Human society is so complex that the vast majority of people have no clue how the world actually works. Take “economics” – most people think they understand it after picking up a few fragments. Because they can’t see the underlying logic of how society operates, the majority just go with the flow, echoing whatever they hear.

Housing

I first went house-hunting around the second half of 2012. I’d just started working and went alone to a development in Zhabei District, Shanghai. A one-bedroom with basic finishes, total price around 600,000 RMB. I didn’t have a cent to my name – less than 50,000 in my bank account, and my family had no wealth to speak of. So why was I even looking at properties?

It started with getting a loan. Back then I was making just a few thousand a month – barely enough to survive in a city like Shanghai, let alone save. On top of that, I’d spent over 50,000 on a Wall Street English course, paying in installments, which was my first real experience with credit cards. Around that time, a college friend needed to borrow money urgently. My pockets were empty, but through a chance encounter I met a bank loan officer who helped me get a consumer loan. During our conversation, he casually mentioned another client who needed 400,000. Since each credit card could only offer a 50,000 limit, the officer worked with contacts at other banks to get the guy 8 cards at 50,000 each. Just like that – 400,000 secured. I was stunned. You could play it like that? From that moment on, I told myself: the day I scrape together 50,000, I’m going house-hunting and getting my own place in Shanghai.

Later, I stumbled upon the “Shuiku Forum” (a Chinese real estate investment community). Once in, there was no coming back. When I recommended it to friends, they were all shocked that such a community existed. Through Shuiku I met many people who treated property speculation as a career goal. One guy had a perfectly good job at a state-owned enterprise in Beijing, but after discovering Shuiku, he quit and went back to Changsha to flip apartments – following the philosophy of “big floor area, low unit price,” going all in with credit cards and consumer loans. I don’t know how it turned out for him, but given Changsha’s real estate market, I’d guess life hasn’t been easy.

Before all this, I had zero interest in economics. But gradually I realized that to understand how the world works, you have to start with economics. Economics connects to politics. Politics connects to history. Slowly, I formed my own views. Eventually I realized that housing is a trap. It doesn’t just drain most families of everything they have – it restricts the flow of talent. Wealthy people can hop between cities and buy a place in each without breaking a sweat. But for those without deep pockets, once you buy, relocating means weighing far more factors.

Debt

I said goodbye to the A-share market years ago. A lot of people with spare cash go to the stock market to “try their luck” – which is essentially gambling. I stay away from A-shares because I can’t read them, and I’ve always believed in earning money through capability, not luck. Money earned by luck will eventually be given back by skill – or lack thereof.

Friends ask me why I don’t buy mutual funds or set up automatic investments. I say: “I don’t have cash.” It’s the truth. People probably don’t believe me – “With your salary, you must have hundreds of thousands sitting in the bank.” It’s not that I don’t save. I discovered something: instead of depositing my money in the bank for others to use, it’s better to spend other people’s money that’s sitting in the bank. So I don’t hold much cash. Where does the money go? Into assets with relatively lower liquidity.

A8+

I’d been pondering a question: “How do you become A8+?” (In Chinese internet slang, A8+ means net worth above 10 million RMB.) Recently, it hit me – the first step to becoming A8+ is to quit your job. Yes, quit. I’m not ready yet – still have unvested stock. Some might ask: you’re already A8, why does quitting matter? That’s not the point. The point is – why is quitting a prerequisite for A8+?

The single biggest obstacle to becoming A8+ is tax. If you’re a salaried employee, you pay personal income tax. The top bracket is 45% – meaning no matter how high your salary, you only take home slightly more than half. If you have stock, there’s capital gains tax too, usually 20%. With luck you keep half; without luck, less. Your income ceiling is locked. As a salaried worker, the formula is roughly: after-tax income = pre-tax income / 2. It’s like the Three-Body Problem’s sophons locking humanity’s tech tree – within this system, you can never break through the ceiling. To break through, you have to step outside the system. Every system has an upper bound; they just differ in where that bound sits.

Breaking Through

In some people’s eyes, owning a few apartments in the city makes you a life winner, a rich person. People love to brag about real estate over dinner. All I can say is: those who accumulated multiple properties in the last decade got lucky. But the last decade doesn’t predict the next. Will luck keep smiling? I’m not cursing the fortunate – I’m saying: if someday real estate stops being as valuable as it is now – say, when transaction costs become prohibitively high – will you still consider those prized possessions as valuable?

So what is real value? Imagine everyone starts from zero (or near zero). Some people are highly capable, earning millions annually. Others are average, earning a few hundred thousand. Some can only manage tens of thousands. After ten years, the results are obvious. Capability plus time – the effect is remarkably similar to compound interest.

The real value is competitiveness. Keep your competitiveness sharp at all times, rather than anchoring your sense of worth to things that already have a price tag.