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The Current Transcript for July 19, 2017

Host: Piya Chattopadhyay

STORIES FROM THIS EPISODE

Listen to the full episode

Prologue

[Music: Theme]

SOUNDCLIP

More than half of Canadians think home prices will never fall. It's the surprising finding from a poll released today by CIBC and it comes at a time of heightened concern about the [fades out]

PIYA CHATTOPADHYAY: That poll was from this spring, when there was no end in sight to Canadian real estate’s rise. Well, this week? A little cold water. Sales have stalled, especially in the markets we love to describe as “red hot.” But is it a bump or the start of a so-called bubble bursting? What does the slowdown mean? And is it a chance to take a step back away from the table and rethink our relationship with our homes? That discussion is headed your way in just a moment. Then inside a building of a different kind—a school with a difference in the Horn of Africa.

SOUNDCLIP

The teachers at Abaarso set high standards for us. While they're doing that, they also believe that we can achieve those higher standards and that makes us believe in ourselves.

PC: She graduated from the Abaarso School in Somaliland then headed to a prestigious US university and she's just one of many to do so. What's the secret behind the little school in the Horn of Africa which is sending so many of its graduates to the US Ivy Leagues? We'll hear from the former Wall Street trader who founded the school as well as hear from more of its students in about half an hour. Hi, I'm Piya Chattopadhyay and this is the summer edition of The Current.

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Canadians should be worried about real estate slowdown, says expert

Guests: Hilliard MacBeth, Rob Carrick, Brian Torry

SOUNDCLIP

Our situation right now is it's too early in terms of the emerging situation to draw conclusions. But we believe that the measures we put in place are having the desired impact—that they are slowing down those markets that were rising at an unsustainable pace.

PC: That's federal Finance Minister Bill Morneau yesterday addressing the real estate market. And it is safe to say that wherever you go this summer to get together with friends or family, real estate is likely to be a hot topic of discussion because even as the mercury has been climbing this season, Canada’s overheated market has finally shown some signs of cooling. The ice cubes have come from the Bank of Canada of course, raising interest rates for the first time in years as well as provincial legislation in both Ontario and BC aimed at cooling things down and apparently taking effect. According to Canadian Real Estate Association Statistics, average national home prices have fallen 10 per cent since the height of April of this year. But is it a blip, a soft landing or the bursting of a bubble? Everyone seems to have an opinion, including our three guests today. Hilliard MacBeth is a financial adviser and the author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash. He is in our Edmonton studio. Rob Carrick is the personal finance columnist at the Globe and Mail. He is in our Ottawa studio. And Brian Torry is the general manager of Bosley Real Estate. He's with me in our Toronto studio. Hello to all three of you.

MANY VOICES: Good morning.

PC: Let us start with, you know, sort of the fundamental question and this is the question that we all want to know the answer to. How worried should we Canadians be about what we're seeing in the housing market right now? Hilliard MacBeth, how worried?

HILLIARD MACBETH: I think it's a big problem. The thing that hasn't been mentioned so far is the debt that’s associated with the housing price increase. So over the last five years—just to take a very short period—the private sector debt in Canada has grown 20 per cent faster and it's the leading pace of increasing credit in the world, in the developed countries I should say. So people forget that when you go in to buy that house, you sign that piece of paper and instantly, magically, a certain amount of money is created in your account and you use that to buy a house. But the debt goes on for a long time and that's the issue that we have to deal with. And of course once those prices as they have in Toronto start to correct, these issues with debt become much more important and people start thinking about it. Home capital situation—that's a pretty big saga that's been happening lately—is the canary in the coal mine, I believe.

PC: Okay. Brian Torry, are you worried?

BRIAN TORRY: Well, I don't know that I'm overly worried about the debt. A lot of the debt that we see for people in their homes, they’re owning a principal residence and the debt they have is on their principal residence. Most people, I think, need a place to live and they're going to stay in that house and not sell it if they don't need to. So as they go towards that renewal in four and five years from now when none of us know where interest rates are going to be, for the most part people are going to make that effort to keep their house. They need to. They need to live in a house.

PC: And just to put some context around this, the average home price in Canada is $504,000—a lot of money. Rob Carrick, where are you on this? Do we need to be worried about what we've seen with home price sales dropping?

ROB CARRICK: You know I don't think home sales, home prices and sales dropping in and of itself is a big deal. I mean asset prices go up, they go down. We've had a long period of house prices rising. We're certainly due for a pullback. It's normal. It's healthy. But I think Hilliard’s point about the debt is well taken. People have taken on an awful lot of debt. I think house prices going down doesn't mean that we're going to see a rash of defaults of people not being able to afford their mortgages. We're going to see that only if the unemployment rate spikes a lot higher—and we don't see anything pointing to that right now. But I'm worried about the household finances of the nation, that people who are devoting huge chunks of their cash flow to their mortgage payments and then the line of credit they're using and there are their car payments, et cetera, et cetera. I just worry, how are people saving? How are they covering life’s basic necessities? How are they going to cover emergencies? How are they going to afford renewing their mortgage in a year or two or more when it's at much higher interest rates? That's the question I raise.

PC: I want to ask you guys about this term that we tend to use, which is this “bubble bursting,” which is a fancy way of saying we're in for potentially bad times. So we know that house prices are down in the last few months. They’re still slightly up over last year. But are we headed for a big drop in housing prices from where you look at it from? Hilliard MacBeth?

HILLIARD MACBETH: Yes, I think we have to get back to the situation where people can actually afford the houses that they're in with a reasonable amount of debt. And that's where I started out more than three years ago when I started this project. And you can look at past comparisons between house prices and household income and you can also compare between Canada and other countries. On both measures, the numbers are way out of whack. In Toronto for example, where the biggest bubble I guess right now exists, we're looking at six or seven times household incomes. And prior to this bubble, the high end of the range was three times, so that would imply a 50 per cent correction to get back to where things are normal and reasonable again.

PC: So a 50 per cent correction in Toronto and Vancouver—the big markets across countries you see it.

HILLIARD MACBETH: Well, it depends on the market. Edmonton for example, it's hard to believe—in fact people aren't going to believe this when I tell them—you can go on the Teranet-National Bank website and prove it yourself. The peak was in 2007, actually July 2007. So 10 years ago, Edmonton home prices peaked. Now they're not a whole lot lower today than they were 10 years ago. So it will be different in Edmonton obviously, given that the peak was 10 years ago compared to Toronto where the peak was probably three or four months ago.

PC: Brian Torry, is it a bubble?

BRIAN TORRY: Yeah, it's interesting that we keep talking about a bubble. And then you hear about other parts of Canada that the peak was, I mean, maybe 10 years ago or two years ago or five years ago. And I think when we talk about Canadian real estate, we're really talking about individual markets. So is Toronto in a bubble? I don't know. I don't think so. I think where we are is we've seen a lot of activity in the government and we've just seen the rate increase. We're going into the summer months so this is a normal time for the Toronto real estate market to slow down a little bit and frankly for prices to come off a little bit. Every summer prices go down a little touch in Toronto. We're just seeing sort of everything come together all at once to, I don't know, perhaps cause a bit of movement in prices. We’re certainly down in prices and we’re a lot more down in sales than we are in prices. But to call it a bubble, I don't think we're at a bubble in Toronto. I think we'll go through the summer very slowly. Certainly people are taking a deep breath here to look at what's going on in the real estate market and we'll see what happens in the fall, which is typically quite a busy market.

PC: Rob Carrick, you know us average people walk around and say things like “Ooh, there's a bubble. There’s not a bubble. Is there a bubble?” But really for me as an average homeowner, to what extent do I need to even think about is this a bubble, is this not a bubble?

ROB CARRICK: Well, I think it's important psychologically because people in Toronto just are in love with their homes and the value of they've built in their homes. This is the biggest financial home run most people in Toronto have ever hit, same in Vancouver. And I think a lot of their sense of well-being financially is tied into the value of their houses, so they're going to have to adjust for the fact that their house prices may just retreat in value. Is it a bubble? It looks pretty bubble-licious to me as a personal finance columnist. I'm not an economist or a housing analyst, but the obsession people have with houses and what their neighbours sold their house for and how much they could get and things like that, sure looks like a bubble to me, the speculative behaviour as well. But I think if you're going to live in your house for 10 years from now, you don't need to worry. Prices will go down and then they'll go up again. Toronto is a great city. It attracts a lot of economic activity and if prices correct now, we will have another up phase to come.

PC: Okay. We'll get out of the centre of the universe in just a minute. But I want to stick with the bubble thing and I want to play a clip for you all to listen to. So this is Gluskin Sheff Chief Economist David Rosenberg. This is from back in April when he was talking to BNN, the Business News Network about how he saw the Greater Toronto housing market at that point.

SOUNDCLIP

This bubble is on par to what we had in the States back in ’05, ’06, ‘07. Now I certainly don't want to scare anybody, but we have to actually take a look at the situation that is the housing market here and a classic price bubble. I think that if you don't acknowledge that, you have your head in the sand.

PC: Hilliard MacBeth, I mean even making those comparisons to the US—and we all know what happened to the US with its housing market a number of years ago—what do you think of that comparison in the Toronto market?

HILLIARD MACBETH: Well, I think he's being kind to the Canadian bubble comparing it to the US because the Canadian bubble right now is actually quite a bit worse than the US bubble was, prior to the correction that started there in 2006. In the metric of household debt for example, we're quite a bit higher than the US was before they had their horrible crash. And in the length of the price increase and the amount of the price increase in house prices were also much more extended than the US was prior to the crash. Now there are some differences. The way housing is financed was different in the US, and so the trigger to cause the bubble to burst will probably be different. And we've got this magic thing in Canada called the CMHC, which hasn't come up yet and that tends to maybe make it possible for the bubble to last a lot longer because the lenders don't have to worry about the possibility that the household won't be able to pay the debt back. And that doesn't exist in the US the way it does in Canada.

PC: When you listen to Hilliard MacBeth, Brian Torry, and when you listen to that clip, say there's worry about this bubble in Canada and citing the US in comparison, do you agree with that? Because that scares regular people.

BRIAN TORRY: I agree that there is a really big difference between real estate in Canada and the United States and especially with tax issues and writing off principal residences, which obviously we can't do in Canada at all anything we pay. And I don't think that to compare Canada and the US markets is really a fair comparison. We are really very different countries. And I want to keep getting back to—we keep talking about a Canadian bubble, a Canadian bubble—but I think really what we're talking about is Toronto which is where we've seen the prices go really, really high in the past year. But even a city like Vancouver where we kept saying bubble, bubble, bubble, bubble, they had a little correction. And I mean a little correction. It was about seven months and then it turned itself back around and I believe their numbers now show prices about where they were before their correction less than a year ago.

PC: I'm glad you brought up Vancouver because I want to play a little more tape for you. This one comes from Jill Oudil who's the president of the Real Estate Board of Greater Vancouver. And this is her take about the effects that a foreign buyer’s tax had on the Vancouver market after it was introduced. It was introduced last August. By the way, Ontario has also introduced one in April of this year.

SOUNDCLIP

There was a very slight dip for a short time. Perhaps that is due to some uncertainty of if it would actually take effect on the market. Today we've actually seen that that has leveled out and we've been still experiencing high demand and a continued healthy fast-paced market since then.

PC: So Brian Torry, she's echoing what you said there. And Rob Carrick, do you think Toronto will rebound the same way Vancouver did after the foreign buyer’s tax?

ROB CARRICK: Quite possibly but you know, the real story here is what's going to happen with interest rates. I mean the Bank of Canada raised rates about a quarter point last week. That has sort of played into higher mortgage rates, slightly higher. If we see the economy coming even close to normal activity levels and interest rates start to creep up to more normal levels—I'm not saying they're going to go back to where they were more normal levels—that's going to cool the real estate market because our whole boom is built on low interest rates making expensive houses affordable. As soon as you take away that stimulus, that will quiet the market right down.

PC: Hilliard MacBeth, what are the on-the-ground effects of our housing prices? So in other words, if we talk about a bubble or a soft landing or any other kind of like colloquial term to describe real estate, our homes, what are some of the on-the-ground repercussions of that?

HILLIARD MACBETH: Well, I think one of the things that—and this is what got me involved in this in the first place—was watching the older generation, the baby boomers help their offspring. And they're not—I was going to say children but they're really in their thirties usually, or late twenties—get into the housing market. So you go to the bank and I actually tested this in Vancouver recently. I asked what could a young couple—I described a young couple that I know with an income of #150 to $200,000. And I asked the bank officer: what could they borrow? And the answer came back, “A million dollars, no problem.” And then he said, “Depending on the down payment.” So to play along, I said well, we could help them with a down payment. And he said, “Million dollars, no problem.” So if that young couple gets into trouble, say they bought a house, borrowed a million dollars, the first thing is going to happen is they're going to pay back a million and a half to two million dollars depending on the amount of the interest rates over the next 20 years, 25 years. And the second thing is if they get into trouble, those parents that have helped them get into that situation are going to feel obligated to help them out. So it's going to be a family crisis really is what it is, if the house prices drop to the point where that young couple can't make those payments or can't hang onto that house. And things like divorce, babies come along, illness. People get into careers that don't work out because they're not suited to it or they decide they want to go back to school and retrain for a different career. I mean everybody, every family runs into that sort of thing sooner or later. So the premise that a couple of with that kind of income could borrow that much money is where we've gotten completely off track in Canada today.

PC: Rob Carrick, you talked about this a bit earlier. You hinted at sort of our culture of real estate, the Canadian culture of it. We certainly talk about it a lot. Are we addicted as Canadians to real estate?

ROB CARRICK: I think we are. I think real estate and rising house prices are the one unifying financial benefit of the last 10 years. All Canadians—I mean not every city, there are some cities that have not participated. But if you look at where the population is, most people live in cities where people have made a good amount of money in real estate. It makes us feel great. We tell our kids, “You got to buy a house. It really worked for mom and dad,” and I think we need to take a step back from that. Houses are a place to live with steady appreciation over the years on average, but they're not the investment home run we've made them out to be. They certainly will not be that in the next 10 years based on where we've come.

PC: Brian Torry, my husband and I do the thing that I think many people do—we look at how much we could sell our house for because the neighbours have sold their house. We go, “Wow, we're sitting on much more money than we paid for our house,” and stuff like that, and we think like it's our money. But to your point, it's our home. We ain't going anywhere. So you sold houses, you bought houses. You're a real estate agent for many years. How would you talk to your client about looking at housing as an investment?

BRIAN TORRY: Well, I think you have to look at it in two ways. You're right. We shouldn't be looking at our primary residence as an investment. It's not an investment. It's a place to live. It's a roof over our head. I think Hilliard had a really important point that people go through life changes and employment, I think, is going to be a really big one. As long as there's stable employment that people continue to be working, they're going to keep their primary residence, that roof over their head. I think what we've seen in Toronto certainly and in some of the other big cities is that we've seen a lot of investing in secondary properties. And these investors are investing in secondary properties and renting them out. So they're adding to the rental pool in the city and they're hopefully collecting a return on that investment. I mean hopefully they've made a good investment and they'll make a return on that. And I think that the rental market in Toronto is incredibly very tight right now and we certainly have tens of thousands—

PC: And very expensive.

BRIAN TORRY: —of students coming to the city right now to go to school for the next year. It's very expensive. Rents are going up quite a bit. It seems like a fairly solid investment. So hopefully as interest rates go up—and I think we'd all agree that interest rates will continue to go up over the next year, though to what, we don't know—that we'll also see rents going up and hopefully that'll help people keep those investments that they've made in real estate because the investment shouldn't just be about the speculative nature. Will the value go up? If you're investing in real estate, hopefully you've made a good investment and the cash flow will be good and the rental market will help you sustain that investment.

PC: So Hilliard MacBeth, is there value that you see, in a drop in real estate prices psychologically or perhaps even spiritually for us Canadians?

HILLIARD MACBETH: Well, I sure hope so. I think the obsession that one of the other guests has already mentioned is it needs to end—the idea that people can borrow a huge amount of money and then get rich over time and don't have to worry about saving for retirement. One of the things I noticed is because people are so wrapped up with their real estate, they've sort of stopped worrying about RRSPs and TFSAs and all that sort of stuff. And I think we need to get back to where there's a balance in the household finances and it isn't all just based on a house. And also you know, studies show that people only use two or 300 square feet of the house 90 per cent of the time. You know they have to eat and they watch TV and they sleep. They go to the bathroom. And so these enormous houses that are so expensive, it's a mis-investment or a mal-investment as some people call it and we need to start thinking as a society about investing more money in new technology and disruptive technologies and other things that would be more productive down the road.

PC: So Rob Carrick, when you find yourself at a dinner party and people say, “Well, Rob, you're right about these kinds of things. What the heck should I do? What should I be thinking about?” What do you tell them sort of culturally how they should think about real estate in their home in Canada?

ROB CARRICK: I want them to think about buying a house they can properly afford and by that I mean you can buy the house, you can pay the mortgage and you have money left over to save for retirement, save for your kids’ education, pay for daycare, pay for your cars, pay for your vacations. And if you can do all that, then a house is a great bargain and a value and it is a sensible thing. But when I see people squeezing all those other expenses down to buy a house, I question what they're doing. And at today's prices, I think a lot of people are doing just that.

PC: Brian Torry, what do you say at the dinner party? If you go out for dinner, I don’t know.

BRIAN TORRY: [Chuckles] You know, honestly I think I might echo what Rob said. I think that's a pretty valid comment and I think that one of the things that we have to do as North Americans is change the way that we live. And I think we are doing that a little bit more, in that we are accepting condominium living, we're accepting living communally in smaller spaces. And I think that, that that price point, that entry point of the smaller condo, the downtown living is where those younger people are going to go if they want to be able to afford a house and to go out to dinner once in a while and perhaps start a family down the road. And I think that cultural shift is starting to happen in our big cities where we're not all starting out in a giant house and then moving to a more giant house down the road. And I think that's important. I think Rob's right. People do have to have a balance in what they're spending their money on and not stretch themselves too far.

PC: Hmm. Thank you to all three of you. Good to talk to you.

MANY VOICES: Thank you.

PC: Hilliard MacBeth is a financial adviser and the author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash. He's in Edmonton. Rob Carrick is the personal finance columnist at the Globe and Mail. He's in Ottawa. And Brian Torry is the general manager of Bosley Real Estate. He's here with me in Toronto. Okay. So if you own a house or if you don't, how do you think about it? Do let us know. You can get in touch with us at The Current. You can e-mail us by going to our website, www.cbc.ca/thecurrent, or tweet us @TheCurrentCBC. The CBC News is next then it takes a school. How an innovative approach to education in the Horn of Africa may be shaping future leaders. And it's not being run by an aid agency but by a former Wall Street whiz. I’m Piya Chattopadhyay. You're listening to the summer edition of The Current. We're back in just a bit.

[Music: Sting]

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ENCORE: Somali school paves way for students to get into Harvard, MIT

Guests: Jonathan Starr, Abdisamad Adan

PC: Hi, I’m Piya Chattopadhyay and you’re listening to the summer edition of The Current.

[Music: Theme]

PC: Up next, how one school with a difference is transforming the lives of Somaliland’s young people.

SOUNDCLIP

My name is Nimo Ismail and I was part of the first graduating class at Abaarso School. I was also the first student to get accepted into an American college—Oberlin College in Ohio. I believe the biggest reason why I got accepted to such a great school is because of the excellent education I received at Abaarso School. The teachers at Abaarso set high standards for us and while they’re doing that, they also believe that we can achieve those higher standards and that makes us believe in ourselves as well.

PC: Well, how’s that's an endorsement of the Abaarso School of Science and Technology in Somaliland? That was Nimo Ismail and as you heard her say, she is now attending university in the United States, thanks in large part to her experiences at Abaarso. The school was founded in 2008, not by a charity group or an NGO, but by a former Wall Street hedge fund manager named Jonathan Starr. The school is located in the self-described Republic of Somaliland. It is a tiny sliver of land on the Horn of Africa, which is still considered internationally to be part of Somalia. Many of Nimo Ismail’s classmates have followed in her footsteps, landing at top US institutions. But uncertainty around the Trump administration's travel restrictions has led to some uncertainty around the future for some of these students. Jonathan Starr is the founder of Abaarso and in his new book which is called It Takes a School, he chronicles the birth of the school and charts the successes the students at Abaarso achieve. Anna Maria Tremonti spoke with Jonathan Starr in March. He was in Boston. You’re also going to meet another graduate from Abaarso—Abdisamad Adan. Here is their conversation.

AMT: Abdisamad, where are you going to school in Boston?

ABDISAMAD ADAN: I am a sophomore at Harvard.

AMT: And what are you studying?

ABDISAMAD ADAN: I study economics.

AMT: And you were the first, if not, one of the very first people from Somalia to be accepted as an undergraduate at Harvard in decades, am I right?

ABDISAMAD ADAN: Yeah, that's true.

AMT: Do you feel you have a huge responsibility on your shoulders?

ABDISAMAD ADAN: It definitely puts a lot of pressure on you. Yes. It's basically a test to see if people from your country can actually do the work. That's a huge responsibility.

AMT: Jonathan, when did you first meet Abdisamad?

JONATHAN STARR: The very first time I met him was we had brought students from his school, from his eighth grade, which we knew was one of the better schools in the country. So we brought them to visit our campus because people didn't really know our school at the time. So we brought a bunch of them onto campus and a bunch of them said, “Oh, it seems great. We're going to decide to come here.” And then when we gave our entrance exam along with another school, I look and see that Abdisamad has actually decided to go to a different school. And for whatever reason, I just was incredibly annoyed and I didn't even know who he was because he visited with this whole group of students from his school. So I went actually to a group of students and said, “Which one of you is Abdisamad?” Except I don't think I said it that nicely. And, “So you say you're going to come and then you decide not to come?” And he’s like, “Oh no, it was a mistake. It was a mistake.” And I said, “Well no, I don’t even want you anymore. Don’t even come.” He said, “No, no, no. I want to change. I want to change.” And then he eventually insisted and changed and that's how he ended up coming. And then he ended up being the first student to go to Harvard.

AMT: Hmm. Abdisamad, what was your first thought about him when you met him then? [chuckles]

ABDISAMAD ADAN: I was like “Oh yeah, I’ll come to your school,” but then like everyone in my family and everyone I knew was going to the other school. So then when Jonathan came to me along with my friend, they were just like, “Oh, that's really ignorant.” That's actually like the very distinct memory of Jonathan for me. I remember him just saying, “That’s ignorance, ignorance.” And that is the first time I learned how to actually say that word, because I used to usually like, read it like as “ig-no-rance.”

AMT: You saw it as a learning moment as opposed to an intimidation moment. [chuckles]

ABDISAMAD ADAN: It was actually a very learning moment. I’ve never forgotten how to say that word since then. [chuckles]

AMT: Jonathan, your story has the potential to sound like a cliché—the rich businessman who goes to Africa to open a school. But it's not like that, is it?

JONATHAN STARR: I think it's not actually cliché in a lot of ways. I mean, I think there is a cliché about the traditional do-gooder. I was much, much more intense than the traditional do-gooder. The “rich person does something in Africa” cliché is usually also that they donate money. And I did donate money, but I moved there. I lived there. I lived on campus. I was with the students 18 hours a day. It was, this is not I think the traditional view of how a do-gooder acts in this case.

AMT: You also had a connection to Somaliland through family.

JONATHAN STARR: That's right. So my uncle’s a Somali. He's a Somalilander. He actually, he's a really a Somalilander. He was from the country while it was a British protectorate before it got its independence and merged with Italian Somalia to form what we call Somalia. He got a scholarship to the States in 1961 after going to a British school in Somaliland and married my aunt, had my cousins. And actually, the school he grew up in and the British school that he went to, he talked about that for years of my life, even when I was a kid.

AMT: Hmm. And so why did you want to build a school?

JONATHAN STARR: [Sighs] I wanted to do something different. It's not all as noble as it would maybe come off also, which is another distinction. I wanted to do something different. I’d live my life in a certain way for, at that time, 32 years. I wanted to go see a different part of the world, live in a different way. A school seemed like a way that would also be a lot of fun for me. You know, you get to be with smart kids and you get to help guide them and help lead them and get them to hopefully a better place—not a better place in terms of a different place, but a better place in terms of their own personal development.

AMT: And you also were willing to bankroll it. You put a lot of money in.

JONATHAN STARR: I committed the first half million dollars and donated that. That in the developing world can go a long way.

AMT: So you go to Somaliland. You had a lot of challenges. Can you take us through some of the biggest obstacles as you tried to create this in a country without a lot of infrastructure?

JONATHAN STARR: I mean, the challenge, there were hundreds of challenges. But to sum them up, I mean, the biggest challenge by far was trying to win over a society that had extremely little interaction with the outside world post-conflict, and was recovering from that, and had some people who certainly had taken advantage of that situation and that created—there was this incredible lack of trust in the society.

AMT: One of your first students is a boy named Mubarak. Tell us about him.

JONATHAN STARR: Mubarak in his own ways is probably the most exceptional. I mean, he grew up nomadic. Didn't realize a car was different from an animal until, I don’t know, he was 10 or so and visited a refugee camp. I mean, most people think of a refugee camp as the lowest place you can be in the world. He got to the refugee camp and the kids there made fun of him for being ignorant. That's how poor and just rural he grew up. So he gets to the refugee camp. He realizes, “Wow, there's actually something called technology. There's some education. There are things beyond what I've seen before.” Runs away to Hargeisa, which is the capital of Somaliland, essentially lived homeless for years and took our exam, got in despite having absolutely no level of English—and I mean like no level of English. He knew what the English alphabet was, but that's as far as it went. He had to have skipped a number of years of school. But he quickly rose to the top of the class. And tenacious, but also one of those brains that just doesn't come around that often.

AMT: Where is he today?

JONATHAN STARR: So he is at MIT. He'll be graduating this June and he studies autonomous vehicles, which is pretty incredible to go from not knowing that a car is different from an animal to working on self-driving cars.

AMT: And of course, you have someone very incredible sitting next to you who we've already met, Abdisamad. Abdisamad, tell me about growing up. What was it like growing up for you?

ABDISAMAD ADAN: Well, I grew up in Hargeisa, which is basically the capital city of the country. At a very young age, I went to madrassa to study Arabic and the Quran. When I was about eight, I started going to primary school. Like I didn’t picture my life lead me to like go to Harvard or anything like it.

AMT: How many brothers and sisters do you have?

ABDISAMAD ADAN: I have a lot of them. [chuckles] I have 18 siblings.

AMT: Are they proud of you?

ABDISAMAD ADAN: They are.

AMT: And when you were at home, did you have electricity to study by?

ABDISAMAD ADAN: When I was younger, no, we did not have it. Until I was, I think seventh grade, we did not have electricity.

AMT: You had a childhood with far more challenges than the kids you're in school with right now, I'm guessing.

ABDISAMAD ADAN: Definitely. [laughs] That's understatement, but yes.

AMT: Jonathan, we should point out that a lot of the kids who showed up at your school couldn't afford to go and you essentially paid the tuition.

JONATHAN STARR: Yeah, we lost a ton of money. The goal was never to make money. I didn't think we'd have to lose it hand over fist for a while, but we tried to keep the costs to be very low. So I work for free. The teachers, because I work for free, I can demand them to work for very little and they work a lot. But because of that, we actually are able to run the boarding school at about $1,800 per student per year and that's a 100 per cent boarding. That's feeding the teachers. It's everything. It's the education. So we didn't want to be losing students over what is relatively a small amount of money, at least in American standards or Canadian standards, to not get the students who are the most deserving or the ones you want.

AMT: And these students had to write exams to get into your school.

JONATHAN STARR: Yeah, so we give an entry exam. It's now become extremely competitive. The days of my yelling at Abdisamad if he doesn't come to our school are long, long over. So we don't have the final results of this year, but last year we had over 1,100 students trying to get under 50 spots.

AMT: Now, you know, we just talked about two students—one of whom is with you and then Mubarak as well—who come from very poor backgrounds, who really had to work hard to do this. How do kids from such backgrounds where there isn't the tradition of school, how are they able to be so smart with those exams?

JONATHAN STARR: So the reality is that across the country, our entry exam performance is awful. One thing I've always said in Somaliland is rich or poor, you can't buy education. I mean it's not for sale. There's nowhere in the country where you can really get it, and certainly when Abdisamad and Mubarak were coming up that was the case. So some kids actually still nomadic and doesn't know so much as the alphabet, they can't possibly perform on our exam. But it's a very simple test. So the average student comes in at around a third grade education level. I mean that's our general assessment. So now we have you come into seventh grade and students are probably coming somewhere in that vicinity, second, third grade, reading level below that, critical thinking level probably below that. Everyone starts low. So really it's a matter of talent winning out, and talent and tenacity. And they had both.

AMT: And the school educates boys and girls.

JONATHAN STARR: Correct. We’re co-ed, which led to a lot of challenges also because that was a very easy way for people who had their own agenda to attack us and say, “Oh, they're corrupting the girls.” People are very protective of their girls in this society. So it used to be extremely difficult for us to get girls to come to the school. Now we have tons of female applicants. Ultimately, the boys actually became terrific supporters of the girls. It just took time. I think it was very foreign to them, and for me I felt like they had to see that these girls were their equals. Those who resisted, eventually pretty much ended up—you either changed or you dropped out. And I think the students like Abdisamad, who were doing well didn't need to resist. They didn't need to revolt against the concept.

AMT: Well, we spoke to another two of your students at Abaarso, two girls. They're both ninth graders. And we asked them what they like about the school. So we're first going to hear Naima and then we will hear Zakeiya.

SOUNDCLIP

NAIMA: I think personally, I think it’s very important to send girls to the schools because they are the future mothers and they are the ones who can really help the country. And same as the boys, they should have the opportunity to go to schools.

ZAKEIYA: One thing it gives you is that it makes you prepared for the future and how to deal with everyone in your society. You get to go abroad to finish your education because most universities here in my country are not that good. Yeah, I think I would like to go to America, especially either Yale or Harvard. I would like to either study astronomy or I would like to become a marine biologist and study about the oceans because these two subjects are things that most people don't know a lot about.

AMT: Hmm. What do you think, Jonathan?

JONATHAN STARR: One thing is Zakeiya, at the time she did the interview, didn't know that she got accepted to Phillips Andover Academy. She is headed to America, assuming the visa ban thing gets cleared. But she is heading to America. So people can feel good about that. I mean, those are terrific kids who came to us in seventh grade and are so talented. And the idea of a society that's not educating them is just such a loss because I mean, Zakeiya, she’s the first student we've ever had get into Phillips Andover. Abdisamad got rejected. He's now at Harvard. We've had, pretty sure our students at Brown and Yale now were both rejected from there. But Zakeiya, her performance, everything—she's just incredibly talented.

AMT: Abdisamad, has going to school with girls changed the way you see them?

ABDISAMAD ADAN: Yeah, like the girls in the society are not treated fairly. At Abaarso, what you have is basically like girls who are just doing as well as the boys. And in some instances they're doing better, and encouraged to think big and to want to one day lead their country. And that has been actually transformational. And it's like, it gives you hope, that like gives you a glimpse into the future where you have like 100 per cent of the country running the country, which is actually phenomenal.

AMT: Mm. You’re saying, so the aspiration to lead the country—a lot of you want to be very involved in that.

ABDISAMAD ADAN: I think a lot of us, now that we're going to be like the future of our country. But now it's not only the boys who are shooting for these opportunities. It's like you have the entire community where boys and girls are equally seeking out opportunities and do well for them.

AMT: Jonathan, you touched on this. I want to pick up on it. President Donald Trump's new travel ban includes Somalia, which includes Somaliland. This can directly affect your students. How do you see this? What are you thinking? How do you work with this?

JONATHAN STARR: We don't like it. That's a starting point. It's not a good development. I understand the fears that some people in America have. I understand the idea that you want to vet people before they come into the country. I don't think people always appreciate that Somalis weren't exactly being handed out visas at the embassies. What's happened here would be a disaster if it stays in place. But I believe that, I just don't believe it could possibly have been the intention. No matter what anyone thinks of the administration in America now, I just don't believe their intent was to stop Abdisamad from going to Harvard and Zakeiya from going to Andover. I just don't believe that.

AMT: Have you tried to talk to any officials about your school and the ban?

JONATHAN STARR: Yes. And the new ban is a little different. So the chance of getting a waiver is certainly higher than it was before. We're going to really have to see what happens. They’re going to apply and it's going to somewhat be a wait and see situation. But we're being caught up in a larger ban that just needs to add the nuance necessary so that you're not keeping a student who actually is good for American security. I mean, Abdisamad coming to America, going to Harvard, going back and becoming a leader in his country and developing his country is good for American security. I mean, what's the alternative? The alternative—the country is going to be led by people who aren't educated or people who are going to be educated by those out there who America is against? I mean, because that's the alternative. I cannot possibly think that that was the actual intent of the people who crafted this.

AMT: Jonathan, how many graduates of Abaarso have actually gone to study in the States now?

JONATHAN STARR: Close to 60 students in America right now and a bunch in other parts of the world as well. We're hoping that over the next couple of decades, it's going to be really an educational revolution in the country where our students are going back, they’re opening schools. We're actually right now, we're opening a teacher's college in Somaliland. So that if Abdisamad went back and wanted to open a school, we could help him open the school and then he could hire teachers from the teachers’ college. And actually the school we're opening will be all girls, which will also even out the—there are very few female teachers in the country. But this is impossible—impossible—if we can't continue to send students abroad to finish their education. What we have been able to do is prepare a student so that they can thrive at Harvard or Yale or Brown or wherever.

AMT: It's interesting, huh, because when they talk about these large bans and these delays on visas and they talk about students, it's just a word. But your students, you can put a face to the idea of who's actually being stopped.

JONATHAN STARR: You heard those two girls. To me, that's not what people are expecting from a ninth grade girl. They're not expecting girls who are capable of what those girls are capable of and there's no ceiling to what they can do. And to block their future, how does America win in that? I just don't see it.

AMT: Jonathan, when you started that school, you had big dreams and you hit a lot of obstacles. Did you think that you would be at this point with your students?

JONATHAN STARR: I sure hoped so. [chuckles] I had no idea that we would hit the obstacles we hit. I mean, that really was a surprise to me. It never occurred to me that I would be fighting with people in the country to educate the children in the country. That just, that never crossed my mind. I thought, “Oh, we’ll have to get fundraising. That's going to be difficult.” I thought the normal things you'd be worried about when starting a school would be my concerns. And all of those got massively trumped by the problems we actually had within the country itself.

AMT: Abdisamad, you learned a lot because of Jonathan's school. But I'm guessing you've learned a lot because of Jonathan. What has Jonathan taught you?

ABDISAMAD ADAN: One of my favorite quotes from him is that like, “Don't run away from your problems. Solve them.” And I think that has stick with me for so long and that has carried me through life a lot.

AMT: It's good to talk to both of you. Jonathan and Abdisamad, thank you for sharing your stories.

ABDISAMAD ADAN: It’s great talking to you.

JONATHAN STARR: Thank you.

PC: That was Anna Maria Tremonti’s interview with Jonathan Starr from March. He founded the Abaarso School of Science and Technology in Somaliland. She also spoke with Abdisamad Adan, a graduate of Abaarso, who currently attends Harvard. He’s set to graduate in 2019. Abdisamad Adan and Jonathan Starr were both in Boston. Well, that is The Current for today. Stay tuned to Radio One for a new episode of New Fire. This week, meet young Indigenous athletes who are using sport to connect with their culture. And remember you can always take The Current with you to go on the CBC Radio app. It is free from the App Store or Google Play. Well, we started today talking about where Canada’s real estate market may be heading and one thing for certain is that the price of living in cities such as Vancouver and Toronto has forced some cherished artists and musicians out. That includes Ron Sexsmith. The singer-songwriter told the Globe and Mail this spring that he and his wife had left Toronto because of the cost of buying a home in the city. They’ve moved instead to Stratford, Ontario. Here’s a song from Ron Sexsmith’s most recent album, “The Last Rider”. It was written about Trinity Bellwoods, the park in his old Toronto hood. I’m Piya Chattopadhyay. Thank you so very much for lending us your ear here on the summer edition of The Current.

[Music: “Man at the Gate (1913)” – Ron Sexsmith]

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July 19, 2017 full episode transcript

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