0:02 Constantinier
0:05 1595 or Istanbul to moderners or
0:07 Constantinople to those of a more
0:09 traditional perspective. In the grand
0:12 halls of the Topcapy Palace, a desperate
0:14 auction is underway. The Sultan's
0:17 treasury is nearly empty. Wars with the
0:19 Hapsburgs have drained the coffers. The
0:22 janiseries are demanding back pay. And
0:23 the man responsible for filling those
0:26 coffers, the Grand Vazier, has a
0:28 solution. He's selling the right to
0:30 collect taxes. Not to taxes themselves,
0:34 the right to collect them. A wealthy
0:36 merchant from Thessaloni steps forward.
0:39 He offers 1,000 a for the tax rights to
0:41 a fertile province in Anatolia. The deal
0:44 is simple. Pay the Sultan up front, then
0:46 go collect whatever you can from the
0:48 peasants. Whatever you can extract
0:50 beyond what you're paid, that is your
0:52 profit. The merchant wins the bid. He
0:54 borrows heavily to finance the purchase.
0:57 And now he has a problem. He paid a h
0:59 100,000 aay. He needs to collect at
1:01 least 150,000 to make back his
1:02 investment, pay his loans, and turn a
1:05 profit. The peasants in that province
1:07 can realistically pay maybe 80,000
1:09 without starving. So what does he do? He
1:11 squeezes. He extracts. He strips the
1:14 province bare. He doesn't care if the
1:16 farms fail next year. His contract is
1:18 only for 3 years. He doesn't care if the
1:20 peasants flee. That is also someone
1:22 else's problem. He doesn't care if the
1:24 roads crumble or the irrigation systems
1:26 decay. He won't be around to see the
1:29 impact. He is not building an empire. He
1:32 is liquidating one. This system had a
1:36 name, Iltisam. Tax farming. And over the
1:38 next 300 years, it would hollow out one
1:40 of the most powerful empires in human
1:42 history. Not foreign armies, not
1:44 technological change, not plague or
1:47 famine. A business model, an incentive
1:50 structure, a choice to extract rather
1:53 than build. I'm Ari Van, real estate
1:55 investor, fund manager, and your fellow
1:57 student of history. And today on the
1:59 Timeless Investor Show, we're going to
2:00 explore what I believe is one of the
2:02 most important patterns in human
2:04 civilization. Because the Ottoman story
2:06 isn't unique. It's the same story that
2:08 destroyed Rome. It's the same story that
2:10 hauled out Spain. It's the same story
2:13 that ended British hegemony. And it may
2:15 be the story we're living through right
2:18 now. The pattern is simple. Societies
2:19 that stop building and start extracting
2:21 are societies that are approaching
2:24 terminal decline. So, let's dive in.
2:26 Before we go deeper into the Ottoman
2:28 case, I want to lay out the pattern
2:30 clearly because once you see it, you'll
2:32 see it everywhere. Here is how
2:35 civilizations die. Phase one, building.
2:37 A society invests in productive
2:40 capacity. They build roads, aqueducts,
2:42 farms, factories. They develop human
2:44 capital, education, skills,
2:46 institutional knowledge. They defer
2:49 gratification. They plant trees whose
2:51 shade they will never sit in. And it's
2:55 hard, requires discipline. It requires
2:57 long-term thinking, but it creates real
2:59 wealth, the kind that compounds over
3:02 generations. Phase two, success. The
3:04 investments pay off. The society becomes
3:06 wealthy and powerful. They win wars.
3:08 They dominate trade. They attract
3:11 talent. Life gets comfortable. This is
3:15 the proverbial golden age. Phase three,
3:17 the pivot. Here's where things get
3:19 dangerous. The society discovers that
3:21 it's easier to extract value from what's
3:23 already been built than to keep building
3:26 new things. Why invest in a factory when
3:28 you can financialize existing assets?
3:30 Why train engineers when you can hire
3:32 consultants? Why maintain infrastructure
3:33 when you can sell it to a private
3:35 contractor for a one-time payment?
3:39 Extraction feels smart at first. You get
3:41 money now instead of later. You reduce
3:43 overhead. You unblock value from
3:45 underperforming assets. Which leads to
3:48 phase four, the decay. But extraction
3:51 has a cost. Every dollar you extract is
3:53 a dollar you are not reinvesting. Every
3:56 system you outsource is institutional
3:58 knowledge that you are losing or
3:59 draining from your society. Every
4:02 productive asset you strip mine is
4:04 capacity that's just not coming back.
4:06 The decay is slow at first and then it
4:07 accelerates. And by the time it's
4:10 visible, it is often too late. Phase
4:12 five is the collapse. The society that
4:14 built nothing has nothing left to
4:17 extract. The barbarians show up or the
4:19 bond markets and there's no productive
4:21 capacity left to resist them. The empire
4:24 falls. The cycle begins again somewhere
4:26 else. This is the story of Rome. This is
4:28 the story of Spain. This is the story in
4:30 some respects of Britain. This is
4:31 definitely the story of the Ottoman
4:33 Empire. And the Ottoman tax farm is one
4:36 of the clearest mechanisms ever devised
4:38 for institutionalizing phase three. the
4:41 pivot from building to extraction. So,
4:43 let me explain how tax farming actually
4:44 worked because it's absolutely
4:46 absolutely wild. In the early Ottoman
4:48 Empire, taxes were collected directly by
4:50 salaried government officials called
4:52 amines. These were bureaucrats. They had
4:54 fixed salaries. They collected what was
4:56 owed, maintained records, and sent the
4:59 revenue back to Constantinople or
5:01 Constantine as they call it at the time.
5:03 The system was boring, but it worked.
5:06 But empires grow as they always do. Wars
5:08 get expensive. And sometime in the 15th
5:10 and 16th century, the Ottomans
5:12 discovered a seemingly brilliant
5:13 innovation. They could get money now
5:15 instead of waiting for tax collection
5:18 cycles. Here is the mechanism. Instead
5:20 of sending a salaried official to
5:21 collect taxes from a province, the
5:23 Sultan would auction off the right to
5:24 collect those taxes to a private
5:27 contractor called a multazim. The
5:29 multazim paid the treasury upfront, a
5:30 guaranteed lump sum, and then they went
5:32 to the province and collected whatever
5:34 they could. And the difference, as I
5:36 said in the beginning, between what they
5:37 paid and what they collect was their
5:39 profit. From the sultan's perspective,
5:42 this was genius. Immediate cash flow, no
5:43 waiting. It's almost like, let me get
5:45 let me collect money today from my
5:47 society and fill my coffers. No
5:49 administrative overhead. The contractor
5:52 handled all the work. The risk transfer,
5:54 bad harvests were the contractor's
5:55 problem, not the government's. And
5:57 predictable revenue. You knew exactly
5:59 what you were getting. Sounds pretty
6:01 nice, right? It's pretty much the same
6:03 pitch we hear today. Whenever someone
6:05 proposes privatizing a public asset, let
6:07 the private sector handle it. They're
6:08 more efficient. You get your money up
6:09 front. In the short term, it actually
6:11 worked really brilliantly. The treasury
6:13 stabilized. The Sultan could finance his
6:16 wars. Everyone was happy. But here's
6:19 what the Ottomans miss. The royal keep
6:21 missing over and over throughout
6:24 history. The Multisim had no incentive
6:26 to build anything. His contract was
6:29 three years, maybe five. He paid a
6:31 fortune for the rights. He needed to
6:35 extract maximum value in minimum time.
6:38 So he didn't invest in irrigation. He
6:39 didn't maintain roads. He didn't leave
6:42 reserves for bad harvest. He didn't care
6:43 about the long-term productivity of the
6:45 province. That was literally the next
6:48 contractor's problem. He strip mined the
6:50 province and he moved on. And the next
6:52 multisim inherited the depleted asset.
6:54 So he bid less or he extracted more
6:56 aggressively or both. Each successive
6:59 contractor squeezed harder because there
7:01 was less juice left in the fruit. And by
7:03 the 18th century, this had created a
7:06 doom loop. Agricultural productivity
7:08 collapsed. Peasants fled. Provinces that
7:10 had fed armies now couldn't feed
7:12 themselves. The empire's productive base
7:15 was being liquidated to fund short-term
7:18 consumption. Here's a crazy statistic.
7:21 In 1695, tax farming represented about
7:23 36% of Ottoman central government
7:27 revenue. By 1800 it was over 80%. The
7:29 empire hadn't been governed for a
7:32 century. It had been striplined. So
7:34 let's zoom out because the Ottoman
7:36 patter is just one variation of a much
7:39 much older story. Rome. In the early
7:41 republic, Rome built things, roads,
7:43 aqueducts, legions. They invested in
7:45 infrastructure that lasted centuries.
7:47 Some of those roads, by the way, are
7:50 still in use today. Roman citizens
7:53 served in the military as a civic duty.
7:56 They had skin in the game. They were
7:57 building something that they owned. But
7:59 as the republic became an empire,
8:01 something shifted. Success bred
8:04 complacency. Wealth bred entitlement.
8:06 Why should a Roman citizen serve in the
8:08 legions when you could hire Germanic
8:10 mercenaries to do it for you? Why
8:11 maintain the aqueducts when you could
8:13 just let them decay and just buy water
8:15 from private contractors? The Romans
8:16 invented their own version of tax
8:19 farming, the publicani. Private
8:20 contractors who bid for the right to
8:22 collect taxes in the provinces. Same
8:24 structure, same incentives, same
8:27 results. And we know those of us in the
8:29 west know all about Roman tax
8:32 collectors, right? The apostle Matthew
8:34 was a Roman tax collector before Christ
8:36 brought him into the fold, right? Then
8:38 the publicani became legendarily
8:40 rapacious. They were hated everywhere.
8:42 As we saw, as as most of us are aware,
8:45 the provinces were squeezed so hard that
8:47 rebellions became common. The empire had
8:49 to spend more on military suppression,
8:51 which meant more extraction, which meant
8:54 more rebellion, another doomloop. But
8:57 the deeper rot was cultural. The Romans
8:59 stopped building. They stopped
9:00 innovating. They stopped creating
9:01 wealth. And they started extracting it
9:03 from the provinces, from the conquered
9:05 peoples, from their own future. And by
9:07 the late empire, the Roman economy was
9:09 essentially a tribute extraction
9:12 machine. The legions existed to conquer
9:14 new territories so they could be taxed.
9:16 When the conquest stopped, the revenue
9:18 stopped. When the revenue stopped, the
9:20 empire could not pay its soldiers. And
9:21 when it couldn't pay its soldiers, the
9:24 barbarians walked in. Rome didn't fall
9:26 to the Visigoths because the Visigothths
9:28 were stronger. Rome fell because Rome
9:30 had been hollowing itself out for
9:33 centuries. The Visigothths just showed
9:35 up at the right time. And here's the
9:36 part that matters for us. By the end,
9:38 Roman citizens didn't even defend our
9:40 empire. Why would they? They didn't own
9:43 anything. The land had been concentrated
9:45 into massive estates worked by slaves
9:47 and tenant farmers. The average Roman
9:48 had no stake in their system at this
9:50 point. When you extract from your own
9:52 citizens long enough, they stop caring
9:54 whether the empire survives. Now, let's
9:56 talk about Spain. One of my favorite,
9:57 because Spain shows a different path to
9:59 the same destination. In the 16th
10:01 century, Spain was the most powerful
10:03 nation on Earth. They had conquered the
10:04 Americas. They controlled trade routes
10:07 across two oceans. Gold and silver
10:09 flowed into Sevilla in quantities that seemed
10:11 seemed
10:14 miraculous and it destroyed them. Here's
10:17 what happened. When you have easy wealth
10:19 flowing in from colonial extraction, you
10:21 don't actually need to build productive
10:23 capacity at home. Why manufacture cloth
10:25 when you can buy it with Peruvian
10:27 silver? Why develop your own merchant
10:28 class when you can just hire Genoise
10:30 bankers, Genoies merchants, Genoies
10:33 anything? Spain became a conduit. Wealth
10:34 flowed in from the Americas and it
10:36 flowed right back out to pay for wars,
10:38 luxury imports, and debt service. The
10:40 Spanish themselves built almost nothing.
10:42 We've talked on this show about the
10:44 Possi mines, the fraud, the debasement,
10:46 the collapse of trust in Spanish
10:48 currency. But the deeper problem wasn't
10:51 monetary, was structural. Spain never
10:53 developed the productive industries that
10:54 were emerging in England and the
10:56 Netherlands. They never built the
10:58 shipyards, the factories, the financial
11:00 institutions. They extracted wealth from
11:02 the new world and they consumed it. By
11:04 the 17th century, Spain was a second
11:07 rate power despite still controlling an
11:09 enormous empire. They had land, they had
11:10 silver, they had everything except the
11:13 capacity to do anything with it. This is
11:16 what economists call the Dutch disease.
11:18 When easy resource wealth crowds out
11:20 productive economic development, Spain,
11:24 patient zero. And the lesson is
11:27 in your face, guys. Extraction is not
11:29 wealth. Extraction is the consumption of
11:31 wealth. Real wealth is productive
11:34 capacity, the ability to create value,
11:36 not just move it around. And then
11:38 there's Britain. This one hits closest
11:40 to home because it's the most relevant
11:43 and recent to where we are today.
11:45 Britain in the 19th century was the most
11:47 powerful nation on earth. The workshop
11:48 of the world. They built factories, the
11:50 railroads, the steam ships. They had
11:52 real productive capacity, not extracted
11:55 wealth, but created wealth. So what went
11:58 wrong? several things, but the one I
12:00 want to talk about is financialization.
12:02 As Britain got wealthy, the returns from
12:03 building things started to look less
12:05 attractive than the returns from
12:08 financing things. Why build a railroad
12:10 in Manchester when you can finance a
12:11 railroad in Argentina and collect
12:13 interest, sometimes huge amounts of
12:15 interest, until your bank blows up, as
12:17 we've covered in prior episodes. So,
12:19 British capital flowed outward. British
12:21 banks financed projects across the
12:23 globe. Mines in South Africa,
12:26 plantations in Southeast Asia, railroads
12:28 across the Americas. The city of London
12:30 became the center of global finance. And
12:33 it worked. For a while, Britain got very
12:35 rich for moving money around. But here's
12:37 what happened underneath. The domestic
12:39 industrial base began to erode. The
12:41 talented graduates went to banking, not
12:43 engineering. The factories got old. The
12:45 innovation moved elsewhere to Germany
12:48 and to the United States. By 1900,
12:50 Britain was still very wealthy, but it
12:52 was no longer productive. They were
12:54 collecting rents on past investments
12:55 while other countries were building the
12:58 future. And when World War I came,
13:00 Britain discovered the cost of over
13:03 financialization. They had capital, but
13:05 not necessarily capacity. They could
13:06 finance a war, but they couldn't
13:08 manufacture enough shells to fight one.
13:10 They had to borrow from the United
13:12 States, the country that had been
13:13 building productive capacity while
13:17 Britain played in finance. By 1945, the
13:19 British Empire was over. Not conquered,
13:21 just depleted. They had financialized
13:23 themselves into irrelevance. I want to
13:25 repeat this because it's important.
13:26 Britain didn't lose to a military enemy.
13:28 They were the victors in both major
13:30 world wars. They lost to their own
13:33 strategic choices. They chose extraction
13:35 over production. They chose finance over
13:37 manufacturing. They chose short-term
13:39 returns over long-term capacity. So,
13:41 let's crystallize this pattern because
13:43 it is the same across all four empires.
13:45 Rome built productive capacity, got
13:46 wealthy, outsourced military and
13:49 administration to contractors, extracted
13:51 from provinces instead of building,
13:53 hollowed out and collapsed. Spain,
13:54 similar story, received colonial wealth,
13:56 consumed instead of building, never
13:58 developed productive industries, became
14:00 a conduit, not a producer, and declined
14:02 into irrelevance. The Ottoman Empire
14:04 built administrative capacity, got
14:05 wealthy, outsourced tax collection to
14:07 private contractors.
14:10 Provinces were stripmined for short-term
14:11 revenue, lost ability to govern
14:12 directly, hauled out, and then
14:15 collapsed. Britain built industrial
14:17 capacity, got wealthy, shifted from
14:19 production to finance. Capital flowed to
14:22 extraction, not creation, lost their
14:23 industrial base, and declined into
14:26 irrelevance. Four empires, four paths,
14:29 same destination. The throughput line is
14:31 this. When a society stops building and
14:34 starts extracting, it has begun to die.
14:35 It might take decades. It might even
14:38 take centuries, but the trajectory is
14:41 set. Extraction feels like you're doing
14:43 well, but it's not. You're eating your
14:45 seed corn. You're spending your capital.
14:47 You're liquidating your future for
14:50 present consumption. So, where does that
14:52 leave us? I don't want to be hyperbolic.
14:55 America is not Rome. We are not Spain.
14:57 The parallels are imperfect, but the
14:59 patterns are fairly visible. And I'd be
15:00 lying if I say that a lot of these do
15:03 not concern me somewhat. So let's look
15:05 at the data. Manufacturing is a share of
15:08 GDP. In 1950, manufacturing was about
15:12 28% of US GDP. Today, it's under 11%. We
15:14 just don't make things like we used to.
15:16 Now, there's a very very fair argument
15:18 to be made here that that shouldn't
15:20 matter, right? There's also agriculture
15:22 was a huge much larger percentage of the
15:25 US economy the start of the night than
15:26 today. Does that mean that we're worse
15:28 off? I don't know. It's debatable. A lot
15:30 of new industries have developed over
15:31 time. But it is true that we cannot
15:34 build like we used to. And the number of
15:36 articles lamenting the US's inability to
15:39 keep up with artillery shell production
15:41 alone is very worrisome. I just read
15:42 something the other day that in the
15:44 event of a hot war between the United
15:46 States and China, the US would run out
15:49 of munitions in weeks and we don't have
15:51 the capacity to build them. That is
15:53 alarming guys. Financial services is a
15:55 share of GDP. This I believe is a huge
15:58 problem. In 1950 financial services were
16:01 about 3% of GDP. Today they are over
16:04 20%. We have become a nation of money
16:06 pushers, myself included in some
16:08 respects, right? So I'm I'm saying this
16:10 this what I do is is arguably
16:12 concerning. Although I have some mixed
16:13 thoughts on real estate. I think there's
16:15 some value as well. Where does the
16:17 talent go? In the 1960s, the best
16:19 engineering graduates went to NASA, to
16:20 Bell Labs, to the great manufacturing
16:23 companies. Today, the best graduates
16:24 will try to go to hedge funds,
16:26 consulting firms, and investment banks.
16:28 Or they just want to buy Bitcoin, right?
16:30 What is that? What are we producing?
16:32 Nothing. Nothing. But it's creating
16:34 wealth, right? We've redirected our
16:36 human capital from creation to
16:39 extraction in some form or another.
16:41 Infrastructure. The American Society of
16:43 Civil Engineers gives US infrastructure
16:46 a C minus grade. Bridges are crumbling.
16:48 Water systems are failing. We are not
16:50 maintaining what previous generations
16:52 built, let alone building new things.
16:54 Corporate behavior. Public companies are
16:56 increasingly returning capital to
16:58 shareholders through buybacks rather
17:00 than reinvesting in R&D or capital
17:03 expenditures. In 2023, 500 companies
17:06 spent over $800 billion on buybacks.
17:07 That's money that could have built
17:09 factories, funded research, or developed
17:11 new products. Instead, almost like it
17:13 just funded extraction.
17:16 Private equity, my least favorite
17:18 industry, and it's a big one. The
17:20 private equity model in its worst form
17:23 is essentially Ottoman tax farming for
17:26 corporations. Buy a productive company,
17:28 load it with debt, extract dividends,
17:31 cut costs, sell it to the next buyer.
17:33 Each successive owner inherits a more
17:35 depleted asset. The multisim would
17:38 recognize this playbook immediately. Now
17:40 listen, I'm not trying to say that
17:41 America is doomed, okay? I'm not saying
17:43 all finance is bad or all private equity
17:45 is predatory. There are plenty of people
17:47 building real things in this country.
17:49 The innovation economy here is real and
17:51 fairly robust. The entrepreneurial
17:53 spirit is very real, but the direction
17:55 is concerning. The trajectory looks
17:58 pretty familiar. We are increasingly
18:00 choosing extraction over production,
18:02 short-term returns over long-term
18:04 capacity, financial engineering over
18:06 actual engineering. And if history
18:08 teaches us anything, it's that this
18:11 trajectory has a destination. Okay, so
18:12 at this point, you've sat here and
18:13 you've listened to me talk about
18:15 collapsing empires for 20 minutes. What
18:16 do you actually do with this
18:18 information? Right? Let me give you my
18:20 framework. Both as an investor and as a
18:23 citizen as an investor, one, you want to
18:25 own things that produce. If we're in an
18:28 extraction economy, you don't want to be
18:30 holding the thing being extracted. You
18:31 want to own the productive assets that
18:33 generate real value regardless of what
18:34 the financial engineers are trying to
18:36 do. For me, that's real estate,
18:38 specifically cash flowing real estate
18:40 and supply constrained markets. Land is
18:43 irreplaceable. Buildings provide shelter
18:45 that people need. Rent is going to get
18:47 paid for almost everything else in most
18:50 situations. More broadly though, it
18:52 means owning equity in businesses that
18:54 make things that provide essential
18:56 services that have real productive
18:58 capacity, not financial abstractions,
19:00 not tokens, not derivatives of
19:03 derivatives, real assets to produce real
19:07 cash flows. Invest in real things. Two,
19:09 cash flow over appreciation. In a
19:11 healthy building economy, asset
19:14 appreciation makes sense. things get
19:15 more valuable because the productive
19:17 capacity is increasing. In an extraction
19:20 economy, asset appreciation is often
19:21 just inflation. You're getting an
19:23 inflation increase, right? Which is
19:25 fine. It's it's a hedge against
19:27 inflation, but it's not enough. Values
19:28 are rising because money is being
19:30 printed, not because real wealth is
19:33 necessarily being created. Cash flow is
19:35 the truth. If your investment thesis
19:37 depends entirely on selling to someone
19:39 else at a higher price, you're
19:41 speculating on the continuation of an
19:44 extraction regime. If your investment
19:45 produces income regardless of what
19:47 happens to price, you might have
19:50 something real on your hands. Three,
19:51 think about political risk. Here's an
19:53 uncomfortable one. If you believe your
19:55 society is in extraction mode, you need
19:57 to think about what happens when the
19:59 extraction regime breaks down. What
20:01 happens to property rights if the system
20:03 gets stressed? What happens to your
20:04 assets if there's a political
20:06 realignment? What happens if the people
20:08 being extracted from decided they have
20:10 had enough? I'm not saying you should
20:12 flee the country. I'm saying you should
20:13 think about jurisdictional
20:15 diversification. You should think about
20:17 asset structures that are resilient to
20:18 political change. You should think about
20:20 where you want to be if things get
20:24 rocky. Four, be a second owner. This is
20:25 a recurring theme on this show and
20:28 applies directly here. Extraction
20:31 regimes create distressed assets. The
20:34 multazines squeeze the province dry and
20:37 move on. The private equity firm loads
20:38 the company with debt and sells it.
20:41 Someone has to buy the wreckage. If you
20:43 have patient capital, long time
20:45 horizons, and the operational capacity
20:46 to rebuild, you can buy productive
20:48 assets at a fraction of their intrinsic
20:51 value. The great fortunes are built not
20:53 by extracting, but by acquiring what the
20:56 extractors have discarded. Be the second
20:59 owner. And five, critical guys,
21:01 critical, build skills, not just
21:03 portfolios. If we're heading into a
21:05 period of institutional instability,
21:07 financial assets may not be as reliable
21:09 as they have been. What's always
21:12 valuable? Skills, knowledge, capacities, capabilities.
21:14 capabilities.
21:16 Invest in yourself. Invest in your
21:18 ability to create value directly, not
21:20 just to allocate capital. The Ottoman
21:22 bureaucrat who lost their jobs to the
21:24 multisim probably never recovered. The
21:26 ones who had real skills found new
21:29 patrons. As a citizen, this one is a
21:31 little harder because sometimes
21:33 individual action feels so insignificant
21:36 against civilizational trends. But let
21:38 me offer a few thoughts. One, support
21:40 building, not extraction. Seems easy,
21:41 right? When you vote, when you engage
21:43 civically, think about which policies
21:45 encourage productive capacity and which
21:47 encourage extraction. This cuts across
21:49 traditional political lines. Policies
21:51 that make it easier to build housing, to
21:52 manufacture goods, to develop
21:55 infrastructures. These are prob building
21:57 policies that primarily benefit
21:58 financial engineering rent seeking and
22:02 extraction. Be skeptical. Two, don't
22:03 participate in the extraction if you can
22:06 avoid it. Every time you invest in
22:07 something purely extractive, you're
22:09 voting with your capital for more
22:11 extraction. Every time you support a
22:12 business that strip mines rather than
22:14 builds, you're reinforcing the pattern.
22:15 This doesn't mean you have to be a
22:19 saint, okay? I'm certainly not. We all
22:20 operate within the system we have. But
22:23 on the margins, where you put your money
22:26 matters. Three, big one. I think we've
22:28 completely lost this in our society.
22:30 Think generationally. The extraction
22:33 mindset is fundamentally a short-term mindset.
22:35 mindset.
22:37 I'll get mine now. The future can take
22:39 care of itself. The building mindset is
22:41 generational. I'll plant trees whose
22:43 shade I'll never sit in. I'll invest in
22:45 things that will outlive me. How are you
22:47 raising your children? How am I raising
22:49 my children? What values are we
22:51 transmitting? Are you teaching them to
22:54 extract or to build value over time?
22:56 Civilizations are literally just the
22:58 aggregation of millions of individual
23:00 choices. If enough people choose
23:02 building over extraction, the trajectory
23:05 changes. And four, for all of my
23:07 listeners and friends out there who live
23:10 in the West, the UK, Canada, Australia,
23:14 the United States, please vote locally.
23:15 All we focus on is presidential
23:17 elections where our vote means the
23:20 least. Vote locally. The voting turnout
23:23 in local elections is a it's pathetic.
23:25 Like we don't vote locally, but it's the
23:26 thing we actually have an impact on
23:28 given nobody votes, right? We see
23:30 radicals on the right and the left get
23:33 voted into office in our cities all the
23:36 time because 20% of the citizens in a
23:38 city vote. And we're talking margins of
23:42 like 500 to 2,000 people. Vote locally.
23:43 Make an actual difference. Do something
23:45 in your local politics. We get so up in
23:49 arms over Trump versus Biden, Trump,
23:51 whatever. It doesn't matter. Who cares?
23:52 Like what matters is your local
23:54 backyard. Make your backyard nice. Do
23:56 something about it. All of us in the
23:58 West, we have the ability to do
24:00 something in our local elections. So do
24:03 it. So let me bring this home. The
24:06 Ottoman Multilazim was not evil. It was
24:09 rational. Given the incentive structure
24:11 he operated in, striping the province
24:14 was the smart play. The system rewarded
24:17 extraction, so he extracted. The Roman
24:19 publicani were not evil. The Spanish
24:21 concistadors were not evil. The British
24:23 financiers were not evil. They were all
24:25 responding rationally to systems that
24:28 rewarded extraction over building. That
24:29 is the tragedy. These outcomes are not
24:31 caused by bad people. They're caused by
24:33 bad systems. Systems that make it more
24:35 profitable to liquidate than to create.
24:37 And here's the thing. We get to choose
24:39 what system we participate in. We get to
24:41 choose where we put our capital. We get
24:42 to choose what we build and what we
24:44 extract. We get to choose what values we
24:47 transmit to our children. The wheel, my
24:49 friends, turns ever onward. Empires rise
24:51 and fall. Instruction economies
24:54 eventually consume themselves. But
24:56 within that great cycle, individuals
24:59 make choices. Families make choices.
25:01 Communities make choices. I choose to
25:03 build. I choose to own productive
25:06 assets, not financial abstractions. I
25:07 choose to invest for cash flow, not
25:10 speculation. I choose to operate with
25:12 long time horizons, not quarterly
25:14 optimization. I choose to align my
25:16 interests to my investors so we build
25:18 wealth together rather than extracting
25:20 from one another. And we choose to
25:22 reinvest in our buildings and make our
25:24 properties better, better for our
25:25 residents and better for the future.
25:27 Upgrade them, enhance them, improve
25:30 them, love them, you might even say, and
25:33 create something wonderful. And I choose
25:35 lastly to remember the multisim not as a
25:37 villain, but as a warning. A warning
25:39 about what happens when short-term
25:42 extraction becomes the dominant mode. A
25:44 warning about where that trajectory
25:46 leads. America does not have to follow
25:48 that path. But we want to avoid it by
25:50 accident. We'll only avoid it by
25:52 choosing consciously, deliberately,
25:55 repeatedly to build rather than extract.
25:58 The question is not whether you
26:00 understand this pattern. Okay? You've
26:02 listened to this episode. You understand
26:05 it now. The question is what will you
26:08 choose? Think well, act wisely, build
26:11 something timeless. I'm Ari Van. This
26:13 has been another episode of the Timeless
26:15 Investors Show. And if this episode
26:17 resonated with you, share it with
26:18 someone who needs to hear it. These
26:20 ideas only matter if they spread. Leave
26:22 a review on Apple Podcast, Spotify,
26:24 YouTube, wherever you listen, wherever
26:26 you are. It genuinely helps the show
26:28 reach more people who are thinking about
26:30 these questions. Subscribe to the
26:32 Timeless Investor on Substack for weekly
26:34 deep dives into history, behavioral
26:36 finance, and real estate strategy. Just
26:38 Google the timeless investor. And if
26:40 you, my friends, are an accredited
26:42 investor who shares this philosophy, who
26:44 wants to own productive assets, who
26:46 thinks in decades instead of quarters,
26:48 who'd rather build and extract, let's
26:50 talk. There's a link in the description.
26:52 Reach out. Let's set up a conversation
26:54 to talk about what we're doing. We are
26:56 buying vintage, multif family and supply
26:58 constrained West Coast markets at
27:00 significant discounts to replacement
27:02 cost. Cash flowing deals with real
27:04 margins of safety and assets that we are
27:06 improving for future generations to make
27:08 this country better. There is a link in
27:10 the show notes. Reach out. Let's build
27:12 something together. Until next time,
