 My topic this afternoon is skyscrapers and business cycles right and I think first we need to deal with the obvious question and that is When mark Thornton Literally wrote the book about skyscrapers and business cycles. You can buy it downstairs. I highly recommend that you buy it downstairs Why are you giving the talk about skyscrapers and business cycles? And that's a good question. I have nothing else to say about that It's a good question I guess I can perhaps you know Show the man behind the curtain a little bit in terms of the process I was sending email earlier as you know, this was being planned and I was told we would like you to give the MMT lecture All right, and just give us a half dozen topics you'd be willing to speak on I sent a list of things and because I have co-authored some things with dr. Thornton about skyscrapers I put in there I can talk about skyscrapers and business cycles and I specifically said in there right if dr. Thornton isn't planning to right so I guess he wasn't planning to All right, and it's fairly clear that I didn't like win this honor in a fight or something I think he has a good foot on me So I'm wondering if there's a skyscraper and business cycles like Lecture height index that we can propose as well. I don't know. All right, so let's talk about the skyscraper index Okay, so we've not heard of this before The idea was first proposed by Andrew Lawrence back in 1999 Where he just made this kind of casual observation, right? So if you look throughout the 20th century, it looks like financial crises right happen right around the time that Record-breaking skyscrapers are being built. There's just one after another we see this pattern right time after time again throughout the entire 20th century it was a clear regularity now He didn't really say much about this apart just kind of observing it There's actually some debate as to how serious he was about this right whether it was just kind of a joke index that he Suggesting very much like the hemline index for skirts in the stock market that kind of thing Was this something that's kind of a joke or was it something that he was proposing would actually be something serious But it was dr. Thornton who came along a few years later and published a paper in 2005 in the quarterly journal of Austrian economics Where he said no, there's actually a very good right theoretical reason for this to happen Right and we know that reason because of Austrian business cycle theory, right? So I first certainly need to describe that paper where dr. Thornton makes these connections right for Okay, so first let's get kind of the empirics out of the way go through the list Right, so go back to the early 20th century We had two Significant record-breaking buildings being built the Singer building and MetLife building in New York. They're both completed 1908 1909 it's they were under construction amidst the Panic of 1907 Then we come forward a couple decades 40 Wall Street the Chrysler building the Empire State building were completed in 1929 1930 1931 that's a under construction as the stock market is crashing and we're entering the Great Depression Come forward a few more decades. We have the World Trade Center in the Sears Tower completed in 1972 and 1973 followed then by the 1970s stagflation and then we have the Patronus Tower in 1997 which is connected then with the East Asian crisis It's one after another we see this happen now There is one false positive the dr. Thornton talks about and that is the Woolworth building in 1913 Which was not then followed by a financial crisis He suggests and I think there's good reason to believe this that what would have been a financial crisis got covered up by World War one Spending and so we really didn't get to see that in the data in a clear way like we did in every single other case Right throughout the 20th century And so why would this happen, right? It's an interesting observation, but why? So let's go back to Austrian business cycle theory and dr. Thornton describes for us Three different Cantillon effects that come from lower interest rates that would then have an impact and encourage right the building of skyscrapers As the first one is that a lower interest rate leads to higher land prices It turns out there are a number of reasons. This is true now So this is where I entered the picture this was a statement that dr. Thornton made in his paper We accept this is true and so I did some research related to this kind of my research method is fairly predictable now for myself and that I read things in the Austrian literature I read things in the mainstream literature I find where there's some overlap or connection. I get an idea. I write a couple pages about it I Send those pages off as a proposal to the quarterly to the Austrian Economic Research Conference. They host here every year I Generally would get accepted and then I put together a 20 minute presentation I come and I talk about it And then I forget about that paper and go move on to something else and never publish it And that was exactly the the history of this particular paper right so I presented this idea dr. Thornton heard this and Said oh, okay, this is interesting I'm glad to see that other people are interested in skyscrapers. So maybe there are things we can do together So then we ended up we did actually publish some things jointly that I'll talk about here in a minute So I'm gonna flesh out right what is a sentence in Thornton? It takes me a couple pages in 20 minutes to say So here we go. So lower interest rates lead to higher land prices. So why does that happen? So I suggest that there are three different reasons right for this that all combine on top of each other And would specifically lead not to not just toward more building but more building specifically of skyscrapers Right. So the first thing right is when we have lower interest rates We tend to discount the future less This is not that surprising that something that dr. Herbner talked about in his lecture Right. So imagine a piece of land. So just any piece of land Let's say that this is fairly raw land might have say wild raspberries growing on it So it is producing something it will continue to produce this over time It's so so I think about the value of this land Well from a human perspective the way that I would value this is I'm really just interested in the raspberries. I like raspberries They're great, right? So I want the raspberries of course most of the raspberries this land will produce are in the future And so I will discount right that future production and when I decide how valuable this land is to to me when I want to buy it Right. So if we have lower interest rates, I discount the future less So all of this future production is less discounted, which then means the value of the land is going to be higher So this is something that is going to be true for any land that human beings are thinking about using as long as it Has this future use whether it's because it's holding a building or because it's producing Corn or raspberries or what have you we're going to value it more Whenever we're discounting the future less the promise of future services But there are also a couple other reasons So one of this is where I got an overlap with some of the mainstream literature regarding land use right, so Another thing that lower interest rates do is it increases wages So we know that Dr. Newman talked about this in his Austrian business cycle theory lecture described how this would happen It's we have an increase in wages and one thing that does is it changes the way that we view the value of our time So that the time that we're spending not being paid We tend to cut back on because there's a greater reward from being paid So one of the things that we will do and not be paid is commute Commuting is not particularly a pleasant experience for me. I don't like it I don't want to do a whole lot of it and if I'm having to give up high-paid work time to do it I really want to minimize that right, so it's this commuting time Is what's going to push us toward downtown? And so normally like this this happens just generally because we value time where you're going to find is that Residences that are located closer to places of work people are going to be willing to pay more for that land right so Because I want to be close to work. I want to short commute on the other hand if I have to live an hour away from where I work I'm not going to be willing to pay as much for that land And this is something you can't actually see when you look at land prices And you can also find evidence of this in the way that we build right on the different land So just as an example look at how tall buildings are when you look at downtown right versus outside of town, right? So you go downtown We stick huge buildings on tiny amounts of land right so one way we can think of this is that the land itself is really expensive Right, so we don't want to build out and use more land Instead we build up right we use that space above it which is expensive to do right building the tenth story of a building is a Hard-feet right, but if the land next door is really expensive it makes sense right to go ahead and build that tenth story Right land is really expensive. We build close together. We build very tall on the other hand when land is very cheap We build further apart right we may leave more green space between where we live and that sort of thing So this is something you can easily observe right driving through any city right starting the outskirts Look at how close buildings are together look at how big they are move toward the downtown And you find buildings get closer together and taller even if you live someplace like where I live I live in a very small town. We are up to multiple stop lights now That's good right so but if you look in Union Town Square Union Town Square, it's not very big. We don't have we don't have ten straight buildings right Well, we also have virtually no green space right right around that is the first stop light right in the town No green space at all our businesses are kind of in these storefronts like you might find in larger towns Go you know block or two away and now you start seeing right lots that are about a tenth of an acre or so Right with the two three-story house on it right built on it also probably with a basement So probably four levels I would guess right go a little bit further out Now you start seeing a fifth of an acre lots being more common and you might not see a usable attic anymore Right so now our houses are a little bit shorter in terms of usable space But they're wider longer and so on and then you go out where I live right. I have a half acre lot I didn't pay an enormous amount of money I don't have an enormous amount of money to pay for that extra land and I have two usable stories in my house So it's relatively shorter even then just if I went a little bit further to downtown Union Town Things get shorter we get spaced further apart This is the type of pattern we find right so then what happens So we'd find then we'd have generally higher land prices right in the downtown area versus outside But this gets intensified as we have higher wages make commutes even less attractive than normal Right, so that would lead toward right people tend to want to move away from the ex-servs and suburbs Try to move closer to downtown right so people are leaving like the opposite of what they did last year But in trying to buy those high-rise condominiums or that kind of thing That's where we're going to see people moving and that's going to tend to drive up land prices as people are looking for shorter commute Times that's the second reason so discounting and then economizing on our commute times The third reason is just a simple income effect With it generally speaking the wealthier we are the more living space we want to have right so that would Tend to increase kind of overall right how much we're willing to pay for land right so that would also push up Land prices on the whole so two of these effects discounting and the income effect are going to push up all land prices But that like commute avoidance effect is going to specifically push up prices of land downtown Pushing us then we really want to build very very tall buildings where we would normally build tall buildings anyway Okay, build very very tall buildings that sounds like a skyscraper to me So that that's an incentive for us to build skyscrapers all because the interest rates were lower But then Thornton gives two other reasons So we have this lower interest rate one We have this impact on land prices leading us to build up rather than out But then we also have other things that happen So another is that a lower interest rate encourages us to engage in more capital-intensive production So we have more capital-intensive production one of the effects of that is that there tends to be more economies of scale if you have a Very capital-intensive production structure So I think of when I think of economies of scale the example that I use in my class is the Kia plant right here on I-85 Is I noticed one time I was driving from Atlanta here for one from the conferences and I just looked over That place is huge Enormous plant right so I decided on the way back in my rental car I was going to watch the odometer and it's literally one mile right from one end to the other I Suggest it's not an accident. This is not in a downtown area It's it's a lot of space that they're using up and there's nothing else nearby I sleep they pick pretty cheap land right but so you have these economies of scale then leading to very large firms So things like this Kia plant when I presented this in class originally I had a student come to me afterwards and say oh a mile long plant. That's nothing or Henry Ford had a five mile long plant in Michigan Five miles. It's like half my commute. I'd be driving past the same plant Right, so we when we have these really capital-intensive auto production is a great example of a capital-intensive industry That tends to lead to very very large firms So if I have a very very large firm I need someplace to put my offices and these offices are probably going to be very large It takes a lot of people right to run something like the Ford corporation or the Kia corporation or the light or the like But so we need a lot of office space ideally located close together It makes meetings easier that kind of thing right so what kind of building is it? They were going to be able to have say in a centralized location so that people can fairly easily right get to it We can house all of these people in one space so we can facilitate meetings between different departments and what have you What kind of buildings that sound like a Skyscraper in a downtown area. This is a great thing for us to build So the more we move toward having larger firms that then have to organize in this way the more demand We're going to have for that downtown area to build skyscrapers the third Effect would be when we have a lower interest rate like dr. Newton described right that does lead to more Investment in the very early stages of production Right so often we like to focus on very physical things. It's easier for us to imagine Right so things like mining we need to pull more ore out of the ground right in production But I'm very glad dr. Newman mentioned there's also an intellectual side to this and research and development Before we can produce a product we have to develop that product and it turns out building especially record breaking skyscrapers So there's a big key there if you're going to build a record breaking skyscraper You probably need to do some serious research and development to make it even technically possible Simply because if I'm going to build say a kilometer tall building And I expect to be able to move people from the floor at the ground All the way up to the top That's going to be quite an elevator In fact, we have nothing like this at this point So we need to develop how do we make this happen without it being a painfully long ride Right from from the bottom to the top so your commute is all vertical Right, how do we make it fast enough and but also safe for people because that is actually a significant change in altitude You're going through from the ground sea level virtually to a kilometer higher So how do we make it safe for people? How do we also make it so the mechanics don't take an enormous amount of space within the building itself because any space that the Mechanics from the elevator take is space. That's very difficult to rent out Right, nobody's really interested in renting the mechanic room So you need to figure out how to do this and that requires a lot of research and development There are other cases where we have had to make significant strides and things like ventilation systems That's how do we manage to actually heat and cool this building at all these different levels without dealing with this air pressure problems and the like It's very difficult. It turns out for us to use say a heating system like I have in my house When you build a hundred stories on top of it The furnace in the basement is not going to work very well We need to come up with some other methods and that requires research and development which gets encouraged by that low interest rate And so we have these three effects land prices Capital intensity leading to larger firms and then the R&D all combining right to make record-breaking skyscrapers Possible on the technological side, but also desirable at the same time So it's very very powerful and all of this comes from Austrian business cycle theory Pretty cool. It's so dr. Thornton published this paper back in 2005 and then a group of economists, right? Noticed this paper Led it seems by a man by the name of Jason Barr who has written a lot about skyscrapers in the mainstream world He has several papers on this topic and it seems like most of his time was spent that trying to figure out why we build skyscrapers Why do we even bother with this is it a purely economic decision? Right, or is it something like we're we're building skyscrapers for the sake of glory It's we're competing with other cities and we want to build the tallest skyscraper to prove that you know Chicago is the best or something like that Okay, so he does a lot of these sorts of tests and then apparently he came across this paper from dr. Thornton and thought Something at least didn't feel right right to Jason Barr with the research he'd previously done So he worked together with a couple other economists Mr. Rock and Moundra and they published a paper in 2014 in the journal applied economics and the title of that paper was skyscraper height in the business cycle separating myth from reality Tile you can get a sense of what they're going to be saying Okay, so what does he say in this paper and I'm going to respond to it a little bit later But first let's describe what he says, right? So they really have two main Results and these are econometric. I'll try to describe them as best I can So the first is that building height my kind of average building height does not Granger cause Output changes now Granger cause is a weird word, right? Why don't you just say cause and there's a reason for that what Granger cause is It allows you to be very agnostic right about actual causality instead. It's just about timing So when we say that height does not Granger cause output changes. Well, what if it did what would that actually look like? So what it would look like if you did this test and you found yes, there's Granger causality What it means is that first we see buildings are getting bigger as we've taller and taller buildings being built and then after that GDP starts increasing, right? That would be height is causing right Granger causing right output So clearly the skyscraper curse is not true. Of course This is nothing like what Dr. Thornton claimed or even going back to Andrew Lawrence. This is nothing like what he observed He did not make any claim like this, right? Okay, all right, so this there's no Granger causality found that what he did find though, right was that height and output Right are co-integrated Okay Cointegration well, that's another very technical term. So what does this mean? Right, so we'll use co-integration tests to figure out whether two series over time two data series over time Share some kind of common trend, right? So are they moving right predictably related to one another? Basically simultaneously So probably the easiest kind of Granger and a kind of co-integration test I can imagine to tell you about Suppose that you take other returns of the S&P 500 over time And then you want to compare it to the returns of the S&P 500 over time No, I didn't just experience a brain blip that was the same thing twice, right? So we're looking okay, so we have this data set in the same data set Let's check for co-integration what we should find is that these are extremely strongly co-integrated, right? You find exactly the same trend right between these two I bet you can also do other things and run this test, right? So for example you could take the S&P 500 over time and then put a negative sign in front of it and run the co-integration test And you also find out that they're extremely co-integrated. It's just that it has a sign of negative one So one is the flip side of the other and we can still catch that right with the co-integration test Or maybe we take the S&P 500 and then multiply it by a half right run the co-integration test again You'll still find yes, they're co-integrated, but it's a factor of 0.5 So so it can it can deal with the fact you have different units or that kind of thing We're just looking for do we have some kind of simultaneity in the way these things move So when we say that height and output are co-integrated, what does that mean? That means that as the economy improves right GDP is going up buildings are getting taller and taller as The economy gets worse Height is falling Buildings getting shorter and shorter new construction It's not that not the buildings are shrinking but the new buildings that were building are smaller than they were before Which suggests then that at the peak right of building height. We should be also at the peak of GDP therefore The skyscraper curses a myth. I suggest that therefore is questionable, right? This feels like the opposite conclusion to what we should come to right so So this Dr. Thornton was aware of this paper and this was right around the time that I wrote the paper and presented it at Austrian Economics Research Conference, so he said hey this paper came out. Let's take we can respond to this, right? So he wrote a fairly short comment Between the two of us and really just kind of recasting their results saying this isn't actually Conflicting at all with the story of the skyscraper curse, right? Like we don't have to reject the empirical work They did it's perfectly fine. It just the conclusion they draw from it that therefore is totally wrong All right, the interpretation is wrong. So he wrote this short comment We sent it to applied econ the place where the original paper appeared And they naturally sent it out right to other academics to review Whether this was worth publishing and we're reasonably confident that they sent it to Jason Barr He effectively identified himself in the his comments on the comment And the decision was made that now this wasn't worth publishing in applied econ So of course we just gave up Unpublishing an applied econ. Let me finish right and instead said well, okay This is too short to publish anywhere else. We need to make this a full paper now All right, so dr. Thornton brings in his student Elizabeth Boyle and the three of us together write a paper that gets published in the quarterly journal of Austrian economics the next year in 2015 entitled is there such a thing as a skyscraper curse, right? And we obviously come to the conclusion that no there isn't Yes, yes, there is right. So so what are we doing that paper? All right, so first we recast the results from right bar and company I'll tell you a little bit more about that though I think I've already given some sense of where we're going with that But then we also provide new empirical results, right? So Austrians don't do empirics except when we do All right, so these new empirical results because ultimately this is an empirical question, right? Is there a skyscraper curse or not or does this actually happen? We know the reasoning is there, but can we observe it? So we did a couple things so one was I just looked at what is the probability of being in a recession in the United States? Because I have that data fairly easily if there was a record breaking skyscraper built somewhere in the world Right the previous year versus if there was not a skyscraper built in the previous year Is there any difference does the skyscraper building make any difference to our probability of being in a recession? All right, so it turns out if there was a skyscraper built in a particular calendar year Then the probability of us being in a recession in any in any one month, right in any particular month is probably clearer The next year is fifty six point two five percent So if there's a skyscraper built somewhere in the world a record breaking skyscraper built somewhere in the world Then the next year in any particular month There's a more than fifty fifty percent chance that you're going to actually be in a recession How does that compare to when there's not a record breaking skyscraper when there's not a record breaking skyscraper built in the previous year? It's twenty three percent right now One would think that you could kind of eyeball fifty six percent versus twenty three percent and say This feels like there's a difference like maybe the skyscraper is a sign, right? There's a recession coming right that that adds something to the information we would have without that But just to be clear I went through I did all of the statistical work See is this a statistically significant difference and yes, yes, it is. It's not surprising All right, but we went further right so we can in fact run regressions so brushed off those skills right ran a regression after all because one of the issues we have is that Recessions and also not recessions right tend to be pretty persistent right so whether I'm in a recession in January I'm probably going to be in one if I was in December right if I wasn't in December I'm probably not going to be in one in January it's tend to persist over time We just have these turning points and it lasts a while and then we have another turning point right so So we were really looking for is kind of what happens with the turning points Right so in this regression it allowed us then to control for not just was there a skyscraper the previous year But were we in a recession the previous month? And so controlling for that what results to begin right so here are a few probabilities for you It's a one right. What is the probability of us being in a recession if in the previous month? We were not in a recession and there was no skyscraper no record-breaking skyscraper built in the previous year turns out That's 2% Very unlikely that you're going to be in a recession any particular year if you weren't in a reset in any particular month If you weren't already in a recession and also there was no skyscraper in the previous year What if instead we add a skyscraper to that? It's what what's the probability of hitting a turning point where we go from things were fine last month? They're not fine anymore. We're in a recession now But if there was a skyscraper built in the previous year that goes from 2% up to 7% so That's three and a half times as high Hitting a turning point and then this in the same 7% chance that feels really small remember that applies in every single month Right out that entire year after we finished that skyscraper All right, so we might not hit it immediately But the odds of pulling that 7% chance at some point right during those 12 months that follow is pretty high We're gonna do it at some point in that time. Okay, right. How about going the other way? All right, so what's the probability of us not having a recession? Well, if we were already in a recession in the previous month and then what's the odds of us now getting out of it If there was no skyscraper It's 8% The odds of the recession ending right as long as there wasn't a skyscraper built in the previous year Reasonable 8% any one particular month. So give it a year right odds are we'll probably get out of the recession On the other hand if there was a skyscraper built the previous year The odds of us getting out of that recession in any particular month Right is 3% Just slashed the possibility of us hitting that turning point where things are going to get better Interesting and yes, these are all statistically significant and all of that right so Okay, right. So I'll just say We're of the opinion that there is actually pretty good evidence right that record-breaking skyscrapers what the curse was about Not just overall building height, but the curse was about record-breaking skyscrapers are in fact connected with higher probabilities of entering Recessions staying in recessions and so on Okay, so let's get into just a couple more problems then with Bar and at all So a couple other observations about it one was what I just kind of mentioned off-hand And that is that they looked at height on the whole right rather than looking specifically at Record-breaking skyscrapers, which is what the curse was about So they end up muddying the waters a bit with just general building a second thing is that when they looked at What happens in terms of GDP they were looking at output levels for GDP Not just at whether we're in a recession or not, which means how bad or how Mild the recession is it's going to affect the results still like does this actually look like it's appearing or not Well, that's going to get muddied by how severe the recessions are where the skyscraper curse is not actually making any kind of Commitment to this at all right, right whereas if I were to use the bar mitzvah khmunja test What it would mean is that higher buildings right are going to lead to worse Recessions for them to be able to catch it right we make no claim about this We're not going to say well because the wreck it turns out this is a shocking fact Record-breaking skyscrapers keep getting taller because that's the way records work, right? But this isn't necessarily true of financial crises, right? We can have recessions that are mild compared to the previous one or worse compared to the previous one That doesn't happen So this is muddying the waters with the kinds of tests that they were using with bar at all And they said this is making it so that one they're not even trying right to evaluate the actual skyscraper person What it says and two even if we accepted they were they're making it difficult right to find Based on just the simple data. They're using So this point I'm going to kind of take the traditional turn and say what happens after the 20th century So let's see what happens It's the first I think it's worth noting that around the global financial crisis We had the Burj Khalifa tower was built right around that time frame So that was predicted it was predicted by dr. Thornton as he noticed that I was being built Yep, there's there's a problem coming. He saw that coming for quite a while and then sure enough it did so have it right now Do we have any record-breaking? skyscrapers in works we do The Jeddah tower which is previously known as the kingdom tower being built in Saudi Arabia That's the one that's planned to be a kilometer tall Now you notice I say planned to be right, so let's talk a little bit about that tower All right, so it turns out they could start a construction back in April 2013 So it's it's a long process to build a kilometer tall building Then February 2018 they finally felt like they could announce right when the expected completion date was 2020 Right so now dr. Thornton is one he thinks that really the time we need to start looking is when they break the record Right, so when does this construction break the record? It might not be done yet When does it break the record? But it turns out we don't have that signal because in March 2018 one month after they announced the expected completion date They had to suspend construction because the Saudi Arabian purges created labor issues for them That's they had to just abandon this so we didn't actually get to the point where we could make that trigger But it was because of a totally unrelated issue. It was just a political problem. All right So nonetheless, we had this signal coming 2020 was a year we should be paying attention It's not interesting right especially because I'm of I'm of the opinion that when you look at the COVID crisis that we faced over the past year and the economics of it But the way that it fell apart doesn't feel like we would normally would think the crisis would happen in Austrian business cycle theory Normally we wouldn't say well the way that the boom ends is that the government decides to just shut down a bunch of the economy That's not normally what happens we we tell the interest rate story usually that's that correction and we're still waiting for that part of it Okay, so we might still need to hold our breath a little bit longer Although I do want to give some cautions and qualifications with my remaining time, although maybe not all of it, right? So one we need to be careful Not to take the skyscraper curse to literally or it can lead us down kind of silly paths, right? For example Well, we have these record-breaking skyscrapers are causing Oops right are causing recessions Zoning regulations We never have to face another financial crisis right just no buildings can be built over three stories tall So we'll never have another record-breaking skyscraper built right we never have to deal with crises again, right? It does not take it that to that level of literalness I know that Dr. Thornton suggested but I don't I've not seen this myself that there was at least some Rumblings in China where they build a lot of skyscrapers. I'll talk about that in a minute But maybe they should consider right stopping building all these skyscrapers because of the concern about causing a financial crisis on this sort of Basis, you know that that's missing right what the story actually is it's it's a common cause So you need to deal with that common cause if you want to prevent the the crisis from happening, okay? So that's one thing right I think it's also helpful because we know occasionally we do get a false positive that comes along Right, so we have things like 1913 right So I think it does maybe helpful if you're using this for prediction purposes to combine this with other indicators All right So for example the Jeddah Tower it started being built in April 2013 we get the Crisis in 2020 when it was planned to be completed while they figured out the plan five years after they started Okay, that's that's a long window. So how can we narrow the window? I suggest looking at other indicators may help one of my favorites is to look for inverted yield curves I think there's actually a good Austrian basis for this being a signal if you ask most mainstream economists I think they would also agree this seems to be fairly reliable most of the time But an inverted yield curve tends to happen before recessions strike And I think we can understand this through Austrian business cycle theory I'll spare you the details at the moment And so we do that combination so so between Dr. Thornton and I right he watches the skyscrapers And I watch the yield curves and right around 2018 2019 the yield curve inverted. This is okay. The recession is coming It's coming. I didn't think it would happen through a global pandemic and lockdowns, right? But we have right this corroborating evidence that there is a problem coming Another thing that can help is to look for clusters of skyscraper building So you notice when I gave the data before right very rarely was I just giving one building Except with the exception of the Patronus Tower So it's singer and met life right built right around the same time 40 Wall Street Chrysler building Empire State Building all built around the same Time World Trade Center and the steers tower built around the same time There's these clusters do in fact help us to get an idea that it isn't in fact Just one entrepreneur right trying to gloriously show off their wealth No, this is something that is embedded in the economy and the incentives that have been created Specifically by fellow interest rates driving the boom, right? And you can actually see this if you look kind of locally, right? So my wife and I was at about Nine years ago now. No, it's five years ago because it was for our ninth anniversary We went we took a I guess a sightseeing tour on a boat right through Pittsburgh It's a you go down the three rivers on the Gateway Clipper I and in the tour guide was you know over the loudspeaker talking about the different buildings and when they were built Okay, and I was listening because I had heard dr. Thornton talk about this 1929 this building is bill 1930 this building is bill 1931 this building was built. Well, isn't that interesting? All right, so I just looked this up when I was preparing this lecture and they're very clear clusters in Pittsburgh, Pennsylvania of Building around the night early 1930s That would be on set of the Great Depression the early 1950s just before we had a recession It's a more mild one not a financial crisis that was huge But we saw a cluster of building right around that time the early 1970s very much the same time as the World Trade Center and the Sears Tower were being built and then the early 1980s We also had a back-to-back recession right around that point in time and then 1987 It was another one which is interesting is that caught a stock market crash that didn't lead Weirdly to much of a recession until a few years later right in the early 90s So I think that's kind of an interesting thing or then I looked because we happened to be close to Atlanta. So what about Atlanta? So Wikipedia is awesome. Isn't it? Like you can actually type in Skyscrapers in Atlanta, Georgia and there's a page and they list them out and they list out the dates. They were completed like My life is so easy. Okay, so So what they do they set kind of an arbitrary cutoff, right? Here's some height I forget what it was for Atlanta. They set some height So and there are 39 buildings that are taller right then this particular height So I went through and I was looking for clusters So when I want at least 10% of them So so say three or four buildings being built in the same year was what I was looking for Turns out four of those 39 were built in 1992 That's when they were completed. They would have happened then during the early 1990s recession Which you probably don't remember one because you weren't born in two because it's fairly mild, right? But okay, then four more were built in 2008 Another three built in 2009. So these are all completion dates. They would have been being built right during the global financial crisis Interesting. So 2008 2009 total at seven right of the 39 tallest buildings in Atlanta being built It's a fairly young city in terms of really Attaining metropolitan sort of status in its building So how about let's look worldwide so there are so again, right tallest skyscrapers in the world on Wikipedia enter They said an arbitrary cutoff for me. I'll accept that arbitrary cutoff 74 tallest buildings in the world I don't know why they picked these right? Why not allow one more building the 75 tallest right or the 40 tallest in Atlanta, whatever All right, so the 74 tallest buildings in the world So here's some some statistics from those again. I was looking for I want at least seven or eight right built in the same year Well, the most common year to have a skyscraper built out on this list of 74 or 12 of them completed in the same year That was 2020 Of those 12 Seven were built in China Interesting now it turns out we also have that we have apparently construction is underway We have completion dates expected in 21 and 22 for three more buildings Three more skyscrapers turns out of these three only three of them are in China Okay, and of those three Two of them are in the city of Wuhan So I don't know whether there's some some kind of skyscraper curse we can tie to the release of diseases We have to go back and do some epidemiological work or something that's outside my field But I find that very interesting like we know that COVID patient zero whatever else you think about how this came about We know COVID patient zero was there in Wuhan China. Nobody debates this The same place that we're seeing a lot of the skyscraper building I just found that interesting. So how about the other ones? So so 12 completed in 2020 10 completed in 2019 So of those 74 buildings 22 right were completed within the past two years So it would clearly be tied then right with the COVID crisis And then the last set was eight that were completed in 2012 That feels kind of strange Right, but if you go back a little bit you realize that these were buildings that took a while to build and that would actually These would have come out of the global financial crisis as well when you look at their building times It did overlap there Right, so so I think that's kind of an interesting thing. So I think there's if nothing else. It's a fun topic It's potentially a useful topic. I myself. I'm not a very good investor So I don't I don't rely on my intuition in looking at this skyscraper index to guide my investing But it is nonetheless. I think something worth keeping track of if you want to know where we're headed But I think it's one thing amongst many that we should keep an eye on so I'll go ahead and wrap there