Deidre Woollard: Hello real estate investing fools, I'm excited today to be talking to Dr. Parag Khanna who's the founder and managing partner of FutureMap. He has a fascinating background. He's been a fellow at the Lee Kuan Yew School, Youth American Foundation, Brookings Institution. He's worked at the World Economic Forum and the council on foreign relations. He's been writing about the future of the world for a long time, his newest book, which I just read is called Move the Forces Uprooting Us. It's a look into global politics, immigration, economics, real estate, infrastructure. It's a fascinating read. It will be out mid-October. It's full of fear and also hope, and also the reason that we're all going to be doing a lot more moving, so welcome.
Dr. Parag Khanna: Thanks so much, Deidre. Great to meet you.
Deidre Woollard: Well, let's just start talking about immigration because it's a hot button issue right now here in the U.S. certainly with what's happening with Afghanistan. You talk in the book about the competition for the best and the brightest, like the ways that Silicon Valley competes with Toronto right now. But what about other people who lack education? I feel like sometimes with immigration, it's more of a kind of sifting out. What are you thinking about that?
Dr. Parag Khanna: There are countries that have very targeted, highly-skilled migrant programs, points-based systems. The Canada and United Kingdom are the ones that are the most transparent where you can really just log into a website, give your educational credentials, and so forth, and it spits out your points. If you have enough points, boom, you are in, you can practically print out your visa from your own printer and get on a plane and go. That's the way it should be for highly-skilled migrants, compare that to our H1B process, it's night and day, which by the way explains why just pre-pandemic, Canada was bringing in more Indian professionals as net new migrants of doctors, educators, whatever the case may be, engineers than the United States. Of course, Canada has one-tenth the population of America. For your question was about lesser skilled or unskilled migrants. I think that's extremely important because that does constitute the majority of migration globally. But what they have in common by the way, rich and poor is that we are all economic migrants, fundamentally, we're always on the move and on the lookout for better economic opportunities. The United States is no stranger to unskilled migration. Obviously, most Latin American migrants who come are unskilled or semi-skilled, and they too are very important for our economy. They have been, everyone who knows anything about construction or agriculture would agree with you, not to mention many other sectors of the services economy, daycare, and so forth. Now, they become more and more important.
The faster the American population ages. But we have an aging population. We have almost no population growth, absent immigration. We need even more people to be the caregivers and to revamp our infrastructure. Just let's look at the infrastructure bill. If indeed hundreds of billions of dollars are going to be spent incrementally totaling trillions over time and rehabilitating infrastructure, a lot of that work is of course going to be done by the indigenous population. But we have very low unemployment right now. We need immigration at all levels, all skill levels in order to actually execute on everything from building wind turbines to installing solar panels. But we also need the nurses and the elderly care, hospice care workers and the sanitation workers and all of those things.
Let's be absolutely clear that both skilled and unskilled migration are good for the economy. If you're a society with economic mobility, which of course is not very strong in the United States but we should always aspire for it to be better, you do have that generational effect where yesterday's is unskilled or semi-skilled migrants or tomorrow's doctors and lawyers and engineers. One more thing, Deidre, and this is very sad thing. The pandemic is hardly behind us. Let's remember what our shortages were in our hospitals for nurses. American embassies, I am an expat so I say this with authority. Our embassies are all over the world.
We're in the middle of the lockdown globally. Last year, one year ago. We're out there consoles is putting up ads, sending out emails saying if you have any medical background of anytime, please come to the embassy, we're going to fast-track you with a Visa and fly you to America. Why was this a rear guard action when we're supposed to be the most welcoming country in the world. Why should we have a shortage? Why were there so many excess debts, because we didn't have the labor force that we need. That's not all fully trained medical professionals. It's really across-the-board. A one final, final thing, if I may. We are entering this global demographic plateau where every country is going to realize whether you're xenophobic and populist today. By tomorrow, you will have realized that it's a war for young talent. Collecting people is collecting power in geopolitics. America needs to remember that because it has been history's greatest winner from immigration. It has to stay that way.
Deidre Woollard: Well, you mentioned construction, which is something that I study. Obviously, the labor issues on the construction side here in the US have been a problem for years, the average age of the construction worker keeps going up. That's definitely one area I think that's really important. Let's talk about the book and about this idea of, you believe that people will be moving around more that they need to have freedom to move. Here in the US, we've been sold the American dream of home-ownership. Certainly when you look at individual personal wealth, home equity is a lot of that here in the US, mostly for middle-income people. What does that mean for the future when people are moving around more, do they need to find other ways to build wealth? Will that no longer be the case at home equity? Is that sort of source of wealth?
Dr. Parag Khanna: That is such a hugely important question, Deidre. By the way just on your last point that you made about the aging of the workforce and construction. It's very important also to point out that this is not going to be rapidly automated away, right? There is augmentation through technology, but non tradable services like construction and education and medical system are still things that humans do for each other. It's actually less complex to understand in other topics, we need young workers. Just to reinforce that point, because you've made it very well also. When it comes to the American dream and our asset base as individuals, as households, we couldn't have the past persist into the future and hold all else equal as if there's no climate change, as if there's no deflationary pressure from an aging population.
As if there aren't other stresses in terms of people's debt, your mortgage debt, educational debt and so forth, that inform this issue of how you were going to generate wealth. The fact is that you and I have an obligation morally and intellectually to put ourselves in the shoes of an 18-year old, a 20-year-old, a 24-year-old today, who by all statistical assessments are not guaranteed to have the same living standard or income as their parents enjoy, who have a large volume of student debt and who don't know exactly where the jobs are going to be in the future, because you have a lot of internal dynamism and creative disruption going on inside the geography of the United States across some of these sectors. Let us put ourselves in those people's shoes. Why? Because I am talking about 80 million millennials and then the 80 million Gen-Z who come after them. That's the future. We need to be talking about the future and not presume that the 2030s and 2040s are going to be like the 1950s and 1960s. That's a great disservice to everyone. Young people who don't know where the jobs are going to be, who don't know where they're going to acquire skills, don't know where they're going to be needed, need to be more mobile. In principle, I support of one of the trends that I wrote about, which is what I call mobile real estate. It's a term that I coined accidentally when I was looking at the growing popularity of young people buying trailer homes, motor-homes, RVs, tiny homes, this kind of thing.
Even now the 3D printing housing industry, Elon Musk is, among others, made this famous because he's wealthy enough to not have to live in a $50,000 bow-clock house. But he does and I think that's pretty cool. If we think about young people even without having Elon Musk as a role model, the fact is this is very attractive to them and I want to say something else. This is part of their survival instinct, right? Not to become heavily indebted when they are not sure how they will pay off their debt. If they don't know where they will live to be in a home that they can physically move. Or if you just think about climate change, which is not something that we or our parents necessarily have to worry about in the good old days. They have to worry about those things. I would do what they are doing and they are the future, so they have a right to do that. Now, rightly, you're asking, how are they going to build their asset base. Well, there are many things happening in the financial industry more broadly and in government policy. Whether it's universal basic income from the fiscal side, or whether it is talking about endowing people with financial assets in terms of equity in leading companies through some kind of a redistribution policy or a crypto instrument to do things like that. Young people will find ways to have their asset wallet, if you will. But you're not going to have young people without any hesitation for locking into a housing market and buy half-million-dollar plus homes, unless you also have a large degree of debt forgiveness on another side of the balance sheet and many other trends. But generally, if you take their complexity approach as I do, and new factor in.
Again, not knowing the geography of jobs, not understanding fully or not pricing in fully climate change and a lot of other things. I endorse this radical shift as much as it may seem to accelerate some of the potential value disruption that we see happening in the traditional model of real estate. But by the way, the family structure in America was doing that anyway because we have shrinking household. Because going back to the demographic point I made at the beginning, young people are not having children. The real estate industry cannot just continue to build, mick mentions, In places where people don't necessarily want to live, homes that are not sized or fit-for-purpose and this kind of thing and not accommodating, of course, climate pressures. I'm with the young people who are basically maintaining their optionality, and it's for us or the industry, for the industry to adapt to them, not the reverse.
Deidre Woollard: Possibly, but I'm going to push back a little bit on that because, I've been studying real estate for a while when the millennials were young, we said this about the millennials they are going to be generation rent. They're not going to be homeowners. Then they started getting in their mid-30s and all of a sudden, they flooded into the housing market. I think I'm not entirely certain that that movement thing is going to continue to happen as they age.
Dr. Parag Khanna: Later and less. Because as we know, even if they are flooded in, the fact is you and I have the same data it's the 10-12 percent less home ownership rate than a generation ago, which is a fact. It might continue to go down, we don't know. I'm not against home ownership but I'm looking at the geography and the human geography of America and wondering what are the optimal geographies for people to own homes? What are the stable habitats? Rather than people putting all of their equity or having all of their equity in a home that may be in the wrong place, that may get destroyed in a climate emergency or something like that. I worry about that phenomenon. Therefore again, I caution, in a way, that they are just be prudence. Not that people not own homes, but again, what type of home are we building for what is decidedly a smaller family structure, one child or no children.
Deidre Woollard: That's a very good point. Well, let's talk a little bit about young people not versus old people, but we have had this young people versus old people thing. You mentioned in the book, the "Okay. Boomer" thing that has happened. You make a point in the book that people are more connected generationally than by country and I think that's really important. But are we missing an opportunity for younger people to learn from older people and for older people to change their thinking a bit and learn from the younger people who are tending to be more socially aware, for example.
Dr. Parag Khanna: Deidre, can I make a confession? At the dinner table just now, I read a couple of your questions to my daughter, [laughs] who is 12 years old and a very precocious young thing. I asked her this question, I said, "I have a podcast coming up and this is one question I have to answer. What do you think?" She said, "Well, old people just have to be more interesting. [laughs] Otherwise, we don't want to talk to them and we have nothing to learn from them." But the way you just phrased it is, I think, really does appropriately flip things over because young people do feel that the older generation has betrayed them in terms of not taking climate changes seriously and of course, building up a huge debt pile for the country and so on and so forth. We're not going to get into whether or not that's right or wrong. I'll tell you what is the most interesting aspect of the research on this sociodemographics, and it is the point that you made earlier.
Millennials and generation Z are the most surveyed human beings in the history of the world. We have very robust findings about the values that they share generationally. This, for me, was really interesting to dig up and it's fresh stuff that you can read all over the world. Young people, whether they're American or Brazilian or Nigerian or Chinese, believe in sustainability, connectivity, and mobility. The three cardinal virtues of youth everywhere on the planet earth, with no exception. North Korean, Iranians, Canadians, you name it. I'm going to restate them, sustainability, connectivity, mobility. You cannot say that the greatest generation or that the elderly across the world agree about anything in particular across national verticals. Indeed, young people disagree fundamentally with old people within their own countries. Look at, say, Brexit or let's look at Democrat versus Republican in America. Young people are younger, they're more liberal, more progressive, all of those kinds of things. They're more urban and so forth, around the world. I think this is a really unique phenomenon and it's also an opportunity to have a global generational consciousness and consensus. What do we do with that? Well, first of all, we do need to learn from that.
We all do need to understand what young people's priorities are. That doesn't mean that they should have screen time for seven [laughs] hours a day but it means that there are certain virtues that makes sense. Again, building sustainability in to our investments, is pressure that's coming from the young. They drive the ESG movement to some degree as well. They also drive legal fractures and lawsuits against state actors and then energy companies and so on that are not in compliance with those emergent norms. I think that's where we stand around the generational consciousness. It came up already when I was talking about, again, young people just don't know where the future will be. For about 10 years now, we've had this phrase that everyone knows. It was Robin Chase in Zipcar, I think, who said, "My parents had one career over their lifespan and my kids will be doing six jobs at any given time." Similarly, if you're going to have six or 10 jobs over the course of your career, you may also live in six or 10 different places. I take that as an analogy and map it directly onto mobility. Because I see young people today having moved from their suburbs or wherever to their college town, from their college town to the city, and now away from the city because the rent got too high, somewhere else, and now remote work is allowing them to go to another place. Then when the climate gets bad, they may shift somewhere else again and all of that's before the age of 40. This gets back to the thing where, I mean, you were asserting that we've heard this before. Young people are going to be different but then they age and they become just like us and I write about this, this is what happened to the '68 generation, to the Vietnam generation, and so on. Again, the big difference was, multiple differences but the big one was, today's baby boomers had children and when you have children, you settled down.
You cannot make the assumption that today's millennials who don't have kids necessarily are going to stick to one place. I can give you the 1,000 anecdotes of friends of mine or also data around that. Then there's the other factors around climate change in economic insecurity and international opportunities as well. The number of American expats, Deidre, people like me, has more than doubled since the financial crisis. The State Department doesn't keep good data but we're talking about 9 million expats, up from 4 million. That wouldn't have been possible if we had replicated each generation. Today's millennials or Gen Xers had two kids or three kids, that would definitely not be the case. We cannot keep the same assumptions from the past into the future because the demographics are different, the climate is different, the economy is different, the politics is different. As you know, this is a central concept in the book, there's a global war for talent. Young people are being lured everywhere for higher salaries, for better quality of life, lower taxes, all of those kinds of considerations. I talked about this in the book, every young person has their own purchasing power parity calculator in their head. Right now as we speak, as you know, corporate headquarters and the human resources departments are saying, "I would like people to come back to the office but they're going to demand obviously to maintain that high salary. But what if I do let them work remotely and they have to tell me where they are. Can I cut their salary down if they move to Costa Rica?" But then the talented people are saying, "Hey, I'm going to move to Costa Rica and you're still going to pay me the high salary." That negotiation is happening literally a million times a day, every day since this pandemic broke out and it's not going to stop. Young people I know because again, I live on the other side of the world from you, I'm seeing this in Asia. We've got plane photos of young people. How many nomad visa programs before the pandemic? About two. Estonia was the only one that anyone ever heard of, right? Well, today, Deidre, there are 70 countries with nomad visa programs. Hearing you have young Americans, young Canadians, young Europeans who don't have kids, who are saying, "Hey, I can go anywhere and I don't actually want to pay high taxes and I'm not enjoying life here and unemployment is high and things aren't fun." But that country is saying, "Come on live on the beach and the rent is really cheap." I can stretch my money and I will have permanent residency there tomorrow, why not? I will try out this place for a year, I'll try at that plays for a year. All of our newspapers have done these profiles of 20-somethings, young millennials who have already moved four or five places during the pandemic. They were at Costa Rica then they were in Athens and now they're into Tbilisi. Again, we're not talking about unskilled labor anymore, we're talking about talent. But those same people are the ones who, in ordinary times historically, would actually just settle down to go buy a home somewhere in America. Again, even the real estate industry it has to me attuned to this because if a young American moves abroad, you just lost a homeowner in a period of very little inward migration, right?
Deidre Woollard: Well, and also you have people inside the US moving from the coast. We had this past year for us has just been watching people move from the coast into places that they haven't really thought about before, Boise, Idaho, Salt Lake City, Utah, certain parts of the Midwest. Some of that is the cost of homeownership, but some of it it's just the cost of living, and some of it it's just the desire to do something different, have a different lifestyle.
Dr. Parag Khanna: That's very promising. As you and I know, in the aggregate in terms of the ranking of cities that have gained the most new residents as a share of their existing population, people move on to Miami and Austin and so forth. Places that are not particularly climate resilient in the long-term, but of course, what do they have in common? They have low-tax. My clients in the real estate industry still focus on those geographies, they're just following the demand, they're following the people, which is obviously not necessarily a mistake per se. But let's bear in mind that when you factor in climate change and the competition between states to lower tax and the construction activity that's going on in these slightly newer areas like the Boise, Idaho's, and so forth, or to recap more significant example like Raleigh, Durham, North Carolina, well-connected city, Research Triangle, lots of people going there too. We can take the hotspots old and new, and we can sort them or rank them by climate resilience, for example. We can look at what their industrial transformation is, we can look at how the new fiscal policy and even the industrial policy that is being announced and undertaken and deployed how that's going to affect different geographies, and we can make a pretty robust forecast around where young skilled people or unskilled people shouldn't go, and then we'll just watch and see that they will eventually go there. Now if you're choosing Boise, Idaho or Montana or wherever, you're a skilled remote worker, you're a software program or an engineer, hedge fund trader, crypto person, whatever they're going to those places. That's not going to fill them up, it's not really going to ramp up the population density all that much.
But the fact that some of these places are in our more northern latitudes does suggest that overtime they will become more popular. Let's take Michigan. The most recent census just came out. Michigan is still losing people, even lost a congressional seat, but it is of course, one of America's climate oasis, which is the term I use frequently in the book to designate places that are relatively more resilient to climate effects. It's still not properly priced and people are not thinking long-term enough, but there are signals. I hear and talk to and interview people, snowbirds, they've said I'm not buy that retirement home in Florida anymore because I want something of great significant value to hand down to my children. But so is a conscientious retiree today going to buy that Florida retirement home if they're not sure that that's going to be an appreciating asset to hand onto their children, or are they potentially going to pick a spot on a lake somewhere in upstate New York? Now, I have anecdotal evidence from my research that there are people doing that and I consider them to be the wise first movers.
Deidre Woollard: Interesting. I want to dive in to drought. It's something I've thought about for a long time because I lived in LA for almost two decades. When you live there, you don't necessarily think about it as much as when you move away and you realize how bad the drought is there that you just aren't focused on. I've been thinking about the need for fresh water for a long time. You write about it in the book. This is really going to play out globally, isn't it?
Dr. Parag Khanna: It already is, of course. There is a profound freshwater shortage in so many parts of the world. I mapped this out as well quite a bit because natural resource geography is really our principal foundational layer of geography. Our borders of political geography and our infrastructure, economic geography is built on top of that. But we're going down now to that foundational levels to examine where we can live. As you know the term that climate scientists use is the climate niche, the habitable latitudes in which most of the human species has settled around the world over the last 10,000 years. That climate niche is shifting and part of it, is of course then it leaves drought in its wake.
Then when you look at these heat-maps around the changing what's called suitability index for geographies, you have the mega drought of the Southwestern United States, and you already have similar effects far more advanced in the Middle East and West Asia, Central Asia, South Asia in particular, which by the way, let's not forget, Pakistan, India, Bangladesh, South Asia is the most populous region of the world. There's about two billion people living in just about four or five countries there. India already its population is equal to or greater than China's already. Drought and falling water tables, the number of zero-day events that have already occurred from Brazil to India, this is a proliferating phenomenon. We have not sufficiently invested in the adaptation solutions. Now let me make a distinction here.
As you know, in our climate diplomacy, everyone's talking about mitigation, carbon capture storage, cap and trade, carbon tax, all this kind of stuff, or even atmospheric geoengineering to block out sunlight and cool the world, which I'm actually a proponent of some of these measures. All of that fits in the category of mitigation. But every single day we actually need to adapt, actually running out of water, actually suffering from droughts and failed harvest and so forth, the wildfires obviously are related to this phenomenon as well. People have to move, they have to be willing, ready, and able to move because you simply cannot live in certain places anymore. Rising sea levels are also part of it, but in America not affecting as many people as the droughts are. If we want to stay where we are though, Deidre, what do we have to invest in? Desalination. Southern California is the epicenter of American investment into desalination. But it still is an adequate and within our reach into the water pipelines is the new oil and pipelines, as it were, to reach all the same geographies that the Colorado River and our entire water infrastructure and aquifers have reached historically. So all over the world if you want to stay where you are, there has to be a significant increase in infrastructural investments around hydrology.
No country in the world has done it adequately to completion. We're behind on where we need to be, India is way behind. You could say the Gulf countries are there because most of the world's desalination spending happens in the Persian gulf countries and in countries like Kazakhstan, India is ramping up, but you're talking about a billion people. They will quite frankly never meet their goal let's be honest, it's going to be disaster. That's where you're going to have massive migration in India of people from south to north. Because the north is begun static plain and the Himalayan waters, which caused a lot of floods. But flood is better than drought. Where we have to invest in technology to channel glacial Melton and other kinds of water resources, rainwater collection and so forth, which you can only do when it's raining or if it rains at all. Long answer. But this is an issue everywhere, but there are again, Climate Oasis, places where it's going to rain more and [laughs] I just have to tell you personal anecdote because I live in Singapore, I live on a tropical island on the Equator. My kids used to not like the rain, because it interferes with tennis lessons and whatever else. Trust me, kids, you'll be very grateful for the rain. You will be so glad that we live on this tropical island because it's way better off then just that everywhere else in the world. According to most forecast, it will get a little bit hotter here, but it's going to get wetter. So I'm going to stay put even if sea levels rise, I think but don't quote me on that. [laughs] Check back with me in 10 years.
Deidre Woollard: [laughs] I feel that way about now that I live in Virginia versus living in Los Angeles, I definitely have a greater appreciation for rain and for the value of it. Well, let's dive into that a little bit because talking about climate, oasis, there's also this other factor that's going to happen, which is that battle for the Arctic, Greenland there's potential there. It seems like there's going to be a lot of war over land that people haven't really thought about before.
Dr. Parag Khanna: Well, whether or not there is a war over these habitable geographies comes second to identifying them and looking at what the current activities and what the first movers are doing. Actually, it's about 12 or 13 years ago that I gave my first Ted Talk and there's an explicit line and even a map of the Greenland flag that I put in that Ted Talk and I said, Greenland will be the first country born of climate change. Because of course, the growing access that they have for their mineral deposits and natural gas fields makes them more capable financially of independence from Denmark and of course, even when Greenland does ever succeed from Denmark, for those who haven't looked at a map, it's very close to Canada. So an independent Greenland is effectively would be a member of what I call the North American Union, a federation of North American States that cooperate intimately with each other. Of course, we have a military base in Greenland. Perhaps more of a military presence than even Denmark itself has. So it's an allied territory whether it becomes independent or not. But there isn't a war for Greenland, there's a commercial token dagger tussles around who is going to get mining rights for uranium and so forth.
But the Arctic as a domain, is largely controlled by three countries, United States, by virtue of Alaska, Canada, and Russia. But we're on opposite sides of the world though at the top of the world that's not actually that far apart. With the melting ice, we have submarine maneuvering and all that kind of stuff. The Russians planted the flag at what they thought it was the North Pole and this kind of thing. But mostly there is such a strong, I mean, this is a large resource potential there. First of all, when you look at the shipping lanes, is generally co-operative. It's cutting shipping times and screening more resilience. The Japanese, Chinese, Koreans and everyone or using the northern sea route. The Russians are working with the Norwegian together on gas extraction and so on. So as much as people talk about how there must be a truly cold war in the high north, it doesn't actually have to be the case. Because Russia, for one does not actually feel that its Arctic position is threatened by anyone. They have the Icebreakers, they have floating nuclear power stations that they have towed out to the north eastern coast of the country to provide power. There were parts of Russia that were cut-off right from the energy grid during winter, and now they have year-round power thanks to floating nuclear reactors. So, Russia has a pretty significant engineering edge in this domain. The Canadians are just starting to get going and the US is as well. That doesn't mean it's going to be a war. The question really is and I think this is interesting from a real estate standpoint is, are we actually going to terraform Siberia? That's actually the title of a chapter in the book. Can we terraform Siberia? But by which I also mean the Boreal Forest of Canada and so forth. These Northern Latitudes now bear in mind, as I'm sure you've seen in the news, there have been horrendous forest fires in Siberia, and the smoke from those fires is literally reached the North pole. So I go to a great pains to emphasize that no place is perfectly safe or predictably safe. I actually set out to write a book about the new North and the Climate Oasis as if you could pinpoint them in an internal way and say, let's just shift people here.
Who will be the first movers? This is the new frontier. It's a new manifest destiny. But I actually came to the conclusion that again, you can't hold all else equal. You can't pretend that if everyone move to Canada, Canada would still be foreseen in perfect. It wouldn't, there'd be excessive resource consumption, depletion of those resources, a tragedy of the comments, spiking real estate prices, race riots, and God knows what else in Canada would no longer be Canada. The Canadians would want to leave. I write on Toronto a little bit in the book, already people in Toronto complain to me that there is gang violence, and prices are too high, and they haven't built enough infrastructure and so forth. So you can pinpoint a place, but everyone may just go there and rush there and the same is true of Sweden and the same is true of other places. So I do go Oasis to Oasis in the Northern Hemisphere through the book, I have been to all these places and I write about their potential ecologically. But we also have to be careful that we manage this. Because we're not really going to get yet another chance to relocate the human population.
If we don't get it right in this next 10, 20, 30 years, we will have destroyed whatever is left and that's not a laughing matter, that's a fact. This is actually our last chance. So I hope the Arctic does not become a war zone just because it's precious. It actually has to be governed in the way that actually Arctic people's, particularly in Scandinavia, have always govern themselves a transnational way, like the Sami people, the reindeer herders of Northern Sweden and Finland, they don't recognize any border and the government has already said, okay, like Sami people don't need to have passport. It's your right, it's your domain. The Arctic had no borders, and so late into the 19th Century into 20th Century there were no borders. So I actually think that there's an Arctic. I know this is not [laughs] what you thought you were going to get when you asked the question. But historically, geopolitically this is a domain that can teach us a lot about how we need to govern the planet in the future because Arctic countries have thought more in terms of stewardship of resources than in terms of strict sovereignty and exclusive control. That's something we can learn a lot from.
Deidre Woollard: I hope so. It does make me think that you're talking about Canada. Justin Trudeau recently said he's proposing a two-year ban on foreign real estate investment in Canada, partly because in Vancouver and Toronto, everyone that's been moving there's so much foreign speculation in Vancouver. You've got the condos with no lights on because people just bought unit there and live elsewhere. It'll be interesting to see how all of that plays out.
Dr. Parag Khanna: Well, there's a precedent. First of all welcome to 57th Street in Manhattan [laughs].
Deidre Woollard: Exactly.
Dr. Parag Khanna: I'm a New Yorker so I've seen that transpire but New Zealand. New Zealand did this a few years ago. They banned some of the key nationalities, looking at you, China, from buying real estate assets because there was so much of speculation. But what boggles the mind is why one cannot anticipate demand and why the real estate industry and governments don't do more around mandating that there be a certain amount of affordable housing built in certain neighborhoods, or just expanding the land allocation for construction. Ideally not on arable land per se because you don't want to inhibit your agricultural productivity. China has learned that the hard way with it's breakneck urbanization. But Canada is an intelligent country and by the way New Zealand is too. New Zealand has done this also because kiwis cannot afford to live in Auckland, or Wellington, or Christchurch.
Again, I live in Singapore, so there's a lot of kiwis here. They tell me, it's literally just unfair. Now that you have this great demographic reset with people moving home from wherever they were, there are still actually New Zealanders, who are stuck outside of New Zealand because there's a daily quota, the number of people who can fly in and then quarantine. But once kiwis go back as they're going back now, they're probably never going to leave. This is a one-way return home, returning to paradise. But there's no homes to buy. Again, it doesn't take long. You know the real estate industry better than anyone. These days it does not take long to build homes. It should not take long to zone certain land. It shouldn't take long to say, look, we need a lot of multi-family housing here, and a lot of people coming back work in these professions and they're going to do this. They are live in the city, and they originally lived here. Their families are here. This is what they're telling us, this is what we know. Let's anticipate and build. The fact that Toronto and Vancouver are congested and lack of affordable housing or adequate housing in any asset class, to me it is actually a failure of foresight in governance and in public private cooperation.
Because Canada, as you happen to know is a very big country. So [laughs] the notion that you actually had to do this ban, and actually lose foreign investment at a time when you're trying to diversify your economy as hydrocarbon prices structurally decline is actually not a good move. Right now the Canadian economy is running at a good clip; unemployment is low, they are diversifying. But why would you reject foreign investment when in fact, you could build more to cope with the fact that you are a popular place? Again, I want to give them points for being popular but I want to take away points for not having foresight because I'm in the foresight business and you could see this coming a mile away even if you're not Canadian.
Deidre Woollard: Well, that's true but part of the thing is, we have what we call in the US NIMBYism. Not in my backyard. That happens a lot. I think one of the things that people have this fear about migration, and the fear that is also that they're going to lose the area's culture. Concerned about historical buildings, the physical culture, as well as the cultural heritage. When you talk about widespread movement, is there going to be an erosion of that? Is it possible to keep the culture of a place and also expand it and make it fair for everyone?
Dr. Parag Khanna: It's a great question and it's not one that we can generalize about. Look, there isn't the same American culture today when you factor in demographic change or ethnographic change given what a melting pot America has become in terms of the diversity of nationalities, the rising Asian population. As I wrote about in my previous book about Asia, the fastest rate of new citizenship in America is Asians, not Latinos. Of course, the Asian population will take a long time, if ever, to catch up with the Latino population. But the fact that that is already happening is a sign of how diverse America is becoming. The most recent census just came out and it was the ethnic data that was released first and America has become more diverse despite any and all administrations and popular xenophobic movements to the contrary. In Canada, they don't have these qualms. They are increasing their population by 400,000 people a year, greater than one percent a year. They famously have their citizenship ceremonies in hockey stadiums in between periods of a hockey game. What we've seen is that country after country, especially those that we identify as nation states ethnically defined, have become more diverse in a very irreversible way such that the answer to your question is not do we preserve our identity?
The question that's now being asked is a very practical one which is, what is our new identity? How does our identity evolve? Germany is a perfect case study in this. Now of course, there is a very clear sense of Germanness. I happened to have gone to high school in Germany so I know it very well. When I was living there near Hamburg in the early 1990s, I was definitely the only ethnic Indian guy within a couple of 100 kilometers. When you go to basically almost anywhere except Eastern states in Germany today. There's lots and lots of Indians, and Chinese, Vietnamese and of course Turks and Persians, and of course, Africans too. The African population of Germany has allegedly crossed one million people and they've been demanding to have their own census because they would like to know how many they are. But I bet you didn't know that there were a million Africans in Germany. I talk about this in the book because I go to Germany all the time and I'm just seeing this all over the country. What I'm seeing is that there is this new conversation. In fact, they call 'Die Neue Deutsch' like the new Germans. They don't just mean those people will immigrate and start to drink beer and eat sausages and go to soccer games. What they mean is like they're changing who we are. They're changing what languages we speak and learn. They are changing how we interact with each other and what constitutes the norms of discourse in society. Yet at the same time, that's not exactly a country that just gives up its identity like far from it. There's also this sense that they create a civic yardstick, not a religious one that is unattainable for people unless you convert your religion, but rather a certain set of civic metrics like this is what we think a good Germanness is. You don't make too much noise, you show up to meetings on time, you learn to speak German, all these things. What I find heartening is that whereas before you had Turkish migrants and all these others who never really assimilated, never really learned the language. Just fly to Frankfurt airport. You're going to see the Iranian guy working at the kiosk and the Nigerian woman stocking the fridge at the convenience store, chatting with each other in German. That's their common language. It's happening slowly, but it's also because Germany said, hey, look, we've let in a million Syrian migrants in 2015, 2016, we're not going to send them back the way other countries are doing, just adapting, assimilate, learning the language. There's a lot to be learned from language policy. In America could learn this too, but will never enforce it, that's just not our thing.
But in the Netherlands, you will never become a Dutch citizen unless you've learned to speak Dutch, it's just not going to happen. The truth is that, I could say this, personally, haven't grown up in different places and not actually, I mean, English is a native language, if you don't learn the language you will never assimilate anywhere. I've had to do this in a few different countries. I study language policy in these countries. The difference between countries where you literally have inter ethnic, race on race violence versus ones where people get along better is literally everyone has to speak one language, bottom line. But now you're still going to have religious violence where you're still going to have that and other kinds of things. But on a relative basis, on a scale, you can get everyone's speaking one language, is going to go along way. By the way, again, I failed to mention Singapore, the country I live in. This is a Chinese, Malay, Tamil and other country. There's four official languages in this country. By Lee Kuan Yew, the great founding father of the country said, everyone better speak English now, that was it, done. Part of what worries me a little bit is that you actually see that there's such an influx of Chinese population from Mainland China that aren't well assimilated, that haven't learned English well because they've been a bit lax on that. Then you start to see a bit of fragmentation. That melting pot is very fragile thing. But I just want to emphasize here that look, America is a huge country, we can absorb tens and tens of millions more migrants from every part of the world and not lose Americanness, and it's far more likely that those people, if you let them, embrace them into want to become American, not just to take refuge in America, but to become American, be considered American, they're going to take that trade. The essence of America, does that have to bend over backwards to cater to every identity that comes in. All those people want to be American. I can tell you because I immigrated to America when I was six and a half years old.
Deidre Woollard: Well, the essence of Americanness, has always been about the melting pot, I think it's a little bit different than France or somewhere out there. Americanness to me and I think to a lot of people is mixed. Let's talk just for a second about building new cities. We talked about Greenland and Antarctica. We see in Saudi Arabia, this idea of building new cities and building them on this really, almost building utopias. So far it hasn't quite worked out yet and yet it's something we really need to do. What do you think that we're missing when we're trying to build new cities?
Dr. Parag Khanna: This is an arena that I'm very actively involved in, I'm on the board of the new city's foundation whose name says it all. But in reality, greenfield projects are not the norm, it's cities that are trying to reinvent themselves. Because the fact is that, actually if you remember the example of Prime Minister Modi of India, he said, we're going to build 100 new cities when he was elected, but they factored. Actually, we're going to help 100 cities become better cities. That's by enlarge what we need to do in the sense that, if you add up the population of every single totally greenfield cities, smart city, high-tech city, charter city, this city, that city thing around the world, all of them would fit in my neighborhood of Singapore. Every single person who lives in a city that was just where ground was broken in the last 20 years, you're talking about a couple of 100,000 people, but that's it.
Except we have eight billion people we need to think about in this world. The story is not really just going and again, putting a shovel in the ground and building a new city from scratch and that being the new pioneering promise land. It's really about helping cities as they are adapt. In that sense, every city has a different set of problems that they need to cope and improve. It could be their sanitation and utilities and basic infrastructure, which is crumbling in so many places, both in the 1st world, in America, and in the third world. Now, there are cases where you should build a whole new city. Saudi Arabia does not happen to be one of those places where you actually need to build a new city. I've been involved in that and other projects and it occurs to me as someone who has been the Jeddah and Riyadh, well, why don't you just actually build more housing in Jeddah and Riyadh? Jeddah happens to be a really nice sea-side city with a very strong heritage. China has built a lot of new cities or districts of cities like Tianjin Eco-city and others. But Tianjin Eco-city is really small, let's remember, in terms of its population. What actually happens to the extent of these projects succeed at all, is that they are very close to large cities, they get absorbed into them to the extent that they have completely parallel jurisdictions and are special economic zones and special administrative zones. Once they accrue enough investment, they wind up normalizing their regulations such that they fold into the main, if you will. They are no longer so distinct or offshore, if you will. I don't really think that we need to, again, set out to, again, to use the phrase from earlier to Terraform Siberia. I mean, there will be an expansion, re-settlement of some populations in desperate situations. But by enlarge, we have a legacy of occupying quite a few of the key geographies or having some infrastructure there, knowing how we would develop them and build them. I hope this is a big part of the argument for me and the thesis in the book is looking at the technologies that will allow us to build sustainable settlements. How do we do a circular habitat? How do we do rainwater collection and gray water recycling at a large scale? How do we do solar power or batteries that switch out and power homes, battery storage and distribution? Obviously, electric cars and vehicles and charging stations. Hydroponic and aquaponic agriculture. How can we do all of those things at scale with entire towns and growing from towns to cities and so forth? That is something that is going to happen within our existing cities, but it's also something that we could do in greenfield projects. But the key thing are the greenfield project is not that suddenly five million people going to live there, it's that the lessons from those experiments radiate outwards to everyone else who could use them so that we can make the places that we already still live in more livable.
Deidre Woollard: Well, you just mentioned something that I'm really interested in, which is the global food supply. Things like you mentioned, aquaponics and things like indoor farms, for example. One of the things that I've been talking to a lot of people about is indoor farming, vertical farming, but also techniques to make the current land, the arable land more efficient as it starts to shrink because of things like drought in California, which is where we grow so much of the produce for the US that the land that we can really grow on is starting to shrink. What do you think about indoor farms I know there are certain areas of the world that are a little bit ahead of US on this?
Dr. Parag Khanna: Yes, I mean, the places whereas seed technology and agrotech are really evolve replaces like the Netherlands, which has essentially as long advantage in seed technology is obviously the flower capital of the world among other things, Brazil is dig into plant genetics, Australia too. A lot of countries are working on that space. Obviously American companies and European companies can catch up. It's a question of deployment and identifying the geography, there is something of a scramble going on around identifying the key new arable areas because that's shifting all the time. This is one of the reasons why we need to talk about environmental geography as a precursor to political geography and transcending it in many ways because it's not that we don't have geographies or food cultivation, Canada is now foods agro superpower. Russia is now an agro superpower. Kazakhstan is now an agro superpower. Not something we would have thought 20, 25 years ago, but they very much are today. Soy cultivation originated in China 5,000 years ago. But China is now the largest importer of soy because it is built so many cities on its arable land. However, now that climate is shifting, you can now grow soy in many more places than before. China is going to start planting soy in Russia and then it's somebody going to have soy again, right in it hinterland, if you will. We have a constantly shifting geography about yes, we need newer technologies and yes, we just think about the appropriate farming practices for those locations.
Whether industrial mono-culture is the right thing to do for scale, or whether we need to have more crop rotation in these things and that's stuff that locals knows best. Whether it's our existing geographies where we're growing things or if we can no longer grow avocados in California, but we can grow them in a whole lot of other places then we do think carefully about the right way to do it so that we can preserve the regenerative quality of the soil and so forth. But we have not run out geographies to grow food nor is there a shortage of food look at how much food rotted in the past one year because it couldn't get moved around the world because the border closures. Our problem is that we have an environmental crisis. But technically we will discover and adapt and harness and harvest adequately from around the world. But do we have the distribution system? Should we even have such far-flung agricultural supply chains? When, of course, that is such a huge contributor to global warming. The answer is no. We should focus much more on what's called the "Ecopolis." Growing more food and our immediate radius whether it's through natural and organic or technologically accelerated means. We're doing both in the greenhouses or in the hydroponic factories of China, which literally are industrial like brownfield conversion. What used to be factories are now food farms in China. They're growing tons of lettuce like every single week. You've got to scale that obviously and it's very doable technology. Look, it's too late to solve climate change again, the mitigation question just through natural means. Adaptation is a very technologically intensive process and I know patients at this point for people who say all but you don't want to put all your faith in technology, excuse me. I'm not going to put my faith in humanity at [laughs] this point because our collective behavior does not suggest that we're capable of collective action at the scale needed. Yes, technology is going to be really crucial here and of course again sounds a lot of the technologies that I just mentioned are ones where I think it should, accredit the real estate industry, the Prop tech industry and so far they've been big investors in some of these technologies around creating circular domiciles and settlements. That is very exciting to me and I want to see many more players in the real estate industry make strong commitments in that direction. It's going to be a very lucrative field to be in.
Deidre Woollard: Well, you just mentioned the word that is perfect way to end this because my last question, obviously I'm with The Motley Fool. We always think about investors and ways that we can invest in this. You said lucrative. What takeaways that should investors be looking at that it seems to me that when I start to start with, there's so many different companies that are working on building different parts of what we've talked about during the past hour?
Dr. Parag Khanna: Well, so I mean, geographically I would invest in the planet Oasis. If you'll permit a plug, my company's products is Climate Alpha. What we've actually done is to take more than 100 different data sets and train them through neuro network and just start to make price predictions around geographies for the 3,000 counties of America. Again, using data driven tools, wherever you're getting it from, the thing is about today's market is that a lot of the products out there, basically your punitive in nature. They tell you where not to invest. They tell you where it'll be flooded and where C-levels are going to rise. But gets what you have a newspaper that can tell you that. But America is going to very large countries. If you want to arbitrage across the geographies and rank the climate oasis, you need to have tools that have national and scale and don't look only at climate variables. We have to look at human behavior, you have to look at tax policy and education levels and proximity to city life for the freight, cargo and warehousing and all of these things you need to look at to get a holistic picture of how the American population, whoever the 300-million plus people are living in America today and tomorrow or the next day, how do they behave? How can we track where they're going and what are the places that they're likely to settle in. I think that investing in these algorithmic tools, data-driven tools, real-time services, is a very key way for the real estate industry to hedge it's that and stay ahead of the curve again, a lot of the companies that I talked to are clearly over levered in the states that are going to be the least habitable. This is hardly an abstract. You're not asking an abstract question, I'm not giving you an abstract answer. Southern California, Texas, Florida, think about all the property developers who have most of their assets there and it's fine if they're just flipping and flipping, build and sell. But eventually, if you want to anticipate the band and you want to have that arbitrage in terms of those slow land price appreciation versus the higher property appreciation that you can get down the road. I would be using these tools to do some serious land banking right now and that's of course, part of the market that we serve and that the industry wants to tap. But it doesn't yet have enough knowledge.
Deidre Woollard: I could talk to you for hours, but I know it is late there, Parag. Thank you so much for your time today. The book is called Move the Forces Uprooting us. It is a fascinating overview of so many different factors, much of which we talked about today, but there's so much more in the book. You can learn more at paragkhanna.com/move book will be out in mid-October. Thank you so much.
Dr. Parag Khanna: Deidre thank you. It's great.