S2E14: The rich will bankrupt us all - Garys Economics
Gary Stevenson is a former city trader who made millions from betting on growing inequality. With his Youtube Channel @GarysEconomics he now campaigns to end the very thing he made money from and he's written a book called ‘The Trading Game: A Confession’ about his experiences in finance and what drove him to leave a life where he earnt millions a year.
Understanding the economic system we are in is important, in many ways it defines how much money you can make. And Gary has spent a lot of time thinking about where our economy is heading. He warns, without a tax on the super rich, wealth inequality will continue to increase, leaving the majority of us much worse off.
What you should remember from this episode
• Gary Stevenson grew up in Ilford, East London, in the shadow of Canary Wharf being built.
• He was good at maths at school and decided that one day he would work in those banks he saw going up.
• He was smart, but at LSE he realised his peers were miles ahead of him. They’d been prepped for years - since they were young. They had stuff like internships and contacts and knowledge of the system. They had an unfair advantage - the game was rigged - and Gary didn’t know how he’d break in.
• But then he was told about a back door into finance - a card game. The winner would be offered an internship at Citibank.
• He played, won, got offered a job at Citibank - and pretty soon became their top trader in the world.
• One of his key learnings, which came from a colleague, was that you can’t understand economics from a book. You have to understand people - ordinary people. And the people studying economics, working in universities, writing books about it, don’t live amongst ordinary people.
• He saw so much money being printed in the aftermath of the financial crisis and Covid - but he could see the money wasn’t getting to the people who needed it - people like his friends and family.
• Gary says that people think inequality is localised to their part of the world but it’s a global problem.
• He says this isn’t some hypothetical event - the redistribution of wealth is happening. For example, Covid saw the biggest and fastest increase of wealth of millionaires and billionaires in the UK - at the same time as we experienced the biggest fall in living standards since WW2.
• Gary says if we don’t stop the rich taking the wealth, the middle class and the government will be bankrupted.
• People think the levels of inequality you see in Nigeria can’t happen in the UK - but Gary says it can, and that’s the direction of travel.
• He thinks for ‘normal’ people in the western world, we were at the top of the proverbial hill 20 years ago. By normal people we’re talking about the average person or family in the 50th percentile. They weren’t living in luxury 20 years ago but there was security, the ability to get on the property ladder, go on a few holidays a year etc.
• Gary says governments often bring in taxes that they think will be popular but then sneak in exceptions for the very rich, e.g. when they added stamp duty for second homes, they also introduced an exemption if you bought seven properties at the same time. Jeremy Hunt, our current Chancellor, did just that.
• Gary says the people who are increasingly taking wealth from most of society are the very rich - the kinds of people who use their influence to pressure politicians. In fact, they often are politicians.
• According to Gary, the very rich are the threat to the middle class - and by very rich he means people with >£10m.
• So how do you stop the super rich gobbling up everyone’s wealth? Gary says the problem breaks down into two areas - technically, how do you stop the super rich taking wealth. But before that, how do you get political buy-in to do this?
• Gary says the first order problem is there isn’t political buy-in, even with Labour. They say it’s not popular (taxing wealth). Gary says we need popular support for this direction before we even get to the technicals.
• And if it does happen, if we do start taxing the super rich, how will we stop these people from leaving the country with all their wealth? Gary says his particular focus isn’t real wealth producers - he’s focused on the asset owners who get rich from doing no work - and a lot of their assets are in property so they’re not mobile. He says they’re not as mobile - their wealth isn’t as mobile - as critics make you believe.
• Gary says we should be taxing the people who own the economy, not the producers. Their money comes from you, not their work.
• Gary asked, is this an economy that rewards hard work? I don’t even know what to say about that as I sit here typing away at 9.17pm on a Thursday.
• He says there’s disappointingly few organisations taking on this problem, but check out Tax Justice UK.
• Funding is hard to come by for this movement because the most funding for organisations generally comes from the rich.
• The economy is often described in the media like a natural disaster, like we can’t affect it - but that’s not true, says Gary. He says we need to band together - that’s our power.
