My last year’s sojourn in Thailand prompted me to view the world in a completely new way.
I spent a total of three months living in this amazing country. I started out by settling down in Chiang Mai, Thailand’s fifth largest city. Chiang Mai is one of those cities that’s just perfect for getting in, setting up camp and getting stuff done. The city’s major draw is that it’s not a huge and polluted megalopolis and also not some tiny and boring village. It’s super affordable (a nice apartment can be rented for only $250/month), very friendly, has tons of great restaurants (one of the best Mexican food I’ve ever had outside Mexico) and easy to get around. It’s also home to one of the most thriving digital nomad communities anywhere.
After spending a couple of months in Chiang Mai, I flew to a small tropical island in the southern part of the country near the Malaysian border. It was my reward for two months of hard work.
The island was so small that you can cross it from one shore to another in just thirty minutes. It’s probably one of the smallest islands in Thailand, a blip on the map compared to the more well-known islands such as Phuket (which has an international airport and shopping malls) or even the smaller Ko Samui (which also has an airport). In a way, it felt like living in a tiny village.
After sun tanning and eating delicious seafood on the island, I flew to the capital city of Bangkok. It was the perfect place to wrap up my three-month sojourn in this country. Bangkok was a big change from the calm village lifestyle of the past several weeks. The city is bigger than life and easily one of my favorite cities in the world. It’s a city that’s perpetually growing and changing; buildings are sprouting out like mushrooms, people are rushing from one place to another, everyone is trying to make money any way they can.
My rented apartment was a small condo in an area that was full of hotels. While I was walking around the area, I noticed that the people who worked in the hotels looked different from the affluent people who shopped in the fancy malls or dined in the nice restaurants. They seemed a lot friendlier too. My Thai friend explained to me that the people working in hotels were actually from a different part of Thailand, mostly from the improvised north. He also told me that most of the people in the services industry which mostly caters to tourists—from hotel front desk employees to the waiters in the restaurants—were also likely not from Bangkok but from the poorer parts of the country.
It was at that point that I realized something that had escaped me for a long time: big international cities are epicenters of globalization. In other words, what I saw wasn’t a city, at least an “organic” city like Chiang Mai. What I actually saw was a place where all kinds of different people mixed together, working at various jobs, jobs that didn’t exist back in the smaller city, jobs whose purpose was to serve a completely different class of people.
It was as though I had descended down on Earth from some distant planet and was witnessing an experiment unfolding before my own eyes. An artificial city of some sorts whose goal was to deliver the maximum value and returns to investors. Lots of money was being injected from inside Thailand as well as from the rest of the world. Lots of labor was imported from the rest of the country as well as from outside the country. And, coupled with technology and planning, many things were being built at breakneck speeds: hotels, office buildings, shopping centers, residential buildings, etc.
The most extreme example of this type of experiment is Dubai, a city I visited back in 2012. Dubai is extremely successful and prosperous. A big part of that is because of the oil, but also because of the productivity and openness to foreign trade, labor, and ideas. Almost all the services are run by foreigners. The police force is made up of Pakistanis. The teller who sold me tickets on the metro was Asian. The waiters in the restaurants were usually Filipinos. Not to mention the countless Western expats working for international oil companies.
My friend took me to a really nice restaurant in an affluent part of town. The restaurant had an Italian name and served Italian food. But apart from some Italian chef’s framed picture on the wall, there was nothing else Italian about the restaurant. The hostess was Filipino. The waiters were Indian. The chefs were Pakistanis. The security out in front was Egyptian. I suppose the food was Italian. In any case, it was pretty good.
Locals (Emiratis) don’t work. They’re wealthy and don’t need to work. In fact, I remember reading somewhere that the only place they work apart from government functions is the passport and customs control in the international airport. They’re usually out and about, eating at restaurants, shopping and socializing with friends.
Dubai works. It’s extremely safe. There are no income taxes. There’s minimal bureaucracy for things like forming your own company and getting a residence permit. The weather is warm year-round, great for those who hate cold weather like myself. (It gets pretty hot in the summer, though the strong and universal air-conditioning sort of makes up for it.)
The biggest problem with Dubai is that it sucks for those who aren’t going there for work. The city feels superficial. It sorely lacks a cultural aspect that defines cities like London or Paris. It’s also very expensive, about on the same level as New York City—if not more. And, if you’re a single man, brace yourself for a difficult time as it’s not exactly a great city for dating. (The latter seems to be a common theme in rich, capitalist cities.)
Dubai is certainly an extreme example of a city that’s meant to make money but sucks for everything else. Everything about it is designed for bringing in capital and labor and converting that into something great. In fact, most Western (and some non-Western) big cities around the world are very similar. They’re agents of capitalism, highly engineered for productivity and the maximization of investor returns while sorely lacking in the “quality of life” department.
New York City, San Francisco, and Moscow
There’s another wealthy capitalist city that immediately comes to mind: New York City. I spent over a decade living in NYC and it’s still my home base in America.
I’ve met tons of people around the world who’d kill to work and live in New York City. Obviously, one of the bigger reasons is the higher salary. But why is the salary higher? Because the cost of living is higher. Why is the cost of living so high? Because it’s a place with a massive confluence of money (i.e., Wall Street) and lots of people who’re feverishly working, trying to build something new. This cooperation of money being invested into productive labor leads to prosperity. That’s why everything is more expensive.
Then there’s San Francisco, a city where I spent eight years working for all kinds of companies, big and small. San Francisco always seems to be in the middle of some tech boom. Now is one of those times. There’s a lot of investment money that’s flooding the local economy. As a result of the influx of high tech workers from around the world, renting a small apartment in an average neighborhood would set you back anywhere from $3-4,000/month and up. New York City and many other big world cities are the same way. Expensive, chaotic, filled with opportunities for up-and-coming people fresh out of college, but also have their downsides such as increased crime and chaos.
San Francisco is a picturesque city with comfortable weather year-round, but there’s little reason to live there if you’re not building your own multi-million (or billion) dollar startup or investing in one. As the result of all the capital flowing into the city, it’s being priced out for everyone who isn’t in the tech space. In fact, even tech employees are having a hard time making ends meet.
Last but not least, there’s Moscow, a city that has been completely transformed from the central planning capital of the Soviet Union to a rich capitalistic city. Moscow is rich chiefly because Russia’s wealth is concentrated there. While I enjoy visiting Moscow, it’s definitely not a city I’d ever live in. It’s just another huge and unfriendly megapolis. Russians even have a nickname for it: мясорубка (meat grinder). It’s an apt nickname because meat grinder is what you go through when you live and work in Moscow. People work long hours and barely have enough to get by. It’s a place of great inequality: on one side, you have very rich people looking to even make more money and, on another hand, you have people who’re struggling just to survive.
Great places for rich or up-and-coming
What all these cities have in common is that they’re great places for the super rich, super ambitious who want to become rich or die trying, or for those who have no other options but to slave away, trading their time for money aka the “9-5” lifestyle. New York City is expensive because there’s a lot of wealth in the form of productivity and lots of money being moved around. It’s home to Wall Street and the seemingly unlimited funding potential that comes with it. If you’re someone from a poorer country such as Afghanistan or Venezuela, you can do a lot worse than to move and live in New York City.
San Francisco is rich because it’s the world’s high tech hub. That’s the place where the greatest tech innovation happens. It’s home to almost all tech giants (e.g., Facebook, Airbnb, Twitter, eBay, Intel, Google, etc, etc) mostly because there are lots of tech employees and venture capitalists. Tech employees move there because there are lots of tech companies who want to hire them. This positive loop creates powerful effects that are hard to duplicate anywhere else.
But if you aren’t part of this economy, if your main source of income is from somewhere else (like worldwide clients), then you’re effectively inflicting a pay cut by choosing to live in such cities.
For example, let’s say you have an online business that’s generating $2,000 per month (a modest income, since most online businesses make a lot more). Here’s a trivia question: is $2,000/mo a lot of money or not? Answer: it depends on your purchasing power. Okay, but how is purchasing power determined? It’s determined by your productivity to others.
If you’re surrounded by more productive people whose skills are in higher demand than yours then your purchasing power will be lower. Conversely, if you’re surrounded by people whose skills are in lower demand than yours, then your purchasing power will be higher. Of course, that’s a massive oversimplification because I’m not accounting for many more variables.
A modest income of $2,000/mo is more than plenty in places like Chiang Mai, Buenos Aires or Bogotá. But if you’re planning to live in New York, San Francisco, or Moscow, you’ll have a very difficult time trying to make ends meet. Of course, you need to build out a modest passive income which, with the right tools, is actually pretty straightforward.
Don’t get me wrong. I like New York City. I think it’s truly a world-class city where you can have pretty much anything you want (for the right price). But as someone who makes almost all the money online and not from the local economy, my money is naturally worth less there than somewhere where the local economy isn’t as developed.
Since I’m not a hedge fund manager, a merger and acquisitions specialist, or a high-priced corporate attorney who needs to close multi-million (or multi-billion) dollar deals, living in NYC automatically devalues my income. There’s little reason for someone like me to pay the entry fee by residing in the city while getting little benefits in return. From a business standpoint, living in a city like NYC would be a very poor ROI (return on investment).
So, if I can have a much higher quality of life in places like Buenos Aires, Kiev or Chiang Mai, what’s the point of spending more somewhere else? To be sure, a city like Kiev might not match New York’s caliber of Broadway shows, but as the capital of a big country, there’s plenty of cultural things to see and experience.
What makes cities like Buenos Aires, Kiev and Chiang Mai (and many others) so alluring is the fact that they’re just normal cities without a huge influx of money that demolishes everyone else’s standard of living. They are desirable because they’re the exact opposite of cities like New York and San Francisco.
Power of globalization
All of this is happening because of a force called globalization. Regardless what you may think, globalization is unstoppable. As the world interconnects, capital goes where the returns are higher. If a company can make quality shoes cheaper in China than in America, it will make them in China. If a high tech startup needs to raise funding, it needs to go where the money is; most likely that will be San Francisco. It’s economics 101.
Globalization is the reason for the concentration of wealth in certain cities and not others. A city like Buenos Aires (a very picturesque, pleasant and livable city) will unlikely become super rich anytime soon. At this point, it doesn’t have much to offer to attract the world’s wealth. Although that may change in the future. Same for cities like Chiang Mai, Vilnius, Belgrade and Kiev. They’re just ordinary cities with an ordinary local economy. They’re beautiful and cultural. They provide a high quality of life without draining your bank account. And they don’t require you to toil 120-hour weeks for some overly ambitious startup in order to afford to rent a tiny apartment (or room).
So, unless you’re a super rich billionaire who’s looking to make more billions, or an ambitious entrepreneur who’s looking to make those billions or die trying, or someone whose mission in life is to slave for the previous two, you can do a lot worse than to live in a place where globalization has improved the quality of life without also destroying the moral fabric that furnishes the city with its beautiful soul.