Tariff Chaos & Trading on Inequality — ft. Gary Stevenson

27:40Signal confidence in the economy through strong messaging and selective data releases. Avoid panic. position short-term volatility as proof that bold change is underway. Keep in mind, overcorrecting or spinning too hard can deepen market distrust. This is essentially what we've seen over the past few days. I think the only thing we haven't seen flat out are these actual stimulus plans. However, he did mention that we're going to allocate a trillion dollars to the Defense Department. So there's some stimulus right there. Here's another prompt we put in. What should we do as the administration if the economy goes down 35 %?

28:21ChatGPT, recommended actions, emergency fiscal package, trillions in direct stimulus, cash payments, food aid, extended unemployment, bailouts for critical sectors, monetary and financial stabilization, coordinate with the Fed to cut interest rates, inject liquidity and backstop credit markets, temporary capital controls or trading holds to stabilize markets, International coordination. You know, we could, I think, pretty easily predict what's going to happen. And if you also just look at the history of recessions, what we've also found is that the most fiscally stimulative times in economic history are the times that come right after a recession.

28:57So we've been talking a lot about deficits. We need to figure out these deficits. We need to figure out our debt. I think one thing that we could certainly expect from this is even more stimulus, even more spending. Because if this gets worse, I don't think the administration is going to have a choice but to start spending again. We're going to be talking about this for a while, but even more damaging again than the tariffs are that the American brand, which is the most powerful brand in the world, at the beginning of my brand strategy class, I say, what's the fastest zero to 60 brand? What brand went from no awareness to total awareness?

29:33And I try and do it to inspire the class. And in my view, it's Al-Qaeda. No one knew who Al-Qaeda was on September the 10th, 2001. By September the 12th, the whole world knew the term Al-Qaeda. But the strongest brand in history, I would argue, is the U.S. dollar, specifically the U.S. It means innovation. It means wealth. It means prosperity. It means unbelievable military might and also rule of law and that our heart's in the right place and we're trying to do the right thing. Trying to do the right thing. Get it wrong all the fucking time, but trying to do the right thing. In three short months, we have lost those associations.

30:09Churchill has this great quote that he's credited with. Actually, he might have been incorrectly credited. It was probably a guy named Victor Hugo. And the quote is something along the lines of the following. Nothing is worse than fighting with your allies except fighting without them. And we're about a country that has been so fortunate that has 5 % of the world's population but 25 % of its prosperity. we're about to find out that as powerful as we are, that when we fight and when we compete for resources without our allies, it doesn't end well. We'll be right back after the break for our conversation with Gary Stevenson.

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33:07Welcome back. Here's our conversation with Gary Stevenson, host of the Gary's Economics YouTube channel. Gary, thank you for joining us on ProfitG Markets. Thanks for having me. I just want to point out before we get going here, Gary, you are, I think, the most sought-after guest we have ever had on this program. I look through the comments on our YouTube channel, on our Spotify. Our entire audience has been begging for you to come join the show for maybe a year, maybe two years. So this is like a big moment for all of us, and we're very happy to have you on today. So thank you. seriously thank you for joining us.

33:48Let's start off with just the rundown of who you are and how you got here. You talk a lot about what's happening to the economy, particularly in terms of inequality. Where did this all begin for Gary Stevenson? Well, it probably mainly started when I was working as a trader at Citibank. So to give a little background for those who don't know me, I'm from London. I grew up in a place called Ilford, East London, quite a poor family. was very good at maths managed to get into the London School of Economics which is a very fancy elite university here and when I was there I won a competition called the trading game which used to be run by Citibank and through that I got a job working as a short-term interest rates trader for Citibank here in London and I worked there from June 2008 through the crisis and I basically made my money by predicting that we would have a very weak recovery from the 2008 crisis.

34:46People sometimes forget that during the crisis itself and immediately afterwards, we basically had 12 years, I guess, from 2008 up till COVID of continual predictions that we'd have a really strong recovery, which never really happened. Mark spent almost the whole time saying interest rates will go up aggressively next year for that whole period 2008 to 2020 which obviously was incorrect for in the UK the whole period rates never went up until after the COVID crisis these are really big important questions right which is when will like the structural fall in living standards end when will the economy get back to normal and I thought you could boil down the question in 2011 and really that whole post-2008 period to a simple question which is why aren't people spending money?

35:32Because the theory is supposed to be zero interest rates are supposed to get people spending. They're supposed to get businesses spending. You know, the logic is not that complicated. There's no point saving. It's cheap to borrow. Go spend, go spend. And that's what you learn at university. That's what's supposed to happen. But by the beginning of 2011, it should have been starting to become clear in my mind that it wasn't happening. And I really wanted to understand why so I just so I come from quite a poor background and I decided that I was just going to go and just ask people you know why don't you spend more money and um you can probably guess what they say right like nine out of ten people are saying we don't spend any more money because we don't have any more money you know we're spending more than than is coming in right And I didn't just take their word here, right?

36:24If you dig in, what I saw then in the early 2010s, I would have been in my early 20s then. What I saw was a generation, our parents' generation, of like poor property owners. So my dad earned less than average income, but he owned his own property, right? And that was very common in this country. And then I saw my generation of like kind of highly educated people who would never be able to afford property. And what you see there is basically the loss of the wealth of the middle class. And it totally answers the question of why aren't people spending money, right? Because if a family is going from being a property-owning family to being a non-property-owning family, in this country, the UK, property is the main way in which people hold wealth as a family.

37:08What you are seeing is these guys are spending more than their income over the long term. Their wealth is going down over the long term. They are dis-saving over the long term. So they are obviously already spending in an unsustainably large way. They literally cannot spend more in a sustainable way. And this was what was bouncing around my head in the beginning of 2011. And then I got called into a meeting by one of Citibank's top economists, a guy who I really rate actually. I'm quite a critical economist, but I think he was really good. And this was in early 2011. And he went through the fiscal, the financial situation of a lot of the world's major governments.

37:46Portugal, Spain, Italy, Greece, Ireland but also to be honest the UK, the US, Japan and what he saw was in basically every instance governments spending more than their income, dissaving their assets and going further and further into debt and I came out of that meeting I couldn't help but notice this like symmetry in the financial situation of my friends and their families and these major world governments, which is in both cases, spending more than income, dissaving assets, going further and further into debt. And what I was really struck by, the mathematician in me, was struck by the kind of impossibility of this.

38:28It shouldn't be possible for both private individuals and governments to simultaneously lose all their assets and go into debt because somebody has to own the assets and debt has to balance out. Somebody has to own the credit we can't all go into debt at the same time and i was trying to figure out like well where have all the assets gone right but obviously i'm working in like a skyscraper in canary wharf surrounded by millionaires and i'd been paid like more than a million dollars in the previous two years and i was like 24 or something um and it was just really obviously it was us right we were the guys who were hoovering up the assets that ordinary families were losing that governments were losing and by then having worked a couple years in the city i was aware that there was like another level of people much richer than us that were hoovering up more and that's when i realized that what you have here is a structural change in the wealth distribution which was we the uk and it's the same in the us used to be middle-class societies with wealth holding governments and we are becoming basically elite societies with bankrupt governments and no middle class and the thing i realized immediately was well if the governments and the middle class can't run a balanced budget when they own their own assets well they definitely can't run a balanced budget when they don't own their own assets and if the rich can afford to hoover up everything when they only own like half the assets the more assets they accumulate the faster they're going to hoover up and i could see very quickly we were going to basically accelerate relatively quickly towards the complete dispossession of the middle class the complete bankrupting of western governments and that basically like this would just just get worse and worse and worse basically and i knew immediately that the trade there was the bet on interest rates being zero forever this is such a great moment because you're basically the uber British version of Scott in a lot of ways.

40:13Scott talks a lot about these issues, the decimation of the middle class in America. And it's so interesting to see the parallels that what's happening in the UK is the same as what's happening in the US. So I'm going to pass it over to Scott to ask a few questions now. Yeah, I feel like I've found my Yoda if he was younger than me. Like, one of our core theses here is that income inequality, so most people, it's impossible to argue that wealth inequality hasn't gone parabolic recently. But one of our theses is that the incumbents will argue that it's all these external exogenous factors that, oh, it's such a shame, but they're sort of out of our control.

40:52Globalization, agility, scale effects, that there's all these things that are sort of out of their control. And one of our core tenets is actually this was a conscious decision that we as voters and specifically governments and the people in power have made. that wealth inequality was a decision, a conscious decision. And I'm curious if you agree, disagree with that and any data you would put forward to support it. If it was generally known that this was going to happen, I would not have been able to make as much money as I continually make, basically. I think that the big thing for me was, so I was betting on these things in the early 2010s, right?

41:34And back then, nobody spoke about inequality and it's not really included in university courses, economic students tend not to think about it. Then you have Piketty in 2011, so the French economist for anyone who doesn't know who wrote the book Capital about inequality and he kind of raises the attention on inequality a bit and it starts to get a bit more known in the background but then the big thing for me was was Covid. I think Covid tells us a lot about what we understand and don't understand as a society. So the total UK government deficit since the beginning of COVID is just over a trillion pounds, which is 20 ,000 pounds per adult.

42:13The US number is like 13 trillion dollars, which is something crazy, like like 40, 50 ,000 dollars per US adult, something like that. and it it was relatively obvious relatively like really right at the beginning of covid that we were going to see these enormous government deficits from the uk the us but basically everyone in the western world right if people think that inequality is a thing that even matters or is worth considering about everybody should have been saying who is going to get a trillion pounds richer? Who is going to get$13 trillion richer? It was very obvious at the very beginning of COVID that we were going to see some kind of significant change in the wealth distribution, that governments were going to get really significantly poorer, and that somebody was going to get richer.

43:07Like that's the way money works. The money doesn't disappear. If government goes into debt, somebody accumulates credit. I'm not in the US. Nobody here spoke about it. Nobody in government, nobody in opposition, nobody in media, nobody in academia, nobody mentioned it. So I was sitting around trying to figure out who would get richer. We can talk about it, but once you follow the logic through, it's not that hard to see that that money is overwhelmingly going to end up being held by the richest people. So once you understand that, there's a few obvious things that will happen in markets, right?

43:40Like if you know that governments are effectively in the overall system going to give$13 trillion to the richest people in the country, then you know with certainty that the stock price will go up. The stock markets will go up. You know with certainty that the gold price will go up. You know with certainty that house prices will go up. These are obvious things. And yet what happens to the markets at the beginning of COVID? Stock prices collapsed. Even the gold price collapsed temporarily. It was insane. so really you know i've been at lse since then i went and i did two years economics masters at oxford i've been in the financial markets i think the guys in the financial markets have a better understanding on average than anyone else there are some guys who are not that smart but really the truth is from what i see our economists are really really really really bad i can't in our public sphere economists and this is kind of obvious when you realize that good young economists are enormously financially incentivized not to become public sphere economists so i i they i don't think they've got it if they if they got it i wouldn't be continually making so much money on the markets because it would be easy everyone would be doing it you know i honestly think i think the best traders know but it's it's important to recognize that the best traders are not allowed to tell you this stuff, right?

45:05The system we have, we've basically very effectively separated the economists who are incentivized to really understand what's happening from the economists who are allowed to speak publicly and influence policy. So I think that what you've basically done is totally hollow out the public sphere of economics. And then you have kids like me, like locked in skyscrapers, making$5 million a year, betting on the collapse of society with no way to influence that. And I think what is super interesting to me is that even still today, I could probably walk into any one of these skyscrapers and get paid a million,$2 million a year, probably more a few years down the line.

45:40And for the last five years, I've been speaking publicly and governments won't speak to me for free. This is the problem that we have, basically. If you are good, there's no point trying to get involved in policy. And the guys who are in policy in this country, basically, it is a bunch of posh boys who have no idea what they're doing. You have a real ability to distill things down to basics. Give us the basics, the underpinnings, the forces that have driven this wealth inequality. You're a professor now at LSE, and you have a 62nd class on wealth inequality. So wealth inequality is usually high.

46:19In most of history, most of the world is high. It decreased significantly in the 20th century because of World War II, essentially, for a variety of reasons. It stayed much lower for a long period of time until the 80s, when we significantly cut taxes on the rich. to be honest as soon as you do that once you do that the rich start accumulating money and they start accumulating assets and then really there's nothing happening here other than compound interest which is that once these guys start accumulating interest they start out competing the poor and the poor start selling assets and then the rich have more assets which means they have more passive income which means they can start to out compete the government they can start to out compete the middle class and what we are seeing as an asset price bubble is really just the rich accumulating assets and getting richer and richer and richer, which means a large amount of this passive income getting pumped to the rich every year.

47:05And rich people have a low marginal propensity to consume, which means they buy assets. This is why for most of history, inequality has been high. Really, the unusual thing that's happening is not what's happening now, is what happened for the 50 years after World War II. So next question, Magic Wand advising the White House and the UK government, What are the two or three things, if you had a magic wand to try and restore a robust middle class, would you suggest in terms of economic or social policy? Once the inequality is very high, then you have these flows of cash from governments and from ordinary people towards the owners of the assets, which will be offset by basically asset flows.

47:50It's really the same as a trade deficit and a capital account deficit. So if you don't do anything, the rich will squeeze all of the remaining assets out of government and the middle class. That will happen relatively quickly. You have to introduce a flow of cash, a flow of wealth into that system away from the richest. If you do not, you have to do that. So realistically, this has to be taxation. And for me, I think what you want to be doing is you want to be trying to find a way to tax asset hoarding. So a wealth tax. A wealth tax or a tax on inheritances at very high levels. So let me just press pause there because I agree with you, but the wealthy are the most mobile people in the world.

48:27And when France introduces a wealth tax, Arnaud decides he loves Brussels and he moves to Belgium. The wealth taxes are difficult to enforce. In theory, they make a lot of sense, but practically they're difficult to enforce. What about the idea of just an AMT that restores minimum tax for corporations and the wealthy, say, of 30 or 40 percent? Taxes on their incomes? Well, right now there's several Fortune 100 companies. Corporations are paying the lowest taxes in the U.S. since 1929. The wealthy is 25 people and paying 6 % tax rates. An alternative minimum tax, they have 30, 40, 50 % above, call it a million, 10 million, whatever it is, that regardless of your ability to weaponize the tax code, okay, fine, you have to pay a minimum of this.

49:10Isn't that a more practical solution than people? You have seen this, the non-dom thing in the UK. The majority of my friends who are wealthy are peacing out to Milan or Dubai because they can because they're wealthy. So for me, a more practical solution would be an alternative minimum tax. Your thought? I think anything that you can get in is good. I'm not sure how much more practical an alternative minimum tax is. To be honest, I actually think the problem with wealth taxes is less practical implementation and it's more political will, to be honest. So, you know, China does not allow billionaires to own$2 billion of Chinese assets and not pay tax because they live in Monaco.

49:55If you think about it, taxing wealth is much less mobile than a person. You know, it's physical assets. Of course, we have a situation in the West where we tax on domicile, regardless of where the assets are located. That makes tax voluntary for rich people. You don't need to do that. China doesn't do that. I think we don't have to do that. But listen, I am not religious about wealth taxes as the solution. I think raising tax on income of very wealthy people would be beneficial. But I think it's important to recognize if you raise tax on the income of the rich, all that is going to do is slow down the rate at which inequality increases in the majority of cases.

50:38If you want to actually improve living standards, you probably do need to think about, will this wealth ever be returned to the people? And I mean, to be honest, really, more than anything, I'm someone who's identified a problem and I want to start a conversation about what are the possible alternatives. Well, you've definitely started it and I'll turn it back to Ed, but I just want to summarize one of the things that, and I'm going to put words in your mouth, but I want to give you a chance to disagree with me, that throughout history, the wealthy just get wealthier unless you consciously redistribute money into the middle class.

51:11The middle class is not a naturally occurring organism. If you don't support it and redistribute money from the wealthy who weaponize government and naturally have just these huge advantages, it withers, which is what is happening now in this common trope or myth of the incumbents is that the middle class, the market will figure out the middle class on its own. I think what I hear you saying is no. It's really important and it requires a redistribution back from the wealthy to the middle class. Am I representing you correctly? Yeah, I think the middle class is a historically abnormality. and it's an international abnormality.

51:43Obviously, you know, taken in a small scale from the perspective of an American or a British person, it seems like the norm, but it's not the norm. We had it for 70 years. I think it should be obvious that we're losing it. Yeah, power tends to accumulate over time. You know, these ideas existed in the founding of the USA, the idea that you need to keep power distributed. You need to keep power divided. I think this is just a truth for all human societies. If the masses do not consciously try to stop the elites from concentrating power, the elites will concentrate power. I think that's how, I think all of history supports that as an idea.

52:19Kind of what you're saying is that throughout history, inequality is a natural force. Inequality begets more inequality. And the only thing that sort of undoes that is a trigger event that causes a redistribution among our society. And what you're saying is, World War II, that was the trigger. That was the redistribution mechanism, where you had this massive crisis which reshaped the world order. And if you look back through previous historical events, often it goes that way, that there's either some sort of global military event, some sort of giant war, and oftentimes another mechanism is a revolution.

53:02I mean, you brought up America, for example. That is a moment where you had essentially a revolt, and that was the redistribution mechanism. It feels as though, I mean, you say that you're trading and betting on the collapse of society, which I think sounds a little bit nihilistic. But when we look through history, you're not off the mark there. But I think what we could be striving towards is some sort of redistribution mechanism that doesn't involve death, pain, and suffering. I feel like that's the thing we're working towards. And so I'm just wondering if you see a future in which we can pull that trigger and not have people with pitchforks killing each other.

53:56As you say, we don't have a societal collapse. Is that possible? I think we can. I believe we can. I wouldn't do the work that I'm doing if I didn't think we can. My hope is really the conversation needs to be being had. At the moment, the conversation is not being had. I think the question which Scott brought forward is the right one. And also the question you brought forward is the right one. But there's a kind of a jump towards the technicalities of what would be the correct taxes to bring in. I think if we're being realistic about how to achieve this change, you have to accept that we are a long, long way away from ever having the power to implement these taxes.

54:34I think what needs to be done is more people need to understand in the absence of something being done here to stop inequality from rapidly rising, we will see really, really aggressive, fast, dramatic falls in living standards in the UK, in the US, across the Western world. I think the more people that recognize that, the more we can start having this conversation on the basis of something needs to be done. But the truth is, we are a long way away from that at the moment. So I always view this as really two separate battles, which is one, technically what you need to do to the tax system. But two, what do you have to do to actually get any changes done at all?

55:11Because the reality is active changes are being made at the moment to reduce taxes on the rich. Rich are taking more and more power every year. they're getting more and more control over politics, more and more control over media. We are not moving in the right direction, even in the argument. So in my mind, I always split into two separate things, which is winning the argument and changing the tax system, because people always push me to change in the tax system when the truth is we are going to lose the argument. And the reality of that is in the next 20 years, you will see collapse into widespread desperate poverty of ordinary people in the UK, in the US, in Europe, across the world.

55:46So really, you do have to win the argument first. We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on Prof.G Markets.

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58:37We're back with Profit Markets. I'd love to get your reactions to what's happening in America and particularly what Trump is doing. I think I would bet that there would be a large percentage of the MAGA base who hears this conversation, who would hear this conversation and say, well, we've got our guy in. This is the guy who's going to break up the world order. He's going to flip the world on its head. The stock market is crashing, which means that rich people are hurting. we're going to bring back manufacturing and then we're going to see the restoration of the middle class or at least poor people in America are going to get richer.

59:14I think that's a conversation that is being had in America. What would be your response to that statement and what are your reactions to Trump and these tariffs? I think you're kind of seeing in a way an interesting shift towards taxing consumption, which is really aggressive compared to taxing income um there's a cut in a way i can't help but look at this and think finally here's somebody thinking about the flows of wealth because this is what my big thing is like look you have the middle class and the government being drained of wealth and the rich and the super rich accumulating all of this wealth and that's a problem and the kind of argument behind these tariffs whether this is the real motivation or not it's kind of a similar argument which is we're running these trade deficits it means that wealth is leaving the country and being accumulated in places like China.

1:00:04And that's a problem. To be honest, I would love to hear what you guys think. I mean, I'm sure you will have been watching it the last few days as much as I have. I'm trying to figure out in my head, I'm super skeptical. I'm very skeptical of the idea that Trump is trying to protect the best interests of American workers. But maybe he thinks that's what he's doing. But if he was doing that, The big thing to me is you want to see who's going to get richer. When you bring in these tariffs, the primary people who are going to be hurt in America are the poorest people because consumption taxes work like that.

1:00:37Are they going to cut other taxes on the poor or are they going to cut other taxes on the richest? It looks to me they're bringing in policies which at the very least in the short term hurt the poor. And the tax policies they're matching with that, which should be supporting the poor, are instead supporting the richest. And I think they're going to see real problems once the inflation hits and once the poorest people in the country start seeing that they can't afford to buy cheap clothing, to buy cheap phones and computers and cheap appliances, because these are the guys who won't be able to afford it.

1:01:12But to be honest, I'll be honest, it's probably the most interesting thing I've seen a Western leader do to the economy in my lifetime. I'm worried about it. I'm not the only person who's worried about it. But if I'm being totally honest, I've spent the last four or five days trying to get my head around it just like everybody else. And I'd be lying if I said to you, I think I've got this totally nailed down. I think what is very clear is that in terms of the gravity that Trump brings to this presidency, this willingness to turn everything on its head, that might be the part where you and I, and I think Scott agree, that actually the situation is getting quite dire, and we need to do something big to switch things up, basically.

1:01:57The trouble is tariffs, as you say, won't do that because it's essentially a regressive tax that's going to show up in the form of inflation, which is going to affect poor people. And they've done a very good job to convince the American people that it's only going to affect the rich. In reality, it's going to, I think, affect the poorest, hardest. And what I find whenever we have this conversation about inequality is all all roads lead to tax the rich it's very simple it's like i love how you simplify things down you boil it down it's like where did the money go it went all the way up here into this top one percent point one percent how do we get the money out you have to tax them it's a very simple conversation but as you say this is all in the realm of politics and actually getting to that point is very difficult to do because we're still in the argument phase we're still trying to convince people, hey, look how unequal things are.

1:02:50You're getting screwed in a lot of ways. So I don't know if it'll happen in my lifetime. Maybe it will. But for people who are listening to this and want to think about ways that they can change things or protect themselves at an individual level, maybe you're not going to go see the greatest wealth tax that you've ever seen in the history of our society. But maybe there are things that you can do on an individual level to grow your wealth, to protect yourself, to establish economic security. And I'd love to, as we wrap up here, to hear from you what your advice would be to individual people. How do you deal with this new world?

1:03:30If the Titanic's going down, what do you do at an individual level? Listen, don't get me wrong. You can try aggressively to reduce your spending. You can do everything you can to get yourself and your kids into good jobs. You can encourage them to study mathematical degrees that have good career options and you can try and get them in. And maybe social mobility is better in the US than it is here in the UK. But I've been to the elite universities. I've been to the best jobs in the world. There ain't no kids from poor backgrounds getting in. So I'm very hesitant to turn around to your audience and tell them to try and solve things on an individual level.

1:04:06If we as a society are countries which try to respond to societal problems with individual solutions, then our societies will collapse as soon as they encounter a societal problem. So listen, I'm not going to tell anybody don't work hard, don't try to make money, don't try to save, don't try to protect your family. But I'm going to try to encourage people to protect their class, to protect their community, to protect their society. And that does mean you have to be prepared to work together to prevent disasters and to prevent catastrophes. About 80 % of our listeners are male. And a lot of them are young people who I think feel they're smart, maybe certification, they work hard, but they feel really frustrated by some of the dynamics you've outlined.

1:04:48In America, for the first time in our history, a 30-year-old isn't doing as well as his or her parents were at 30. And it's just very upsetting for them. We have the most anxious, depressed, obese generation in history. What advice would you give to your younger self or to some of the young people listening to this podcast? The message that I think I would like most to deliver to young men in America, in the UK, is I want them to understand that we have really significantly reduced social mobility. The reason I want them to understand that is because I think we still send a message to young men that success is about how hard you work and what you put in, when the reality is, and I know people might not like to hear this, The truth is success is like 85, 90 percent who your dad is now.

1:05:36I'm sorry to say that, but that's the truth. The reason I want people to know that is not because I want them to give up and not work hard, but because the reality is if you come from a poor background, it is very, very difficult to even be able to buy a home and afford a family. And I want people to know that because I want young men to go out there, work their hardest and recognize that if they are able to buy a house and support a family from a poor ordinary background, they are doing really well. They are doing really, really, really well. Because I think this message that tells young people, you are what you make, you get out what you put in, and then gives all the money and all the wealth to people from rich families who then go and post on Instagram is making our young men feel like absolute shit.

1:06:19It's making our young men feel like, and we're lying to them. Listen, the truth is we've kind of broken society now. And if you come from a poor background, it's almost impossible for you to ever be rich but it is possible for you to have a family protect that family, support that family and live a dignified life where you are proud of yourself and what you achieve. So what I want young people to realise is yes, social mobility has been destroyed and yes, if you are from a poor background that makes it maybe impossible for you to get rich but that doesn't mean your life is over. There are important things that you can achieve that you can do for yourself and your family and for the people you care about.

1:06:54Gary Stevenson is a YouTuber and former financial trader known for his economic commentary and activism against economic inequality. He studied at Oxford, worked with economic think tanks and founded a YouTube channel, Gary's Economics, which focused on teaching people about real world economics. His first book, The Trading Game, the story of his time as a trader, is published by Crown Currency in the US and Penguin in the UK. The paperback has been number one for nine straight weeks and counting. Congrats on that, Gary. And thank you so much for joining us. Our YouTubers, our YouTube audience is going to be very excited about this.

1:07:28And I just want to add to this, Gary, I think of you as a class trader and I say that in the most positive way. We need people who have made millions of dollars trading, who are calling bullshit on, I don't know what you would call this, the corporate elitist, the corporate, we need class traders and I count you among that group and I think your message is really important. Thanks for your good work. Thanks, guys. Thanks for having me.

1:07:59Scott, it finally happened. We finally got Gary Stevenson on the podcast. What are your reactions? It reminds me of something that really changed my perspective on U.S. and the term meritocracy. Do you know Alain de Botton, the British philosopher? No. He wrote a book called Religion for Atheists, and he did this wonderful thing. He hung out at Heathrow Airport. He lived at Heathrow Airport for a few days and interviewed people. And it was just this really inspiring thing. And he has things called the School of Life. And he gave this amazing TED Talk about 15 years. It kind of changed my life, but really kind of changed my political views.

1:08:38And that is, he said, the problem with the meritocracy is that the upside is agency. You believe you can do anything. And that's really important for people. And that's a core tenet of America that we're a meritocracy. But he said there's a really ugly side to a meritocracy, or the belief that you live in a meritocratic society, and it's the following, that if you don't make it, it's your fault. That we teach kids in America that anyone can be anything, but if you're not adding up to a lot, it's your fault. And Gary's comments really echo that. And that is a lot of young people don't forgive themselves.

1:09:18It feels like everyone around them is on a Gulf Stream or partying in St. Barts, and they're not. And what's worse than that is I think they could handle that they're not, but they believe it's their fault. And I thought that was really powerful. I don't want to lower anyone's expectations. I do believe that still in America, low-income people still do have agency. Our actual income mobility has stayed flat. It's still 11 % of people in the lowest quintile make it to the top quintile. That's actually stayed flat for a while. So you do still have some agency, but there is an ugly side. We've just, again, I go back to some of those, look what money has done to us.

1:10:01We give young people, especially young men, the belief that if they aren't just fucking ballers, if they haven't figured out a way to turn money into millions and crypto, or they're not a partner at Goldman, because everybody knows someone who's done it, right? Everybody knows somebody. And then 210 times a day, they're reminded it's not them. And I do think it's important to say, look, to take care of your family, take care of yourself, be a good person, live a virtuous life, get up, work hard, be patriotic, that that means you're a good man. And I worry that every incentive and algorithm and notion that you can be president or you can make millions in crypto, there's an ugly side to it, that we need to move to a society.

1:10:51And I think we used to have this, you know, being a principal with a high prestige position, being a cool guy, being strong, being in shape, you know, you could have, you could be a high character person and it meant you were a real successful man. And I worry now that everything around your self-worth is just all about money and that it just attacks the self-esteem of good people, good young people who are trying hard, taking care of themselves and taking care of their family. So his message really resonated that there's real dignity and honor in, in doing that. Even if I mean, you know, even if you're not living in the biggest house and driving the fastest car, there's dignity in work and dignity in figuring out a way to take care of your own.

1:11:53and join us for a fresh take on markets on Monday.

1:11:59Lifetimes

1:12:05You have me In kind reunion

1:12:16As the world turns

1:12:22And the dark flies in love

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