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Saudi Arabia's Vision 20-30 plan
began its life in 2016 as a 

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white paper. 
It was a fairly dull document, 

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filled with a combination of 
management speak and religious 

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references, and it wouldn't 
shock me if I'm the only person 

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to have read it in full, other 
than maybe the people who wrote 

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it. 
It's the kind of document that's

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written so that people can point
at it in meetings, but no one 

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actually reads anything other 
than the table of contents. 

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The white paper sets out a goal 
for Saudi Arabia to become a 

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global investment powerhouse, to
transform the country into a 

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global hub, which it describes 
as an epicentre of trade and the

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gateway to the world. 
I don't really know what they 

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mean by a gateway to the world 
or who's outside the gate and 

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where they even are. 
None of that's explained. 

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But as I said, I'm not really 
sure anyone was meant to read 

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it. 
There's a bit in there about 

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improving fiscal health by 
cutting government spending, a 

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bit about the need for less 
onerous business regulations. 

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It says that they plan on 
expanding the variety of 

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government digital services so 
that they can reduce delays and 

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cut tedious bureaucracy. 
There's talk of wide-ranging 

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transparency and accountability,
and of the need to measure the 

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performance of government 
agencies and hold them 

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accountable for any 
shortcomings. 

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In many ways, it's a bit like 
Dodge, but without the jumping 

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around and of course, the 
saluting. 

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Next up, there's a section on 
living healthy and being 

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healthy. 
It says that there aren't enough

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sports facilities in Saudi 
Arabia and that this needs to 

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change. 
It says that they'll encourage 

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widespread and regular 
participation in sports and 

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athletic activities so that 
Saudi Arabia can be amongst the 

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leaders in selected sports both 
regionally and globally. 

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There's a bit about improving 
schools, a bit about equal 

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opportunities, you get the idea.
A fairly standard government 

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document saying that while the 
country is great, these are the 

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areas we plan on improving over 
the next 10 to 15 years. 

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There's no mention in the 2016 
white paper. 

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A building, a 110 mile long 
city, an upside down skyscraper,

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a ski resort in the desert, an 
Octagon shaped industrial 

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complex floating in the Red Sea.
There are no robot dinosaurs, 

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artificial moons, flying cars or
beaches that glow in the dark 

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like the face of a watch either.
Like I said, it's fairly dull. 

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Surprisingly, the document 
reflects on the mistakes made in

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developed the King Abdullah 
Financial District, a Saudi mega

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project that had started 10 
years earlier and was by 2016 

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plagued by delays and a lack of 
enthusiasm from potential 

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tenants and investors. 
The white paper points out that 

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the biggest mistake was that the
King Abdullah Financial District

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had been started without 
consideration of its economic 

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feasibility. 
They explain that its challenges

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were deepened by the fact that 
it had been developed in a 

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single phase which pushed up 
construction costs and could be 

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partially blamed for a lot of 
the delays. 

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They highlight that this massive
development resulted in a large 

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oversupply of commercial space 
and then renting out the 

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3,000,000 square meters of built
up areas at reasonable prices or

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even achieving decent occupancy 
rates would be extremely 

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challenging. 
They finish up by saying that 

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their commitment is clear, that 
they'll seek to eliminate waste 

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and make spending more 
efficient. 

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They quote a Quranic verse. 
I won't read it out to you, but 

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it calls for moderation. 
The white paper was authored by 

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Mohammed bin Salman, who's known
as MBS. 

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He was the deputy Crown Prince, 
Minister of Defence and 

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secretary general of the Royal 
Court at the time. 

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A year later, the Saudi king 
decided to depose his nephew, 

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who had been next in line for 
the throne, and replace him with

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his son MBS, who became the de 
facto ruler of the Kingdom of 

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Saudi Arabia. 
In October 2017, MBS announced 

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the first plans to build a new 
city, Neon, promising a 

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lifestyle not available in 
today's Saudi Arabia. 

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He told the press that the new 
city would be powered by clean 

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energy and would have no room 
for anything traditional. 

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Other than that there were no 
real details. 

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At the time no room for anything
traditional was interpreted as 

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meaning a Dubai style city with 
a few solar panels and 

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windmills. 
Today we all recognize the term 

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no room for anything traditional
as meaning that you plan on 

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drilling a huge hole into the 
ground to build an upside down 

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skyscraper. 
Along with other non traditional

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ideas like robot dinosaur parks 
and a giant artificial moon that

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will live stream images from 
outer space. 

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Now, I'm of course very positive
about this idea, but the Wall 

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Street Journal came out with an 
article this week discussing 

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some of the difficulties being 
faced at Neon. 

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Now, a few viewers of my earlier
video accused me of only being 

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positive about Neon because I'm 
afraid of being murdered and 

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dismembered, but I'm not even 
slightly worried about that. 

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I've been in hiding over the 
last year for entirely different

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reasons, and anyhow, no one's 
out to get me anymore. 

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They told me that if I hid an 
air tag in the pocket of and 

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Tumi's trench coat that I'd be 
off the hook. 

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And so everything is fine now 
anyway. 

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As a fan of non traditional 
architecture and the TV show 

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Grand Designs, I was delighted 
to see the Saudi Vision 20-30 

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plan transform from a bit of 
rezoning and government cost 

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cutting to hiring a Marvel 
Studios concept artist to design

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an impossible to build 30 story 
high chandelier because the 

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Prince likes The Avengers 
pictures. 

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According to the Wall Street 
Journal piece, the Crown Prince 

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compared the project to the 
Egyptian pyramids. 

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And in truth, when compared to 
the pyramids, NEOM is quite a 

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success as no one lives in the 
pyramids today either and the 

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pyramids don't have sustainable 
flying cars or a Hyperloop. 

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But you don't see anyone writing
hit pieces called What Went 

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Wrong at Egypt's Futuristic 
Pyramids in the Desert. 

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If you're a fan of innovation 
and technology, you'll 

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definitely love neon. 
According to Reuters, they plan 

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to use personal data as a 
currency. 

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The data will be collected from 
smartphones, homes, facial 

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recognition cameras, and 
multiple other sensors around 

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the city. 
Apparently, the data sweep will 

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help the developers predict and 
customize every resident's 

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needs, according to The Wall 
Street Journal and after 

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spending more than $50 billion, 
The crown prince's sci-fi 

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inspired dreams of an arid 
mountain ski resort, a floating 

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business district and a 106 mile
long pair of Empire State 

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Building height skyscrapers 
that's neon centrepiece have 

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collided with reality. 
They say that costs have soared,

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delays are ubiquitous, and the 
decision last year to reduce 

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Neon's first phase threatens to 
deprive the desert city of the 

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critical mass of inhabitants 
needed to make it a modern 

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business hub. 
Now, first up, the Wall Street 

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Journal are understating the 
ambition of the line. 

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It's not going to be as tall as 
the Empire State Building. 

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The Empire State Building is 
only 381 meters tall. 

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The line is going to be 500 
meters tall. 

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I mean, there'd be no point in 
building a long narrow city with

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a Hyperloop underneath and gene 
editing facilities if it was 

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only as tall as them. 
Empire State Building. 

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And anyway, the line was 
initially budgeted to cost $200 

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billion to build. 
And according to the images 

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online, they've already dug a 
big hole in the sand. 

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And that's probably the hardest 
part of the job. 

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Once you've dug the hole, all of
the other stuff like the 106 

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mile long building, the flying 
cars, and the artificial moon 

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are easy. 
I think they're most of the way 

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there. 
Basically, some people are 

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saying that it'll just be 
another fancy place for rich 

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people to live, but the great 
thing is that it'll all be 

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affordable housing as. 
Think about it, if you can house

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9 million people at a cost of 
$200 billion, that's just 

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$22,000 per person. 
Where else can you live so 

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affordably? 
Oh sorry, hold on. 

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If you keep reading, it says 
that they now expect it to cost 

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$8.8 trillion, which is it's a 
bit more and they've downscaled 

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the size of the project too. 
Apparently $8.8 trillion is 25 

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times the Kingdoms annual 
budget. 

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Well, I still think that it's 
great. 

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And as I mentioned in the last 
video, they've scaled the size 

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of the line back a little bit. 
Instead of building 106 mile 500

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meter tall building, they at 
first reduced it to 10 miles and

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then to a mile and a half by 
20-30. 

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Which still involves 
constructing the equivalent of 

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all of the office buildings in 
Midtown Manhattan three times 

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over in the next 5 years, 
according to the Wall Street 

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Journal, which the articles says
would require a significant 

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portion of the world's available
steel and glass. 

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OI, guess I can see why you 
might not build a full 106 miles

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all at once. 
They have already dug some of 

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the hole, which is a big deal, 
and I guess it's actually pretty

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smart of them to scale it back. 
As if you remember, the original

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white paper pointed out that it 
had been a mistake building the 

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King Abdullah Financial District
in a single phase as it flooded 

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the market with unused office 
space that was impossible to 

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rent out if they build a 
modestly sized building. 

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Something equivalent to three 
times the square footage of all 

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of the buildings in Midtown 
Manhattan. 

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That should be much easier to 
rent out. 

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The article says that some of 
the cost overruns are due to the

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fact that they're building these
mega projects in the middle of 

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nowhere, meaning that there's 
virtually no labor, no sizable 

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port, few roads, and 
insufficient electricity. 

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And, and yeah, I can see how 
that would make construction 

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difficult, but the article then 
goes on to say that the design 

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involves an amusement park built
1000 feet in the air with 

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theatres suspended between 
parallel towers, and that's just

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going to attract people. 
Construction workers love 

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amusement parks. 
I figure as soon as the 

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amusement park is built, people 
will rush to get construction 

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jobs in the region so that they 
can go to the amusement park 

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after work. 
And just to be clear, for all 

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the negativity in the Wall 
Street Journal, there are all 

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sorts of new projects being 
added all the time. 

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There's some sort of Japanese 
dragon themed amusement park 

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being built, There's A50 hectare
E sports and video game 

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facility, whatever that is, and 
a royal palace, which should be 

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nice. 
This article from last month 

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says that you can even get some 
sort of experimental brain 

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implant tested on you at Neon, 
which will probably only hurt 

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for a while. 
The article says it'll allow you

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to control external devices, 
which are thoughts. 

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You probably have to put one of 
those wireless phone chargers 

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under your pillow to charge it 
up. 

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Who knows? 
The article says that former 

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managers and executives at Neon 
told the Wall Street Journal 

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that some of the projections 
were completely unrealistic, but

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the plans were pushed ahead 
regardless. 

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Apparently the executives made 
the project work on paper by 

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beefing up profit assumptions. 
So it seems to me that they have

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a spreadsheet which says it'll 
work. 

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They've all of those CGI 
graphics showing the buildings. 

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They spent $50 billion digging 
the hole, probably doing some 

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research on how to get the giant
moon thing and the glow in the 

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dark sand working. 
So there's no reason to believe 

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that this won't work. 
They also had a big opening 

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party in October. 
Will Smith, The Fresh Prince, he

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was there. 
Tom Brady, the guy from the FTX 

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commercials, he turned up to 
Alicia Keys. 

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She attended. 
Come on. 

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You know Alicia Keys, She had 
that big song about 25 years 

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ago. 
She's not going to get involved 

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in a failing project. 
Come on, you. 

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You remember her? 
She was hired as the creative 

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director of BlackBerry back in 
2013. 

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You remember that? 
Back when everyone was ditching 

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their iPhone to buy a 
BlackBerry. 

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Yeah, her. 
It says that the party alone 

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cost $45,000,000, so it was 
probably a good party. 

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It was to open Cindela, which is
one of the Neon projects. 

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It's an island with some 
restaurants, hotels, shops and a

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yacht Marina. 
They probably should have 

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invited the island boys if 
that's who you really want at an

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island opening party. 
There were a few hitches, I 

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guess. 
Apparently the hotels were 

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unfinished. 
High winds disrupted ferries and

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golf, and much of the site was 
still under construction. 

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But other than that, I bet it 
was great. 

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It says in the article that the 
Crown Prince wanted the project 

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to achieve an internal rate of 
return of 9%, which is Matt 

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Levine at Bloomberg points out, 
is significantly higher than the

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standard wild vanity project 
rate of negative Infinity. 

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According to the Wall Street 
Journal, an internal audit that 

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they got access to found 
evidence that Neon executives, 

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with assistance from McKinsey 
consultants, used overly 

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optimistic financial projections
to justify surging costs. 

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The audit cited deliberate 
manipulation of figures by 

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certain members of management. 
One example is that at the 

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planned ski resort, the audit 
found that costs had surged by 

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over $10 billion, which caused 
the IRR, or internal rate of 

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return, to fall below the 
projects target return rate. 

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And that sometimes does happen 
when you spend $10 billion more 

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than you planned on spending. 
To cover the gap, the nightly 

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cost of camping, which they 
describe as glamping at the ski 

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resort, was adjusted up from 
$216 per night to $704.00 per 

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night in the spreadsheets. 
Now, I've never gone on a desert

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ski resort camping trip, and I 
don't judge you if you have. 

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But it's my belief that a huge 
wave of human effort was 

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required to get us to a state 
where we sleep indoors and have 

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access to modern plumbing, 
heating and air conditioning. 

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And I feel that if we start 
paying hundreds of dollars to 

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sleep outdoors on holiday, it 
would just be disrespectful to 

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my ancestors and all of the 
effort they went to to get us 

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where we are today. 
Now, I'm going to guess that 

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glamping is a bit better than 
camping, as otherwise they'd 

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just call it camping. 
But $704.00 per night does sound

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a bit expensive for glamping in 
the middle of nowhere to me. 

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But I'm fairly sure that I'm not
the target customer, and so if 

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you have desert ski resort 
glamping experience, let me know

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in the comments section if 
that's the standard rate. 

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In another example, the price of
a boutique hiking hotel room was

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marked up to $1866 per night 
from $489 a night. 

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Once again, I don't know what a 
boutique hiking hotel room is, 

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but I'm guessing it doesn't come
with a parking space one way or 

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another. 
These adjustments help to push 

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the projects IRR up to 9.3%, 
which is above MBSS target of 

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9%. 
That's really the The great 

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thing about spreadsheets is the 
same way that you can design any

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building you want in CGI, you 
can achieve any IRR that you 

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want in a spreadsheet. 
It it always works. 

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According to the Wall Street 
Journal, officials tried to 

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shield MBS from the harsh 
realities, too. 

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An e-mail revealed that one of 
the managers told consultants 

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that we must not proactively 
mention cost at all before a key

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00:16:58,400 --> 00:17:02,000
meeting. 
So look, not everything's going 

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00:17:02,000 --> 00:17:05,680
well at Neon, but they do have 
plans to get things back in 

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00:17:05,680 --> 00:17:09,040
line. 
Officials mothball digging an 18

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00:17:09,040 --> 00:17:11,880
mile tunnel through a mountain 
to cut costs. 

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00:17:12,119 --> 00:17:15,920
The head of the country's wealth
fund suggested cutting costs by 

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00:17:15,920 --> 00:17:19,440
using new technologies to reduce
the labour force. 

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00:17:19,440 --> 00:17:23,880
So maybe AI robots? 
From what I've read it might be 

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a struggle to get wage costs a 
whole lot lower. 

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00:17:27,359 --> 00:17:31,640
Neon CEO stepped down in 
November after an ITV 

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00:17:31,640 --> 00:17:36,040
documentary alleged that 10s of 
thousands of foreign workers had

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00:17:36,040 --> 00:17:40,800
died working on the project. 
The current plan is to open the 

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00:17:40,800 --> 00:17:44,640
first half mile section of the 
line, topped by a football 

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00:17:44,640 --> 00:17:48,640
stadium to host World Cup 
matches by 2034. 

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00:17:49,040 --> 00:17:52,480
The development lead told an 
audience in January. 

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00:17:52,680 --> 00:17:56,160
Will start to go vertical, 
hopefully at the end of this 

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00:17:56,160 --> 00:17:59,440
year. 
Saudi officials say that neon 

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00:17:59,440 --> 00:18:03,800
will eventually attract private 
investment, but so far that's 

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00:18:03,800 --> 00:18:07,520
not happening. 
Investors so far remain wary, 

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00:18:07,760 --> 00:18:11,240
concerned about the scale and 
complexity of the projects. 

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00:18:11,560 --> 00:18:15,360
Many pulled their money out of 
Saudi Arabia after the murder of

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00:18:15,360 --> 00:18:20,480
Jamal Khashoggi in 2018, too. 
There are some winners, however.

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00:18:20,720 --> 00:18:23,840
According to the Wall Street 
Journal, consulting giant 

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00:18:23,840 --> 00:18:27,280
McKinsey and company is 
reportedly earning more than 

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00:18:27,280 --> 00:18:31,400
$130 million annually for its 
services. 

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00:18:31,680 --> 00:18:36,080
A McKinsey spokesperson denied 
any allegations of wrongdoing 

301
00:18:36,280 --> 00:18:39,800
and told The Wall Street Journal
that the firm has strict 

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00:18:39,800 --> 00:18:43,040
protocols to prevent conflicts 
of interest in their 

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00:18:43,040 --> 00:18:45,640
engagements. 
Thanks for tuning into this 

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00:18:45,640 --> 00:18:48,160
week's podcast. 
If you found it interesting, 

305
00:18:48,160 --> 00:18:51,840
please tell a friend as that 
will help the podcast grow. 

306
00:18:52,080 --> 00:18:55,000
Have a great day and talk to you
again next week. 

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00:18:55,160 --> 00:18:55,480
Bye.