Who Killed the Living City?

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0:36And if you're worried about after-hours leads slipping through, Quo's optional built-in AI agent can answer questions and even book appointments while your team's offline. It's the number one rated business phone system on G2, and over 90 ,000 businesses already trust it to stay reachable. Money is on the line. Always say hello with Quo. Try Quo for free. Plus, get 20 % off your first six months when you go to Quo.com slash tech. That's Q-U-O dot com slash tech. This is Nick and Jack from The Best One Yet, and we are excited to tell you about Walmart business. Staying ahead of business trends means moving fast and adapting quickly.

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1:43David McWilliams: To understand the economy, you have to understand human nature. This podcast is powered by Acast.

1:57How you doing there? It is time for the podcast. I have my old partner in crime, John Davis, who's had a few little small ones at lunchtime. So he's in France, not the full shilling. How are you, Ed? I know I am the full shilling. Well, pretty much, probably more than a full shilling. Okay, all right. It's so hot here, Mac, today that I went out walking and actually I couldn't manage it. It was just, it's just too hot to walk. So I decided I'd head back and I opened the fridge and there was a few bottles just looking at me. But should they have to be drunk? Yeah. Well, I can tell you, you were talking about too hot.

2:33I am in Connemara.

2:35David McWilliams: Yesterday, it was 12 degrees. Ooh, Jesus, that's November weather. Dublin was 21, 12 degrees. The rain came in off the Atlantic. It settled down. Do you remember the day of my wedding where the actual church leaked? Yes, I do. I do. And I had the most amazing fog on that day. So the fog came in. This was a perfect Connemara day, right? The fog comes in. The rain comes in. Tick a soup. Mist. Tick a soup. You can almost touch the sky. The pressure is so low. I gave a great speech that day. You did. You gave a very good speech that day, John. You did. Down in the annals of speeches. In the annals of speeches.

3:15This was, just so you know, this is my wedding many, many years ago here in St. Mary's Church in Roundstone, where, John, in order to celebrate for old time's sake, I am going to go tomorrow morning to the church. Good man. Bring your raincoat. Belt out a few hymns. But you can swear to God, what happened was, so you're on Mervy and Gurchin Bay, right? You can hardly see anything, right? The wind is howling. It is like the middle of fucking December. Yeah. And it's the end of June. But of course, then of course, as I said on Twitter, if people are following me on Twitter, a barstool knows no guilt on a day like yesterday.

3:54so I found myself Ain't that the truth Ain't that the truth so I found myself in a number of hostelries I just want to give a shout out actually to Shane in King's Bar in Clifton up the road who gave me John a on the house a pint of harp I bet you haven't had a pint of harp for a long time Pint of harp I hope you put a bit of lime into it just for you Mac Exactly exactly but I was there and I was looking at I was looking at the varieties and there was Carlsberg and Heineken you know and it's obviously the day after, the night before, so you need a settler. But it has to be a lager, it can't be stout again.

4:29You have to just give your bag a chance to rest up. Yeah. So Shane, thank you very much for the harp on the house from the McWilliams podcast to you in Kings Bar in Clifton. And John, we are going to talk about, you know I've been on my little tour around the world, right? Yes.

4:45David McWilliams: And I've managed to find myself in a lot of very beautiful cities. Bilbao, Barcelona, Vilnius, Riga, Montreal last week, okay? And then you come home, and the contrast between the state of those cities, i.e. the fact that they're cared for, the fact that they're loved, the fact that there's no dereliction, the fact that every building is used, every building is used, and you come home, not just Dublin, but all over Ireland. We're back on this again, John. We do a podcast on the derelict state of Ireland every now and then. It's a plead, Domac, isn't it? It's a plead. Yeah, it's more of a plead.

5:25So we're going to talk about that. We're going to talk about how you fix cities. How if we don't stop the rot in Dublin. Seriously. And people listening to the podcast from outside Ireland probably are scratching their head and say, hold on a second. How can this economy that's growing so quickly,

5:41David McWilliams: how can this economy that's thrown off so much tax revenue, How can this economy that is basically swimming in state money and has 150 billion euros on deposit, how can an economy and a society like that have a capital city that is falling down, dilapidated, and certain parts of the capital city are actually falling down? So we're going to start with that, but you've got something else in your mind. No, no, you're absolutely right. And I do find that whole thing immensely frustrating when you look at that city that we grew up in and that we love. And it really is. As you say, there are parts of the city that are just falling apart.

6:20But here's the thing. Just before we get into that, I was looking at a few articles about Jay Powell coming under increasing pressure from Trump. And now he has been, you know, Trump is always having to go every so often. but he's under increasing pressure to resign now. Jay Powell, of course, is saying, I'm not going anywhere till May 26th. That's the end of his contract. But even if we wait till the end of his contract to May 26th, Trump is saying that he wants somebody in there to reduce interest rates and he wants them down to 1%. So that throws up a whole load of questions, certainly for me, such as, you know, what will that mean for the American economy and for the world economy?

7:04What does that mean for the dollar? Does that mean more inflation in America? You know, is this more for stock buybacks? Questions are endless. Okay, so the best way to frame this is through the idea, John,

7:20David McWilliams: of who gets to set the pace of growth of the economy. Is it the president or is it the president of the Federal Reserve? Yeah. So if you look at the relationship between the state, i.e. the Treasury and the presidency, and the Federal Reserve is one, probably the best way to think about it is a car with brakes and accelerators, right? Yeah. So the president will always want to accelerate the economy, to grow the economy faster, as fast as possible, so that people feel as good as possible. So that feel-good factor percolates down into demand, number one, but also, number two, into polls. So what Trump wants, every president, not just Trump, wants an economy that is really humming along by the time the midterm elections come around and are, in Trump's case, the possible run again for president.

8:18David McWilliams: He's probably trying to, I mean, he's not really not running again. So, right, the mandate of the Federal Reserve is low inflation, a target of 2 % inflation, and an economy that is moving quite nicely. That mandate is quite different from the ECB, which just has an inflation mandate, simply because the ECB is dominated by German thinking. So the Americans have a sort of dual mandate. But ultimately, you have, keep this image in your head, of the accelerator and the brake. So the Fed puts on the brakes, raising interest rates when the economy is overheating. The president wants the accelerator to be to the floor all the time.

8:58David McWilliams: Now, the arbiter of this is the bond market, right? So this is the most important thing. And this is where we're back to the idea of the trilemma. The trilemma facing America is the following. It has a debt GDP ratio of over 100%. It has long-term interest rates moving towards 5%. And it has a growth rate of around 2 % or 2.5%, which means that the debt is on an unsustainable path. Okay? Either they raise taxes and are cut spending. The Trump big, beautiful budget doesn't want to do either of that. So I actually think that the Trump presidency will end in some sort of fiscal crisis. But the mechanism is the following, John.

9:39If Donald Trump removes Jay

9:43David McWilliams: Powell from office, or if he waits and at the very end puts in a patsy, somebody who will, as you say, only cut interest rates, what will happen then is the yield curve. This is an important thing. The yield curve will become dramatically upwards sloping. Now, what does that mean? It means that if the rate of interest is reduced dramatically, so the Fed funds rate, which is the rate of interest at the very, very short end of the market, which means the rate of interest that pertains for three months, let's say that's cut to 1%. At a time when there's fears about inflation, but there's also fears about the sustainability of the debt position, fears about the dollar, what will happen is the long end of the curve, which is basically the interest rate that pertains to either 10 years are even further out than 20 years, but let's say 10 years, that will dramatically increase.

10:37David McWilliams: Why? Because long-term interest rates are only short-term interest rates with a risk premium put upon it. Yes, yes, yeah, yeah. So what you're talking about now is the risk premium on long-term rates rises dramatically. Now, why is this? The reason is because the risk profile of the United States rises dramatically because the car is only being accelerated and there's nobody actually pushing down on the brakes. Keep that image in your head. Is that not a robo-taxi from Tesla? Is that the definition of it? Think about it, right? So what you have here, what you have here, John, is Donald Trump wants lower, very short-term interest rates.

11:21David McWilliams: What will happen is the yield curve will dramatically slope upwards. Now, what that means is that if the yield curve, let's say, for example, the 10-year yields go up to 5 % or 6%, then it means 30-year yields go even higher. And that means the mortgage market begins to look like a mortgage market with rates of interest of about 8 % or 9%. So that means it kills the housing market. So what Donnie doesn't seem to appreciate is that his biggest enemy is the bond market. And this goes back to James Carville. Do you remember the Raging Cajun we spoke about before? who was Bill Clinton's economic advisor.

12:00No, he was actually more his kind of service, his fixer.

12:03David McWilliams: And he said he wanted to come back in the future if there was reincarnation as the bond market because the bond market bullies everybody. Yeah, he was a weird bloke, that fella. Very, very interesting bloke. A character from the 1990s was the bond vigilante. So it was an image of a vigilante waiting up a dark alley for the president to knock him over the head and mug him, right? And this guy will re-emerge. He's already back in the shadows, but he will re-emerge, regroup, and I think mug the president if that's what he does. And the reason is very simple. As the risk premium increases in America, people who hold American assets, i.e.

12:45David McWilliams: who lend money to the American government, will need to be paid a higher rate of interest to compensate for the higher risk. And the higher risk will manifest itself in higher inflation expectations, in higher debt problems. Now, of course, what happens is the United States, since 2008, has been on a debt binge, right? And this, of course, accelerated during COVID when interest rates were at zero. So lots and lots of loans that were taken out during the COVID period, car loans, student loans, house loans, all these things that most people just take out anyway, all of those will have to be refinanced at higher rates of interest in the future.

13:26David McWilliams: And that is why the whole financial architecture of the United States is predicated on this link between bonds and the government deficit. And the problem with Donald Trump is that his economics are the economics of debt expansion, which is what he's always done in his own empire. I mean, this is how Donald Trump got rich. He levered up all the time, borrowed up the yin-yang, hoped to Christ the assets would increase in price, then borrowed again. And then, of course, when things didn't go well for Donald Trump, he just defaulted. So he's looking at the American economy exactly like the Trump casino empire.

14:04David McWilliams: And he's running it the same way. And he wants to run it the same way. So I think that what we're going to see is if he goes through with this. Now, that's the big if because who knows? He's Zelensky's best mate this week. He hated him last week. He now loves NATO. He hated NATO last week. All that sort of stuff. But if he were to go through, John, with a public execution of Jay Powell and a replacement of Powell with somebody who is a Trump patsy, which is highly likely that he will do this. But if you do that very, very soon, I think that would bring forward a fiscal stroke dollar debt crisis in the States.

14:43David McWilliams: If he does it later, it will also probably end up with a fiscal crisis in the United States, simply because there's an inconsistency here. You can't have low interest rates at a time of expanding budget deficits and at a time of higher rates of inflation, which is what the tariffs will eventually do if they're eventually ever imposed. on American consumers. So you're right to be worried, John. I can see you sitting there in France worried about it. Yeah, absolutely. But even if he brought the interest rates down to 2%, even 1%, whatever, what does he gain out of that? My understanding is the economy takes off, but there's going to be more borrowing because it's cheaper.

15:31So there's going to be more personal debt in America. inflation will shoot up. And then, you know, from a corporate perspective, there's more stock buybacks and all that kind of stuff. So I'm not sure why he's pursuing this in the first place.

15:47David McWilliams: I think he's pursuing it because he believes in the basic idea that if you reduce interest rates, people will borrow more. And if they borrow more, you will fuel the economy. You'll basically push your pedal on the accelerator down. and that will allow Wall Street, it's a Wall Street versus Main Street idea, that will allow Main Street to actually boom a little bit more than it's doing at the moment. He's looking at the midterm elections, which are November 12 months, right? So he's looking at that, he's thinking, okay, I need to have the economy going on all cylinders by then, right? But he's not so worried about the long end of the curve.

16:31David McWilliams: Yeah, but he's not that worried about the long end of the curve simply because what he sees that as a Wall Street problem, not a Main Street problem, okay? Because he says, well, you know, if Wall Street has a problem with treasuries, let interest rates rise a little bit more because in effect, that's the financial markets over there. But what I don't think he appreciates is the knock-on effect from the long-term interest rate in America to the rates of interest rates that apply to most American borrowing, which is the mortgage market. And I think that the mortgage market is much more susceptible to higher interest rates.

17:10David McWilliams: And at the moment, if you look at the details of the American mortgage market, there is a dramatic fall off in buyers across the American housing market in the last couple of months. So all these things, all these things are happening, but the basic idea, John, is he will be mugged by the bond market. And the interesting thing is the Federal Reserve cannot control the long-term interest rate. That's something we need listeners to understand. The Federal Reserve can control the short-term interest rate for a while. It can set interest rates very, very low. It can even set interest rates at zero.

17:42David McWilliams: But the long end of the curve needs to settle itself. And at the moment, the long end of the curve is extremely nervous about the flight path of the American economy. and so the more he talks about mugging Jay Powell, the more the long end sells off, the more the long end sells off, the more actually the guardrails on the American economy and on Trump himself are actually robust. So I think it's probably quite a good thing for the American economy for the long end to sell off. So that, we just keep, this is a watching brief, John. It's a watching brief. Yes, yeah, watching brief. All the while the dollar weakens and all the while the rate of interest rises.

18:23So this is not good for America. but let's leave America John and let's come back to our old benighted dear old Dublin city. Well you were talking about mortgage rates there so you know there's your link into the Irish property market. So let's talk about the dilapidated city that Dublin is that just needs a bit of loving. Let's do that after the break.

18:56Your call has been forwarded to an automatic voice message system. A missed call doesn't feel like anything. No red flag, no notifications screaming at you. It just disappears into your call log. And nine times out of ten, that was someone ready to hand you money. That's why today's episode is brought to you by Quo, spelled Q-U-O. The business phone system built so you never miss a call. Here's what I like about it. All your calls, texts, and voicemails live in one place. so anyone on your team can pick up a conversation, see the full history, and respond fast. No more, wait, who talked to this customer last?

19:32And if you're worried about after-hours leads slipping through, Quo's optional built-in AI agent can answer questions and even book appointments while your team's offline. It's the number one rated business phone system on G2, and over 90 ,000 businesses already trust it to stay reachable. Money is on the line. Always say hello with Quo. Try Quo for free. Plus, get 20 % off your first six months when you go to Quo.com slash tech. That's Q-U-O dot com slash tech. This is Nick and Jack from The Best One Yet, and we are excited to tell you about Walmart business. Staying ahead of business trends means moving fast and adapting quickly.

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21:39We were talking about Dublin at the very start there, and the Irish government have just released a kind of master plan for Dublin. So tell us what you think. Where do we go from here? Well, just, just listener, I just want to tell you, John has been left alone in France. As a general rule, you should never leave John alone. Somebody should always be there to mind him because he goes rogue very, very quickly and he has just gone rogue. So bear with us, bear with us. But it's a lovely sight. I've just seen it many, many, many times. It's a familiar sight. Long lunch on a hot day. A long, long lunch.

22:13Okay, so John, I'll tell you, first of all, as I was sitting at the top, because I've been doing this tour around, I mean, it's been a, I found myself in Montreal last week of all bloody places the week after the festival,

22:24David McWilliams: which was kind of mad. But anyway, I was also giving a speech up in Ottawa and last Friday. So what I was doing, I was looking around. I told you we'd been in Bilbao, I'd been in Barcelona. I talked about those cities in Vilnius and Riga. I've had a really good trip, really fascinating trip. And I'm sitting in Montreal, which is an amazing city. We were going to do, we will do a podcast on Quebecois independence and the Quebec economy in time, John. Maybe sometime over the next couple of weeks. Nice. But yeah, because it's a fascinating, fascinating story. And actually from people who are really into monetary economics, which we are, John, there is a very interesting genesis of exchange rate theory, which comes from Quebec, which I'll explain to you again in time.

23:07David McWilliams: But two things, fascinating thing about Quebec, of course, is the language revival. When I first went to Quebec years and years ago, particularly Montreal, was a sort of a French-speaking city with an English accent in the sense that it was very, very bilingual and English was spoken quite a bit. Now, English is not spoken. Young people are definitely bilingual, but it really is a 100 % French-speaking city, which is maybe not 100%, but about 90%. There were pockets of English speakers. And that stems from the Québécois imposing a language law on people that you had to speak French. and many, many people said, well, this won't work, but it has worked.

23:46So we'll talk about that again in time. It's really interesting. Wow, that's quite incredible, actually. It is incredible. It is incredible. I was sitting in the cafe using my very, very poor French and two people walk in. I kind of clocked them, but I was aware they're walking. There was a group, about six of them. And they came and sat down beside me. We thought, this is a bit rude. You know, there's a whole cafe. It's fine. Somebody cramp my style. And I was actually trying to write an article at the time. And yeah, invading my space. But anyway, they said we're massive fans of the podcast.

24:18Ah, brilliant. Yeah, yeah, yeah, yeah. It was Shane and Maraid from Singapore, right? Who had just been, this is the craziest thing, at the Dalky Book Festival two days before. Oh. And had flown, must have been on the same flight as me, to Montreal. Yeah. So it was the weirdest thing.

24:36David McWilliams: But actually, one of the topics of the conversation was just how beautiful Montreal City was. And they were making the point that every time they come back home to Dublin, They live in Singapore, but they've grown up kids. Their kids are in college in Ireland. Every time they come back to Dublin, they're always, and they're both from Cork, and they're making the same point about Cork as well. They were saying that just the dilapidation, just the lack of care, the lack of love, and we contrasted that with Montreal, which is an absolutely beautiful, majestic, vibrant, lived-in city. This is the key, right?

25:09David McWilliams: Yeah. They're a resident. So I want to talk about the task force that the government announced, which is a good thing, right? Although lots of listeners will say, Jesus, another task force. You know, we don't need task force. We need action. More quangos. But be that as it may, you need a blueprint and you need an objective. So, you know, plan is always better than no plan. So that's a good thing. Sure. But it got me focused on thinking about what happens in cities. And the first thing about it is that it's not bad people that destroy cities. It's bad incentives. right? The incentive structure has to be right in order for people to invest in dilapidated buildings.

25:49David McWilliams: And what that means is that we need to change the behavior of ourselves because dilapidation and vacancy, which we see all over the city of Dublin, are the results of specific choices made by owners. And it's time now that those choices have a price on them. That's the first thing but the second thing is if you look at cities that have recovered and cities that haven't allowed themselves turn into what in effect in parts of Dublin is a ghetto what you find is that those cities make it easy for people to do up things they don't stand in the way of builders of developers of young entrepreneurs of go-getters of people who say yeah I want to buy that building and I want to change it.

26:38David McWilliams: They make it easy. And the first thing you've got to do is you've got to change the incentive structure so that for the next 10 years, for example, it is cheaper to refurbish a building in Dublin city, let's say Dublin one or Dublin two, than it is to build anywhere else in the country. That's the first thing. And the reason you have do that is if you have to attract capital into the area. So if the task force, the task force is talking about them investing a billion euros in the city, which is a lot of money, but it pales into insignificance against the background, John, of 150 billion euros sitting on deposit in the Irish banks, the savings of ordinary Irish savers, getting modest to almost negligible interest rates, and more importantly, staying in the banks doing nothing, right?

27:36David McWilliams: So what we know is that we need to change the price. So there's 150 billion euros sitting in banks. Yes. So this is your average person, their wages goes into their bank, their savings and all this. It accounts for 150 billion and does nothing? Irish people are extraordinary savers, John. We don't realize that. Because the economy has been running so hot, wages have been rising, there are far more people at work than there were even 20 years ago. The proportion of savings has risen and risen and risen. The problem is that the banking system's function typically is to be the recycler of those savings.

28:15David McWilliams: So the savings come in, then the bank's job is to lend that money out. And by lending that money out, it actually creates what they call the circular flow of money in the economy. But what we see in Ireland is the Irish banking system is not lending that money out at a rate commensurate with the amount of savings that are going into the bank. So basically, in effect, the banking system isn't the recycler of money in Ireland. It is more like a safe deposit box where the money is parked, the banks pay modest interest, and the money leaves the system. So what you've got to do is figure out a way of coaxing that money into the hands of people who want to use that money in order to refurbish streets or areas of Dublin City or Cork City or whatever.

29:02David McWilliams: We're just picking on Dublin at the moment. So how do you do that? What you do is you create a special savings product which is linked to refurbishment. So for example, stockbrokers all around Dublin and wealth managers and pension advisors and whatever, right, are constantly selling people products, right? Usually those products are based on buying a little sliver of a hotel or buying a little sliver of a big new office development, right? Sure, yeah. But what we've got to do is create the same structure, but what you're doing is you're buying a little sliver of a refurbishment of an area. And then what you do is you allow the builders and developers to access that cash, to pay back more than the rate of interest.

29:49David McWilliams: At the moment, the average rate of interest, John, in Ireland is 0.13 % on deposits. So it's nothing. And inflation is what, Mac? Well, inflation in Ireland is about 2%, 3%. So you're losing money constantly. You're losing money all the time. So all that money has been lost, right? Yeah, yeah. But also the whole point is it's not finding its way into areas of the economy that need money. So what areas of the economy need money? obviously the old city center needs a huge amount of investment. There's no point having state investment. What you've got to do is have private sector-led investment and state investment.

30:27The reason you need state investments is you do need to build council houses for people, you need social houses, all that sort of thing. You just need every sort of homes. So I'm looking at, for example, O 'Connell Street. O 'Connell Street has no residents on it. Not one. There isn't one registered person who lives on O 'Connell Street.

30:44David McWilliams: So that's the first thing. So you make cash available. Then the second thing is, how do you make it attractive for people to live in the city, to buy the mortgages? And I want to go back to an example. The reason I'm so passionate about this or I've seen it work is the following. Years and years ago, John, you remember I bought a flat in Parliament Street in Dublin in 1992, right? I had an income of 16 ,000 euros a year. So it was the average income. That was my first job. It was a graduate job in the central bank, as we remember. I was an economist in the central bank, but just starting out. Now, for younger listeners to imagine that you could get a job that paid you so little, because it didn't pay fairly little, with that small salary, you could buy a two-bedroom flat in town, right in the center of town.

31:37David McWilliams: So how was that possible? And the reason it was possible was the following, that it was the first ever development under the Temple Bar Properties Act. And it was a guy I knew, a young guy, an architect, who bought an ancient building which was falling down on Parliament Street. It was the first residential development in Parliament Street in over 100 years. Think about that. There was nobody on Parliament Street. There were no shops. There was nothing. It was just the Parliament Inn. It was the only, remember it was the only gay bar in Ireland. It was just that. That was it. That was it. So it was myself and the gay bar living on Parliament Street, which has subsequently moved around to the bottom of Georgia Street.

32:13So when I think about it now, what happened was I got a massive tax break in order to buy that house.

32:22David McWilliams: So my mortgage, for example, the cost of my mortgage was dramatically reduced against tax. So I could write off for 10 years almost all of the mortgage against tax. So suddenly buying the flat made complete sense. It was much cheaper than renting because your mortgage rate was reduced dramatically by the tax break. But also the developer got a tax break as well. So on his profit from selling the flats, there were three of them, he again also got a tax break. So suddenly, by using this tax initiative, the relative prices of mortgages, of building, of buying, of developing in the city collapsed for the owner-occupier and for the developer.

33:07David McWilliams: And the state took the responsibility. Why? Because the state thought, look, if we're going to redevelop Temple Bar or that area, we need to get money in very, very quickly. We're not getting any money in at the moment. So better than get a little bit of money in from taxation, get a little bit of money in than none at all. They also knew that they had to change the incentive structure to kickstart the development to attract people into town because nobody was living on Parliament Street then. Today, it's absolutely buzzing. Yeah. So that's the key, John. That sounds so kind of sensible in many ways.

33:44So whose initiative was that and why was it stopped? Ah, you see, your mother will love this Charlie Hawhey's initiative. Ah, Jesus. It was Charlie. The novel rogue, as my mother used to call him. Well, the thing about Charlie, right, is he understood greed and incentives and the human condition better than everybody else. So Gareth Fitzgerald had wanted to turn that particular temple bar

34:13David McWilliams: or was overseen into a bus station. and Hahi said no we're going to try and create a cultural quarter of some sort right yeah how are we going to do it we're going to set up a special purpose vehicle within the department of the Taoiseach that will actually oversee the entire development of Temple Bar now it's kind of uneven and people complain about it but the fact of the matter is it could have been a bus station and it's now actually a part of the city and a decent part of the city and it was Hahi understood the human condition. You understood, look, people respond to incentives in the same way as he responded to incentives too by taking money off everybody.

34:54Big time. But he understood that you have to change the dynamic, right?

34:57David McWilliams: You have to shift gears completely. And then suddenly living in town became cheaper than living in the burbs. Living in town, which hadn't been a thing at all until then, suddenly becomes open to young people. And why wouldn't you do it? And of course, then what happened, John, is after that move in Parliament Street, thousands of flats were built, all down the quays, all over the place. And hundreds of people got to live in town. And large parts of what was previously derelict Dublin got built. And I think now, if you're talking to anybody who's involved in the building game now, they will tell you that it's Dublin City Council, or certain parts of Dublin City Council, make it very, very difficult, make it very expensive for people to refurbish.

35:46David McWilliams: You have all sorts of, you know, you've got to do this, you've got to get a fire set, you've got to, all that sort of thing, right? So at the moment, it is almost unprofitable to build over the shop, which is why there are so many vacant properties in Dublin City. there are 4 ,000 vacant properties between the canals alone. And if you want to change that, what you've got to do is you've got to change the incentive structure. So you've got to encourage people to part with their money, to live in the city, and to buy stuff. Now, why is it important to have residents? Because basically residents police the city.

36:25David McWilliams: Safe streets are streets with people on them. Dangerous streets are empty streets. We know that. That's all for the Jane Jacobs stuff about urban living, etc. So what you need is you need permanent residents, not transient residents, permanent residents. You need home occupiers who have a stake in the area. Once you have a stake in the street, you will look after the street. You look at Parliament Street now, it's going to be pedestrianised. It's a beautiful street. When I moved into it, I think you were in the flat years ago, John. It was desolate. It was bleak. There was nobody there. It was dangerous.

36:59David McWilliams: People thought it was dangerous. you know it was dark all that sort of thing now it looks like a totally different place we're talking 30 years later but it's the same dynamic now you think of Talbot Street you think of O 'Connell Street you think of Sean McDermott Street you think of all those areas you could do exactly the same thing. So that begs the question why was that scheme stopped when it did and why can it not be kind of rejuvenated why can't we reintroduce that or a similar scheme? Well, I don't know why it was stopped, because it seemed to me to be evergreen in the sense that the more tax breaks you were given, the more investors came in, the more builders came in, the more owner-occupier flats there were, the more people began to live in town.

37:46David McWilliams: But if you look at Dublin's centre city, the difference between the census now and the census in 2006 is the population of north inner city Dublin was 80 ,000 10 years ago. It's now 69 ,000. So the population is falling. And of course, there's another big issue, which is that there are loads and loads of immigrants in the centre of the city. And lots and lots of people might find that uncomfortable. And lots of people say, I don't want to live there. So in order to change that dynamic, you've got to make it fiscally and financially rewarding for people to do so. So you've got to be realistic. You know, you can't say, oh, we've got lots and lots of immigrants and it's not changing the complexion of the city.

38:28It is changing the city. And in order, if you want to have a diverse population,

38:33David McWilliams: you need to have owner occupiers in there who want to live there. And if they don't want to live there now, because A, either the properties aren't available, or they're too expensive, you change the tax system in order to make them less expensive. And therefore, people will move into town and not move out to the burps. Because our big risk, John, is the Detroitization of the center of Dublin. So the Detroitization is what they call the donut effect in America, where you get flight from the city of people, of businesses, out to the suburbs, to business parks, etc., etc. And the center of the city is hollowed out.

39:11David McWilliams: and of course what goes into the center of the city then will tend to be all drug taking crime and you lose the city indefinitely and that has happened in america in certain cities yeah so that's why we need to do this thing it's now we need it this is this is not something we can just think oh it'll happen over time it needs to be done urgently and i think again what it requires is this task force is setting up a special purpose vehicle like Temple Bar property. So that's good. But you need to give it financial teeth by allowing it to change the incentive structure and the tax system so that if I were to buy a flat, let's say in a part of the city, which is derelict now, I would get a tax break for doing it.

40:00And if I was a developer that wanted to buy the building,

40:04David McWilliams: I would get a tax break for doing it. and then the last thing you need to do john is you got to encourage sales so how you do this is you penalize hoarding so the people who are at present sitting on buildings and not releasing them because they're watching their value go up they have to be penalized for that choice and i think what you do i think i've mentioned before is it's not all stick you need to give a carrot you offer those people in amnesty for let's say 18 months you can avoid draconian penalties if you sell now. And that will focus the minds. And then you hammer them afterwards. And you hammer them afterwards.

40:40So you're basically saying, look, if you, for example, have inherited a building and you're having a row with your sister in America who doesn't want to sell, okay, and she can't stand you. Because, you know, you know that expression where there's a will, there's a way, but also when there's a will, there's always a war, right? Yes. Yeah. Okay. And so what you do is you focus the mind and say, look, you might be having a family squabble, but the greater good of society is that that building is sold.

41:06David McWilliams: We're going to give you 12 months to sort yourselves out and sell it. If you don't, we're going to penalize it like a ton of bricks come down on you. Suddenly what you'll find is a whole host of previously hoarded buildings will come on the market. The prices will probably even fall because there'll be an oversupply of these buildings coming very dramatically. And as a result of that, what you do is you basically liberate and fuel and grease the wheels of a market that is stuck, which is the market in Dublin 1 and Dublin 2. And what you do then is you penalize bad behavior and you reward good behavior.

41:44David McWilliams: Good behavior is not offices. It's actually residential owner occupied buildings. Absolutely. Why? Because people make the city, right? The last thing you want are passers-by or commuters. That is exactly the death of Dublin. What you want is a living city. I was walking around Barcelona a couple of weeks ago, John, and I was just amazed. The city is alive. And I know that they complain in Barcelona about the amount of tourists, but still there's big areas are alive. Bilbao is alive. Vilnius is alive. Montreal is alive. And of course the common denominator is people live in the city, in the center.

42:26David McWilliams: So the idea was, John, you asked me, was the task force a good idea? Yes, it is. Applaud, great, fab, et cetera. But now we've got to do things. And the key thing is always to analyze the world, not as you'd like it to be, but as it is. And as it is, Dublin city, center city, is not attractive for living. So rather than pretend it is, do something about it. Change the incentive structure. do it over a 10-year period so the people have a 10-year period to write off good behaviour against tax. Irish people love a tax break, right? They love a tax break. We know we respond to these things. Yeah. And just go and do it and save the bloody place.

43:09Absolutely. You go and have more Cronenbergs and I will go for a stroll on Dogs Bay, John. It's a Connemara summer, so you're not getting sunburned. There's no Factor 50 needed here. That's why you love it, Mac. It'll be all good. I'll talk to you next time.

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