Why Garyconomics Is Making So Many People Rethink the Wealth Gap |108

[00:00:03]Hello everyone. So in this video I want to discuss Gary's economics because I do think that soon this is probably going to be the most talked about idea. Um because obviously Gary's economics is bringing in a slightly different concept around looking at this whole rich poor dynamic government people middle class working class the rich the wealthy. He's bringing a different spin to this. But ultimately what I hope that you guys take away at the end of at the end of the video is why we came to the concept of the rising tide in the first place.

[00:00:35]Why that became so popular, why that became sort of widely accepted that when the tide rises, it lifts everyone.

[00:00:42]>> The rich are growing their wealth very rapidly and it's acting like a black hole in society. It's sucking the wealth away from the middle class, from the working class, from the government. And I saw immediately that that wouldn't stop. I saw because >> just just explain how that happens. What why does the wealth go to the top?

[00:00:58]>> You know, the simplest way is you know Richie Sunnak suddenly magically appeared in the in the Times richest people top 100 richest people in the country. Um wealth of £700 million. I think what people often don't realize is is the passive income that comes with that. So if Richie Sunak is worth £700 million, what's his passive income? And when I say passive income, I mean that the income he gets just from his wealth, not from his work. you know he's going to make around 5% £35 million a year let's be conservative £26 million a year half a million a week so imagine you wish you son now and you're making half a million pounds passive income a week how much you going to spend >> not a lot of it >> you spend you know 50 grand a week live like live like the queen basically I could have spent 50 grand a week if I tried right so the the problem is once you have this group of society with very large passive income [snorts] unless you have a rapidly growing economy, they basically have nothing they can do with that income other than buy up the rest of the assets. It's as simple as that. It's basically compound interest. If you have the wealth of the rich growing at 5%, in an economy that's growing at 1 or 2%. There's there's nothing they can do. They they outgrow the economy and they squeeze everyone else out. And what ordinary people see is house prices going up, stock prices going up, my kids can't afford the house. And what that is is the rich squeezing the middle class out. It's the kids of the rich out bidding your kids for things like houses. The >> Here's another clip.

[00:02:22]>> I want to speak to you now. Somebody who is is not incredibly rich but has a bit of money and is opposed to wealth taxation of the very rich and I want to explain to you what is going to happen from here. Okay, we have increasingly in this country, in America, in the world a untaxed super rich class. These people have enormous amounts of passive income.

[00:02:45]The poorest billionaire in the world with a wealth of just $1 billion will generate more than a million dollar a week in passive income and that is currently almost untaxed. These people have no choice but to buy up all of the assets very quickly and that is squeezing asset ownership out of every other group in society. As that continues to happen, more and more people in our societies will own no assets and will be in debt. This will mean we will have no strong consumer and we will have a weak economy. That will lead to an increasingly angry public that push their governments into taking action to support the growing poverty.

[00:03:22]Governments will be politically forced to step in to try to deal with the growing poverty. But because they do not have the capacity to tax the richest people in society, they are going to tax you. And you know this this is a prediction but it's also exactly what is happening now. You know, governments are trying to support the poverty that is being caused by the growing inequality by borrowing money, going into debt and further taxing the very rich in the UK.

[00:03:52]Now, we are at the point where the government basically has two options here. Either tax you, tax hiring workers, or dismantle the welfare state.

[00:04:02]In the absence of taxing the very rich, one of these two things is going to happen. So when you argue for not taxing the very rich, what you are arguing for is the taxation of yourself. And I know that they tell you when I say tax the rich that I am trying to tax you. The reason I make these t-shirts which tax wealth not work is to make it clear I am the one who is on your side and trying to keep your taxes low.

[00:04:33]>> Okay guys, so there you have it, right?

[00:04:34]I've listened to so much of Gary's stuff that I feel like my brain hurts cuz he's got such a strong accent. But in a nutshell, he's basically sounding the alarm that guys, this ship is sinking, right? And anyone with eyes, anyone who even even a slight bit honest can clearly see that there's a huge problem.

[00:04:51]The ship is sinking, right? He's highlighting the fact that the wealth gap is widening, right? As a result, the wealthy are not at the same time as it should be sinking, he's highlighting the fact that the wealthy are not feeling the same tax burden as the the the one that the middle class is feeling, right?

[00:05:07]Hence then he's speaking about the fact that if you tax wealth and not work, that would essentially change the picture, right? As a gap is also widening between rich and poor, he also then makes the point about the fact that this is creating a social crisis. more people are then either out of opportunities or more people are having to then need welfare or need support from the government, right? And obviously this is a social crisis which is obviously spilling quite rapidly as we saw what happened with CO where the government then all governments around the world just got into a borrowing spree increasing their debt in order to support people that weren't able to support themselves or people that support those that weren't able to work and make money. Ultimately the middle class is being squeezed out. That is essentially his point. And he also states in many of the content that I've seen is that unlike the wealthy, which he does come to the fact that the wealthy is very difficult to tax, right?

[00:06:02]It's a very very small group of people.

[00:06:05]First of all, it's a totally different class compared to the middle class.

[00:06:08]Middle class is easier to target. That's why if you guys remember I don't know if you guys would remember that I did a video I think sometime beginning of the year where I looked at where exactly in our case here in South Africa where exactly SR getting the money from right and this was after SARS made a huge announcement who big hoo-ha about collecting I think up to 2 trillion or whatever the case and just clearly you can see here that a huge portion right of 40% of the total tax revenue that the government is collecting is coming from pay as you earned second contributor is that right which is still consumer spending it's still you and I followed by t corporate um tax uh customers and services and so forth and so forth right but Gary's point is that no one is speaking about the passive income that the wealthy people are getting from the assets that they own and the fact that this particular source of income is also daily tax right so you may see analogy that if you are on the higher so-called tax bracket in for instance in South Africa we've got a progressive tax system. The higher you earn, your tax tax percentage can go up to what 40% or so. He's saying that the passive income that the wealthy then have um or the wealthy have can be taxed a minimum of about 0.6%. Which obviously does not even compare versus the 40 or so% that you are taxed as the middle class.

[00:07:31]adding to the fact that well the very same um tool that is used to squeeze the middle class out is also not taxed in the same rate that the middle class is being taxed. So the middle class is not only carrying the social burden because of the widening gap the middle class is also being squeezed out and not really basically get getting the opportunity to be able to access things like assets and all of that. A big part of Gary's entire theory is a big um around housing, right? He makes quite the point around housing, which if you look at South Africa's scenario, this does tend to make a lot of sense, right? Cuz there's been a lot of people ringing the alarm around Cape Town's um housing pricing and all of that whole discussion >> out of 11 pictures available of the inside.

[00:08:16]>> So, let's watch the video.

[00:08:18]>> This is an interesting one and will be the shortest video yet.

[00:08:23]2 and a half million rand 3-bedroom house for sale in BAP. three bedrooms, one bathroom, 96 square meters. The agent, it's very nice. I messaged him, um, has stipulated that there are no pictures out of 11 pictures available of the inside because the inside is old.

[00:08:44]>> But you guys do get the point, right?

[00:08:45]2.5 million for something that on a on a normal day, this probably would be no more than 500,000. One, you can see the the the build of it. this in this video, the guy goes on to show even other angles of this home. Um, and this is what would be the front of the home, right? Is is this something that is worth 2.5 million rand, right? And maybe potentially this is precisely the entire theory of Gary's theory that the problem is the people that are buying the properties, right, they bidding at a far higher rate. Um there was another angle of this home that I found where he would I guess he was trying to show yeah this angle here look at that is this does this warrant 2.5 million or does it simply then speak is this now 2.5 million because of where it's located which again the whole theory of Gary's theory is that because of where it's located the wealthy are they buying faster quicker and and therefore increasing the market value of some of these properties because then they're bidding at a far higher rate compared to what the middle class person is able to then bid on. Right? But with all of this said, right, which again perfectly diagnosed, he's spot on in terms of where the problem is. However, he's not necessarily saying that, hey, let's push for the government spending or government to be more efficient. Right?

[00:10:10]He's not saying that at all. Right? Gary is also not saying, let us then work or push for there to be increased income, increased opportunity. In fact, if I were to fit Gary's the Gary's theory into into the spectrum, this is the current political spectrum, right? Which we all know. We've got the left, you've got center politics, which center can really be linked to regulation. They regulate the living crap out of the markets. And in the process, they also do tend to make a little bit more. This is now the government officials, right?

[00:10:43]And then of course, you've got the right side, right? And of course the arrows is either far further left or further right. But this is pretty much pretty much the the the the political spectrum.

[00:10:53]I would put Gary somewhere here. I would put Gary here because he denies the fact that his concept is redistributionist. I think it has a lot of traits of being redistributionist though he completely denies it. Right? Because you still take it from A to give to B. That's ultimately the solution. But because the taking is still a government intervention, I would put him somewhere here between center and left, right?

[00:11:19]It's not purely organic. It's not a market dictating. It's not it's just government say to the government go there. Don't go there with obviously ultimately the goal is that by doing that the government then is able to give a bit of breathing room uh to the middle class which of course that would be good. I think I obviously would would totally welcome that. But what I also wanted to state in this video is that Gary, like I said, shies away completely from the broader picture because all of these things are linked. So what's happening in conjunction with what Gary's predictions are speaking about is a rise on centrist politics. Cinders politics is basically one of the ways that government has can legitimize intervention intervention through regulation which if you think about South Korea for example what ultimately you end up with is big corporations being the only ones that can survive in a system like that the small business class themes have no chance because to stay afloat to continue operating in the formal sector it becomes increasingly difficult right we're also having a problem of poor performing government government failures. You just have to open the news. In fact, it's even a no, right? I don't even think the news would exist if it was a for government failing just to show you the extent that this is happening. But there's no consequence.

[00:12:36]There's no recourse. A government can spend over it. So much now I saw people are trying to find out from Stelland where is 500 million will ever trace that money. Will we ever get it back? We just came back from Hanganim which was again a trauma. the guy bought a fleet of vehicles. What's going to happen?

[00:12:53]Right? Instead, the entire justice system has been made a joke. You've got all of these guys or Kat Matala. It's just a complete joke. This is happening simultaneously to the sinking ship. And at the same time, there is no clear path for how we can get society to agree on the fundamentals on the basics. In fact, we are more divided than ever in society. Despite the fact that everyone understands the importance of safety, the importance of a strong economy. Yet, when it comes to how we get there, we could not be more divided. This is happening at the same time, right? There is no co cohesion in terms of what is it that we need to focus on. The divide is clearly benefiting some people. That's why it continues to persist, right? And I would say that the only difference between Gary and the Mum Danny kind of guys that Mam Danny is saying tax the wealthy, tax the rich, tax the billionaires just to feed that money into the state coffers, right? Which we all know the state coffers is wasteful and it's inefficient. Gary is just saying tax the wealthy, tax the rich, and stop taxing the middle and stop taxing the working class, right? That's ultimately how I would look at both of these theories. Gary's saying hands off the middle, hands off the working class.

[00:14:06]let them build, let them grow and increase their their taxes. A Mam Dani would probably say, "Tax them all, give me all the money, let me have it, and then I'll see what I can do from there."

[00:14:15]Because the Manny kinds tax tax with the promise that they're going to create a better state, better social services, free services. Nothing more dangerous than a politician speaking about free services, by the way. But obviously the biggest thing here around tax, whether it's Gary saying it, I'm Danny saying it, when a billionaire hears tax, something happens, which is they switch off, they run, right? They hide what they have. That's just the behavior.

[00:14:42]That's how they've behaved over time.

[00:14:44]When rich people hear tax, the reaction is always the same, right? They think about how do I protect myself from basically being ripped off. What's also happening is that I would call it, you know, an opening of floodgates, right?

[00:14:57]this whole globalization push but it's one that does not have a strategy. It's one that is not necessarily strategic.

[00:15:05]There's almost no direction as to yes, you've got this open flat gate of import and exports, but to what end? How does it benefit your your country? What is your broader strategy? Right? And what I also did want to just highlight is that basic business principles says how you create an economy is that people who have problems those that can solve those problems and come up with solutions are the ones that will become the entrepreneurs in that society. Now in this day and age, people have problems.

[00:15:34]Yes, in many aspects. They need schooling, they need healthcare, they need transportation. D. Who's filling in those gaps? It's international companies. It's companies that are not from your market. The question we need to ask ourselves is that well, there's no strategy clearly here. And to what end? Who to who to whose benefit is it that he hailing is 100% a global company with a headquarter somewhere somewhere around the world operating here solving a problem that local guys should be should be should be solving. I'm actually getting to a point where I'm starting to think about this thing a little bit differently and if I were to say in my view free market absolutely but only in your jurisdiction. So in your domestic jurisdiction, the markets must be free. It must be the best of the best that win because the best of the best win. They create opportunities.

[00:16:26]They hire. But when it comes to a foreign in uh partners or guys that are coming in from external, there has to be a different approach. It has to fit into the broader strategy. It has to fill existing gaps. It should not just be free for all everybody because that is greatly creating another problem. But I'm going to close this video by saying that to Granny's credit, I think what he has done is really to bring a bit of focus on this wealth gap to say listen this issue deserves far more attention than we are giving it. But at the same time, it's also reminded me of why I believe so strongly that the way we need to begin to solve these issues is by focusing on the rising tide to increase opportunities and get more people lifted. That way more of us benefit. And if we say that for the tide to rise the problem or the bottleneck is government, we then use our political power to be able to change the government system, right? Like in the case of South Africa, we have elections coming up. We use that vehicle to be able to change the government system. And if if all fails, right, if all fails and indeed the ship does sink, maybe that's also the upside, the fact that, okay, let it all fall, let it collapse. Hopefully when we come back from that people will be a bit more sober to be able to realize that okay cool maybe let's reook this entire thing because the other component about the middle class that also then adds to the constraints is the fact that the middle class uses sells all of their time 80% of their time for this one monthly income that the government is so um you know um eager to tax and to take and all of that cost of living you're raising a family you've got young children school all of these things are on this one income that is also, you know, comes with with a huge sacrifice because 80% of your time goes into you making money, working, right, to keep these companies afloat. Perhaps maybe when the ship does sink, we'll come back from there with a different perspective that says, well, maybe we should not be working 5 days a week. Maybe we should work 4 days a week. Maybe instead of taxing me 40% on the highest threshold, maybe we should have a flat tax rate across the board.

[00:18:37]Maybe that would be a better solution.

[00:18:38]Maybe we should advocate for remote work for people that are in the services industry. Why must people be stuck in an office Monday to Friday 9 to5 for example, right? Which obviously disables them and doesn't give them the opportunity to make other income streams. All of these things maybe can come up and now become more real and realistic maybe when the ship eventually does sink. But I just do not agree with taking from A to give to B. I don't think that solves the problem. But anyway, that is my perspective. Please do share your thoughts in the comment section. I would love to hear what you guys think about what I think is potentially going to shake up the discourse around how we view wealth, rich, poor, middle, and all of that jazz. Please like this video before you go. That definitely does help. And I'll see you guys again in the next