Okay. Welcome back to Gary's Economics.

Today we're going to talk about investment.

This is building on some stuff

we've been talking about about growth.

And there's a question about, okay

how do you get growth?

You need to invest, invest to build your economy.

Invest, invest, invest. Let's grow.

And I think it's important to understand

how does investment work.

Because I think there's a very simplistic

understanding of investment,

which is if you want to invest,

you need to give loads of money to rich people,

because who does investments?

Rich people,

if you give loads of money to rich people,

we’ll get investments and we’ll grow.

If you look at the last 20, 30 years

when the wealth of the rich

has grown really significantly, investment

has actually fallen in many countries,

especially here in the UK.

So why is it that when you give money to rich people,

it doesn't necessarily lead to investment?

But the first thing I would say is

when a rich person invests,

it doesn't necessarily lead to the creation

of new productive capacity.

So for example, if I make £2 million

and I use it to buy all your mum's houses,

it doesn't really do much to improve the economy.

So rich people can simply invest by buying your assets.

And this leads us to thinking

and a little bit

of a more nuanced way about investment.

And for me,

when you want to create investment

to create new productive capacity,

there's basically two things you need.

Yes, you do need somebody

to basically fund that investment,

which is basically I'm going to use the resources

that I have to create something new,

to build something new, to build a new factory,

to build a new windmill,

to build the new diamond mine,

whatever, to build the new office block.

You need somebody

to say, I'm going to provide the resources

and in a modern society,

which is very unequal, that is often the rich.

But, you know, when you look back at the postwar period

when investment was much higher,

it could be government or it could

be, you know, a group of ordinarily non

super wealthy people putting their resources

towards building new things.

But it doesn't just require

people to fund the investment.

You also need profitable investments to exist.

So I have been

essentially retired ten years ago.

And since then

I've basically been living off my investments

and so I guess you could say I'm

a professional investor in a way,

although I think that's probably

a little bit of an excessive

fancy word to say, A rich person.

In that course of time,

I've done loads of different investments

and some of them were like productive investments.

Let's build something, that's create

something new in the economy.

And some of them were,

you know, I'm just going to buy existing assets.

I'm going to buy the stock market, I'm going to buy

gold, I'm going to buy a property.

And in the course of those ten years as an investor,

almost all of the times I tried to invest in actually

building new

productive capacity,

increasing the size of the economy.

I lost money, basically,

those investments almost all failed.

And almost every single time

I just bought stuff that already existed,

I made a ton of money.

The most profitable investment I ever did

was probably buying a ton of gold

at the beginning of Covid.

I made an absolute fortune on that. And,

I think it's pretty clear that me buying

a ton of gold does nothing to help grow the economy.

And this raises the question of

why is it that trying to build new stuff

is not profitable,

but buying existing stuff is profitable?

And I think that is because essentially,

to make a productive investment,

a profitable investment, you need a customer.

At the end of the day it's not enough

just for rich people like me to turn up and say,

here's the money.

You also need businesses to say, well,

we know that there's a massive customer base out there,

so we want to build new stuff for these people.

And I think the story of the last 20, 30 years

is basically the impoverishment of the middle class

and the ordinary British family,

the ordinary American family, European family,

Australian family, whoever you are,

at the expense of the very rich.

And that is why

trying to grow the economy has basically failed.

And if you look at this,

the parts of the economy

that have grown a lot,

it's almost exclusively

luxury stuff and services for the rich.

So I think

this sort of drive towards growth and investment

will not work

unless you deal with the fundamental inequality

that exists in our society.

And that is because

no matter how much money you give to the rich,

when they go to businesses and say, here's

the money, businesses are going to look and say,

well, where is the customer?

And if the only people they see

who are accumulating

a ton of money are very rich people,

even if we do build new productive capacity,

the only stuff they're going to

create is super luxury,

expensive stuff that you can't afford

that is for the rich,

because these guys have the money.

And I think what you need to understand is

a capitalist economy is very flexible.

It will provide stuff

specifically for people who have money.

You know,

I often think, you know,

since I started this YouTube channel, people like to

tell you go and be like Mr. Beast.

For those of you who don't know, Mr. Beast is,

I think, the most biggest, most watched YouTuber ever.

And he does a lot of stuff, like he goes to Africa

and he pays for like cheap

eye surgery for people in sub-Saharan

Africa, in poor communities

and these are very cheap surgeries

that provide extraordinarily, phenomenally

significant improvements

in life for people in poor communities.

So if you think from an investment perspective

like this should be what we're investing in right?

Here are people who,

you don't need to put a lot of money in,

and you can really significantly

improve their quality of life.

So why don't we do that?

Why does capitalism, why do businesses,

not build healthcare in sub-Saharan Africa?

The answer is quite simply

because sub-Saharan Africans are poor

and capitalism

does not provide investment for poor people

because they want it to be profitable.

And the reason you should be worried about

this is because in the West, in the UK,

US, Europe, Australia, increasingly

ordinary people are poor.

You are poor. Your future is poor.

So if you want growth, if you want investment,

you're not going to get it.

Unless you deal with the fundamental fact

that you are poor,

you need to deal with the distribution.

Listen,

capitalism has for a long time not provided

anything for people in sub-Saharan Africa.

People in lots of Latin America, People in lots of Asia

because they were poor people.

And it was easy for

people like us not to worry about it

because we were the comfortable middle class.

Now we are poor. The average British person is poor.

The only way to get things

is to change the distribution.

If you don't change the distribution,

then all of that new investment

will be luxury

consumption, luxury properties, luxury holidays

for the rich and that is not going to help you at all.

So this relates to the videos

you've been doing

about the stupidity of growth,

which is if you focus only on growth

without focusing on distribution,

all you do is keep running

towards slavery at a faster rate.

Listen, there's a fundamental imbalance of power

and resources.

You are in a competition with the rich for resources.

If we're going to invest in this unequal system,

businesses will have a choice.

Are we going to build

healthcare centers in sub-Saharan Africa?

Are we going to build affordable homes

for poor people in the UK,

or are we going to build a sixth

helipad on the top of Elon Musk's f**king skyscraper?

You are going to lose that competition.

As the rich get richer and richer,

they will take the resources

and the investment that you need,

and the economy will turn into an economy

which provides only for them.

I don't know if you've seen The Hunger Games.

They have this city, which has one super luxury center

where all of the rich people live,

living lives of unbelievable luxury,

surrounded by terrible poverty.

Listen, that is what investment

looks like in an unequal society.

The only way to get investment

for you is to get wealth back.

To get power back

from the superrich into the hands of ordinary families.

And the only way to do that is to tax the rich.

And I know I say it millions of times,

and I'll say it millions of times more,

because until we do that,

our society will collapse into poverty.

Taxation is the only way

to escape poverty for your kids and your grandkids.

Tax the rich more, tax working people less.

Save the f**king future. Good luck.