Okay. Welcome back to Gary's Economics.

Today we are going to talk

about how you keep your house.

Okay.

So I wanted to do a video called

How You Keep Your House.

Because the whole argument of this channel

is that we live in an economy of rapidly

growing wealth inequality.

And that leads to ordinary families

losing their homes, governments losing their assets,

and ordinary families and governments

going further and further into debt,

because those assets are going to the rich

and people are being forced to basically borrow money

back from the rich in order

to protect any asset ownership.

And, this is really, really bad

specifically for the middle class, right.

Because the middle class

are the group of people in society

who used to own assets and are losing their assets.

But as the

middle class

lose their assets to the rich and the rich

get richer

and richer and richer,

because rich people like to buy assets,

as the rich get richer,

they bid the prices of assets up

and you get this kind of split,

which is rich people like assets,

ordinary people like goods and services.

So as inequality increases,

asset prices go up and wage,

wage rates fall.

And the middle class should hate this, right?

Because they're the group of people

that own the assets.

And yet sometimes when I talk to my more

middle class friends, they,

they actually think it's good because what they see is

their house price is rising, stock prices are rising.

You know,

maybe they've got like a small like pension pot

and that's going up.

So for them it's kind of like the number’s

going up, we’re good, I'm getting richer.

My house price is going up.

My pension pot is going up.

So it creates this kind of like interesting,

confusing thing which is happening,

which is the same group of people in society

who are getting squeezed out,

are kind of like cheering on their own demise,

and they think they're winning because they say, well,

I'm getting richer.

And what I normally say to these people is, well,

you know, the only way for you

to benefit from your house price going up

is to sell your house.

And once you've sold your house,

you know, in a world where housing is

unbelievably expensive,

then your kids will never get homes.

So you're basically,

you know, you're selling the family's silverware,

you're going to become poor.

And the only way for you to benefit

is to give up the most important thing

that you have, basically.

And what they then sometimes say to me is,

well it doesn't matter, I'm

just not going to sell the house.

I'm not going to sell the house, I'm going to dig in.

I'm going to keep the house.

And you have this kind of perception of,

I'm just going to hold onto this thing.

I'm going to cling on to this asset

and I'm going to get richer, I'm

going to get richer, I'm going to get richer.

And they’re kind of seduced in a way,

by like this rising asset value.

So I wanted to do this video today

to talk about this idea of, I can keep my house

as long as I just never sell,

and kind of explain why

that is basically a bad strategy

to take care of your family

in the world that we live in.

And the reason for that is

so if you accept that we live in this world

where inequality is increasing,

and in general

the middle class is being thinned out

and the government is becoming poorer,

and that wealth is instead being held by the rich.

That causes a thing to happen,

which is asset

prices get more and more and more expensive,

and the rich hold more

and more and more and more assets.

But because the middle class,

which is your traditional consumer, is being weakened,

the cost of like basic consumption doesn't really go up

because that basic consumption

market is selling to ordinary people.

Ordinary people are being screwed over.

It's the rich who are making money,

and what they want is assets.

So then from the perspective of an individual

rich person, what you have is, I'm crazy, crazy rich.

I have a ton of assets.

The price of those assets is going through the roof.

And yet the cost of regular consumption

is really, really low.

And I often talk about on this channel

that rich people have like a low

marginal propensity to consume,

which is they don't tend to spend a lot of the money

you give them.

But as they get richer and richer and richer and richer

and the price of assets get more

and more expensive relative

to the price of consumption,

these guys will start to consume more stuff.

And that is when

this kind of, I'm going to keep my house,

I'm not going to sell my house person,

basically starts to get screwed.

And I think, I think probably the easiest way...

easiest place in which you can see it at the moment

is, for example, in elite education.

So very rich people,

they want to send their kids to elite universities,

Oxford, Cambridge, you know, Harvard, Yale.

And there's only so many places at these like top,

top universities

which you kind of need to get into nowadays

if you want to get one of the best paid jobs

and as the rich get richer and richer and richer,

it becomes quite easy for them to pay $30,000, $50,000.

And, you know,

rich people do frequently pay

those kinds of amounts of money per year

to send their kids to elite universities.

And they can do that.

They can easily do that

because they're super, super, super, super rich.

And it is only because in some parts of the world,

the government protects ordinary people,

that ordinary people don't have to do that.

But as the universities can increasingly sell

a place to a rich person for 50,000 70,000 a year,

inevitably that starts to squeeze up the price

that you have to pay

to send your kids to an elite university.

And that is when you start

to see the consequences of your strategy,

which is I'm going to hold onto my house

and I'm not going to care about the fact

that the 1% is getting unbelievably rich.

That's like politics of envy. Forget that.

Well,

your kids are competing with their kids

to go to the elite universities,

and if their wealth is just blowing up,

then they're going to pay 50 grand a year,

70 grand a year, 90 grand a year.

And eventually the end result is, your kids

can’t afford to go to a good university,

they can't compete with their kids for the best jobs,

and then their kids are making £500,000 a year,

and your kids are, you know,

working for £20,000, £30,000, £40,000 a year.

So it ends up in a situation where, okay,

I hold onto my house, but the cost of that would be

my kids can't go to a good university,

my kids can't get a good job.

But it's not just the elite university market, right?

So I went to a grammar school

in East London,

so for people who don't know, a

grammar school is like

a free school, but it's like a slightly fancy school

and it tends to get people into better

jobs, better universities.

So I went to school with a lot of kind of middle

class kids who got good degrees

and a lot of them went into medicine and dentistry.

So they became doctors and dentists.

And now

the doctors and dentists who make the most money,

what they do is

cosmetic surgery

for rich people,

things like Botox or like teeth whitening,

teeth straightening,

cosmetic stuff

that is obviously not like medically essential.

Or they work for private

healthcare, healthcare for rich people.

And, you know, that's who cares about that.

That's politics of envy.

Well, what happens when you need a dentist?

What happens when your kids need a dentist?

And we're in a situation now in this country

where it's becoming increasingly impossible

to get a NHS dentists

to get cheaper, affordable dental care.

And as a result,

people are just not going to the dentist.

And it's not that the dentists are not there.

It is that

just like your kids are in competition

with the kids of the rich for elite

university places,

you and your kids are in competition

with the rich for access to the dentists

and access to the doctors.

So you're there.

You're thinking, I'm going to keep my house.

I'm going to keep my house.

I'm going to keep my house.

Who cares if they're getting rich?

That's politics of envy, that's politics of envy.

And then they've out competed for university.

Your kids can't go to university.

They've out competed for a dentist.

Now kids don’t have a dentist.

They've outcompeted you for the doctors.

And now you can't get access to healthcare.

What I'm trying to say is, it's a very unwise strategy

to hold onto your house like it's your baby

and just watch the price of the house going up

while you and your class are being rapidly outcompeted

for all of the things that you need

by this one other group of society.

Because of course,

nobody can force you to sell your house, but they can

take all of the other things that you need

and eventually are going to be put in a situation

where the only way to get a basic,

just the basics of living is to sell, sell your house.

And the most obvious example of

this is when you look at equity releases schemes.

So the people who don't know

what equity release schemes are,

you'll see these advertised.

If you’re ever watching daytime TV,

you'll see them advertised on TV.

And my grandparents all owned property,

but they never died with property

because they used these equity release schemes.

And these equity release

schemes are basically saying, look,

we'll let you keep your house.

You can live in a house till you die,

but we'll give you money during your retirement.

And then when you die, the house is ours.

And what you're seeing here is...

I think that the best example is during Covid.

I've spoken about this a lot on the channel.

We gave an enormous amount of money out,

and that money ended up with richer people.

And a lot of people were like,

well it doesn’t matter if the rich get money.

You know, who cares if the rich get money?

I think there's a quote by Peter Mandelson

who says, I'm intensely relaxed

about the rich getting rich.

If the rich get rich,

they will start to consume more stuff,

and some of that stuff will be stuff that you need

and some of the obvious repercussions

of that were, you know,

rents in London went absolutely crazy.

If you give a tonne of money to rich people,

of course, rents in London will go crazy.

They'll give that money to their kids.

The kids will buy houses.

The kids

won’t need to share, they won’t need to take flatmates

because they'll be really, really rich.

There's less housing and the rents will go up.

You know, the rents don't go up out of nowhere.

Somebody is paying them.

The rich people are paying them.

So you see them, they squeeze you out of,

they squeeze you out of education,

they squeeze of healthcare, the squeeze out of housing.

You know,

we were talking earlier today about

the potato famine in Ireland,

and there were also famines in India

during British rule.

And at the time that there were famines in India

and millions of people were dying

because of lack of access to food.

There were enormous

fields, farms in India growing tea,

which was shipped to England.

So farms that could be going

food, are growing tea,

an inedible luxury crop to be sent to England

while people, local people, are starving,

dying, you know.

It doesn't matter if you keep your house

because eventually the rich are going to outcompete you

for education, for health care, for housing.

And at the end of the day, for food and energy.

And know when we talk about these

old ladies who are using equity release schemes,

you know, in

many cases,

these are old ladies

who are using those equity release schemes

to heat their homes while they're 80 years old.

And, you know,

why is it that the energy price has doubled?

You know, who's using the energy?

Rich people. Rich people don't keep the heating off.

You know, if you allow these people

to get richer and richer and richer,

they will consume more.

You will consume less.

And eventually you'll be forced to sell your house.

It doesn't work.

So I guess the point I'm trying to make here is

it's very shortsighted

to think that you are winning

when house prices go up

just because you are keeping your house,

when everyone around you,

your class, people like you, people

in the same financial situation

as you, are losing their houses

and a small section of society that you are not in

is taking everything.

You know,

the wealth of the rich will grow and grow and grow.

If you don't stop that, eventually you lose everything.

You know, it's a little bit like,

you know, if you play chess,

you only lose a game of chess, if you lose your king.

So if we're playing chess

and you're taking one of my pieces

every single day

and I'm just like, well, that's not my king.

That's not my king, that's not my king.

You know,

you need to protect your competitive position.

You need to protect your competitive position.

There's this French film

La haine, talks about a man who jumps off a skyscraper.

And as he was falling,

keeps saying to himself, so far, so good.

So far, so good.

So far, so good.

Yes, I know house prices are going up

and house prices are going up

because the rich are getting richer

and richer and richer.

That is not...

an increase in wealth

inequality is not an abstract thing.

It is a transfer of wealth

away from the middle class,

which most of the viewers will be in

towards the super rich.

It looks good because your house is going up.

The end result is

the only way you can keep

that house is by slowly

giving up every single one of the things that you need,

and that guarantees poverty, basically.

So the end of the video, how to keep your house.

The way to keep your house,

if you are a middle class person,

is to protect the middle class

from the rapidly growing wealth of the rich.

You have to stop that flow.

You have to stop that flow like you can't sit there.

You know, it's like you, you know,

you're like one part of the bathwater

watching the bathwater go down the drain.

You're like, well, my part's not down the drain yet.

You can't, if there is a...

if you exist in a society

where there is an aggressive

flow of wealth

away from the middle class

towards the rich, and you are in the middle class,

you have to stop the flow.

You have to stop the flow.

And I think there's a really like kind of

beautiful parallel in this

where you have,

we have a new government in the country,

a Labour government,

that is watching wealth like flood

out of the government towards the rich.

And they're just like, well,

if we a little bit more sensible,

if you manage just a little bit better,

then we can fix things.

And then it turns out

they actually don't have any money to do anything.

What the government are doing

is exactly the same as a middle class person.

It's like,

you're existing in a situation,

you're obviously losing,

you're obviously dying,

your wealth is flooding away, and you are

stupidly, stubbornly resistant

to doing anything to stop that flow.

And then you're surprised when it leads you to poverty.

The way to keep your house

is to protect your class as a group.

If your class dies, if your group dies,

you die as well.

You need to fight back against that.

You need to protect the middle class from the rich.

If you don't do that, the rich eat the middle class,

then there's no middle class.

And if you want to know what a country looks like

with no middle class, go to Mexico.

Go to Colombia, go to Nigeria,

go to India, go to South Africa.

It's poverty for the many.

The only way to stop that

tax the super rich, lower tax on ordinary people.

You have to fight back.

You have to protect yourself.

Otherwise you lose everything.

You keep your house

by working together and protecting your people.