Okay welcome back to Gary's Economics

This week we are going to answer the question

are Labour unlucky or are they just rubbish?

Okay so this week is Labour conference

Labour for anyone who is not in the country

are the traditional centre left party of the UK

they are in government, they won an election last year

so just before the election last year

I did a video

saying that Labour would win a massive landslide

and then become incredibly unpopular very quickly

which is exactly what has happened

a lot of polls show it's the biggest and fastest

ever fall in popularity

for any new government in the country

and this has led to the question of

why are Labour perceived to have been doing so badly?

Why are Labour so unpopular so quickly?

And a narrative is kind of forming from Labour

or people have supported from Labour

which is basically that Labour are unlucky.

Today we're gonna ask the question whether that is true

I think it's a really really interesting question

because I think it is actually

true that Labour are unlucky

but completely

not for the reasons that they think they're unlucky

or that they say they're unlucky.

So what is the Labour argument?

The classic Labour argument is basically

that they are unlucky

because they inherited an extremely bad

financial situation

from the conservatives and that is true

government debt is very high

inequality increased massively during Covid, in fact

the reason that I started this channel

at the beginning of 2020 was because I was predicting

that the economy would collapse

that government finances would collapse

that we would have a massive cost of living crisis

The fact that government finances were so bad

was basically exactly the reason

I was able to predict that Labour would be

really unpopular really quickly

Basically if you go back and look at my video

maybe we'll link it here from before the election

What I basically said was

we are in the midst of an economic crisis that

is being caused by economic mismanagement

inequality has increased massively

the assets are increasingly owned by the rich

If you don't tax the rich

living standards will keep falling

and this is why basically

we could predict very easily that

Labour would become very unpopular

for this very simple reason

living standards are falling

because of rising inequality

Labour wasn't gonna take action on inequality

for that reason living standards would keep falling

which would mean Labour would be very unpopular

very quickly and this is basically the argument

which Labour politicians have been making

I was watching Sky News this morning

as I make my breakfast, as I do

and there was a Labour advisor there saying

you know this is not really our fault

there was no way of us knowing this would happen

we didn't know

for example that Trump would would bring his tariffs in

we didn't know these things would happen and

we were left a really bad legacy by the conservatives

and this is not really our fault

and what this reminded me of

was a speech given by Jeremy Hunt

two and a half years ago.

Jeremy Hunt was a Conservative chancellor

so different

different prime minister, a different government

Where at the time people were very unhappy

because living standards were falling

the economy was weak and what Jeremy Hunt said was

we know that living standards are falling

and the economy is weak but it's not our fault

because there have been a series of

of black swan events and what a black swan event is,

is just something very unfortunate and very rare

has happened. Black swans are rare

so a black swan event is a rare event

and I did a video on this idea cause I found it really

really interesting because when Jeremy Hunt said that

at that time, I had been saying very consistently for

three and a half years that living standards would fall

that we'd have a cost of living crisis

that we'd have an inflation crisis

I was explaining exactly why

I was betting on it I was making a lot of money on it

so it's kind of interesting

and kind of funny for me to see Jeremy Hunt

come in and say oh my god

the economy is collapsing

aren't we terribly unlucky

who could possibly have predicted this

and now here we are two and a half years later

with a Labour government who are in power

that have failed on the economy in the exact precise

specific way that I predicted that they would fail

one year ago, two years ago

four years ago, five years ago

and they are now saying the same thing

which is, ‘oh my god

aren't we terribly unlucky

how could we ever have predicted this’.

So let's be clear, was this avoidable?

In one sense, no

which is the sense that I predicted

these living standards would collapse, five

sex years ago. Well,

five years ago at the beginning of Covid

At the beginning of Covid

we knew that we were going to significantly increase

wealth inequality

in this country, in your country

wherever you are across the world

we knew that government finances would collapse

we knew that the rich would get much richer

It's not rocket science right?

If you massively

change the wealth distribution in your country

if you massively impoverish the government

and you massively increase the wealth of the rich

that will affect living standards in a predictable way.

Your government will be poorer

your government services will get worse

the rich will get richer

their living standards will increase

and ordinary people will get less

this is like really really

really really

really obvious. So in that sense

what is happening now has been obvious

ever since the beginning of Covid

Was it avoidable? 100% yes

there's this really frustrating way

that people talk about government finances

and government debt as if this is just like money

which has just disappeared and

and we can never get it back

and like, god has it now, we've sinned

we can never get it back. That money

which the government gave out

is sitting now in the bank accounts

of the richest people in the country

and the richest people in the world

What I said, you can go back and watch it

in the beginning of my video was

if you want to avoid a cost of living crisis

a massive economic catastrophe

and massive decrease in living standards

you need to start working now to fix your tax system

so that we, the people of the country

can reclaim that wealth back from the rich

If you do not deal with the problem

you have in your tax system

which is that you're not really ready

or willing or able to tax the rich

you will have no choice

but to accept decreased living standards.

We said this publicly

we got a decent bit of press even back in 2020

you know, I wrote in the Guardian

I wrote for a lot of publications

by the time of last year's election

this YouTube channel was quite big

and we and the people that we work

with were lobbying Labour pretty aggressively

saying basically this exact thing

which is, you know

when you come in, if you do not take action on

massively increased inequality

inability to tax the rich

you will end up in a situation where basically

you have no choice but to either slash the state

or try and tax the middle class

which is exactly where the government are now

so was it fixable? Yes

if they had listened to us

could they fixed it? Yes

so are they unlucky? No

was it predictable? Yes

could something have been done? Yes

are Labour unlucky? No

I've been screaming about this for five or six years

something could have been done

something hasn't been done

Labour should have been thinking about it

when they're in opposition

Labour should have been thinking about it

before the election, they didn't

that is why they're failing now

it's not bad luck. It is incompetence

But the truth is

actually much more interesting than that

in my opinion, which is once you look at things

once you take a bit of a step back

and start looking at things on a grander scale

there is another way in which Labour

actually have been unlucky

and what has happened is not Labour's fault

and that is the fact that this mistake

which has been made by Labour

which is neglecting to look at the wealth distribution

to think about changes in the wealth distribution

to worry about changes in who owns the assets

is not at all a mistake which is unique to Labour

I didn't just predict that Labour would be unpopular

I also predicted that Rishi Sunak would be unpopular

and I predicted Rishi Sunak would be unpopular

for the exact same reason that I predicted

Labour and Keir Starmer would be unpopular

so what you have here is two political parties

opposite sides of the political spectrum

making the exact same mistake

and I did a video earlier this year

might have been back end of last year

where I explained that Labour

and Donald Trump would both fail again

for the exact same reason

which is the exact same reason

failure to consider meaningfully

the wealth distribution

changing the wealth distribution

changing inequality.

So what you have here is centre left Labour

centre right Conservatives, right

I guess you could even call it far right

Donald Trump. But it's not

it's not even just these parties

the Democrats made the same mistake under Joe Biden

Macron made the same mistake

in France

the centre left

and the centre right made the same mistakes

in Germany, in Italy

in Spain, in Japan

the governments making the same mistakes

So really

once you step back and you realize this mistake

which Labour is making

is the same mistake that the conservatives made

is the same mistake Trump is making

is the same mistake

basically every established traditional political party

even new

political parties like Macron's party in France

When you realise these

all of these parties made the same mistake

you have to accept that really

what is happening here is not at all

in any way Labour's fault

in particular this is really quite obviously

not a failing and not a mistake specifically of Labour

but really of

of the broader western political class as a whole

and if you take a step back even further

it's even bigger than that

because this is not a case of the politicians failed

and for example

the economists were right or the journalists were right

or even the traders were right

you know at the beginning of Covid

because of my background as an inequality economist

I was able to recognize very quickly

that wealth inequality would increase a lot

and I was able to predict relatively easily

that we would see the things that we have seen.

Big increase in asset prices

big inflation crisis, cost of living crisis

all of these things were predicted

If you don't believe it

you can go and watch our first video on the channel

in which all these things are predicted

but it wasn't just the politicians

who didn't really notice it at the time

basically nobody in the media was speaking about it

I didn't see almost anyone in academia

speaking about it, with maybe a few exceptions

and even the traders who I think I often talk about

as maybe being a little bit better informed

a little bit more on the ball than the academics

of the politicians

the vast majority of the traders didn't notice it

I've made a huge amount of money

betting on these things since the beginning of Covid

that wouldn't be possible if the traders knew

so this mistake, this

what I'm gonna call, naivety, about wealth

and naivety about wealth distribution and inequality

it's not just specific to Labour

It's basically

every established political party in the western world

and it's not even just unique to the political parties

this is basically a failure of understanding

of pretty much the entire western intellectual class

What is happening here economically

is not that complicated

the big picture story is all there.

Government wealth has collapsed

that wealth has gone to the rich

the wealth of the richest has increased massively

You can see that

in the massive increase in stock prices

the massive increase in gold prices

the change in distribution is not that hard to see

if you look at it

Nothing really made it clearer than Covid

in Covid we had this

unbelievably clear example of a period where we were

obviously

going to pause the economy for a period of time

and massively increase inequality

Nothing could have been more obvious than the fact that

that would be immediately followed by a massive

fall in living standards for most people

This is not rocket science

if you massively change the distribution of wealth

that will be relatively quickly followed by a change

in the distribution of living standards

for relatively obvious reasons

and I think in my whole life

I'm 38 now

I've never seen anything as interesting really

or as amazing happen as the discourse

or perhaps it would be fair to say

the lack of a discourse

around the change in distribution during Covid

because if anybody had taken the time to consider

how will Covid change the distribution of wealth

anyone would have come to the conclusion

that Covid will massively increase

inequality of wealth and yet nobody had that discussion

so I often talk about the total amount

of money given out by the UK government

since the beginning of Covid

which is over £1 trillion now, £20,000 per adult

the US number is over $13 trillion

we knew at the beginning of Covid these huge

huge huge

huge huge amounts of money were gonna be given out

which means that we knew with certainty that somebody

some group in society

was gonna accumulate a huge amount of money

We knew

with certainty

that the distribution of wealth would change

that the distribution

of living standards would change

and yet nobody

not Labour obviously

but also not the Conservatives

not the Democrats not the Republicans

not the centre left party where you live

not the centre right party where you live

not the academics, not the journalists

not the central bankers

not anybody, even ask the question of

where is this enormous amount of money gonna end up?

Who is gonna get richer? Who is gonna get poorer?

How is that gonna affect living standards?

And it was so amazing that

I would say it verges on beautiful

and what that shows us is very

very clearly this problem is much

much bigger than Labour

It is a problem of the whole western intellectual class

I've often used in some of my interviews a metaphor

which I think really captures

really quite well what is happening here

which is I say we have an economy which has cancer

and we have a group of doctors

who do not believe in cancer

and I think that that really captures really

very nicely what's happening in the economy

because what you do have is a small group in society

really the problem is really the very rich

you know the top point one percent that are rapidly

rapidly increasing their wealth share

they're growing and they're growing

and they're growing and they're growing their wealth

and they're squeezing everybody else's wealth out

and that has really obvious consequences

the most obvious consequence is just that

other groups in society lose their wealth

and what we are seeing most sharply at the moment

is the loss in government wealth

and the consequence of the loss of government wealth

but we've also seen loss of

ability of ordinary people to

for example, own homes without taking big mortgages

massive increase in debt of ordinary families

what you're seeing is their wealth is increasing

everybody else's wealth is decreasing

and that is really

the primary cause of most of our economic problems

but most modern economists and politicians

and journalists simply do not think of the economy

in terms of distribution and inequality

and we'll discuss that more in this video

and in next week's video

but I want you to think now

what would it look like if you had an economy

that was being destroyed by growing inequality

and you had a political class and an economic class

which never ever considered the distribution

what you would have is

because of that inequality growing really

really quickly

you would constantly see bad consequences

affecting the economy

Things like unaffordable housing

things like unaffordable state services

things like government austerity

these are all obvious things that would happen

as inequality increases. But if the political class

and the economic class wasn't able to recognize

that it was being caused by inequality

what they would see is we're doing everything right

and yet bad things keep happening

and we don't really understand why

We think what must be happening

is that we are just really

really consistently unlucky.

Bad things keep happening

to the economy

it must be because of the Trump tariffs or

I think Jeremy Hunt spoke about the Ukraine war

or because of Covid or the aftermath of 2008

or the aftermath of the 2011 sovereign debt crisis

this is what you would expect to happen

if you were constantly misdiagnosing the problem

if you had a patient who had cancer

but you didn't know cancer exists

you'd tell them, you know, eat healthy

exercise, rest

drink water, and your patients would keep dying

because you haven't correctly identified the cause

So once we zoom out

and we recognise the problem for what it is

which is that

it wasn't really a problem of the Conservative Party

it isn't really a problem of Labour

it's not even a problem of Donald Trump

it is a problem of a failure to recognise the

correct cause of the problem

by the western intellectual class

that will probably feel initially

a little bit overwhelming, because

you know

when we had the Conservatives in this country

there was a big like let's keep the conservatives out

things will get better

and that feels achievable

it feels relatively easy

I mean

it was done, the Conservatives lost the election badly

they were kicked out

they're not in power anymore.

Now we have Labour, they're unpopular

if the problem is Labour, we kick Labour out

we're gonna fix the problem

if the problem was

isolated to one specific political party

it would be relatively easy to solve

by kicking that political party out

if the problem is a failure of the entire western

intellectual class to correctly identify

what is causing falling living standards

that feels a lot bigger and that feels a lot scarier

and it feels a lot less easy to resolve

but actually in many ways

it is a massive massive source of opportunity

because I think it is become increasingly clear that

in many ways and in many countries across the world

the public is starting to recognize this fact

which is that the problem is really a broad problem

of the political class, intellectual class

just not really understanding what's happening

and what that is doing is creating this massive

massive demand for new ideas

and this enormous space is opening up

and this enormous demand is opening up from the public

not just here in the UK

but across the world for new ideas

different ways of thinking

different ways of managing the economy

and it creates this massive

massive opportunity to do something new

to do something different

and I think that is one of the reasons why

like amazing things can happen

like me and Jack

sitting here in my kitchen

can have a political show

that is basically

the biggest political show in the entire country

you know, because there is this massive

massive demand for new ideas

in politics

and it means that the the opportunities are are really

really huge. And I'm often reminded

I'm trying to get more medieval history

into these videos

this reminds me of, you're gonna like this one

the collapse of the Roman Empire

So the Roman Empire

obviously is a massive empire in early medieval Europe

and there was another massive empire in Asia at the time

the Persian Empire

and they fought each other

loads and loads and loads and loads and loads

until they exhausted each other

and then what you saw was this massive expansion of

in the north

German tribes who were considered like very

very weak, not powerful, divided

and in the South, Arabian

Muslim tribes

who were considered like very weak and not powerful

suddenly expanded and took over

basically the whole of Europe

the whole of North Africa

the whole of the Middle East

like totally conquered this enormous space

from these massive massive empires

and that was basically what happened

When the big existing powers fail

it creates this enormous vacuum

for new ideas to come in and take the space

and I think that is basically where we are now

There was a book written by, is it Francis Fukuyama?

End of History in, I think the 90s

where he spoke about, once communism collapsed

that basically we were at the end of history

and we had figured out

what the best way to run the world was

and it was capitalism

and it was this new kind of modern economic management

and that's it we're done now

we figured it out, nothing ever has to change

and now we are at the kind of the end of

the end of history where suddenly

we have realised that the ideas of the western

intellectual class have failed

and there is this massive

massive demand from your ordinary people on the street

here in London here in the UK

across the world for something

new, something different

and it is this massive massive

massive opportunity to establish really

what will be the economic ideas

on which the future of this country

the future of the world will be run

and that is there to win

that is there to win basically

and that is why you know

often even though it can be depressing

to look at the falling living standards

and I think things will get worse

I get kind of excited really here doing this channel

because I know that the world is gonna change

the new economic ideas are gonna be built

and we have an opportunity here to build a new economy

that is based on relatively simple ideas

such as, it is important to prevent wealth and power

from being monopolized by a tiny elite

we need to protect the wealth

and the power of ordinary people

we need to protect wealth holdings of regular families

of government and what I think is really

really interesting is you say this here and now

this sounds like a really

really new idea but if you go and look upon

like the sort of

founding principles of the United States of America

one of the big principles there was

we need to make sure we have division

and separation of powers

to prevent power from being concentrated

to prevent power from being accumulated

and this was a big idea that existed

in the early United States

because people had come from a Europe

which was being destroyed by massive inequality

so it's been done before we can do it again

the opportunity is absolutely massive

all we need to do is convince somehow

the western intellectual class

just to understand

the reason living standards are falling

is growing inequality

if you do not stop inequality from increasing

living standards will continue to fall

That simple understanding

can stop living standards from falling

and can save the world. But unfortunately

we are, we're not quite there yet

at the moment we're at an interesting space here

where on this channel, we've really

I think

we've done a really great job of educating the public

and I'm really proud of what we've done

but we have repeatedly failed to win over basically

these intellectual elites

and what that has meant really

is that the intellectual elites

are collapsing in popularity

and it is leading to this massive

surge in popularity of the far right

and I think that is, really on this channel

we've had a massive success

sort of building a political movement

but I think where we have failed

is in really establishing this intellectual movement

which is getting people to understand

this just simple economic idea

that if you allow wealth

inequality to grow very quickly

living standards will fall

and I'm constantly reminded when I do this channel

of my time at Oxford

So people who don't know

I actually quit finance in 2014

and I tried loads of different things before

I started this channel in 2020

including a two year masters at Oxford University

and I turned up at Oxford

like perhaps quite naively

having been a very successful trader

trading interest rates

thinking I could talk to the professor at Oxford saying

look you know

you've got a very bad track record

of understanding interest rates

you know we can talk about why

I've made loads of money doing this

you can make loads of money doing this

I can show you the data, I can explain it to you

and basically these guys had had totally no interest

and that reminds me of

where we are now basically

which is

you have this really interesting situation here

in this country

of a Labour Party that is desperately in need of money

desperately unpopular

desperately in need of more social media reach

and we turn up with a really

really popular

money raising idea with loads of social media reach

and we say

do you want to do it and

they for some reason have

have no interest

and it really reminds me of

of this

this situation

this stubborn unwillingness of the intellectual class

to basically accept or even really countenance

the idea that they might be wrong

on the big ideas about the economy.

So the message is clear

I think the problem is actually shockingly simple

and it goes way

way beyond just Labour or just Donald Trump

or just the Conservative Party or the Democrats

or whoever the party, parties are

where you are

there is a relatively simple problem of understanding

in our western intellectual classes about the economy

they're very naive about the wealth distribution

about wealth in general. They tend not to look at it

they tend not to think about it

and as a result they have allowed

and are allowing

the wealth distribution to become very unequal

if we don't do anything about that

living standards will fall further and further

and further and further. That will create

and is creating massive demand for new politics

new politicians and until

and unless

the western intellectual class is willing to adapt

willing to change or the political left is able to

to build something powerful and popular

this will inevitably go the way of the far right

and as living standards fall

and fall and fall

I suspect it will end up in a situation of

in the end very extreme poverty and

and relatively extreme fascism

so on that very optimistic message, what do you do?

So last week, or is it two weeks ago now

two weeks ago I split my my message into two messages

and one was to people who don't want Reform to win

and one was to people who do want Reform to win

so today I'm gonna again split my message into two

which is one message to the public

and one message to people who are in

or might be able to get into this kind of

intellectual elite. So people who have

can get university degrees and get fancy jobs in

in universities or government

or political parties or the media

So to the public what I wanna say is

you need to understand this problem

I know if you haven't gone to an elite university

if you haven't studied economics

you you might be used to being told

this is a problem for experts

this is a problem for intellectuals

this is not a problem for you. If this is not fixed

your living standards will collapse

and the intellectuals are not gonna fix it for you

don't be ashamed into silence

understand it, the public

is desperate for a new vision for the future

and in the absence of leadership from the

political elite and the intellectual elite

you have a massive opportunity to fill that gap

I've spoken before on this channel

about the importance of citizen journalists

ordinary people, conversations between ordinary people

the economy is gonna change massively

the emperor has got no clothes

everybody knows the existing political class

the existing intellectual class has failed

but the new future is yet to be built

the future is there to be built and to be fought for

you need to build it, understand the simple problem

the reason that living standards are falling

is because of growing inequality of wealth

if nothing is done about growing inequality of wealth

living standards will fall further

the only way to fix that

is to fix an unfair tax system

understand that yourself and be ready to push for that

for a long time the existing elites have failed

the space is there to be won, win it okay

and now to the existing intellectual class

people who might have fancy jobs

fancy names, come from fancier places than me

listen

I know we maybe don't come from the same background

and I know when you see somebody like me

who maybe didn't come through the right channels in

in the way you see it or

or doesn't speak the right way

or maybe you feel speaks disrespectfully

and maybe you feel

criticizes your group and your group's understanding

you can get mad I understand that

and I know

you might have invested a lot of your self worth

and your belief

in the understanding that your class is good

and your class has good understanding

if you are not willing to be flexible

and change your ideas about the economy

and about the way to run this country

I guarantee you

living standards will continue to collapse

and you will be displaced by the far right

I guarantee you that will happen

I'm betting on it every year and I'll be right

you must be willing to bend or you will be broken

not by me but by the far right

you will be displaced, that is what will happen

if you are not willing to be open minded

about the causes of falling living standards

OK I know when you see me and when you hear me

you think this is some crazy working class

left wing guy

you think I'm like Lenin or Trotsky or something

I've got the qualifications okay

I've been to the best universities in the world

I was one of the best traders in the world

one of the biggest banks in the world

I've been predicting this correctly

from the very beginning

go and look at those predictions

go and watch my video from the beginning

read my article in the Guardian June 2020

I've been predicting this right from the start

I've been betting on this right since 2011

I have a very very

very good track record here

you guys are comfortable

you get paid well

you have a good situation in today's society

if you are not willing to countenance

the fact that inequality could be driving

falling living standards

living standards will continue to collapse

and you will be displaced

open your mind, open your eyes

or you will lose your comfortable positions, okay

So to conclude

what we have right now is not a Labour Party problem

it is a much much bigger problem than the Labour Party

it's basically happening to every

single political party in the western world

so it's obviously much

much bigger than the Labour Party

I'm not saying that to defend the Labour Party

I'm not saying that to protect the Labour Party

I think the Labour Party has done a bad job

but I am not at all disappointed with the Labour Party

because I knew exactly that this is what they would do

it's exactly what I predicted that they would do

it's what I bet they would do

but it's important that you understand

accurately what is happening

otherwise you will make the same mistake

that the Labour Party is making

The Labour Party's basic mistake

is an incorrect diagnosis of the cause of the problem

they think that the problem is

I don't know, a lack of productivity

incompetence from the Conservatives

they think they can sensible their way out of it

and they can't

that is because they don't understand

what is really happening

if you don't understand what's happening

you will also make a bad diagnosis

a classic example of that was two years ago

everybody thought the Conservatives were the problem

they thought if we kick the Conservatives out

things will get better

they did kick the conservatives out

things won't get better, the same thing is happening now

everybody thinks Labour are the problem

they think if they kick Labour out and get Reform in

things will get better and again

it will not work, you need to understand correctly

the cause of the problem

it is growing wealth inequality

and you need to drive that into the political narrative

so that is it basically

what I want you to do is to understand

build that understanding as much as you can

build that understanding every single day

with your friends with your communities

simple nice and simple

the reason living standards are falling

is because of growing inequality

if you don't stop growing inequality

living standards will continue to fall

listen, Labour will get more and more

and more and more unpopular

until and unless they accept that

and if they lose and Reform come in

I guarantee you Reform will fail

and become more and more and more unpopular

Until and unless they accept that

the space will open up

more and more and more for this idea to come

so that's it

build that understanding in your communities

use our videos

but also if you can throw yourself into it

we need to get ourselves into

those intellectual classes

if you

or your kids or your friends are able to get jobs

as academics, as economists

in the media, in government

in civil service

go and get those jobs

and drive these ideas into the narrative

until people accept and understand

that the cause of the problem is inequality

things are gonna get worse and worse

but ultimately

understanding itself is not gonna be enough

we do need to get these ideas into policy and

ultimately that's gonna mean

both in this country or wherever you are

that we do need to somehow break into government

and in this country

that means either influencing the Labour Party

or replacing them somehow and

that is what we're gonna discuss in next week's video

which is gonna be one of the last in the series

the big question, can Labour be saved?

Thank you very much. Tax wealth not work, thank you