Author, digital nomad and web entrepreneur Olivier Roland joins me to talk about his issues with AML and his very interesting views on where the world is going in the age of remote working and internet communications.
- The problem with KYC / AML
- Taxes and the Sovereign Individual thesis
- Digital Nomadism disrupting nation states
Relevant prior episodes:
- SLP318 Ronald Pol – The Ineffectiveness Of AML
- SLP424 Simon Lelieveldt The Problem with FATF and AML Laws
Stephan Livera links:
Stephan Livera 00:01:42
Olivier, I had a chance to read your blog and I thought it was really great with some of the articles you’re writing. About AML and FATCA and you know the thesis you have about what’s happening and what’s changing in the world today with technology, remote working and all of this. So firstly, welcome to the show.
Olivier Roland 00:02:02
Thank you, Stephan. Thank you for having me.
Stephan Livera 00:02:04
So, let’s start with a little bit about your issues with AML. So, can you give us a bit of a high-level statement? There what are some of the problems that you see with the AML system and why do you say KYC and AML are destroying the world?
Olivier Roland 00:02:22
Yeah, it’s basically the title of the of the article. It could be seen as a bit hyperbolic, but I think actually when you really do a deep dive into the efficiency of this regular. I don’t think it’s so hyperbolic because so KYC is not your customer and AML is anti-money laundering and these two regulations were basically created between the end of the 80s to through the 90s. You know to try to stop criminals and terrorists to use the financial system and the idea was not stupid actually the idea was like, hey, the main motives of criminals like drug traffickers is to make money, right? And want they made money. They want to use it to buy stuff. So why? What happened if we make sure they cannot you the money, of course they will lose all motivation and they will stop being criminals, right? That was basically the idea which is I mean, why not? Right? But when you look at the efficiency and? So there is like 3 decades of feedback we can we can look at. It’s actually terrible. Like terrible, there are values estimations of the percentage of criminal money that is identified through this system that go through the banking system and the best estimation is 1.2% of criminal money that is identified. By these regulations, which is obviously very low, and when you look at the percentage of money that is actually seized, it’s even lower. It’s from the estimation is from 0.01% to 0.03% which is. So, I mean it’s so bad. And when you look at the cost of this regression, you have the direct cost that you can quantify and the indirect cost that is, it’s really hard to quantify, but direct cost is like 300 billions per year worldwide, more or less. I’m giving you the numbers from my head, but. I shared the exact numbers in the article. Right. And these regressions make CS maybe 3 billions per year. So we’re looking at the direct cost of like 100 times. The money sees every year and the indirect cost must be even higher because it creates so much friction in society accounts a close, for no reason people are sending, you know, money to their family in some Irish country like Pakistan for example. And they can’t because they don’t work or they sometimes the guy can’t get closed because of this. I mean, it’s ridiculous. It’s absolutely ridiculous and one of the points also I’m making in the article is like. It’s also a big corruption of a pillar of democracies, which is the presumption of innocence because you suppose in all societies normal societies to you need to be proven guilty. You need to have investigation on you to be proving guilty, but these regulations, like every time you do something that could be suspicious, potentially you need to prove that you are innocent. You know what I mean? So, it completely serves that this principle. And is basically a mass surveillance on people that is completely inefficient.
Stephan Livera 00:05:52
I totally agree. And now of course I think what many people are seeing and we’re seeing this now and you speak about this in your article is what happened with Nigel Farage in the UK. We’ve seen other examples around the world where maybe a well-known individual has their account shut down and maybe they are able to get it back, but other people aren’t and so it sort of turns on your ability to get the masses riled up, or at least get some kind of public support for your case. How many people are there out there who are just getting their accounts shut down and they have no ability to get banked again?
Olivier Roland 00:06:26
Yeah, it’s hard to know. I tried to look at this, but there is no research on this yet, but we can guess it starts to be quite high. There was an article in the New York Times a few months ago, especially about that, like people getting their account closed for formal reasons, and I have to say, sometimes it’s not directly related to QIC or IML. For Nigel Farage, it was apparently a political decision by one of their committees. They were like, saying that this guy was too risky for their reputation. But my point is, this kind of regulations help the banks actually to do these kinds of discriminations because they have a lot of latitude to say hey? We don’t want to do business with you, and we don’t need to give you any reason. So, it means basically they can use if they don’t want to make business with you because. I don’t know. They are racist, for example. Well, they can close your account and you will never know really why. Right. And yeah, when you’re famous, it’s more easy to defend yourself actually defending himself efficiently. And right now, he’s creating a movement. I think he called that the unbanked or the debunk kit maybe. And he’s trying to gather more testimonials from people. So, I guess soon in the next few months, we’ll have a bit more clarity about exactly how many people are affected, but I think it’s going to be higher than what most people think.
Stephan Livera 00:07:49
Yeah, but even there, I’ll tell you what, it seems like they are making it more about this idea that everyone should have access to a bank account. But that’s going to still be distinct from all of the AML and KYC checks, right? So, it’s not that he’s going in there to try to deregulate and take away the AML requirements. And so, there’s a broader battle, isn’t there? That has to be fought about getting people to realize why AML laws are unjust, ineffective and. I think maybe that’s where the longer the bigger battle is, and of course building alternatives and using alternatives like Bitcoin. But how do you see that broader battle? I guess that winning hearts and minds, do you think people can be won over in terms of hearts and minds about why? AML laws are unjust.
Olivier Roland 00:08:34
I think it’s gonna be a tough battle, you know, an uphill battle. I mean, many people are completely unaware of this. Maybe most people don’t earn enough money that they know the trigger the threshold for investigations kind of things. But I mean I think you. See more and more. People complaining about it, you see more and more articles about it. So I think the awareness is reading is still quite low. We need to be. Honest, but I think it’s going to be maybe one of the battles of this to come. It’s certainly something I wish will be more known, you know, because I think it’s actually revolting, honestly. And also something revolting about the system is like, I mean basically the government asks the banks and the financial institutions to do their job. And not only they do that, but they ask the banks to work for the government for free. They are not paid for this and it’s even worse, when you look at it, it’s. Not only they work for the governments for free, and they have to but they also pay the governments for the privilege because if you don’t follow exactly the regulations you, I mean the banks get fine and big time. It’s like billions of dollars, you know, so I mean. How would you react if your government will ask you to work for them for free, and not only that, but if you do one mistake you. You get fined heavily. For me it’s a form of servitude, you know, and it’s not normal. And also when you look at the efficiency of the system, one of the reason is so inefficient is like the banks. They don’t care really about the results, they just care about following the regulations to the later. You know, they are more interested in just following what is written. What is a philosophy? What is the spirit of these regulations? And I think one of the reason is like, hey, I’m not paid for this. It’s not my job. Why should I do It well? you know, but also there it’s not their job, so they are not. They’re not skillful in that it’s the job of the police, of the investigators and this kind of things. So, I mean when you look at this, you see how these all these inefficiencies, all these like revolting things and the fact that so many people are affected to it. And I think the cost to society is really enormous, so hopefully will spread the world and make it an object of public debate. And one of the subjects are I share in my in my article is like I make some parallels with the situation of the Catholic Church in Europe in like the 1500s, you know, because at the time the Catholic Church was at the top of the peak of its power and the system was very corrupt, very corrupt. For example, one of the most famous things of the time is like this. The church was selling indulgence. I’m not sure if I pronounce it right, you know, indulgence.
Stephan Livera 00:11:31
Yeah, indulgence. Yeah.
Olivier Roland 00:11:32
And basically, it was like, hey, you were a sinner, you did some bad stuff. No worries. You can still go to heaven. Just need to pay the small fee of X amount of money and your sins will be forgiven. You will go to heaven, which is a big corruption of Christianity, right? There is nothing in the Bible about that, but it was making the church lot of money and you can draw some parallels from that because. Here we have a system that is super inefficient that creates a lot of friction in society. That is the corruption of one of the core principles of our democracies, which is the presumption of innocence. And yeah, so it’s not, I don’t think it’s gonna be too sustainable and like the Catholic Church, back in the day you know, it was so corrupt that it’s actually. I mean, it created indirectly Protestantism because Protestants were protesting against the Catholic Church, and they used the printing press to spread their ideas. And you can make a lot of powerless with the crypto situation right now. One of the core reasons of the creation of many. Also including bitcoins obviously was to be permissionless and why is it important to be permissionless? Because when you look at the KYC and AML and the permission system, it’s actually very corrupt, very inefficient. So hey, if we cannot change the system, maybe we can create something that is completely outside of. It and that will destroy it. You know, that was a Protestantism. Approach and I think the situation is very. Similar today.
Stephan Livera 00:13:09
Yeah, for sure. and so in terms of people having their accounts stopped or shut down or frozen, I guess the typical scenarios might be a user, a bank account user is doing a transfer above a certain threshold or maybe they’re doing an international transfer and for whatever reason, it comes up on some kind of monitoring or transaction interfering system in that bank and our compliance Officer or an automated e-mail goes to that customer saying, hey, we froze your account because explain this transfer otherwise, we’re gonna, you know, shut your account, or here’s a new form that you need to fill out. And if you don’t fill out the form, we’re going to close your account. That seems to be the way this is happening for a lot of people. Is that being? Your experience or at least what you’re hearing from people?
Olivier Roland 00:13:55
Yes, Although in the New York Times article there were like examples of people who got the account shutdown without any explanation and no question asked, people hand which is the problem is the fines are so high that if the customer is like a normal person, meaning he’s not going to make a. Lot of money for the bank even if he stays for a few decades, I mean, in some cases the banks just don’t bother. They’re like best case we’ll make a few 1000 bucks from this guy worst case is gonna cost. This guy is gonna cost us millions. So the decision is easy. Let’s cut the account because we have other things to do. Let’s focus on higher priority customers, right. And this problem I think is getting worse and worse and people are like waking up to this fact, but also about the question asked beforehand we are part of a of a group in Dubai and I don’t know if you saw, but somebody shared maybe was it you? I don’t remember. So, it was you Okay? You said, hey, there is HBC Australia.
Stephan Livera 00:15:03
That wasn’t me. That was another person but go on.
Olivier Roland 00:15:06
So Okay, so this guy was saying, hey, I should be Australia. Ask me a few questions about this transfer but look at the form they sent me and it’s a 13 pages form seriously. I mean, do you really want to fill 13 pages of explanation? For like a wire transfer you did to your grandma in another country. I mean, at some point it starts to be completely ridiculous, right? But also you can see the trend is toward this, you know more and more bureaucracy why? Because the banks wants. To cover themselves, you know in case of investigation they want to show the regulators. hey, we did everything by the book. If this guy is a drug dealer or something, it’s not our fault. Right. We followed the regulations.
Stephan Livera 00:15:54
Yeah, that’s sadly the situation we’re in. But I think part of that part of what has driven us here is also. The very high level of regulation and licensing for these banks, right? So, it’s not easy to set up your own competitor bank. And even if you did, there’s a big chance that people try to shut you down. Like, if you look at what happened with Peter Schiff as an example. So, he set up a bank I believe in. Puerto Rico and he has spoken publicly about how the government and the regulators. Made it very difficult for him and they eventually sort of railroaded him into shutting it down and so it might normally have been a competitive environment with lots of different banks. So people can say well this bank treated me poorly. I’ll go to somewhere else, but now we’re operating in an environment where many of these banks have. In some cases, received bailouts like NatWest did from the UK, from the British government. Some of these banks have received bailouts. Some of these banks are, you know, just they have received all these permissions and special permissions. So there’s maybe a little bit of a tip-for-tat right. So, you said, like you said, they are being forced to work for free by some of these governments, but there’s also a tip-for-tat. Element here because the banks and the government are sort of saying, We’ll give you this holy blessing, that you may work in this industry. Right. And if you don’t have our blessing, you’re not allowed to work in it. And so that’s a little bit. There’s an element of control there, but I think it comes into a little bit like a deep state conversation, right? So, there’s all these individual. Voters who theoretically are electing the government into power, and that government in power should theoretically represent their interests, but actually that’s not really what happens in practice, because most average voters and people just don’t understand all of these intricacies of the AML and the systems that are at play here.
Olivier Roland 00:17:40
Yeah, that’s something I want to investigate more you know. I mean everything I share on my blog, so disruptive horizons is very deeply researched as maybe so. So, these I didn’t search enough so I don’t want to share my opinion right now. But I think there is definitely something to investigate Yes, but you know all of these and many regular sources actually blind to these and many. People in the banks too do all of this actually is 1 push for cryptos one out of many, right? More and more people will be driving to cryptos and to Bitcoin especially, and it’s going to be one of the reasons. I mean when you see you can send a wire transfer to your grandma and receive a certain page form. To explain why or you can just send a bit of script to and nobody will ask you anything. What is the obvious choice right?
Stephan Livera 00:18:39
Yeah, exactly. I do think that’s the way things are going. But it is I think like you were saying, it’s there’s also an element of raising awareness and getting people to understand what is the. Right, like the AML Laws, FATF, etc. Another area that you have written about is FATCA and the FATCA disaster. So can you just explain what is FATCA and what are some of the issues you see with FATCA?
Olivier Roland 00:19:04
Yes, so the US is one of two countries in the world. who do something very special they care very much about their citizen so the Americans have the incredible luck of having to pay taxes wherever they live, because the US has a tax on citizenship basically in, basically all the other countries except one, which is Eritrea in Africa you pay taxes where you’re resident so for example, I’m French. If I go to live in Spain, I’m not going to pay taxes in France anymore unless I have some sources of income like real estate there but I will pay my taxes in Spain It’s like most of the world works like this, But Americans know if an American goes to Spain, he has to pay taxes in Spain. But he also has to send every year to the IRS tax form, explaining how much he earned, you know, and if it’s above a certain threshold, he will have to pay taxes in the US too, it doesn’t mean. You will have to pay taxes twice because usually you have. There is a tax treaty, there is a tax treaty between Spain and the US and usually you will be able to say, Okay, I paid this amount of taxes in Spain and it’s gonna be deducted from the amount of taxes you will have to pay in the US. So, but obviously, if the American goes to attach 7 like Dubai, he’s gonna pay a lot of taxes in the US, even though he’s not living there anymore. He’s not using the infrastructure, he’s not using the school, the roads, the hospital or whatever, but that’s how it’s that’s how it is right now. So until recently in history. It was quite theoretical because the US didn’t have a lot of ways to enforce this, but at the beginning of the 2010s they put in place something called FATCA, which is basically a requirement. It’s a worldwide regulation, they said, hey Banks, good news we have really good news for you. Starting from now, you will have to report to us the US government, the IRS, all the bank accounts of Americans you have. And if you don’t? No problem. We’ll just take 30% of every transaction you do in dollars up to you so it means like any wire payment that goes from one of these banks in Spain, in Japan in whatever through the US system, the US will take 30% imagine that. So, it was like, I mean it’s one of the first example of a country saying. hey, the world you need to follow our national regulation, even though you’re not in our country or else, you know, so many countries were not so happy about that, but many countries signed an agreement with the US and it created a lot of unexpected side effects. I mean, there are many, so I don’t know how deep you want to go into this subject, but one of these side effects is like for many non-US banks, American customers are like radioactive now.
Olivier Roland 00:22:18
They don’t want to do business with them because the cost of all this? Paperwork and sending the information to the US. And also I mean there is the problem of if they don’t do it correctly they can, you know, get this 30% fine on every USD transaction so many banks are like why bother? We will not just accept the American customers and it’s going to be easier. You know, our life is going to be easier and there is also the problem of accidental Americans because the US like quite a few countries in the Americas I mean, it’s very generous if you are born in the US, you get the US citizenship. Amazing, right? But in this case, you get a radioactive citizenship when you don’t live in the US. So, what is accidental American is someone who was born in the US but didn’t live there. He was born there just because his parents. were there for. When he was born for many reasons they could have been students or working there temporarily or even sometimes tourists you know. And they don’t. Sometimes they don’t speak English, they never live in the US, they don’t. I mean, some people didn’t even know they were Americans. Right, And then suddenly, the bank said, hey, good news, we’re not going to work with you. Anymore. Thank you, Bye and I give one example of a very famous person. In my article is Boris Johnson. many people don’t know this but Boris Johnson is an accidental American. He was born in New York just because his parents were students in New York when he was born, and a few months later. I think he was not even six months old. His parents came back to the UK and Boris Johnson never lived again in the US Yes, he did a few trips, like most of us, right? He never lived there and so what happened is like in 2009, he was at the time Mayor of London. He sold his house and in the UK you don’t you don’t have to pay taxes on capital gain on your own house. But in the US you have to, and the IRA said Hello, Boys and son good news. You have to pay taxes to the US How amazing is it? And we just was like, what the Because, I mean, he didn’t know, right? Like many accidental Americans back then. Didn’t know. I think now most of them know, right? And he there was like, a mini scandal in the press, Boris Johnson said. I will never pay the taxes to the IRS. It’s outrageous. I’m not American. I was just born there by accident. Have nothing to do with the US and you know, but in the end, you have to pay. But here we see an example of someone. With clearly British who doesn’t feel American? Who sold her house in London, and the IRS says, hey, you need to pay taxes. It’s ridiculous, right? It’s completely ridiculous. You see, like, this kind of intense side effect of, like, a regulation that is too. Two overreaching so in the end he paid the taxes and he is a US citizenship. And I mean again, the reason is famous. Probably he made some kind of deal with the IRS. We don’t know exactly the details, but many people are not in this situation, right?
Stephan Livera 00:25:37
And I think the important thing you’re getting out there as well as you talk about in that article is it’s not just about these accidental Americans as an example, it’s also about. The viability of some kind of global taxation system, and I think that’s kind of a deeper implication that you get to because that’s something that it seems other countries might like to do, but maybe it’s not feasible for them to do or at least not yet. So what are your views on this idea of global taxation?
Olivier Roland 00:26:08
Yeah, One of the pages so basically my blog is like the articles in my blog like extracts of my upcoming books. I’m writing a book about the disruption of the nation state by the Internet and globalization and one of the core phases is as the population will be more and more, more mobile, it’s gonna be harder and harder for nation states to tax these people. And when you look at the repartition of taxes, you see that the top in many countries, so top 10%. Wealthy, wealthier people, they pay more or less 70% of the income tax. Is the case in the US. Yes, in France, in the UK, it’s very close. In Canada, it’s like 20% of the richest people pay 64% of income tax. And usually it’s, I mean there is no official number about this, but many people in this category are entrepreneurs. So, you can guess also it more or less the same. For corporate tax sales tax, like VAT etc. So you. Don’t need. That many people out of this trailer. To leave the country to make the like the balance, the budget and balance, right so I think. We’re gonna see. More or more countries trying to restrict the freedom of movements of their citizens, especially the more wealthy ones and. One of the possibilities is to do what the US are doing, which is a taxation on citizenship, and you see quite a few countries who studied this possibility. And so I’m French and the French Government actually studied that in depth. In 2019, there was a 92 pages report from the National Assembly about the possibility of doing exactly that. And the good news is. They don’t think they can pull it off for a few core reasons the 1st is. Well, the US are doing that, but France is not as powerful as influential than the US, right? So it’s gonna be harder for France to pull up, which is good news for most of us because no other country has the same cloud as the US, right. And the second reason is France. If France can pull it off, let’s say theoretically, they will have to renegotiate all the tax treaties they signed with every countries which will take years and years and years. I think maybe France signed like something like 130 tax treaties and they can maybe renegotiate 5 year, right? And not only they will have to renegotiate tax rates, but also they say many countries we want something in return. So it’s not sure we’re gonna gain anything. 3rd is actually. It’s doubtful that the worldwide taxation will bring more money than what it costs, and they gave the example of the US because we didn’t talk about that. But actually when you. Look at the system.
Olivier Roland 00:29:22
It was supposed to bring attach member exactly, but like 100 at least hundred of millions of dollars every year of taxation. And when you look at the numbers, it’s completely ridiculous. It brings 15 millions per year and it costed like maybe 800 millions of compliance and stuff just for the US government in the for the first years, all the numbers are exact numbers are in my article. And actually, FATCA is profitable, but only through the fines only because banks many banks have to pay the 30% fine, you know. So again, you see a completely ridiculous regulation that is not so efficient. And the 4th reason, but this is more. It’s. I mean, it’s not gonna. Be universal, it’s. Like because France is part of the EU and in the EU, there is a fundamental right of being able to move from a one country to another, it’s like the freedom of movement of person, companies and capital and a tax like this will be contrary to this freedom of movement. So if France pull it off. It’s not going to apply in the EU, which will open so many loopholes, right? So I mean it doesn’t affect all the countries in the world, but it’s still 27 of the wealthiest countries in the world, right. So Long story short, it seems. Likely that other country than the US will be able. To pull it. Off, but they were exploring other possibilities like so. For example, in Portugal they have a blacklist of tax havens and if you have been a Portuguese resident for, I don’t exactly remember the years, maybe 5 or 10 years. And you move to one of these stocks saving. They’re like, hey, good news. You moved to Dubai. I hope you’re gonna enjoy it, but you will need to pay to still pay tax in Portugal for the next five years. Thank you. Bye, bye. And so this is one of the possibilities, right? It’s like a softer form of our right taxation. They were also thinking of the possibility of raising the exit tax so if you’re an entrepreneur and you move abroad, you will need to pay your tax on capital of theology called Capital gain on your company. Any they were thinking of the possibility of making you pay for the use of the education system if you leave before a certain age and these kind of things so there are still many possibilities, and I think we’re going to see more and more countries trying to do these kind of things because we are the trend is clear more people will be more mobile. Digital nomads are gonna be more numerous by the year and it’s gonna affect literally the budget of countries and we were talking recently in the group about what Australia is doing right. They’re also trying to implement a system like this. It’s not as bad as Portugal. It’s like for two years. If you don’t show that you really live abroad, you still tax resident in Australia.
Stephan Livera 00:34:12
Right. So just to clarify there, so that is an item that’s in consultation right now, but it looks it looks likely that’s the direction they’re going and basically the rule there is something like if you were a long term tax resident of Australia and you don’t follow certain aspects like if you don’t get an employment contract. I think for more than two years with accommodation in another place, they will just treat you like you’re an Australian tax resident, even if you’ve literally packed up and left everything out of Australia and you’ve gone to somewhere else and I think. You could theoretically be on the hook for up to three years, depending on the timing, but again, this is still unclear exactly what, where and when this comes into force, but it looks. Likely at this point, so it’s certainly they’re sort of trying to push in this direction. And I guess to be fair, like you said before, they would still have double tax agreements, right? So but what they’re doing, maybe the net effect whether that’s planned or not, the net effect is that they want to restrict your let’s call it escape pathways. They want to restrict which countries you can go to say you’re not allowed to go to a 0 tax place, but if you’re going somewhere else that also has high tax. Okay, fine. We’ve already got a double tax agreement with them. You’re allowed to go there, you know. And so that that’s kind of a weird thing that they’re doing and you know they have this concept called adhesiveness, right? They want to make it easier to become an Australian tax resident than it is to exit than to lose Australian tax resident, right they call that a principle, right? That you should so-called pay your fair share. But as you said. There are going to be or there is becoming there is this class of let’s say top 10% earners, let’s say roughly who might have an incentive to leave. And if even a small number of those, you know, people really start moving in numbers, that could cause a lot of issues for some of these nation state couldn’t it because they are reliant on them for tax revenue.
Olivier Roland 00:36:11
They do it’s gonna be, I think one of the big battle of the years and decades to come. So one of the articles I publish is like 10 principles of history to try to predict the future and the first principle is the power of governments is based on the immobility of their subject, and we have many cases in history of people trying to leave their country, sometimes in mass. Now one of the most recent examples was in the Soviet Union, you know and in eastern Germany before the Berlin Wall was built, I mean millions, I don’t remember exactly. I think it was two or three millions. Eastern German escape to West Germany. So it was like. A lot. And I’m not saying it’s going to be the same volume of people, right? But I’m just saying. When it happens, what do they do? Well, the government they build walls, either physical or in the law, like what we’re saying. And one of the oldest example we can find in history is in the Roman Empire, when Diocletian, it was in the at the end of the 3rd century, he basically completely reformed the government and it was like the biggest government of the whole history of Roman Empire until this time and it costed a lot of money, so he had to raise a lot of taxes and he made many Romans escape to the Barbarians. You know, quote unquote to escape the taxes. So what? What did the government did at this time they were like hey. Good news, now you will not be able to move freely. Until you paid your fair share of taxes. You will be attached to your land. If you’re like a farmer, a worker or whatever. And he started actually serve them that one of the things that started serve them, which was a crisis slavery system that lasted for more than 1000 years. I’m not saying it’s going to happen again. Right. I’m just saying that we saw that in history again and again when people are starting to escape, the governments are trying to tie the people to the land.
Stephan Livera 00:38:29
And this also ties in and I’m not sure how deeply you’ve looked into this, the demographic collapse that people, there’s this narrative going now, people are, you know, speaking and writing about this idea, right? So the gist as I understand it is, you know the world population today is about 8 billion. It’s still growing, it’s gonna be projected around 10 billion in maybe 2050 or 2060. Around there, but the issue is not it’s the composition. So as I’m understanding, it’s like normally societies have been, or at least you know, up until recently, recent decades it’s been more like a pyramid. There’s been a few old people, but a lot of young people to sort of pay for that to sort of fund the welfare state fund, you know, the militaries and all this other stuff that the governments are spending on are wasting money on rather. But instead of being a pyramid, we’re sort of shifting more to being like a cylinder. And so there’s less and less young people to pay for the old people. Now the common response that a lot of governments are using here is immigration, they’re saying. Well, our local population is not being very fertile and having lots of children. Let’s just import people from elsewhere in the world. But the problem with that is it will tap out eventually and so there are these big problems coming in the decades to come because these governments will have these big, big tax bills. And not as many people to pay it.
Olivier Roland 00:39:46
Yeah, I mean, I’m not there yet in my articles, but I wrote about that in my book already. I mean, there are many descriptions coming for the nation these what we talked about. Is just one of them. And not only it is going to be hard for them to release, it would have been. Hard in any situation. But no, it happens at the worst time in their history, because many Western countries are broke already. When you look at the level of debt they have, the cost of servicing the debt. The level of taxation, and I mean it’s bad and when you look at the demographic, it’s even worse. I mean, it’s like, yeah, in many countries, almost all of them, the population is getting older you have less and less workers to support the whole population. And it’s not a recipe for success in the long term, right. So yeah, many countries will have to have immigration. But when you look at the demographics. Today, most of the of the newborns are in Africa, right? So it means basically most of the immigrants will have to come from Africa, just mathematics. And yes, it’s gonna be a competition among countries to attract the immigrants. At the same time. As the more mobile segment of the population will look at what I call the market of jurisdictions, because when someone is mobile enough like is doing basically a full remote work or he has an Internet company, he has access to a market of jurisdictions like dozens of countries. Fighting to attract him and his family or her and her family with the best conditions. So, it’s gonna be interesting to see how this dynamic plays out you know maybe we’ll see you know, you talk about the concept of it’s easier to become tax resident than to escape. Maybe it ‘s gonna be easier to immigrate than to escape. We don’t know. It’s gonna be interesting to watch.
Stephan Livera 00:41:47
Yeah, I think that’s and in fact, I believe the sovereign individual mentions an idea. Related to that, have you had the sovereign individual, yeah.
Olivier Roland 00:41:54
Yeah, Absolutely. I was heavily influenced by this book. I read it at the end of 2021, so I have been a Digital Nomad since at the end of 2010, traveling around six months. A year like. For 17 years now, I lived left France in 2015 to live in London. Three years and now it’s been five years. I’ve been in Dubai. Right now I’m in Brazil, so it’s not Dubai. Here but so when I read The Sovereign video I was already doing what they described in the book actually. And so I was amazed by. The precision of the predictions. I mean this book was published in 1997, so probably it was written in 1996 or something. It’s amazing. All the trends are predicted. It’s actually one of the inspiration. When I saw what they did, I was like, how did they do? To be so precise in their prediction, they didn’t get everything right, but they get they got like many things, right? And it inspired me to try to find principles, universal principles in history. So you could. Think about the future from first principles, you know? So yeah, I read the book and I highly recommend it.
Stephan Livera 00:43:11
Yeah, well, that’s great. And I think some of what you’re writing is almost like an updated version in some ways. Right. It’s sort of like taking that and advancing it in terms of where we are today in 2023, but I think. The fundamental point is that there are now options available for, let’s say, people who are earning in the top 10%. If you’re in that top 10%, it’s something like that now, not every one of those top 10% people can leave. But there’s at least options for some of them, and I think that is going to go into what people talk about. Some people call it flag theory. Some people call it global citizenship, but they sort of it’s this broader idea that you don’t have to just be born in one place and die in one place that that you might actually pick and choose and you know. Use different things like residence here, citizenship there or a bank account here or phone number there things like this. So, do you want to just elaborate a bit on how your I guess how you would explain flag theory or some of these ideas?
Olivier Roland 00:44:11
Yes, sure. First, just to clarify something, I put the emphasis on the top 10% because of the people, because just a few of them living is very unbalancing for the countries. But I think it’s gonna, I mean, many digital nomads are not part of the top 10%, you know. And now with the democratization of. The remote work is even people from middle class will be able to enjoy these kind of things, right? So yeah, the flag theory. So you mentioned you don’t need to die in the same country you were born. So I call these kind of people mono country people. Meaning you were born in one country, you were red in this country, you speak more often than not the only the Language of this. You got married in this country, you have a job in this country. You take your vacations in this country most of the time you return in this country and you die in this country. You know, and when you look at the people around you, it’s probably like 95% of the population, maybe more, right. Many people are like this and there is nothing wrong about that, but it creates a lot of blind spots when you stop being a mono country you the blind spots are obvious to you, but it’s not for them. And one of the blind spot is many People, they don’t know what happens in other countries. Like I’m not talking about the news. Everyone can read the newspaper, right? I’m talking about exactly how the system works in different countries. Just to give you one example, in France maybe 95% of the population is absolutely persuaded. They think the Social Security system is the best. In the world and. When you ask, how do you know it’s the best? Did you compare with other countries? They said no, sorry. I only left live in France until now, so I don’t know. So how do you? Basically, they repeat what they have been told. While the government say this is the best, it’s the best system in the world. Trust us and people, they don’t have any comparison, so they don’t know right. When I moved to England, I saw that this is the health system was really good. Dubai too. So when you start to escape. From your own country, you can start to compare and you see I mean sometimes you see stuff in your country that are better than the rest, but more often than not you see. Actually, it’s not exactly what I’ve been told, right? So you have this more. Like I don’t know like objective way of seeing things, so I think. The more mobile people will be, the more they will travel the world, and not only as tourists, but like, really living in the countries. The more they will realize that and they will start to compare jurisdictions. So the idea of the flags. Theory is to actually use the friction that borders create to protect yourself or to make you a less appealing target for administrations and governments. It was basically designed in the 60s. First it was just the idea of three flags. So basically the idea was like. You should put your business in an other place as where you live and put your investments in another country. Then in the 80s it was expanded to five flags, and now we speak more of Six Flags. So What are the Six Flags? So the first flag is your flag of Citizenship and if you want to. Follow this strategy by the book. You shouldn’t have anything in your country of because out of all the countries in the world, it’s going to be the country that takes you the most for granted. They want to attract people like you, but they don’t care.
Olivier Roland 00:48:00
That’s a very it’s a big paradox. It’s like schizophrenia actually. They take you for granted, but they consider you more like someone who should follow the rules than a customer. But if someone about with exactly the same profile you they want to attract him, right? So you can take advantage of this because all the other countries in the world will treat you better than your country of birth. So that’s by the book. okay, I’ve. Never met anyone who follow exactly the strategy. Like the book, so I’m just giving like the theoretical example. Second flag is your country of residence, and you should usually choose the country with that, treat you the best. Basically, that gives you the best creative price ratio of government services, like how much you pay. And what do you get? And not only of government services, but obviously of do you like the place or not? I would never, never advise to go to a country you hate just to pay less taxes. It’s completely ridiculous, right? You don’t do that. I mean, life is short. I hope at the end of your life you will remember more the love letters you got at the bank letters. Right. So, but my point is you don’t need to go to a place you don’t like. There are so many interesting, amazing places in the world that are less, probably less like that your country of birth that you can choose. A place you love and also where you will be less taxed. And the cert fly is where you put your business now nowadays is harder and harder to put your business in another country that where you are, but we can expand the concept to you can have your business in the same country as your residence, but your customers will be will not be in this country and with the web business is. Quite easy, right? The 4th flag is where you put your investments. It can be different countries, right? Not just one. The 5th flag is where you what they call the playground. So where you spend your time. So for example, my base is in Dubai, I spend six months a year there, but during the rest of the year I’m traveling. Right now I’m in Brazil. Here and the 6th flag is where you put your digital assets. So if you want to follow the strategy by the book, every flag should be separated, but obviously it’s not mandatory. So why doing that? Well, it’s so asymmetric difference against national states. What do I mean by that? It means. It’s not so hard to pull It off for Example, it’s complete integrity into my lifestyle. I don’t have to do with the work to do that. I just do it naturally, so it’s easy for many people to do that, but it’s very hard for an administration to fight against it. That’s what is an asymmetrical difference. It’s like. Cryptography, right? Cryptography, is easy to use and very hard to break or impossible to break. So for people who want to maximize their freedom against governments, it’s a strategy. And I need to be clear that I don’t think anyone is invincible. All right, if you are famous drug trafficker. Like, I don’t know if you’re the new Pablo Escobar and you use that. No worries. The FBI is gonna get you at. Some point Okay. It’s not. The idea is not to be Invincible. The idea is if you’re a harnessed entrepreneur, just a normal one. This setup will create so much friction that it’s not going to be worthwhile for administration to try to boost your user would choose easier target like mono country entrepreneur you know, and I mean, you could ask about the moral. The epic the Ethical of this right, is it right or wrong? I’m not talking about that. I’m just saying that’s the if you want to maximize your freedom against government, I think it’s quite efficient and let’s not forget that some people also try to protect themselves again against authoritarian governments. You know, like Russians and Chinese kind of things, right?
Stephan Livera 00:52:02
Right. Yeah. And as you’re saying this quote unquote game is going to play out over the next few decades, that more and more people are looking for alternatives. And as you said, it made it may have started at maybe only the elite could afford this decades ago. And now because of Bitcoin, because of remote work, because of these. Trends that we’re seeing, it’s actually becoming more accessible to a lot of people to more people. And so you talk a little bit about I think you have a two article series where you talk about principles for predicting the future. We spoke about some of this and as you said, the immobility is a key one, but some other key ideas you mentioned are this idea of communications technology and of beliefs people hold in their heads. So do you want to just? Spend a little bit. Why is it important the beliefs people hold in their heads.
Olivier Roland 00:52:50
Yes. So I mean it’s so long subject, but let’s try to make it Short, if you look at the wars of religion in Europe in the 16 and 17th century, basically what happened? Is like as we mentioned before, the Catholic Church was has become a very corrupt like institution. And I mean, even before the 1500s, many Christians realized that and try to create something different. But every time they were. By the Catholic Church, what made first Protestantism a success was a printing press. The printing press was the first technology of mass replication that allowed the Protestant to spread their ideas before the Catholic Church could scratch them and when you look, So what we look we’re looking at right now is like it was a battle or the story people were telling themselves in their mind because the Catholics, the story they were telling themselves was like, hey, the Catholic Church is very important. And the Pope. He is the Representant of God here on this planet and everything the God the Pope says as a Pope is basically God speaking through him. More or less, you know. And we should listen to him. That was the story they were telling themselves. So the Pope and the Catholic Church are very important for our faith. And the Protestants? Were like. Hey actually sorry, but when you read the Bible, there are many things the Catholic Church is doing that is not in the Bible. So there is a problem. And I’m sorry, but selling indulgence is actually a big corruption of the of Christianity, of our faith. It’s completely contrary to the teaching of Jesus, which is true, right? So the story the Protestants were telling them their head is like, we don’t need the Catholic Church, not only the Pope is not the voice of God, but is actually corrupt like the church. And we can just practice our fear directly. We don’t need the hierarchy of the power. the Cardinal, the Priest. We can just talk to go directly. And pray directly. We don’t need that. So I mean, for us today, it’s ridiculous to go to war for these kind of things, right? It’s completely ridiculous. We’re like guys, just do whatever you want it’s fine. You pray the way you want, no problem. But back in the days it was very important and people were willing to sacrifice their life for these kind of stories. So, you see that we can deduct a few principles from this, and I mean the worst of region in Europe were terrible. Like it was like millions of death. It lasted for a few decades, you know. Almost one century. And where it happened was mostly in what is today Germany back in the days it was the Holy Roman Empire and it estimated that from 1/5 to 1/3 of the population was killed and this it was very bad. Very, very bad. So we can deduct two principles from this. The 1st is a chip and hard to censor. Technology is very powerful to change the story people tell themselves in their head and the principle before that. Is like. This the. Story people think in their head is very important for their allegiance. So we see the Catholics in like the in 1100 for example. They believe so much that the Pope was the God was speaking through the Pope, that they were going to. To do credits on the other side of the world, because the Pope said you should do that a few centuries later. Well, the most Catholics after the regions of war didn’t believe the Pope enough to be willing to do all the atrocities again because there was a peace of Westphalia. Basically, that said, hey, starting from. Now you can choose to be a Catholic or Protestant, doesn’t matter. Up to you. Okay. It was a revolution, right? And if the story is, I don’t believe in you because I don’t think you, the Pope, is God speaks through you, then they don’t listen to you. They don’t obey you. And maybe they will Fight you and we see that a chip technology of communication can be very powerful in changing the story people have in their head. So where I’m getting at is that when you look at nationalisms and patriotism. Most people are completely blind to it, but it’s actually very recent in the history that it exists. Until recently, many people, I mean, it’s part of our DNA, I think to feel part of the community and to want to contribute to this Community and to define the Community. But for most of history, the community was the direct community that people were in relation with. It was basically the tribe, the village, maybe the city and that’s it. So I give the example in the article of Francois of It’s a French guy, I mean a French guy. Francois on the territory of France in 1500s and in 2000. And they are. Both in Brittany, which is a region in the West part of France, and if 1500 if a city in the South of the Kingdom of France is attacked, the Francois of Britain will not feel a sacred duty to go defend this. Really, even if it’s part of the same Kingdom, France, why?
Olivier Roland 00:58:27
Because first, he doesn’t speak the same language. Speaks brittle. I don’t know how to say the English brittle. He doesn’t speak French if he’s educated. Maybe he speaks lots of French, lots of Latin you. His community for him is his village, his Lord the Duke of Brittany and yes above there is a king of France, but for him it’s like a very fuzzy concept. He will never see the king in his life. Maybe we’ll see his face on the on the coin at some point. But and he never saw a map of the Kingdom of France in his life. He doesn’t even know where it is. You know, so if he goes to sacrifice his life to defend a city a few 100 kilometers South, it’s not because he feels he’s part of the same community of subject of the Kingdom of France. No, it’s because his law asked him to join an army and why? The Lord asked him. Because the Lord of the Lord asked him to join the army. And why it happened? Because the King of France asked the Lord of the Lord to do an army to defend the thing you know. So he was willing to sacrifice his life for honor of the promise he gave to his Lord. Or maybe if this city was attacked by an army of a different religion, he could go to defend this city because he wanted to. The different East region, right and 500 years later, it’s completely different. The Francois from Brittany, he feels more like a French from Brittany than a brittle that is also French And if this city in the South of France is attacked, he will feel a sacred duty to defend the city. And why, I mean, it’s very long. I’m sorry, but it’s like. So, so complex that. Yeah, You need some time to explain, but. What happened between the two these 500 years? Why the first row of 2000 fields, part of this community is what we call imaging community a country. A nation is imaging community because you feel part of a community, that of people you will never meet. And that is not in direct relation to you. And why one of the reasons is developed is actually the printing press, which is surprise. Using the printing press made before in Europe, many countries had many, many regional languages. For in France there were dozens of regional languages, and someone from one region could not talk very much with someone from another region, and one met French, which was Parisian. At the time, the name was Parisian of France Francia. What made Paris and the French is because the printing press at the start, like in the 15th century, they went to these to the cities that were the most wealthy, usually the capitals, right where the kings were. And when they started to spread the books in the local language. They use the language of the city and it helps spread the language through the territory, and this suddenly you have this common language spreading in the in the country. And the people who could read first, they had a common language with someone from another region of the same Kingdom. And they also imagine it was also the imagination of like this book that I’m reading was printed. There are thousands of people, all the Kingdom reading it right now. And it’s, I mean, it’s complicated. But it’s like it’s it was starting to create this notion of this community of people. Sharing the same behavior, sharing the same belief, sharing the same stories basically, and I think so it’s. I mean I just brushed off the subject. It’s you could go for hours and hours on this, right? But basically, patriotism and nationalism is a very recent invention until the. 17th or 18th century most armies were form of professionals or mercenaries, and people didn’t fight for the values right. Sometimes they did, but more often there not know. And I think the Internet is going to have the same kind of effect, meaning the printing press basically destroyed regional languages and regional patriotism. And I think the Internet is going to do the same to nationalisms, because as the people will be will become more and more mobile. 1st, as I said before, they will start to compare the different system in different countries and realize sometimes it’s better sometimes. And also they will feel less and less attached to their country of origin, and they will become more and more attached to maybe the idea of becoming a global citizen. But I think and then we can connect this to the book, the network state by Balaji, right, they will feel more connected to. Another imaginary community which another you know, communities. Of like-minded people connected by the Internet today, some people feel more connected to one or more communities on the Internet than to their neighbor because Internet makes it very, very easy to find. Like many people who share the same passion as you. Even if your passion is very esoteric like. Years ago, if you had a I don’t know if you were passionate by role-playing games, if you live in a small village in the middle of Kentucky, good luck to find someone who like that too, right? And today it’s super easy to connect to a community online community of people who. Like that, right? And Balaji idea in the network set is like all these communities are some of these communities are auto network states, meaning people who feel more attached to themselves and to the other their fellow countrymen of the same country. So, it’s just a start. We’re just. Starting to see this, but for example I’m a digital nomad and I really feel part of the digital nomad community and I feel more close to a digital nomad living in Japan or in Brazil or Mexico or whatever, that I don’t know. A plumber living in French in France? What I mean so you can. I mean, it starts to shift a little bit the allegiance and the story you have in your head. Of what community do I belong to.
Stephan Livera 01:04:53
Yeah, right. So one thing I would just add here, I think like while I kind of broadly agree with a lot of what you’re saying, I think there’s also some element where we’ve seen people over the last few years lose their minds with all the COVID crazy stuff, right, like they just, they lose their minds. You know, whether it’s COVID, hysteria, climate hysteria, you know, you name the hysteria and. In some cases, it wasn’t just a matter of getting the information out right, because most of these people, they have a phone, they have the Internet, they could, they could read about this stuff too. So I think there’s gonna be a big segment of the population who just take whatever narrative they’re fed, right? Maybe they’re just too far gone. They’re not really open-minded, but I where I do agree with you. Is that I think there’s a small segment. I don’t know what that is. Maybe it’s 10 to 20% of the. They might be a little more open minded than able to, let’s say connect more with people based on shared interests and not necessarily feel such a strong tie that they’re going to go and die for, you know, the government of some particular state that they don’t necessarily care about, right, so I think. I sort of. I agree with you, but I think it’s a subset of the population who are going to do that. And I think sadly, a lot of people will just sort of go with the tribe of, you know, the state and what the narrative that you know, states push out there. So I’m curious what you think there.
Olivier Roland 01:06:15
I completely. I agree. I don’t think it’s gonna affect most of the population, but when you look at history, all these kind of movements, it was always a minority. But it was always a minority that was leading and that was important. When you look at the eritic quote unquote Protestantism, it was always a small part of the population, right? And I mean when during the war of religion, many people were like, I don’t care if. Just tell me what I should believe and I will believe, you know, just don’t kill me. Right. But it doesn’t matter. It’s 10 or 20% of the population. I don’t, I don’t even know if it’s. Going to be so high, but I would argue that even 5% of the population doing that is already very disruptive, very, very, very, especially since probably many of them will be part of the wealthiest population. And it’s gonna also affect the budget of states, but even 5%, I mean the stories are going to spread. It’s gonna convince more and more people. And it’s gonna create some conflict. So in history unfortunately, when you see like there is a battle for the story in the mind of the people there were many times there was a war or wars. I hope it’s not gonna be the case this time because now we have. Other new technologies, right, which is like freedom of religion and freedom of speech, basically freedom of religion and you know, speech is like, hey, you don’t need to fight physically, just can’t fight verbally to see what ideas are winning right, which I think is really, really amazing innovations. And we have them and I Hope it’s not just going to be. At this level. But because it’s also going to affect physically some states with their money, right? It’s possible that we see some kind of real Berlin Walls being built at some point in some countries. I mean in one way or another. And when you look also. In the history of Protestantism, it also won. Some princes and kings of the time supported them and I think we’ll see also a battle. Hopefully I don’t think it’s going to be a war, but like a real battle of influence and jurisdiction step of countries trying to track like these new people and countries trying to receive them from living also about Cryptos. We can see it already, just the start of El Salvador, making Bitcoin legal tender, and you see that in the US, the congressman is not happy about that. I mean, some Congress men and women, right. Not everyone. They did an investigation on. And the President of El Salvador, they buckley said, hey, we are not sorry. We are not your colony. We can do whatever you want, but you can see already that it starts to. It’s not a war, but it’s a fight that is starting that is going we don’t know what is happening backstage in backstage. Right. Maybe there is pressure from the US government to El Salvador like this they will say I Don’t know.
Stephan Livera 01:09:23
Or potentially like the IMF, right? There’s the people have spoken about that the IMF trying to pressure. These kind of international organizations that are really just government funded organizations, but anyway, I mean certainly I take the point like that we are seeing I think the point is that we’re seeing competitive jurisdictions that’s going to be really interesting because it’s going to change the game because now it’s giving a lot more people the option now, not everybody will take that option. But as you said, even if 5% of the population. Start doing this. Then it’ll cause big shifts. And so I think that’s really interesting. Spot to finish up before we let you go. Olivier, where can people find you online? What’s the best place? I think it is it. disruptive-horizons.com right.
Olivier Roland 01:10:06
Stephan Livera 01:10:7
Well, I’ll put all the links in the show notes and Olivier, do you have any indication of when the book is coming out or is it more just, you know, you don’t know yet?
Olivier Roland 01:10:13
Well, I’m I work more than 150,000 words already and I don’t feel I finish to say everything I have to. Say so. Hopefully it’s going to be published. I’m writing it in French, actually. So, my blog I mean I use AI for my blog because I write all the articles in French and I translate them using zipper which I think is interesting case, right?
Olivier Roland 01:10:38
So hopefully it’s gonna be published in 2024 in French, and I hope that it’s gonna be published in English also, 2024, maybe 2025.
Stephan Livera 01:10:46
Okay, great. Well, I’ll get everyone to check out your blog at least and check out the articles there. And thanks for joining me today.
Olivier Roland 01:10:54
Thank you, Stephan.
Stephan Livera 01:10:56
Now a quick announcement, just as we finish up, I’m going to be a speaker at Nomad capitalist, live in Kuala Lumpur, Malaysia. This is coming up September 6th to the 9th, so it’s coming up soon, but this is going to be very relevant for those of you who are interested in the topics discussed in this episode around International Wealth Building. So, this is interesting for those of you who are. Looking at things like second passports or offshore banks, or residencies best places to live, and there’s an awesome line up of speakers, Andrew Henderson from nomad capitalist is going to be there obviously as well as many other speakers like Jim Rogers, Marc Faber, Mark Moss, Zuby and so many more so go over to nomadcapitalist.com/live and you can get your tickets there. And of course, you can find my show and details over at stephanlivera.com. Thanks, and I’ll see you in the Citadels.