The Chinese guy who is buying a small chunk of Iceland

by on September 3, 2011 at 1:41 am in Economics | Permalink

Surely not a geopolitical threat:

Dressed in sweatpants, he does not look the strait-laced apparatchik, nor is his office typical of a Chinese businessman’s. The lobby features sculptures inspired by his poems; crampons and oxygen tanks are lined up outside the meeting room. A litter of grey kittens runs around, vying for his attention. Upstairs, beside his bedroom, he keeps two monkeys, several parrots and a rabbit. He used to keep sharks but says they failed to thrive in Beijing.

Yet he is not familiar with Ernst Stavro Blofeld:

Mr Huang, who has climbed Everest and reached the north and south poles, rejects any claim that his deal is motivated by strategic considerations. “It’s true that I have a government background. But I didn’t want to be a bureaucrat,” he says, stroking a purring kitten. “Could a bureaucrat keep cats in his office?”

Morgan Warstler September 3, 2011 at 1:56 am

yes. but who cares? China rocks. Someone has to make us more competitive.

James September 3, 2011 at 2:03 am

I can’t find the link about the Chinese guy.

gregasaurus September 3, 2011 at 3:40 am
E. Barandiaran September 3, 2011 at 5:25 am

Tyler, I find amusing that you pay so much attention on a Chinese tycoon trying to “corrupt” Iceland by buying a little piece of land and ignore the American tycoon that has been “corrupting” Chile and Argentina with his large “investment” in Patagonia’s land.

To find out who Douglas Tompkins is and what he has been doing in Patagonia use Google.

Bill September 3, 2011 at 10:38 am

This is funny.

E. opposes someone purchasing on a free market private property to be used for conservation purposes.

E. Barandiaran September 3, 2011 at 2:00 pm

I’m not opposing it. I’m just making the point that Tyler is ignoring the elephant. Tompkins’ purchases of land in the Patagonia has been a political issue over which a lot has been written in the past 15 years. In Chile, he bought so much land bordering Argentina that he had to negotiate with the government but some details of the agreements are still secret. At least in Chile, it was not a market transaction.

I find stupid to argue about why a Chinese tycoon is willing to buy a small piece of land in Iceland.

E. Barandiaran September 3, 2011 at 2:17 pm

Talking about government transactions, we should not ignore the last elephant that the fraudulent-clown-in-chief inflated at the price of $535 million. I refer to Solyndra. Read

http://justoneminute.typepad.com/main/2011/09/solyndra.html

Donald September 3, 2011 at 5:23 pm

What’s Tompkins’ tax situation on all that land? How do you know that it’s “free market private property” and that Tompkins actually pays for the cost of his vast property rights down there and that the cost for them aren’t socialized and subsidized by others?

Government’s primary purpose in is the protection of those property rights — hence a use fee is properly charged for this service.

People who have vast property rights should pay for the existence of the entity that upholds those property rights — just as they should pay more for property insurance.

When you possess something you cost society something: the cost of defending your right to possess that thing.

There is an exception: the homestead. Homesteads predate government property rights and are based on a head of household’s ability to defend his animal territory: Modest house and what might, in modern terms, be thought of as ‘the family business’ — which at the dawn of the neolithic was basically just a small dwelling, a few acres of arable land and the tools/weapons needed to work/defend that homestead.

Obviously Tompkins’ holdings far exceed a simple homestead.

So does Tompkins in fact pay for the Chilean and Argentinean state, police, military etc. that upholds his property rights and prevents Chileans, Argentineans, Russia, the People’s Liberation Army, Hugo Chavez, etc. from settling or seizing the land? Does he patrol and guard the land himself everyday? Does he pay for his own private army to do so? Or is the cost of maintaining his vast property rights mostly paid by others via various income, sales, capital gains, value-added, etc. taxes i.e. taxes on anything but wealth, property, net assets?

Bill September 3, 2011 at 7:26 pm

First, how can you attack him, and his private property purchase, if YOU do not know Chlean taxes. You are starting from the proposition that there are no taxes, but say that you do not know.

Burden of proof is on you.

Donald September 3, 2011 at 10:14 pm

Can you read? I’m not starting from the premise that there are no taxes. I’m simply asking questions.

Does Tompkins actually pay for the cost of his vast property rights down there? Are the cost for them not socialized and subsidized by others? Does Tompkins in fact pay for the Chilean and Argentinean state, police, military etc. that upholds his property rights and prevents Chileans, Argentineans, Russia, the People’s Liberation Army, Hugo Chavez, etc. from settling or seizing the land? Does he patrol and guard the land himself everyday? Does he pay for his own private army to do so? Or is the cost of maintaining his vast property rights mostly paid by others via various income, sales, capital gains, value-added, etc. taxes i.e. taxes on anything but wealth, property, net assets?

Bill September 4, 2011 at 10:02 am

Don,

I can make assertions by asking questions.

When did you stop beating your wife? Did you beat your wife?

Burden of proof is on you. And, yes I can read, and yes I did point out that you asked everything in the form of a question and did not know. Burden of proof is on you.

Or, to put it another way that you are more familiar with: Are those people who assert facts as questions duplicitous or is this inquisitiveness that goes on for paragraphs? Do they know what the burden of proof is before they make claims the answer to which they do not know? Will this point be made?

Donald September 4, 2011 at 1:54 pm

Bill,

And I can ask questions by, um, asking questions.

I’m not trying to “prove” anything. I’m not asserting anything. I honestly want to know the answers to these questions. What you seem to be trying to do is prevent certain questions from being asked by aggressively painting any such questions as being claims that require “proof”.

As a result of your strange, defensive reaction to these simple questions, I now want to also know why you seem so hostile towards such basic, simple questions? What are you afraid of? Are you trying to hide something or prevent something from being probed into or answered?

Bill September 5, 2011 at 7:58 am

Don, Just go back and read your first post and ask yourself “Is that what I now claim I was doing.”

Donald September 5, 2011 at 2:06 pm

Bill,

Learn to recognize what a question looks like and go back and read my first post.

And let me ask you again, why you are you so hostile towards such basic, simple questions? What are you afraid of? Are you trying to hide something or prevent something from being probed into or answered?

Yancey Ward September 3, 2011 at 9:10 pm

You should have noted the quotes around the word corrupting.

Scott from Ohio September 3, 2011 at 5:48 am

After googling, I am glad to find out that “crampon” does not mean what it sounds like it means.

Walter McGrain September 3, 2011 at 8:50 am

This story reminds me of Douglas Tompkins, the former CEO of North Face and ESPRIT who bought huge swaths of Chile, to the point where he nearly severed the country in half. The one remaining parcel that would have completed his acquisitions was initially opposed by the government and many of the people.

http://www.nytimes.com/1995/07/02/world/world-news-briefs-chile-to-stop-american-from-buying-more-land.html

They eventually made agreements that established a national park.
They eventually

Bill September 3, 2011 at 10:41 am

So, its a free market. That’s what the property was worth. He chose to use it for conservation.

Next you’ll be in favor of condemning his land purchase and awarding the land to Alcoa at a low price.

E. Barandiaran September 3, 2011 at 2:02 pm

That NYT article refers to only part of the land that Tompkins bought in Chile in the past 15 years.

Walter McGrain September 3, 2011 at 3:38 pm
E. Barandiaran September 3, 2011 at 4:45 pm

Sorry the two NYT articles are from 1995. If you want to know the current state of the land tracts owned by DT through his foundations, read this recent article from El Mercurio (07/17/2011)

http://diario.elmercurio.com/detalle/index.asp?id=%7B85756d5a-68e6-4b12-80a8-ff2e2a1c1dc2%7D

Walter McGrain September 3, 2011 at 7:07 pm

Well, yes, I realize that there are old articles; that was sort of the point: what sorts of feelings were generated in the host country when people suddenly realized that a non-national was acquiring large swaths of land. Yes, it all turned out well in the end, but at the time it stoked feelings of nationalism, etc.

Bill September 3, 2011 at 7:28 pm

I’m glad to know you guys support eminent domain and taking of property which was purchased by Tompson in a free market.

Apparently you support having his private property being used for a higher purpose, other than conservation.

Andrew Montgomery September 3, 2011 at 2:03 pm

It’s not a perfectly free market though. If a foreigner buys up all the land in a small country and refuses to sell to anybody, then it distorts the economy. The foreign landowner is under no obligation to sell, at any price. His land is protected from invasion by the police and judiciary of a country in which he pays no taxes. No wonder the Chileans were upset.

The truly free-market solution is for the government to only lease land, never sell it. This already happens in Hong Kong, where thanks to the revenue from land leases, personal and corporate tax rates are very low (the top rate of personal tax is just 17%; and few people fall into the top band). If Douglas Tompkins had only been able to purchase a 20-year or 50-year lease on the rainforests of Chile, he wouldn’t have bothered.

Bill September 3, 2011 at 6:54 pm

You mean they don’t have property tax? Come on, you are arguing from your conclusion and what you want to believe.

Next you’ll tell me that his property ownership should be condemned and resold by the state.

Andrew Montgomery September 5, 2011 at 9:47 am

According to this link, Tompkins’ $8m farmhouse with 1,749 acres of land paid only $300 in property tax last year. As with most countries, Chile taxes buildings, not land. Undeveloped land isn’t taxed.

http://online.wsj.com/article/SB10001424052702303745304576357413621875804.html

Donald September 4, 2011 at 2:06 pm

The problem is conflation of the function (net in-place liquidation value of assets) with the derivative (income, capital gains, value added, sales, etc.).

The result of this conflation is a brain-dead discourse in political economy.

OF COURSE people who have vast property rights should pay more for the existence of the entity that upholds those property rights — just as they should pay more for property insurance.

OF COURSE people who make X dollars a year should have zero tax burden as a result of those CHANGES in their net in-place liquidation value of assets.

That creation of wealth is taxed rather than possession of wealth is precisely what is wrong with the tax base. Taxing creation rather than possession is precisely backwards from the fundamental standpoint of proper statecraft.

When you create something you are not costing society anything. When you possess something you are: the cost of defending your right to possess that thing.

It’s that simple.

Benny Lava September 3, 2011 at 10:25 am

+1 for the Ian Fleming reference

mark September 3, 2011 at 11:49 am

Why can’t America have more bug-nutty, crazy millionaires like this guy?!?!? We need to encourage Peter Thiel, Bill Gates, Steve Jobs, etc to really let their freak flags fly as high as possible.

Bill September 3, 2011 at 7:29 pm

We did. The Rockefellers.

Rahul September 5, 2011 at 1:03 am

Howard Hughes

Mike September 3, 2011 at 12:51 pm

So he’s a former, reformed communist apparatchik now living the American Dream. He acquired wealth not through merit and risk, but through political connections – being the right bureaucrat at the time when a looter state figured out how much wealth it could acquire by abandoning their core belief in communism.

CBrinton September 4, 2011 at 12:23 am

Blofeld was a latecomer to the cat-stroking bit. Cardinal Richelieu did it in the 1920s (in silent-movie version of the Three Musketeers).

The American Swaption September 5, 2011 at 12:25 am

Nor, I suspect, Dr. Claw

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