 They were back with a live view from the North today. I'm Jay Fidel. This is Stink Tech. Our guest is Ken Rogers. And at the moment, we're going to know more about him. Ken is a business guy. Ken attended NYU Stern School of Business, which he and I went to see six months ago in New York. And it was quite a time. And it was called GBA Graduate Business Administration. Was it back when, when we knew each other in New York? Welcome to the show, Ken. Hello, Jay. So let me, let me start by saying, you know, you and I have both followed the world. I mean, we lived in the world now since, you know, we made many moons, many, many moons. I won't go into the details, but it was actually in the 60s. And in the 60s, though, we're not newspaper headlines about affordable housing and homelessness. And somewhere along the line, it all changed. And now you see problems and headlines about affordable housing every day. You see every legislative governmental body trying to solve that problem unsuccessfully in so many places. And you see homelessness on the streets pretty much everywhere. So if you look at the views of an economist, which you are, what, you know, what do you see happened here? How come? What was the evolution of our global economy so as to have all these people on the street? Well, an awful lot of it relates to government policies worldwide, particularly all of the governments of the world tend to run net mega-sized deficits. In order to finance the deficits, all of the central banks have to increase the money supply for the amount that the government is spending. But in addition, it's become government policy, particularly since Japan had a period of deflation. And everybody thought that was somewhere between leprosy and the plague. And, you know, I don't agree. However, the world reaction was pretty simple. It was just print more money. You know, the Federal Reserve certainly has led the way in having very easy money. But every country like Canada is no different. You know, our government spends money they don't have. They don't worry about it because, you know, the last 25 years have shown they can just keep having deficit every year. Nobody cares. And that the central banks set this target of 2% inflation. Well, if you just take the last 10 or 15 years, certainly since the 2008 crisis, the abundance of cash in the market, let's just call it, central banks printing money. Where did all that money go? You know, now it did filter throughout the economy and have an effect everywhere. However, the major difference was that it went to those people who had capital. You know, and what did they do with it? You know, they had some capital. What did they do with it? Well, you really have two really obvious places. It went into housing and it went into the stock market. You know, you're sitting where the increase in stocks has been very phenomenal. But thank you, Federal Reserve. You know, it's not because somebody was a brilliant picker of stocks. It was really, you could buy anything and it would go up. I mean, even General Motors, who's been a laggard, let's call it the big automobile companies, have been laggards behind the Koreans, the Japanese, even the Europeans. And yet, nevertheless, their stocks have gone up over the years. That anybody that had a bunch of capital, they accumulated an awful lot more. But you know, the biggest thing for the public at large was that everybody that owned a house became a financial genius because it went up in value. You know, if you owned a condo when you came out of college back, you know, whether it was 1970 or 80 or even early 90s, you know, and you could squeak into a small condo. It didn't take very long before you could sell that condo at a sizable profit. You know, and that gave you the equity to step up to the next level. You bought a bigger condo or you could buy a small single-family home. Well, you always had, you know, the Canadian dream or the American dream was to own a house in the suburb with a lawn and you could raise your kids in a nice neighborhood where all of the houses near you were similar to yours. There was homogeneity in the neighborhood and you had a school that all the kids could walk to. You had not too far away. You had some recreation center. And life was a dream if you took, you know, most cities in the Western U.S. or the West and most in Canada, almost everywhere. You know, and I think of cities like Salt Lake City or Seattle or Phoenix or that Denver, you know, the way of life is a nice single-family home in the suburb. You know, those cities are really spread out, you know, in Canada, you've got Calgary, Alberta's probably got an area that's close to the size of London, England. You know, just in area, but there's not very many people living in an apartment. You know, there are apartments, but they're virtually all rental. There's not as many condos as there are somewhere. Now, so you get your housing crisis. It's really, it's not a crisis for anybody that's a baby boomer that's, because they're sitting on this upgrade in housing and they're house rich. It's really anybody trying to get into the market, you know, and you've got to start off with, you know, the rentals. You know, what's the matter? Why do we have allegedly an inadequate number of rentals? Well, there's a difference depending where you live. For example, most cities in Canada, such a, you know, large city like Calgary or Edmonton, you know, they're a million and a half people or a, you know, a fast growing smaller city like the one I live in, Kelowna in British Columbia. If you have minimum wage of $15 an hour, you know, that's just between two and two and a half grand a month, what can you afford? Where can you afford to live? Well, a, you know, 50 to 70 year old apartment building with a one bedroom suite that's about five to 600 square feet that is pretty skinny. But, you know, a pleasant one bedroom, well kept building, nice close in neighborhood, you know, but in Calgary, Edmonton or Kelowna, you know, they want, you know, $1,500 a month for that. So the guy at 15 bucks an hour can't afford it. He would call that a housing crisis. You know, you have to have two people to share that while two people sharing the one bedroom. Gee, maybe you got upgrade to a two bedroom. Well, two people have troubles weaking out the two bedroom unit in those cities in Canada. If you went to cities in the maritime provinces like in New Brunswick, you know, very, very pleasant, lovely city, Moncton or Fredrickton, you know, there are 150,000 people type of scale. You know, you can easily, you know, if you can earn $15 an hour and I put an if there because the problem with those areas is lack of jobs. You know, you can find accommodation. However, if you then tried to say, well, what about Toronto, Montreal or Vancouver? And you'd just be, you know, laughed out of the room because there's no way on earth that, you know, a person with $20 an hour job can't afford anything in Vancouver, you know, just absolutely not a chance. I mean, you know, a two bedroom condo in anywhere, in a reasonably close in, let's call it almost anywhere in metropolitan Vancouver, it cost you like 2,500 to 3,000 a month. What is government doing about that? I mean, it seems to me it's a, if we can identify it here on Think Tech, if you can talk about it that way, then government should know and government should, you know, consider steps, measures to fix it, alleviate it, you know, but what options are available to government and what has government done for both the federal government and the provincial governments in Canada? Well, the federal government in Canada has done a lot of talking. They said, gee, we have a housing crisis, we're gonna allocate a whole bunch of money and just about like everything, this particular government has done in particular Prime Minister Trudeau is they talk a lot and do nothing. You know, they talked a lot, said they were gonna allocate a huge amount of money to work on the housing crisis, but didn't do anything. You know, you can take a different angle of the housing crisis and your solutions would be day and night different than, you know, the example I was using of somebody who has a low-paying job, they're at the entry level, they're not married yet and they're trying to move up the ladder, you know, and in most cities in Canada, you know, they can achieve a certain level. That is they can certainly pay the rent, but they can't jump to home ownership. They have great trouble jumping, you know, the first step is can they buy an apartment condo? You know, and where do they get the down payment? You know, if they're sitting with 35 or 40% of what they're earning going into paying rent, they're certainly never gonna be able to save enough money for a down payment again, because of the, you know, cash inflation or just the inflation that the governments and central banks have put into the economy in which the biggest beneficiaries are the biggest problems where it was, most of that money went into housing or stock. Well, if you take the other end of the housing crisis, you've got the homeless people. We've talked homeless on your category and there you're sitting where, what can governments do to solve the housing crisis of the homeless? You know, that is, how do they get them off the street? Well, you certainly could create the equivalent of hospitals or housing, you know, institutional type housing for mental problems. And a good percentage of the street people have mental problems. Secondly, you've got alcohol and drug treatment and the society does not have adequate provision for treatment and government should invest pretty heavily in those two things or three things. If you take alcohol or drugs as one problem or two, it doesn't matter which, your solutions are somewhat similar, but the mental illness is another and really another aspect of that homeless problem which we discussed in a previous thing was the legal framework where in Canada we have a very simple catch and release program for an endless number of repeat offenders. They may be, you know, a small petty crime in terms of the court thinking, but you know, when the same person has committed, you know, breaking a window for a store, you know, then standing there, wait for the police to come so they can get arrested and get, you know, a couple of days or maybe a month of free meals in the pokey. But that homelessness problem, you know, really has very little to do with the cost of housing the same as the person that's working and trying to, you know, first pay for rent and then upgrade to where they can buy a condo and then hopefully someday dream to own a house in the suburb with the kids in the backyard. Well, I mean, it looks like it's a crisis from both sides. And when I say crisis, I mean, a crisis to the larger community, a crisis to the society, a crisis to the country. And for some reason, lawmakers don't see that. Maybe since it doesn't reach them personally, they say, oh, you know, this is a sort of a right-wing approach to it. It's their fault. If they work harder at up early in the morning, you know, they find a job. If they put the nose to the grindstone, they wouldn't have this problem. It's all on them. And so, legislators, you know, lawmakers don't really take the steps necessary. And what, you know, do you have any thoughts about what motivates their inaction on what is obviously a crisis and increasing crisis on both ends? The, I would say, you know, lack of enough intelligence to figure out what to do. You know, for example, in Vancouver, which has really got a housing price problem. I mean, Vancouver is a pretty compact city. It's got an awful lot of apartments, apartment condos and apartment rentals, as opposed to single-family housing, where most Canadian cities are like Phoenix or Denver or Salt Lake City, where it's predominantly a single-family home city. Well, you know, the province of British Columbia is brilliant solution for housing. Their very first item, brand new premier, who used to be the minister of housing, was to say that all condominiums could no longer have a provision in their strata title or strata rules that precludes rentals. Now, they backed off saying, well, if it is a seniors-only strata, you know, age 55 and over, they can maybe still have rentals or no rentals, you know, but everybody else must have. Well, you know, that's, you know, an infringement on the people that own a condo. I mean, if you have a upscale condo, you know, you certainly don't want a couple of, you know, teeny boppers moving in next door, having wild parties or something. However, you know, your overall government need to increase the supply of housing, but importantly, how do you get the cost of housing down relative to the income of the population? You know, and you've got to, you've got to see, yeah, go ahead. You got to stop printing money. You know, one thing that some people might say is a good thing that may happen in the future. In the past, when we've had technology kicking out a certain type of job, somewhere else in the economy, there have been other jobs created. Well, there's an awful lot of serious economic thinking now that, you know, part of our, you know, current problems of inequality relate to the fact that technology is knocking off higher paying jobs than those that are being, that are developing because the economy is expanding. That is, you know, we have a lower level, and if you look at the accelerating pace of technology, and you're going to hit major areas, like if you just say a self-driving vehicle may be the way of life in less than 10 years. Yeah, but that takes nearly three to 4% of all workers are drivers. You know, you take a big swack out. Now, you know, a person driving, you know, long-haul trucking, you know, those are not, you know, penny-pinching jobs. They get pretty good pay. If you're, you know, driving a, you know, a mining vehicle way out in the boonies, or you know, a lumber truck or something, you know, those are pretty good paying jobs. Now, what are they going to be replaced by? You know, you have an awful lot of other jobs that will get replaced by technology that are high paying. And I don't see where there's going to be jobs spring up in the society that are going to be equal to those that are replaced at high paying numbers. You know, you have an area like healthcare, where there, you know, there's going to be a phenomenal expansion in the number of people employed in the healthcare industry, but most of them are not going to be, you know, the MD at a big income. They're going to be, you know, at lower level healthcare. And- Isn't a solution to that to have the government step in and incentivize training of people who lose their jobs to technology and train them in technology so that they can, you know, sort of circle back and be involved in the tech revolution. I mean, you know, with training, they can participate, no? And that way you have innovation at the technology level. And maybe, you know, it's not a zero sum game. You have the whole society moving forward into technology. So the low paying jobs, which aren't available anymore, are in fact replaced by high paying jobs. Well, I don't see that. I really don't see the jobs that are being replaced being at a lower pay than the jobs that are being developed or the ones that come out of the woodwork. Now, there's going to be lots of high paying jobs in the future that don't exist today. But the number of those is going to be way, way, way less the number of jobs that technology kicks out at the lower end of the pay scale. That's my personal opinion, but you know, I believe there's lots of basis for that. However, you know, it's really how does it affect the housing crisis, which was really what we were trying to deal with and what can governments do? Well, you know, how can the government reduce the cost of housing? Well, I'll tell you one way. This may not apply to Canada, but in Hawaii, we don't have housing kits, you know, prefabricated kits. Because the unions oppose it. They don't put as much time into building a house when you import a kit from the Pacific Northwest, you know, and all you have to do is, you know, put it together. So they want to see it come up from the ground. They want to see a lot of labor involved in building a single family house. And the problem there is that they're politically powerful. So they have had their way and kits just don't get imported to Hawaii. But if you had prefabricated, if you had technology, if you had, you know, houses that get printed up, you know, by printing machines, it would be a lot cheaper. And a lot of that is labor. So why can't the government incentivize tax credits, what have you, that kind of housing construction? Well, I certainly believe that you call them prefabricated kits. Well, why don't you have a prefabricated factory in Honolulu that produces, you know, what I could call a mobile home or a prefabricated components for a stick-built house. You know, you're, you know, the advantage of building in a factory is a lot less in Hawaii than it would be in a place where the weather's not as good. And, you know, because you work outside whether it's raining or not, but you can't work outside in 30 or 40 degrees below zero. But if you took a simple example of a mobile home that's pretty common in size because that's what you can ship down a highway, 14 feet wide. And if you just take 58 feet long, you got about a 750 square foot mobile home that there are zillions of excellent floor plans with most all of them are two bedroom units of that exact module. And if you took a factory in Ohio or Pennsylvania or Michigan, you can produce one of those for about $50,000. Now in, you know, that's US dollars. In Canada, they build a bunch of restrictions in whether you call it union or whatever, but certainly they won't let that mobile home roll across the US-Canadian border. You know, they, you know, you'd have to build it in Canada and then they have built in a bunch of other things. So you're lucky if you can do it for a hundred grant in Canadian dollars, which would be about 75 US. So it seems to me just focusing on that possibility of prefabricated and, you know, mobile homes, we can alleviate a lot of the housing problem because we can build it cheaper if we don't over-regulate it. If we, you know, make it more of a free market, we let it cross the border, we don't impose, you know, all those obstacles and we could build a lot more of them at the $50,000 range. And then we could give tax breaks on the $50,000. We could put everybody in a home that way, right? Well, if you picked Honolulu as an example and you built a subway station or a train like a subway or an on-surface electric railroad and you picked somewhere on Oahu where you could buy a bunch of land. The government could buy it or already own it. You know, it could take one of the military bases and throw up military and say, we wanna use all this land for inexpensive housing. You know, now if you've got the infrastructure where you've got, you know, water, sanitary sewer, storm sewer and a transportation to wherever the jobs are, you know, you can't put them way out in the boonies for a low-income person if they gotta, you know, commute for two hours to a job. Or you have to put in the money for that infrastructure which isn't cheap and requires the government to actually shell out big bucks to make it possible to have the prefabricated or mobile home. But I wanna get to one other thing before we run out of time, Ken, it's this. It's the Charles Dickens, you know, future. You spoke before initially about how we have been printing money, both the US and Canada and other Western countries. And this ultimately leads to the housing crisis. And the housing crisis, you know, at least in large part leads to the homeless crisis which has taken place in relatively recent years. Suppose I reverse that. Suppose I say, we're not gonna print money, we're gonna be really conservative. We are going to stop that. We're gonna treat that as an abuse. So we're gonna stop that. You've been listening to Kevin McCarthy and his idiots. Sorry, I don't wanna sound like him at all, but if you got conservative about it, and I'm not suggesting this as a solution, I'm merely asking the effect of it, right? So if I get conservative and I say, we're gonna reverse all those processes you were talking about that led to this thing in the first place, you know, the national and say provincial, the state processes that throw money around and print money, that could be a reversal of the problem and over time lead to a better situation. But at the same time, at the end of the day, this is all about money. And suppose the legislature in addition or alternative spent a lot of money on that infrastructure. They built the projects you were talking about. They incentivized construction. You know, they saw this as a true crisis and did everything within their power to alleviate it. On the thought that if we let this go on and let the numbers get worse and worse and worse, it's gonna destabilize our cities. It's gonna create a problem for public safety, for public health. We have really got to stop this process and whatever it takes. So we're gonna take the money and put it on that instead. We're not gonna hold back. If we do that, and this is my big question to you, if we do that, what effect does it have on other parts of the economy, on other parts of fiscal stability? Doesn't it have negative effects in some other way? At the end of the day, it is kind of a zero sum game, isn't it? Well, the inflation as has been occurring is really key to the increase in income inequality. You know, and it's the income inequality that in my mind causes the social unrest. You know, in virtually every city in Canada, there's not a housing crisis that is in any way similar to Toronto or Vancouver. There's no housing crisis in Kelowna if you eliminate the homelessness problem. That you have people striving, but really your question, if you took economically, and said, if we're going to have deflation, you know, in deflation, you're gonna have the value of assets such as a house, a condo, gradually goes down in value, you know, 1% a year or something, and in theory. And you know, that holding cash is better. Well, that didn't work in Japan. You know, it didn't work like Tokyo, you know, has got a housing crisis that's not unlike New York or Vancouver or Philadelphia or, you know, any really big city where, you know, there's not no empty land anywhere near the middle of the city and the solution. Like Vancouver has a great solution for some of their housing, where as they've extended their railway system or their train system for local commuting, you know, they have required that they will not build a line and a station unless the local area allows for a phenomenal increase in density. Well, you know, Vancouver has been a phenomenal success in that regard. There are zillions of housing units in quantity have been built. They just, you know, cost more than most people can deal with, you know, but your Canada is very heavy on immigration. And most of the people that immigrate to the areas of Canada that I'm most familiar with, they don't have a great problem because what happens is they get two families move in together in an accommodation that no North American thinks is appropriate for me or my children. You know, you've got tons of people in the area around me that have been phenomenally successful, especially Sikhs from the portions of near the border of India and Pakistan. Big states in there that are, you know, heavily populated with people with agricultural talent. They moved to our area and, you know, 10 years later they're able to buy, you know, huge orchards and wineries and because they are willing as people to solve the housing problem themselves by just having, you know, 20 people living in a three bedroom house. Well, you know, sacrificed by the immigrant sort of thing, you know, a very strong willed approach to dealing with a new country. But, you know, for a lot of other people, as time goes by, the white picket fence dream disappears. As time goes by, they can't afford to buy a house and they also can't afford to pay the rent and as we move forward, I would say, we're gonna see really draconian things happen in the next, what, 10 or 15 years where more and more people are in the crisis. So, clearly- Well, it's not so much a crisis as a loss of hope or the income inequality is, you know, what was yours and my dream when we came out of college and what was the same for every baby boomer that came along that tomorrow would be a brighter day than today and the day after would be better still and boy, can I look for a rosy future and, you know, some 25 or 35 year old now, you know, they don't have that nice, cozy feeling and the housing is a big part of it, but also the inequality in job income is so dramatic. So, these things are all connected in the sense that when you talk about a lack of vision, a lack of optimism for the future and that goes with that a lack of confidence in the government, the system, the community who, you know, they have hoped would care for them and isn't caring for them. And I suggest to you that, you know, if I were a legislator or you were a legislator, we would see this as a threat, you know, to the future and not only for the individual or the community, you know, but even to other cities that don't have these problems right now, they may have them later. And so, we really have to do something about it. It is existential. And I don't know what that is exactly, but somebody has to roll up their coat sleeves, shirt sleeves, if they have sleeves. Well, certainly, it's certainly not, you know, the American Congress setting the example. They're doing exactly the opposite. When the new House of Congress, the very first thing they do is eliminate the ethics committee, you know, and then they stick a bunch of these yin-yings that committed frauds to do with the election and contributed to the January 6th, mass two years ago, and they're just trying to cover their own butt, but, you know, certainly they don't provide an example that anybody else should think, you know, sets a high standard. Yeah, the message is clear, they don't care about helping the people, their theoretical... Or any ethics whatsoever. Or any ethics question. They're in it for their own benefit, and that's a corruption. And the problem is that the people out there, millions of them, see this, they understand that they're not on the list of priorities, who knows how far down that list they may be, and they lose confidence in the government, and ultimately, you know, the government is at risk, as in Brazil, as on January 6th. And so, you know, to me, the confidence question is critical. Public confidence, George Washington said it, that's the first order of business. And if we have people on the street homeless, if we have people who can never see a reasonable, you know, life ahead of them in this country, we have a lack of confidence, no? And so, if we were going to list the priorities here, the one thing that we could do, which should be very close to the top of the list, is provide housing. Yeah, well, you've got to provide a better future for people, that's what they're after. I mean, why do people, you know, why are the Venezuelans knocking at the Southern border to the US, or people from Haiti, they want a better future for their kids, as well as themselves, you know, where, you know, to me, a lot of the stupidity of the American public is because they don't see a better future. You know, the government's not doing it for them. Maybe between now and the next time we get together, we'll find at least, you know, some clever, innovative possibility to suggest to them. In the meantime, thank you very much for joining me today. This was a very interesting discussion. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, and LinkedIn, and donate to us at thinktechhawaii.com. Mahalo.