Leasehold, London, and concentrated fortunes

What is the impact of land reform on economic development? What are the implications of property law when a financial crisis hits? This episode offers a comprehensive look at how land has shaped socio-economic landscapes.

Mike Bird is the Wall Street editor at The Economist and the author of the new book, The Land Trap: A New History of the World's Oldest Asset.

Greg and Mike discuss the historical and contemporary importance of real estate as an asset class, its undervaluation in modern investment strategies, and its critical role in the financial systems. Their conversation explores the distinction between land and other assets, and how mortgage-backed securities have revolutionized real estate finance. Mike lays out the history of land financing from colonial North America to present-day reforms, touching on the influence of key historical figures and economic theories. 

*unSILOed Podcast is produced by University FM.*

Episode Quotes:

How land reform fueled economic growth

41:29: These sort of moments of expropriation are really focused on land quite tightly. They do not spread over into sort of general expropriation attitudes. They can have seemingly really positive impacts. So lots of people credit land reform in Japan in particular with sort of establishing the basis of a democratic society, of massively accelerating the education boost in Japan. If you are a tenant farmer and you are given land yourself, you are able to actually invest in it. And you want to make the most of it because it is no longer the landlord taking it from you. The surplus you create is your own. Most of those people used the extra money they made to massively accelerate the education of their children. This generation of people in Japan becomes a more educated one, which fuels the economic development that happens, you know, 1950s, 1960s, 1970s. So the spillover effect from land reform is really quite large.

ETF vs home ownership psychology

50:15: I would say, I think half the answer here is behavioral and slightly irrational and social, and half of the answer is deeply rational and makes sense to any student of finance. The side that is irrational is home and land ownership has a reputation and a status that other asset ownership does not have. You have people who say they do not want to form a family until they can own a home. That is a fairly common sentiment in large parts of the world. Nobody says, I have got to own $300,000 in my S and P 500 ETF, or I am not starting a family. It is not a common thing. There is a sense of status security, middle class belonging that comes through owning a home, which makes it very unusual. And I think this digs into a deep historical thing about freedom from feudalism, from living under a landlord, from living, in sort of someone else's pocket.

Why housing isn’t diversified

54:52: Obviously what you cannot buy unless you are buying an extremely well diversified REIT, for example, you cannot buy a US house, right? It has to be somewhere. You are plugging into the opportunities and rewards or punishment of a local economy, and so on, I am not enormously surprised at that. I think the thing that is unique in the US relative to the rest of the world is just how well you can do and have done historically investing in listed equities, investing in risk assets and getting the compounded returns relative to home ownership, which I think is massively to America's credit. This is not true in other large portions of the rest of the world.

Show Links:

Recommended Resources:

• Samuel Adams
• Hernando de Soto
• Zamindar
• Henry George
• Progress and Poverty
• Georgism
• Leasehold Estate
• Duke of Westminster
• Wolf Ladejinsky
• Case–Shiller Index

Guest Profile:

• MikeBird.co
• Profile on The Economist
• LinkedIn Profile
• Social Profile on X
• Social Profile on BlueSky

Guest Work:

• The Land Trap: A New History of the World's Oldest Asset

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