working conditions when you have taxpayers and elected officials and you put this third party group in between them? I agree with you and sort of Franklin Roosevelt, that that was something that was unthinkable, you wouldn’t unionize government in the same way that you would unionize private sector workforces? Because, by by definition, government does necessary services that can’t be provided from other sources. And I know that’s, that’s more ideological than it is realistic at this point, because government’s involved in everything. But the notion that we can apply this confrontational labor market model that developed in the private sector, to the public sector, I agree with you 100%. On that we should not recognize unions for purposes of bargaining with government employees.

Jason Hartman 6:29
Okay, so yeah, because and the reason the public employee unions are such a wacky idea is that the government is the arbiter of fairness. And yet, you should be able to you’re basically unionizing against your fellow taxpayers. That is craziness that is absolute craziness. But in a private company, if you want to join a union, because you think the Union offers you benefits as a worker, sure, you should be able to join it. I mean, you know, it shouldn’t be illegal to form a union. But it should be illegal to force somebody to join a union, if they want a job, that is absolutely anathema to free market, anything that’s just completely unfair. It’s like, you have to pay this many times corrupt organization, that is just taking your money, and spending it in all kinds of abusive ways that we’ve seen. And that’s, you know, been exposed many times, just because you want a job, why can’t you just have a job without, you know, maybe you don’t want to be part of that. Right?

Mark Mix 7:35
Yeah, it sounds really simple. It really does. And it really is very simple in that regard. And this idea of individual freedom and the kind of the fundamental bedrock of who we are as a nation and our constitutional privileges and our first amendment rights. You know, you can’t have the right to associate if you don’t have a corresponding right not to associate, I mean, those, these are simple issues, but because of politics, to your point, Jason, you know, this is big business, and it’s big money. And union officials use their power in significant ways in the political system. And, you know, you talk about the corruption in these workers still forced to pay union officials right now. There’s a scandal unfolding. That is really kind of bigger than most scandals we’ve seen in organized labor, and that’s the United Auto Workers Union. They’ve had two of their past presidents their their most immediate past president had to resign because his house was raided by the FBI. The previous presidents house was raided by the FBI 12 UAW officials have either pleaded guilty or been indicted on racketeering and kind of extortion and criminal charges. I mean, that’s what the federal prosecutor called it racketeering and extortion. They’re starting to talk use those words in the context of this scandal. But yet workers in states that don’t have right to work laws are still required to pay fees to that union to keep their jobs that is wrong.

Jason Hartman 8:47
Yeah, it definitely is. Okay, let’s talk about the impact on the real estate markets of right to work areas. I don’t want to say states because like when you talk about real estate, estate is too big. Right? You got to talk a little more micro than that. And then the broader economic impact. You tell us what you think about that first, and then I’ve got maybe some specific questions, largely about Detroit, but go ahead.

Mark Mix 9:12
Yeah. Glad to talk about that. Let me talk about it in the context of states, right towards states versus non right. We’re sure we can kind of maybe get more granular with your questioning, but the number of people employed is almost double the growth, the percentage growth rate in of number of people employed in right to work state from 2008 to 2018 is double than a non right to work from states? Okay. We’ll

Jason Hartman 9:33
Say that again.

Mark Mix 9:34
Yeah, the percentage growth in the number of people employed from 2008 to 2018 was double in right to work states versus non right to work states. So that’s the percentage growth in people employed. The growth in manufacturing private private sector, payroll employment was double in right to work states between 2013 and 2018. Then forced unionism states the percentage growth in total private sector non farm employment was basically about 1.5% greater. 17.2% in the right to work states 13% in the non right to work states from 2008 to 2018. And one thing that goes specifically to the real estate market, new privately owned single unit housing authorizations per 1000 residents in in fiscal year 2018, double in the right to work states versus forced unionism states. So the growth in manufacturing and private sector employment are occurring in states that have right to work laws now. And it really you don’t have to use statistics to see it. You can see, for example, the automotive industry moving for while they don’t have to move from Michigan anymore because Michigan is a right to work state, but you look at you know, where the for and

Jason Hartman 10:41
But mostly, it was actually that only changed recently. Like, what, three years ago, maybe in Michigan?

Mark Mix 10:46
Exactly. Yes, exactly. And and so you look at BMW and Mercedes Benz, and Nissan

Jason Hartman 10:53
They’re setting up in the south, and all in all the right areas, right. Yeah.

Mark Mix 10:57
That’s right. That’s exactly right. And, and if you go to Nashville, Tennessee, and you go to, you know, South Carolina produces more automobile tires than anybody in the whole world now, and they produce aircraft down in South Carolina. And, you know, you see where the growth centers are going, you know, the unions want to blame it. They say, Well, it’s because, you know, air conditioning, we’ve got air conditioning now, so people can move to Florida and move south carolina move to Georgia and Alabama. And that’s just not true. I mean, employers are going where they have where employees and employers to have a relationship with each other that’s not necessarily interfered with Now, are there unions in those rightward states? Absolutely. There are unions in those states. But workers get to hold union officials accountable, because they can vote with their pocketbook. Right?

Jason Hartman 11:37
Where there’s as it should be. Absolutely. Yeah. In California, in the Socialist Republic of California, my old home state, thankfully, I don’t live there anymore. But there, you don’t have the right to a job. Right.

Mark Mix 11:52
Right. And you don’t have a right to work without paying union dues or fees. Yeah, that’s right. Okay, so that so that’s no surprise here. I guess you’re in Arizona. Now. Is that right?

Jason Hartman 12:02
No. I used to be. I’m in Florida now. You know, so Okay, I’ll just keep lowering my tax rate with every move. Yeah.

Mark Mix 12:10
Good for you.

Jason Hartman 12:11
Okay, so we have this situation now, they have unions in right-to-work states that where you’re not required to join a union. So let’s talk a little bit about that culture and how it works. For example, you mentioned the car manufacturers that have set up shop and all the hot real estate markets in the southeastern United States. And we’ve done tons of business in all those places for many, many years. And I agree with you, that’s where the growth is. It’s in the it’s in those right-to-work states. But what what happens when you apply for a job? at you know, BMW, for example, are you presented with there is a union here in this in this shop, but you don’t have to join it? Is that how it works or give us a little idea as to how that works?

Mark Mix 13:01
Yeah, actually, none of the automotive manufacturers in the right to work states in the south are unionized. They’ve tried, they’ve tried twice at Volkswagen plant in Chattanooga, they’ve tried it the Nissan plant in Mississippi. And they failed, because the workers there, they’d like the relationship they have with their employees, in most cases, they like their benefits and their pay packages. And so there’s no need for a third party to come in there and get in between the workers and you know, their supervisors in the management of those companies. So but let’s say for example, you go to a place where let’s take a right to work state first, and you go to a place where there is a union. Okay, what happens under federal law, and this is something that union officials desire and try to maintain at all cost is they get to be the exclusive bargaining agent for every worker in that particular shop. So they’re the single voice are the only ones that can talk to the employer. And they’re the only ones who can start the grievance process or finished the grievance process, if you have a problem. They control every single worker, whether that worker is a member of the Union, whether they’re paying dues or not, in a state that has a right to work law, in a state that doesn’t have right to work, you would be in a in a right to work state, they can be they can be forced into this collective, but they can’t be forced to pay for it in a non right to work state, you’re forced into this collective and union says, you know, we’ll negotiate everything for you, and we’ll do all this stuff for you, but you have to pay to keep your job. And so this is one of the reasons why employers you know, site selection experts, consultants, CEOs of companies looking to invest or put a new plan up, we know now, and this is evidence has come out more and more so in the last maybe 10 years, basically three quarters or everyone looking to expand or relocate or invest in a manufacturing facility or or, you know, an additional facility for their company, look at only right to work state. So that means that basically, if you’re not a right to work, state 75% of all the economic opportunities that may present themselves out there in the marketplace won’t even consider your state because

Jason Hartman 14:57
They’ll just pass you by, right there. Now, what about Amazon. I mean, we all know Jeff Bezos is a liberal. And so you know, he probably loves unions. But what about Amazon, for example? I mean, are they searching for new campuses? And they’re, you know, they’re already in a pretty liberal state. What’s their scoop?

Mark Mix 15:16
Yeah. Well, you look at the two places where they’ve actually decided they’re citing Tennessee and Virginia, both right to work states, they had announced that that decision to beside a new facility in New York City or outside of New York City, and all of a sudden, the union started posturing saying, okay, you’re going to be unionized, we’re going to unionize this you got to we demand that you have neutrality agreements, you let the unions in? And what did Amazon do? They said, you know, what, we’re not as interested in coming to New York anymore. And they stopped that particular development, I think they may be still be doing smaller things there. But generally, what Bezos and Amazon is looking for, and where they’ve cited their their new expansion, I forget what they call it, when they call it Amazon to or whatever, something right. And it ends up in Tennessee and Virginia, both right-to-work states.

Jason Hartman 16:01
Hmm. Interesting. Interesting. So even they didn’t want this in the end. If, you know, it’s so interesting how, at the end of the day, you know, people say a lot of stuff, but they always vote with their pocketbook. You know, it’s like, are they vote with their feet, if you will, same idea, right? They just go where it’s more beneficial to them. And we look at all these big tech companies that are sprouting all their leftist ideas, yet, they’ve got companies set up in Ireland and, and the Netherlands to, you know, do the double Irish twist, so they don’t have to pay any taxes. And, you know, in the jurisdiction where they’re really operating, I mean, they’re, they’re just hypocrites scum. I can’t stand it. You know, apple, even, you know, and I like apple. Right? They were sucking taxes out of California, right? By setting up another company in Nevada, I think so they didn’t have to pay California Tax. And it’s just ridiculous, you know, do what I say now what I do, right, that’s the mantra.

Mark Mix 16:59
Yeah, that is interesting. But, you know, we do know that this labor policy certainly has an impact on those types of decisions as well. And, and just to your point, I mean, one of the things that I think is the most, the most effective argument about right to work is that, you know, you union officials, you take away the incentive for them to come and organize workers and right to work state, because there’s no guaranteed revenue stream, they can’t force people to pay dues, they can, they can try to convince you, they can sell you a product, they can say we’ll do these things for you. And if they follow through on it, just like any small business person, you know, it’s the bakery shop, if you the only bakery shop in town, you don’t care how good your rolls and muffins are.

Jason Hartman 17:37
Or how high your prices are.

Mark Mix 17:40
Wxactly, exactly. But if there’s five bakery shops, it’s a totally different calculation. And so what Right to Work laws do very simply is they give power back to the worker, right, instead of the power to the union. That’s really the secret of it.

Jason Hartman 17:54
Exactly. They give the worker, the right to make the decision in a much freer type of marketplace as it as it should be. Okay, so where do we go from here? There’s 27 right-to-work states in the country. What is the direction of this? I assume it’s for more right-to-work states? Is there anybody coming on board soon to give the workers the right to work without being forced to join a union?

Mark Mix 18:21
Well, it’s it’s Manifest Destiny, Jason. You know, the idea that we hope is someday that no worker anywhere in the country can be compelled to pay fees or dues to a union to keep their jobs we have. We have an ongoing state program. We have programs up in Minnesota in New Hampshire, we have a program in Montana and Colorado and and a few states where we think there’s a probability that we can pass right to work laws. And we continue to do that. We also have a bill in the United States Congress. It’s so one page bill, it doesn’t add a single word to federal law. It simply says that the authorization of forced unionism It was created back in 1935, in that Roosevelt era, New Deal, that we’re repealing that and we’re making the bias in federal law in favor of volunteerism. We have I think, 2324 co sponsors that bill in the Senate, we have 100 plus in the house, again, doesn’t add a single word to federal law. It simply repeals provisions authorizing union officials to have workers fired. So we have a congressional we have a US Congress program. We have a state program. And we also have a litigation program, in fact, that on June 27 of 2018, our attorneys argued a case called Janis v asked me, which ended up in the US Supreme Court, it came out of Illinois. And in that case, we won, the majority of the Supreme Court agreed that no government employee anywhere in the country can be forced to pay fees to work for the government. That is a national right to work law for all public employees across the entire nation. So that was a huge step forward when it comes to government sector unionism. This idea that you can be forced to pay fees to a private organization or union, it to work for your government was just a bridge too far for the US Supreme Court. And they ruled that that was a violation of workers first amendment rights and the state was They’re compelling this violation and so therefore they can’t do it anymore. So that was a huge victory. That type of victory in the private sector is is probably not as easy from a litigation standpoint, because the courts tend to try to stay out of it as much as well, I say this, ideally, they try to stay out of private sector, labor relations and private sector contractual relations, to the degree that they’re legal. And there’s consideration and there’s a meeting of the minds of those elements of contract. So we continue to push on the legislative front, we’ve continued to push on the litigation front, and the movements getting stronger and stronger all the time, because people recognize now, the importance of the issue, not only from an economic standpoint, or from individual freedom, individual freedom standpoint, I think those two points, the individual freedom being the most important, you know, predicated on who we are as a country and our first member protections, but also on the economic side, it can’t be argued anymore. You know, union officials say, well, you make more money in forced unionism states. And, yeah, I guess if the cost of living is, you know, two times the cost of living in a right to work state, you can argue that a plumber in New York City makes $95 an hour as a union member. And a plumber in Provo, Utah only makes 65. And you could say that’s a $30 union difference.

Jason Hartman 21:08
But I will, but first of all, a bunch of that goes to the cost of living, which would be automatically adjusted in any market, and a bunch of it goes to the dang union. That’s why they have to be they have to be paid more because they got to pay their union dues. How much are union dues? Generally? How much do they cost?

Mark Mix 21:25
Yeah, no, that’s a great question. And it depends on the occupation. But we we now have come up with a fairly reliable average between $800 and $1,000. Now, if you’re an airline pilot,

Jason Hartman 21:33
Per what? Wait. Per what?

Mark Mix 21:35
Per year per year per year. Yeah, $1,000 per year for if you’re a teacher, or you know, your machinist, 800. Between 100 1000 if you’re an NFL football player, it can be a whole lot more than that. It can be hundreds of 1000s, I suspect. I don’t know that for sure. We ended up representing some football players back in the in the strike, I think it would Gosh, what, 1995?

Jason Hartman 21:56
Basically, basically let’s look at the teacher example. If you’re a teacher now that’s a public employee union. Okay. So it may not be the best example. And I don’t know which direction it would or wouldn’t be. But you know, if you make 50 grand, that’s 2% of your income is going to the union. I mean, they better be doing something for you, or you’re getting just completely ripped off.

Mark Mix 22:20
Yeah. And that yeah, that’s exactly right. And and if they’re doing something for you, then then have at it, give them more money, if they’re doing good things for you. Right, they’re not. And the only claim they have is you have to pay them money, because you want to work at a particular school district, if they can’t do any more under the Janus decision, which is great news. But, but but take that example and move it over to the private sector. And you still have that scenario unfolding with workers in 23 states.

Jason Hartman 22:44
You know, it’s you mentioned the Janus decision, again, that you mentioned a few minutes ago. I mean, isn’t it beautiful, our legal system and court system, just by by going through litigation, you can literally change the law of the land. That is an absolutely beautiful thing. You know it? I mean, what other country can you do that, you know, that that’s, that’s incredible. I mean, it’s like, it’s like having your own political power your own lobbyists. And hopefully, the decision that’s adjudicated is, is fair and good. It’s certainly not always many times it goes the other way. But just the idea that you can impact government in that way and literally change the law by litigating a case is is a absolutely wonderful, right. You know,

Mark Mix 23:31
Yeah, well. It’s, it’s, you’re absolutely right. And you know, it’s funny, I wrote to my daughter, and I was, I was taking my daughter to work care to school, driving her to school, and I was on my way down to the US Supreme Court because we were arguing another case there on behalf of some teachers and public employees in the state of California. And I, we had that conversation. And the National Right to Work Legal Defense Foundation has been is argued in front of US Supreme Court 18 times. And this Janice’s vision was one guy in one bargaining unit in Illinois, to having the courage to stand up allowing us to represent him. We went all the way through the court system, the federal court system we end up at the steps of the United States Supreme Court and on the very last case decided on June 27 2018 of the whole term. We waited outside three days for for them to have the hand down this decision. And sure enough, we win that case and one man Mark Janis with our help and the legal right right to work legal defense Foundation was able to change the law for every single government employee in the country that

Jason Hartman 24:28
You know, Mark Janus is like the United States modern version of liquid lensa in Poland, okay. And I’ve been to the liquid lensa Museum twice now and I can’t think of the name of the city but it starts with the G Gdansk. Thank you. And, you know, it’s, it’s, it’s really incredible. Yeah, that’s the way we do things here. You do it through through the legal system and it’s great. Give out your website and tell people where they can find out more support your organization or whatever.

Mark Mix 25:00
Yeah, they can find us at on that wonderful worldwide web @www.nrtw.org. That’s our legal defense foundation. Our committee, which does the legislation is in our twc.org. And in those two places, you can find out lots of information about the right to work. If you live in a right to work state, you can have any of your quote your kind of frequently asked questions or simple questions answered there. We have an 800 number, we have 21 lawyers who provide legal representation to employees and information to employees, and they do that for free. And so it’s a great place to go and kind of get a feel for what right to work means and the impact it has. Not only on individuals, but on our on our country as well.

Jason Hartman 25:45
Real Estate Investors remember, when you’re evaluating a real estate deal, if it’s a right to work state, it’s probably also a landlord friendly state. And it’s a state where people are moving to it’s a state that is growing most likely, this is almost always true, by the way, just look at the 27 states. And, you know, by and large, what I say is is the way it is, you know, so you’re you’re going to have a better investment experience. And there may be a mitigating factor that makes your deal better in a, you know, in a no right to work state, right. But by and large, you’re just gonna do better in right to work states so, so think about that when you’re buying your next piece of property. Marc Mix, thanks for joining us.

Mark Mix 26:31
My pleasure, Jason, thanks for the opportunity. It’s great to have a conversation with you about this issue.

Jason Hartman 26:40
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website Hartman Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

Unfu*k Yourself, Get Out of Your Head and Into Your Life by Gary John Bishop

In this episode, Jason Hartman welcomes Gary John Bishop, author of Unfu*k Yourself, Get Out of Your Head and Into Your Life. They talk about being honest with yourself, forgiving someone or something, and a significant change available to everyone. Gary also shares some of the philosophies that shaped his world.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Jason Hartman 0:12
Welcome to the American Monetary Associations Podcast, where we explore how monetary policy impacts the real lives of real people, and the action steps necessary to preserve wealth and enhance one’s lifestyle. Welcome to the show, 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 going to do today. And let’s go ahead and get to our guest with a special 10th episode show. And of course, on the next episode, we’ll be back to our regular programming. Here we go.

Hey, it’s my pleasure to welcome Gary John Bishop to the show. You’ve heard his name, he has sold so many books, and they are really unbelievable. He’s the New York Times bestselling author of an F yourself, get out of your head and into your life. Several other books, stop doing that. s h. I find that people always get stuck introducing you with these titles, right? And, and do the work and a bunch of others. He’s got a new one that’s just an audio-only book. And we’re gonna dive into his very unique and innovative philosophy of life. So I’m looking forward to it. Gary, welcome. How are you?

Gary John Bishop 2:02
I’m great. And thanks for having me on your show.

Jason Hartman 2:05
It’s good to have you and you’re coming to us from Orlando area. Is that correct?

Gary John Bishop 2:08
Correct. Right here in sunny Central Florida belt.

Jason Hartman 2:11
Not too far from me in Palm Beach. Good stuff? Well, you know, you have sold so many books, I mean, give us the latest tally on your numbers, and congratulations on your success as an author.

Gary John Bishop 2:22
Well, on the first book, it’s over 2 million copies, you know, and that book is very, it’s definitely unique from my publisher’s perspective. HarperCollins. I’m the only author ever to have breached a million audio books. So that was a kind of big deal. And the books, I guess it is surprising to me, they continue to sell, like consistently every week, like the numbers really don’t go down. It’s it’s like a steady stream of people doing this kind of work on themselves.

Jason Hartman 2:53
That’s fantastic. That’s fantastic. Well, in your most popular book, The Unef yourself book, you start off chapter one, asking the question, you know, have you ever felt like a hamster on the wheel on a wheel furiously churning your way through life, and somehow going nowhere, I think we’ve all felt that way at one time or another. So maybe that’s a good place to start.

Gary John Bishop 3:16
Yeah, there was a lot to be said for, you know, because I think in the day to day loving of our lives, we have general thoughts about how we’re doing and how life still went and how you know, overall, how I’m feeling. But it’s sometimes very challenging to tell yourself the truth about how you really feel about something or, or maybe what the impact is something really as on you. And that’s a lot of what I wanted people to deal with in this book like this opportunity for you to really tell one on yourself. Right? He put together a good aside there that can show like, if you like and start and reveal some of your innermost struggles.

Jason Hartman 3:55
Now, reveal to oneself or to others or both?

Gary John Bishop 4:00
Well, definitely and actually oneself. Most people think the odd honest with themselves, you know, it’s of all the people I’ve ever met. When I first start talking to them, most of them would say I do tell myself the truth. But once you started digging away at it, you’ll see how a lot there’s a lot of things in your life you’re still convincing yourself about. And you have to do it repeatedly. You have to keep convincing yourself about it. And you have to keep reminding yourself that you’re older you have to keep reminding yourself that you don’t care. And a big part of my work is finally telling the truth to yourself, which is the best place to start.

Jason Hartman 4:38
Right. Well that’s I think that goes back to maybe the unexamined life not worth living concept, right? Because we’ve got to first be honest with ourselves. That’s true. So you know in the do the workbook, you really reveal specific steps that one can follow to doing the inner work on one’s life. And we all have to do that at some stage or another, I’d say maybe most people do that kind of in their 20s, maybe their early 20s when they’re sort of finding themselves, if you will, but then again, whenever a crisis comes up, maybe maybe it’s just a general midlife crisis or, you know, marriage, divorce, whatever, things like that death in the family, or getting fired, it’ll cause us to examine, right? These are things that are an impetus to that. But do you have some specific steps that you offer to an effing oneself?

Gary John Bishop 5:31
Yeah, a great place to begin is to connect. And again, it all has to start with some kind of truth, which a lot of people ignore or, or resist, because it seems like it’s not a positive thing, right? Seems like oh, this is too negative for me. So let me focus over here where things and keep things on the sunny side. But I say to people, very simply look at an area life you feel as if you’re tolerating something, either yourself something about yourself some circumstance, some relationship and look at where am I currently just explaining or become okay with. And that’s when you start to kind of zero in on something you’ll see. And what you will see as a human being as your tremendous capacity for tolerating for putting up with and then overcoming. Overcoming on the surface might seem fine, but in fact, it’s really just this constant stream of trying to make something okay, that fundamentally you’re not okay. So I like to ask people that kind of questions where if you told the truth to yourself, for instance, about, let’s say, your procrastination raise somebody procrastinating? What’s it really like for you when you when you know yourself as a procrastinator, right? What’s it really like? What’s been the impact on you and your life? Are you in your career? Are you and your finances? And how do you explain that to yourself? And how do you explain it to other people. And you’ll see that in the areas of your life that don’t work as well as you would want them to, you’re actually putting a lot of work into making that palatable for yourself, right. And so that’s a big part of that are feeling like that, you start to see what you’re burdened yourself with,

Jason Hartman 7:12
Like you said, we as humans have an amazing capacity to sort of rationalize justify. But, you know, the question is, maybe is that all bad? It seems bad in this in the context of this conversation, but, you know, maybe that’s a survival mechanism, right? That’s just built in to all of us. So we can, right kind of get by at some level, we do have to accept things like the the prayer of St. Francis, right, you know, change the things I can accept the things I can’t change, right. So we’re gonna draw the line on that, I guess?

Gary John Bishop 7:45
Well, St. Francis, and I might have different points of view. But with all the respect in the world to St. Francis, my view was, you’re way more encumbered by what you think, than anybody else. So you’re way more burdened by your own limitations, people live with a complete illusion that they’re interacting with life, you’re not interacting with, like you’re constantly interacting with your own view, in or interacting with how it is, you’re interacting with how you think that’s right, that’s a veil that you never really quite get in touch with your wife until you started, you can step back a bit and see the matrix of your own thoughts and the matrix of your own emotions, and the matrix of your own automatics. And you don’t have to reveal all of that in one go. By the way, you can reveal a little better that that would sometimes shock you to your core, when you see how you’ve kind of funneled yourself away from your own satisfaction, funneled yourself away from your own fulfillment, and favor some subconscious belief or some subconscious idea. So there’s nothing wrong with being able to overcome overcome, it’s fine. But I think it’s full, fully proper to look at your life in terms of, am I realizing on my existence? Or am I shelving parts of myself? in favor of some explanation?

Jason Hartman 9:11
Gary, do you want to share any examples of these things, you know, maybe from some of your readers that they’ve shared with you, you just did an audio book on this? And, you know, maybe there are some specific examples. I just thought I’d open up that door for you. If they make sense at this point, or, or maybe later and some of the other steps.

Gary John Bishop 9:28
Yeah, I mean, one of the things that people often struggle with is this notion of forgiveness. How do I forgive somebody? Most people, just if you have a fairly positive attitude, you’ll just say, Well, you know, I’ll just let that go. The problem is, you have no capacity for letting go. You only have a capacity for overcoming, you know, capacity for actually just releasing yourself from something. How do you know that? Because the things that you haven’t let go of, you get reminded of them over and over again, then you tell yourself, you’re okay with it, and then you’ll let it go. So this thing, so Keep coming up in your mind you get reminded a little hook the little trigger. So people are often asking like, how do I forgive someone or something, which is you are never taught how to forgive, we are taught we should. We shouldn’t forgive another human being. But there are other steps to what? Yes, there are stamps for governance. And mostly what we’re left with is some kind of morality based forgiveness, which ends up being unbearable than Yep. So I’ll forgive you. Right, right, which is quality. And so I don’t do morality that way. So if you look at forgiveness, in terms of, what do I get to justify about myself, or my life by not forgiving? Now you’re getting closer to something. Now, like, I get to say about myself, by not forgiving you what I get to hold on to

Jason Hartman 10:52
So you know, you get to be right. In essence, right? Yeah.

Gary John Bishop 10:56
Initially I get to be right about something. And that is another thing that human beings just love. They just love being right, right? Even though they say no, no, this isn’t about being right. But but but the funny thing is, and I found this in my own experience, and of course, in culture, monster people, it’s amazing the things that will just trash in favor of being right. We’ll let go of a marriage, or like, have a business or an opportunity. Because I’m right. Which, and again, I understand right, and and if people are something’s like, well, I am right, I know. But at what cost? Like I’m right, but at what cost? cost, peace of mind. So forgiveness for me begins with seeing your own kind of self righteousness, and how you use your how you use your current situation, to justify you. But I think a really important part is, and this is something you’ve got to do a little bit of mental acrobatics for this. You got to see yourself and other people, you got to fight you got to see them logic. It’s not your logic. It’s not how you do it. But when you see somebody logic, they make sense to you. And when somebody makes sense to me, I got a lot of compassion for them, because I realize they don’t have a whole lot of choice where that thing, choose that thing, what it does. So I’m always at great pains till I’m like a serial forgiver. And I’m a serial forgiver because I don’t like who I am when I’m not when I don’t forget. I don’t like the minor. But

Jason Hartman 12:30
Here’s maybe the $64,000 question. Should you always forgive? Or are there times when forgiveness actually doesn’t make sense? When I interviewed Dr. Laura someday, I’m gonna ask her that question.

Gary John Bishop 12:46
No, I’ve said it very, yeah, you should always forgive for the sake of forgiveness. Right. So much. Part of the reason I think why we struggle with forgiveness, too, by the way is we feel as if it means something to the other person, like somehow it gets them off the hook or whatever they did. Right?

Jason Hartman 13:05
May may be a distinction between forgiveness and accountability,

Gary John Bishop 13:10
Right. I’m okay with forgiving you. You’ve got to live your own choices, I’ll forgive you because I want to disconnect myself from resentment. I wasn’t willing to torture myself, because of what you did. I’ll forgive you, you might never play another role in my life. You and I might never connect again. But I want you to know, I’ve forgiven you, you got to go sort that out for yourself. Whatever you did or didn’t do that’s on you. But I am a serial forgiven. I forgive every time again, because I just don’t like what the lack of forgiveness of the brother the presence of resentment does to me. I don’t I don’t like being a resentful man. It’s a horrible place to be. I’d much rather free myself from not to get on with whatever’s next in my life and to get myself fully to the people that in my life. I get that.

Jason Hartman 14:01
Yeah, no, the forgiveness is really for yourself. In other words, right. That’s, that’s like an internal exercise. Right. So what do you do in the external world?

Gary John Bishop 14:13
Yeah, you declare your forgiveness. Like, if I forgive you, I’m going to tell you, I’ll say I’ll forgive you. However, this relationship is over something that might be something like that. Okay. I’m willing, right? I’m no longer put the work in this friendship.

Jason Hartman 14:27
But is it Hey, look, I forgive you for you know, sneaking out on the debt you owe me but you still have to pay me back. Or

Gary John Bishop 14:34
I can totally do that, by the way. And that’s another great thing. Because my, I may forgive you. It doesn’t mean to say you’re no, you know, like, for instance, obviously, if you owe me money, suddenly that you don’t owe me that money. No, I forgive you for the way you’ve paid me back. And you’re still on the hook for that. Yeah. You know, I’m not going to make it mean in the book. I’m not going to hold on to that, you know, this kind of person or that kind of person, but the reality is, I forgive you. Give me my cash.

Jason Hartman 15:00
Yeah, right. Right. Right. I like that. Because, because I think a lot of people confuse that. they confuse it with, you know, walking away when we come into like the biblical reference of turning the other cheek. Where does that come into play with forgiveness in this discussion?

Gary John Bishop 15:18
Well, I mean, I’ll quote Sartre, the French existentialist. And he said, life is empty and meaningless, right? So it doesn’t mean anything. So I don’t, if you’ve done something that I feel as if you shouldn’t have done, I’m not gonna indulge that emotional, kind of sense of whatever lost her dimension, I’m not gonna indulge that. All I’m really just gonna look at, you know, like, what you who you and I are, and what you and I had, for instance, in your case, if you say what somebody who owes me money, that’s what this is about. I’m not going to make this mean, somebody with me on to week with people, I’m not great with people or people that are always trying to abuse me or take advantage of me. None of that. I’m just going to say, Okay, well, I forgive you for what have you done. And you do owe me that money. The only way out of that, by the way. And I’ve actually had this as an experience, I’ve had somebody owe me money for a long period of time, no use money as an example, I guess. But a lot of people owe me money for a long period of time. And a couple of occasions actually turned to him and said, so I want, I forgive you for not paying me back. And I’m now gonna gift you that money. I don’t I’m no longer willing to live with a single like an open wound in my life guide. So I’m going to gift it to you. Of course, you can rely on that I would never give you money again. Right, but, but I’m gifting it to you. And I want you to know that I’m fully gifting it to you. It’s not a favor. I don’t want to answer return. Why do I do such a thing? Why? Why have I done that my life? Because it’s important to me that I close that thing? I don’t want to leave that open there between me and life or between me and people? Oh, yeah. And then you can’t do that. Because people owe you money, or people cheat you. I’ll close the loop. Now, what does that taught me? It’s taught me one, I’ll be very careful. But whoever I lend money to, I’ll be careful about that and responsible about that. But whenever I do, if I have lent somebody money in the past, have been fully cognizant of the notion that I might not get this back. Right. So I no longer feel like it’s a surprise. It’s part of the game. If you’re

Jason Hartman 17:25
Right. Right, that’s a good, that’s a good way to look at it. I like that.

Gary John Bishop 17:28
But it’s part of the game. It’s an unsavory part of the game. But as part of the game,

Jason Hartman 17:33
Right. Good stuff. We’ve talked a lot about forgiveness, just wrap this up, if there’s anything more on this, because there’s a lot more to your philosophy. And I just wanted to give you the opportunity to maybe share a couple more points before we wrap it up.

Gary John Bishop 17:45
Well, one of the things that really always jumps out at me, as you know, people often leave themselves helpless, they often leave when they have no more ideas, or no more sense of how to change them, like for change what’s next for them. I think the big thing that I want people to get as that that significant change is available to you, right, and every area of your life, by the way, with your emotional state, your moods, your body, your finances, your well being your friendships, your experience of love. All of those things are transformable, all of those things can be impacted. And even though it might seem impossible from where you’re sitting right now, I do want people to know that it’s available, and it’s made me not as complicated nor take as long as one might think.

Jason Hartman 18:32
Okay, so don’t be the victim. Resources are available. They are you are available, you you can change any of these things anytime you want,

Gary John Bishop 18:42
You can and I’m not saying it’s always it’s always easy, but I’m telling you, the pathway to significant change is an uncomplicated one, it will might take your time. And it might take you some things that you need to handle. But it’s all dealt with well, and I’ve worked with people that have produced amazing results in their life, with their finances, with the body with a love life, whatever. And it’s available to all human beings. I know you might be despondent or down or whatever, but it’s available for you.

Jason Hartman 19:10
That’s a pretty empowering thought. I mean, if people want to change how they think about themselves, or how they think about their, their station in life, that’s the answer, isn’t it?

Gary John Bishop 19:22
It is. Look, we don’t always enjoy our thoughts, you know, or our opinions of ourselves. They often arise in moments of crisis, you know, when we’re most kind of down on ourselves. I’m not someone who says Be positive about that stuff. I’m someone who says All right, well, let’s kind of get that on the table. What is that? Right? What does that really about? What does it go and you don’t always get a say in your thoughts. You know, you have random thoughts, they come up, they disappear. But a lot of the times it feels the same emotionally. I don’t always feel you know my best. Some people deal with anger, lack of confidence, things like that. It’s amazes me how people can And leaves themselves with the experience that they’re stuck with. And I just want them to know in your heart of hearts, you’re not it’s this is all doable, right?

Jason Hartman 20:08
So if you think yourself, well, that’s just the way I am. Or that’s just the way it is. Those are just false statements, aren’t they?

Gary John Bishop 20:17
They are. It’s. It’s funny, you know, for this conversation with many people, people talk about self limiting beliefs, the problem of self limiting beliefs is you don’t know yours. Because you believe them.

Jason Hartman 20:30
Right? Because you’re in it. That’s the context out of which you operate. Right? It’s this box, and you don’t know what’s outside of the box. Yeah,

Gary John Bishop 20:38
Right. You’re the fish in water. Fish has no sense of water, right? You have no sense of your beliefs. You just level you can see other people and part of our fields of good work that you do on yourself as revealing what you fundamentally believe revealing your own sacred combs what can what is possible when as impossible. And it’s it people are more often than not completely shocked at the way they’ve boxed themselves in?

Jason Hartman 21:04
Yeah, they sure are. That’s. Gary, that’s so good. It’s, it’s great. Give out your website

Gary John Bishop 21:10
You can reach here at Gary, john bishop.com. There’s courses on now there’s obviously great ways to connect with me on Instagram and on Twitter. And also on Facebook, I got lots and lots of followers out there. And I like to make sure I’m giving them plenty of good stuff every day. So there’s always great little nuggets of insight and thinking for you to do.

Jason Hartman 21:33
Excellent. How did you become such a life life philosopher,

Gary John Bishop 21:37
I guess it started with working on myself and my own life. And then the more I got into it, the more I realized that I loved impacting other people’s lives. And I became a senior program director for a really, really big personal development company. And I did that for many years. And then yeah, it’s just been this layering and layering and layering, maturing and adding new information and thoughts and discussions, such that I can give it away to people now.

Jason Hartman 22:05
Good stuff. Any closing thought you want to share, quote, whatever.

Gary John Bishop 22:10
Yeah, I’m gonna I’ll give people one little thing that the your success in life is almost exclusively tied to the degree that you can keep a promise to yourself.

Jason Hartman 22:20
Very good, very good. Say it again.

Gary John Bishop 22:23
Your success in life is almost exclusively tied to the degree that you can keep a promise to yourself.

Jason Hartman 22:29
Excellent. Gary John Bishop, thank you so much for joining us today. We really appreciate it.

Gary John Bishop 22:34
Wonderful. Thank you for having me.

Jason Hartman 22:41
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out this shows specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are the rain. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

AMA 398: Thou Shalt Maintain Control of Your Investments

There are many different ways to invest your money. What’s the difference between things like REITs and simply purchasing a single family rental? Both of them are, technically, investing in real estate, but only one of them gives you a multi-dimensional asset that you can control.

Jason Hartman dives into the two investments to see the pros and cons of each.