Okay.

Welcome back to Garys Economics.

Today, we are going to do something different

and we're going to have a guest on the channel,

an economist for the very first time.

One of my favorite economists working today.

I very often get asked on this channel,

where else can we go to learn about economics?

What other stuff can we read?

How can we learn more?

And there are a lot of

economists who I like working today.

There's obviously a couple of

French guys working on inequality-

Piketty and Zucman.

But the person who I always recommend, because I

think he is the best at writing about economics

in a way that is accessible and relatable for

ordinary people is today's guest on the channel.

So I'd like to welcome Ha-Joon Chang.

Thank you.

Thank you very much

for coming.

I think I'll just introduce briefly

how we met and how I got to know you.

So, I quit banking in 2014, and when I came back, I

was sort of looking about how can I change the economy.

And I didn't really know much about the work getting

done in economics today, and I got invited to a small,

what can I say, lecture series that you were doing?

Yeah.

Yeah.

When was it?

Was it 2015, perhaps?

'15, '16, I forget.

2015,

I was invited to a lecture series which you

gave to a smaller audience, and I was lucky to

watch a few lectures you gave about

how, I think it was How Poor Countries Become Rich.

And I was very impressed at the time about

basically how you seemed to have thought the

problems through and delivered answers rather than

kind of relying on rigidly mathematical models.

That's kind of you.

And I was very impressed at basically how

you were just able to communicate ideas in

a way that ordinary people would understand.

So, was very impressed, and I'm very happy

to have you as the first guest on the channel.

Thanks.

Yeah, actually those lectures have

been made into this lecture series called

Economics For People and available on INET

website, The Institute for New Economic Thinking.

Yes.

I sometimes get people tweet photos of me

asking you a question, saying, "Oh, here's-"

That's right, you asked some sharp questions.

Yeah.

Looking, looking younger and fresher,

less jaded by politics.

Yeah, yeah.

So would you be able to introduce yourself a

little to the audience, talk a little bit about

why you chose to study economics, when you started, why

you chose to move to the UK to study,

because I know this is not where you're from

originally.

That's right.

Yeah, yeah.

I'm Ha-Joon Chang.

I'm a professor at SOAS,

University of London, at the moment.

I used to teach in Cambridge for over three decades.

I've moved to SOAS recently.

Yes, I was born in South Korea in 1963.

That was right at the beginning of

the country's so-called economic miracle.

And, you know, really that was where

I grew up and when I grew up that I wanted to study

economics, because, you know, at the time, South Korea

was growing at like 10%, 12%, sometimes at 15.

This is when you were sort of in your teens?

That's... Yeah, that's right,

In the

'60s and '70s, yeah.

And yeah, I mean, the, people's living standards

were rising really rapidly and, you know, the new

buildings going new towns are forming.

Yeah, so there were a lot of good things

going on then because, you know, at that, level

of income, you know, the South Korea's income,

per, per capita income, you know, for example, in

the, the ni- early 1970s when I was a primary

school student was like, $400, yeah?

Yeah, so I think...

It was a very poor country-

Yeah.

... which meant that this economic growth

really, was literally

a matter of life and death, you know.

Yeah.

Because that, in that, at that

level of development, if your economy grows at

5% rather than the 1%, it means that,

you eat one more bowl of rice

Was it still like a very agricultural economy-

Yeah, yeah, yeah,

at that time.

but you know, like 60... 50-60% of

people were in the countryside, engaged in farming.

But, also because the

country was industrialising rapidly

literally millions of people were arriving

in Seoul, the capital city, and Busan,

Ulsan, these industrial cities in the

Southeast to find jobs in factories, yeah?

But the life was very hard for the workers,

you know, because, this was a time when

these workers are working 13, 14 hours a day,

six and a half days a week.

In factories, in cities?

Ye- yeah.

Exactly, yeah.

And some factories refused to

serve soup in the canteen so that they don't

have to give extra toilet break,

No, no.

this was a very, very harsh time.

Yeah.

But, you know, things

were improving.

On the other hand, you know, you had

these workers you know, being

worked to death, and, you know, slums

springing up in urban areas, and then the-

Okay.

... property developers mobilising

these thugs to beat people up,

to clear illegal settlements.

So you've got this rapidly urbanising and, like, growth

is high, incomes are growing, but living standards

are still really poor for a lot of people,

That's right.

the cities are growing in sort of slum fashion.

Yeah.

Exactly.

And then there were a lot of tension because,

you know, the country was between 1961 and

'87 ruled by a military dictatorship.

Even though this military government,

was able to engineer this rapid

economic development into the very brutal-

yeah.

And as I grew up, I just, I wanted to

understand what's going on around me.

And you, you're, you were growing

up in, like, a middle-class family?

Yeah, yeah, yeah.

In Seoul?

That's right, yeah.

My father was a high ranking civil servant,

in the Ministry of Finance, and yeah.

I mean, okay, I mean,

we were not rich, but, well off, yeah?

I guess by the standards of a career

which was quite poor at the time.

Yeah, exactly.

Yeah.

So, when I was a kid, our house was the

only house in the neighborhood with a TV, you know?

Okay.

So people went to... came to our

house to watch a football matches,

a boxing match.

So you were witnessing, I guess, it

sounds like a period of really rapid economic change

and economic growth, and, like,

that interested you and excited you.

That's right, yeah.

So there were a lot of positive things

happening, but, also a lot of negative things, yeah?

I mean, this

exploitation of workers, you know?

Yeah.

Political repression, you know?

It's interesting to hear you talk about the, like, the

rapidly growing cities and the rapidly growing slums

because obviously at the moment, we have

a government that is obsessed with growth,

and they want to build, they want

to build, they want to build.

And, I come from, like, a

very poor part of East London.

Yeah.

And I'm seeing, you know, I'm sure it's not the

same, but I'm seeing this, like, rapid growth

of these poorer outer London suburbs,

and basically turning into slums.

Yeah.

I was saying before, the Daily

Mail went to my house last week.

And I think they wanted to do, like, the

house I grew up in, and they wanted to do a story

like, "Oh, you know, Gary said he was poor, but he's

actually not." And the story they actually wrote

was, "Oh my God, this place is a slum." They

couldn't believe it. so it's interesting to see

You know, And I often worry that this like,

this rapid, like, move for growth

will lead to the slumification of London.

Yeah, yeah.

No, I mean, of course, I mean,

it was worse in Korea at the time because

the general living standard was lower.

But yeah, I mean, if you, expand too fast

these builders are not going to build

houses of good standard.

Yeah, and of course, we're only a few years

out from the Grenfell disaster, you know?

Exactly.

I sometimes worry that this, "Let's slash the

red tape," sometimes feels shocking to me.

Yeah.

I mean, the housing problem has to be

solved by, you know, the regulation and the

more equal distribution of assets, I mean, you

cannot solve it by building more houses.

It seems a bit naive to me.

But let's get back to, you're a child in Korea.

It was my fault. You're interested

in economics, and you decide that you,

you moved to, in the UK when you were 18?

No, no, no, no.

Actually, I went to university in Korea.

Okay.

In Seoul?

Yeah.

So we studied economics, and,

yeah, some professors were different,

but most of the professors were just

teaching this equilibrium models, you know?

The similar models to what I would have learned.

Exactly.

Mathematically less sophisticated,

but the same idea.

Yeah.

Okay.

So just these are like basically

very mathematically, mathematically complex,

mathematical equilibrium models, not so much

stuff on the history of economic thought, perhaps?

Yeah.

We had a course in the history of economic thought.

And you don't mind me asking,

what years would

you have been studying in Korea?

Yeah.

So I entered university in 1982.

Okay.

And graduated in 1986, and came to England in

the summer of '86 to start my master's.

Okay, just before was born.

Exactly, yeah, yeah.

I'm old, yeah.

So well, I, yeah, entered the university,

most of the professors were, you know,

teaching this abstract...

In Seoul?

Yeah, Seoul National University.

And many of my friends couldn't take it

seriously, you know, because, there's this huge

upheaval going on outside the classrooms, you know?

Economic development, export success,

political repression, you know?

Yeah.

In 1980, the second military government

committed this massacre in

actually my father's hometown killing

thousands of people who are protesting against

the coup d'etat and, you know?

So, a lot of us got interested in

finding out whether there's

another way of thinking about economics.

So you went into university.

And you got very interested in economics, and

you were kind of almost amused by

your university basically doing maths.

That's right.

And there's not much discussion of, there's

all of this crazy stuff happening, you know?

Exactly.

This is, you know, one of the great

modern economic miracles, right?

at this period of Korean economic growth.

Yeah.

So you kind, you kind of thought...

I mean, I had a similar thing, really.

Like you sort of, you, I think sometimes

people are really amazed when I tell them,

we don't talk about the housing crisis.

That's right, yeah.

And we don't, we don't talk

about the cost of living crisis.

Uh-uh.

What we do is maths.

Yeah.

And I did my undergrad in the mid-2000s.

Yeah.

And I did my post-grad 2017 to '19.

Yeah, and while you were

doing this, there's

one of the biggest financial

crises in the history of capitalism.

Yeah.

And many professors-

I'm kind of surprised to hear

that even, you know, this is 30 years earlier

in Korea.

You were also doing this very, very

heavily mathematised form of study.

That's right, yeah.

Okay.

Yeah, so I just wanted to study something

different, and I found out that there were a

few universities in England and the United States

where you could study non-Neoclassical economics,

Marxist economics, development economics,

So, just to make clear,

we're talking, you didn't want to do just this

kind of very specific heavily mathematised.

That's what you mean when you say Neoclassical?

Yeah, yeah, I mean already Neoclassical

economics was very heavily mathematised.

So Neoclassical is basically like the...

at the moment at elite universities there's

kind of one... there's basically there's one-

Exactly, yeah.

one kind of economics that you're taught

almost, from my perspective, almost as if

it's like physics, like a physical science.

That's right, yeah.

So this is a particular approach to economics

which assumes that the world is made up of

this selfish rational individuals, and they,

you know, try to get ahead and compete with

each other, and that's what generates wealth and-

And in particular, what I often

talk about on this channel

is that these models, these kind of

large-scale heavily mathematical models,

they tend to use what they call representative agency.

Which means that rather than talking about, we have

whatever 60 million people in the UK or 40 million

people in Korea, you just look at the average.

You say let's look at one guy, the

average guy, the representative guy.

Which of course means

there is no inequality.

Exactly, by definition,

There's no equality in distribution.

And you were studying the... that was the

same thing you would have been studying.

Yeah, exactly, and yeah, still

laughing when I, remember that incident

you know, these models that really

came on stream in a major way in the 1980s,

because yeah, before it was more of

a general equilibrium and that, that kind of stuff

and, yeah, it, in my early days in Cambridge,

someone was, giving a... a seminar

using this representative agent model.

Yeah.

He also added this assumption that

this agent is non-infinitely lived.

Okay, well, I'm glad to hear it.

We are like looking at this guy and

one of us asked, "What does that mean,

'non-infinitely lived'?" And another guy said,

"Well, I guess it means that we all die in the end."

Yeah.

You know what mean?

Yeah.

There's no sense of realism there.

I mean, just whatever makes it

mathematically neat.

Yeah.

I wondered, so-

You say

moved to Cambridge in '86?

Exactly, yeah.

To do your post grad, masters?

That's right, masters and PhD, and then I

studied with Professor Bob

Rowthorn who was a famous Marxist economist.

Okay.

Yeah, although, I mean, he

did lots of other things and,

he didn't insist that, I follow his approach, so my

approach is a bit different, from him, but

I really thank him for, kind of showing me different

types of economics and, you know, teaching

me how to kind of reconcile them if I have to and...

So you chose to go to Cambridge because you

thought that Cambridge was teaching

like a more like diverse range of-

That's right,

ways of looking at economics?

Yeah, that, at that time Cambridge was of

course at the bastion of Keynesian economics.

Okay.

Can you just quickly describe what

that means to our viewers who might not know.

Yeah, Keynesian economics is economics

that was kind of invented by the early

20th century British economist John

Maynard Keynes, who... well like you, made

a lot of money in the financial market.

He's one of a few economists who actually

makes money in the financial market

because surprisingly many economists that

when they invest in financial market

they fail.

Not so surprising to me.

But he was rooted in, so I think

one of the best economists of all time.

Yeah, exactly.

And he lived through The Great Depression.

That's right, yeah.

So his argument was look, you cannot treat

the economy as a household, yeah?

Yeah.

That is the mistake that the

current Labour Government is making, yeah?

We've maxed out

our credit card, you know, we cannot spend more.

Of course you can, but

the point is that...

He's basically saying, if you tax people,

like tax working people more and you don't... the

government stops spending, you'll basically cause

this kind of economic depression which is that

there's not enough spending, businesses will fail.

Then more people will lose their jobs.

And, well yeah, this is-

Yeah, so his point was you know,

that your income is my spending, you know.

My spending is your income, yeah.

Although we're kind of in this weird situation

in the UK now where we have a government that

seems to want to spend but is kind of not able

to spend and we'll discuss more on this.

But, so basically I think the point

you're making is at universities, especially

elite universities, economics is kind of taught

like there's this one way of doing things.

Exactly.

Which you're calling Neoclassical,

neoliberal, which is this very highly

mathematised, rational individuals, we look

at the averages, but there are other ways of

thinking about things like Keynesianism, Marxist

economics.

And you wanted to, I guess, study a wider

variety so that's why you went to Cambridge.

Absolutely, yeah.

Cambridge was, you know, Neoclassical

economics was not so dominant until the

1950s and '60s, but from the '70s it started

really pushing out other schools because they

are more kind of, accepting of the status quo.

They don't

ask awkward questions, yeah?

So it was that really becoming

dominant, but there was still in the '80s

a few places here and there where

Neoclassical economics was not dominant.

Cambridge was one of those places.

Is Cambridge still like that now?

No.

Okay.

Because when I... so I went to London

School of Economics, 2005 to 2008, and

really to be honest, I was not, I was not

even really aware that there were other ways-

Exactly, yeah.

No, no, that's how it is, these days and, you know.

Yeah.

So I deliberately

wanted to come to Cambridge.

Luckily I got accepted, but you know, when

I told people that I want to study in

England, I mean, a lot of people in Korea-

Your friends and-

just couldn't understand it because

you know, we had no historic

relationship with England, so studying

abroad meant 90% going to the US and

maybe 5% to Germany, 5% to France.

Hardly anyone came to England,

And yeah, I mean, moreover people

thought wanting to study anything other

than Neoclassical was career suicide, yeah?

I mean, career hadn't even begun, but you know.

Yeah.

So.

So have you got any advice

to... We sometimes get messages

from young people who are studying economics

or are interested in studying economics.

Sometimes we even get messages from people

who are really interested in the ideas that we

talk about on this channel, we talk a lot about

inequality, and they say, "Where can I

learn about these things, where should I study?

is it gonna be a problem if, for me, for like

career advancement?" What advice would you give to

young people who are interested in studying

economics and actually learning about the economy?

Yeah, I mean, it's getting more and more

difficult to study economics in a kind of pluralistic

way that accepts different theoretical approaches

and try to learn the best from all of them,

because most universities will

teach you a very, very narrow curriculum

completely

dominated by mathematics, yeah?

Yeah.

So basically a lot of people

want to study economics because they want to

understand inequality, you know, cost of living crisis,

financial crisis and then they go to

the university and they don't learn any of

those, and then they do maths for three years

and they graduate, you know?

Maybe you could speak a little bit,

because you were teaching at Cambridge

for quite a long time, right?

As you've been teaching at SOAS so you've

been an economics professor and teacher

at universities for a number of years.

Yeah.

My experience of studying economics is when I did

my undergrad I was at LSE, it's a very elite university.

So lots of wealthy students.

The truth is for me, I found the

majority of students there on the undergrad,

to be honest,

I think they were not, and I include myself in this.

We were not really that interested in the economy,

really.

We were there because we thought, I think rightly to

some degree, that economics, especially at an elite

university like LSE, was a way to get a well-paid

job.

It is, yeah.

So how... What... Is that what you were

seeing when you were at Cambridge as well?

Oh, yeah, yeah.

But you know, I mean

there are different people, so the...

Yeah, even in Cambridge, I would

say, you know, 30% of the students were

quite interested in the real world problems.

And Cambridges-

It's funny that, it's quite a small minority

but that's the same, I think at LSE

was probably slightly less.

Yeah, to be fair, Cambridge

still offers a slightly more diverse

curriculum than LSE.

It used to be actually very

real world oriented and diverse

and so until about 2005, yeah?

And then does a major curricular reform

that made it very mathematical and...

Yeah, so that another story, but, so...

But the problem is that even

for those 30%, 35%, I mean-

That's just the nature of the study, the ma- the

The ability to think about the economy is

beaten out of them, yeah?

I think, yeah, I think your

gestures are correct.

So for me, okay, so I well, when I did my

undergrad I was not interested in economics.

Really.

Other than its ability to get me a good job.

And that was almost everyone at LSE was like that.

But then I went back to do a master's,

at Oxford, '17 to '19, and what's

interesting about that is the master's is

not really like necessary to get a good job.

That's true.

If have a good undergrad.

So then that means that some of

the people who did the master's

a much bigger percentage of them

were kind of interested in

economics.

But of course they've all had this experience of,

you go to do your undergrad and maybe you go in quite

naively thinking, "I'm gonna learn about the economy."

But the actual experience is you have to do a lot

of very, very difficult, essentially algebra exams.

Algebra and calculus exams, and, you

know, it's just like complicated maths.

And then those exams are really hard.

So then you, you don't... Unless you're

like super smart, you don't really have-

Time to do anything else.

Yeah, you, you don't have time to step back and be

like, "Well, you know, does it make sense that we

don't look at the... have any wealth distribution

in the model?" You don't really ha- you know,

you need to be, and also if you were to think,

ask those questions, who do you ask them to?

You know, I was at Oxford.

Oxford had one guy who looked at inequality.

Was his name

Tony Atkinson?

Yeah, yeah, yeah.

Yeah.

And he died

1 year before I entered.

Yeah, so I applied with the hope...

He was a yeah, very influential

economist in the field of inequality study.

I think Piketty was quite an influence.

Yeah, yeah.

So by the time I got there, there was not

even anybody to speak to about inequality.

And then, and, you know, you have to,

you have to study really hard.

And, you know, I didn't really

care about my grades in master's

but, you know, it does whip it out of you,

because if you, if you, you have to

do so much maths and it's difficult.

Yeah.

And there's... and it kind of whips out

anyone who actually wants to ask these

big questions, it's like, well, everyone

else is doing 100 hours a week of maths.

And you're sitting around asking stupid questions.

That's right, yeah.

Yeah, so I think it does kind of whip,

and I thought it was really, really sad.

Like, I thought the smartest kids

on that Oxford post-grad course

they all dropped out of economics.

Because it was like, well, the guys were curious.

It was so clear there is no space here for people

who are curious about the economy.

Yeah.

This conversation reminds me of what the radical

Keynesian economist, Joan Robinson said.

I mean, Robinson was one of the few...

Was she at Cambridge?

... Yeah,

female economist, yeah, was a big

name in the Keynesian economics.

I mean, she should have got greater

recognition, but she was very left-wing

and asked a lot of awkward questions, and

yeah, therefore she was pushed back.

But she once famously said

that, "I had to learn to think because I

wasn't all that good at math," you know?

Yeah.

I think it, I think it, yeah.

Sometimes, maths becomes

substitution for thinking, yeah?

Yeah, well, I think, no, I think

that's a really good point.

I think that's a really good point.

The obsession, it's insane, Because you

know, especially for that Oxford post-grad.

You know, it's very difficult to get into,

Oxford's a very prestigious university.

These are really, really smart kids, and

the reality of it is we spent two years

locked in tiny windowless rooms inverting matrices.

That's right.

It's insane.

It really, really is insane, but I think this,

I want to make this point to our viewers.

because the point I often make is, you know,

at the end of the day, these are the guys

who are controlling the economy,

making the decisions about the economy and-

It's quite worrying, isn't it, yeah?

Well, the other point that I make is, and this

something I wanted to ask you about, was so when

I did my undergrad, I think LSE is probably the

worst for this, but I don't think it's unusual at all.

The vast majority of the students wanted to be traders.

Or at the very least to work in finance.

And the vast majority of the students with

the best grades did go on to become traders.

Does that mirror with what you've seen

as a professor watching students go through?

Yeah.

I mean, you cannot blame them,

you know, they've...

No, I did it myself.

That's right.

Going into trading, I mean, you will be

making five, ten times what you could be

making in any other uh, possible uh, profession

The civil service or whatever.

So that is natural, yeah?

But, you know, the trouble is when

you train people in this particular way, basically

maths, and then put them in charge of the economies,

a bit like

training people in, say, biochemistry

and then make them medical doctors, yeah?

Yeah, so it's related, yeah?

So you have to understand the

principles of biochemistry and so

in order to understand human body and so on,

but you need clinical experiences, yeah?

You should have actually looked

at actual patients

to know how to diagnose them as well.

Yes, this is, this is the,

the big thing that I feel is missing.

And to be honest, it's why I was impressed

when I went to your lecture series.

Which is, I think that from my personal

experience, first of all, these guys who study

economics to high level, they're smart guys.

They're very good-

Of course, yeah.

To be honest, they're very good at maths.

Yeah.

But I think there's really a lack of

being able to, or even in a sense thinking that it's

a thing you should do, step back and look at what

you're doing in a, in a sort of big picture sense.

Yeah.

I always remember when I was at Oxford, we had

one lecture, and there was a discussion

of like the aftermath to the 2008 crisis.

Which the recovery was much weaker than everybody

predicted, and they were saying, "We don't know

why." And I put my hand up and I asked this guy-

"Okay, well, why do you think it was?"

And he said, and I think this is

one of the funniest things I've ever heard.

He said, "We're not sure why, but we think it

was because of an exogenous shock to consumption

savings preferences." Which is, oh, this me,

I have to explain this to the audience, right?

Exogenous is a technical term in economics modeling

which means something outside of the model has changed.

So I've asked him, "Why do you think..." You

know, this is a real thing that happened in the

real world.

"Why do you think the recovery was so weak?" And he

said, without like a hint of irony, "We think something

outside the model changed." And that is crazy.

It's a cr- but I think it shows exactly when you

make a guy do so, do so much maths in the model

they forget that the model is not the real world.

And when you reach the point that you start

explaining things in the real world by using

technical terms, saying something outside

the model has changed, I think this captures

like exactly what has gone wrong.

And the maddest thing is, nobody

in the hall even laughs, you know?

They just think, they're just like, they...

I think this form of like very, very

intense forcing people to do maths

is almost like a brainwashing.

That's right, yeah, yeah.

No, I mean, first of all, you know, that

what this guy was implicitly saying was

"Suddenly people didn't want to spend."

Yeah, which is the whole answer, yeah.

Why, yeah?

Yeah.

Some I don't know, alien overlord that...

Yeah, came in and changed the world.

Yeah.

That's right, came and changed people.

I mean, that's so stupid.

But secondly, even if that is the case, then

why are you not putting that into your model, yeah?

Yeah, it's-

So it's that,

like, you know, I mean, unfortunately, this

is now kind of verging on

becoming a theology, you know.

I mean-

Yeah, yeah, I saw.

I don't know if you realise.

I know you're not on social media.

There is a clip of you kind

of going viral on social media.

Oh, yeah, yeah,

Are you aware of this?

Well, yeah, my son, who's...

who's working in the the Royal Institution.

He's a biologist.

But even he saw it.

Yeah, yeah, yeah.

People keep sending it to me, yeah, of you

basically saying like... And I think it's a

really good point and I think it's totally true.

Like it or not, economics has become a bit like

Catholic theology in medieval Europe.

It has, basically become

the language of the rulers.

So, if you don't speak economics, you

cannot participate in any debate.

Unless you're able to speak in this language, use these

terms, you're basically not allowed to have an opinion.

And it kind of locks... To be

honest, like, it locks poor people

out of the conversation.

Yeah, absolutely.

This... I mean, this scary parallel

with Catholic theology in medieval Europe

Yeah.

So, theology at the time was justifying

whatever is going on in the world.

Yeah?

Yeah.

You know, famine and exploitation.

You know, the abuse of power.

Whatever, it's all in God's will, yeah?

Today, whatever is going wrong in

the world is justified by economics.

Yeah, must be-

This must be what is best for the economy.

Exactly, yeah.

Yeah.

Best of all possible worlds, yeah?

Yeah, yeah, yeah,

And to make it worse-

they, they use that term a lot in economi-

well, they use, "The first best optimal."

Yeah, exactly.

Have you, have you read Candide by Voltaire?

Yeah, yeah, yeah, yeah.

Yeah, so there's a book, it influenced

me a lot in my book, where he talks about-

this, It's by Voltaire.

Hundreds of years ago.

He says that back in the day

they justified everything by saying,

"If it wasn't supposed to be like this-"

That's right.

"... God wouldn't have made it like this."

Yeah, exactly.

"This must be the best of all possible worlds or

God would've made it differently."

Yeah.

And economics uses sometimes similar language.

They say like, "The first best optimal outcome."

"If it wasn't supposed to be like this,

the economy wouldn't have made this."

Absolutely.

But what I want to... The point which I

make a lot on this channel is if you reach

high levels in this debate about how we should

run the economy, how we should manage the

economy, so if you become a prestigious academic

or if you become a high level politician, or if

you become, working in the central bank, or

even high level media, you're quite rich by that point.

Yeah.

And then what you have is a group of rich people

basically refusing to allow poor people

into the conversation because they're

saying, "Sorry, you can't speak the maths,"

saying, "We think nothing should change"

as a way of justifying a system which, from where I'm

standing, appears to make the rich richer every year.

Yeah.

And is, is... It's crushing living standards.

Yeah, we have to remember, you know, during

the, the medieval times, the Vatican

did not allow the Bible to be translated

into vernacular languages.

It all had to be in Latin.

So most people couldn't read Latin.

And therefore, they had to just take

the priest's word for... I mean, the...

Yeah, the face value, yeah?

This is basically why the Daily

Mail has run four stories on me

in four consecutive days, because...

You are dangerous.

What I'm trying to do on this channel, and I think

it's also a lot of what you're trying to do,

in the work that you do, but also your books,

which are very accessible to ordinary people

is, you're trying to explain what's happening to

ordinary people in a language they can understand.

And well, I talk about it a lot on

this channel, what I think is happening

is that the distribution is changing.

The wealth distribution is changing in front of us.

Ordinary people are getting poorer.

The rich and the very rich are getting richer.

And I think if people... You know,

I said it a lot on this channel,

what I see my mission as is really quite simply

getting people to understand what is happening.

Absolutely, yeah.

Because if people understood what is happening and also

what's goIng to happen, so in my opinion, and don't

know how much of our videos you've watched, I think

this crisis of wealth inequality will get worse.

I think it's, it's really going to...

It's already decimated the working classes

in the West.

I think it's starting to decimate the middle class.

You're seeing how it's basically impoverishing

the government, and that is happening in a

context of rapidly growing wealth of the richest.

Yeah, and now, I mean, in places like the US,

although it's happening in other countries

at a lower level, you know, now

there's blatant money politics, yeah?

Yeah.

Well, I saw on the news this morning- we had

Elon Musk offering people a million dollars-

Exactly,

if you voted his way.

Yeah.

Well, this is another point I like to make

a lot, which is, distribution of wealth is

distribution of power and, it's control over

resources, but it's also control over the media

and it's also control over the politicians.

Exactly.

Now, we're in a downward spiral

because it's feeding into each other.

So, the more inequality, economic inequality

gives more power to this rich people

Yeah.

Which they can then use to take more power.

Yeah, that's right.

Yeah, yeah, yeah.

I talk about this a lot actually.

I talk about basically these dynamics

which you're talking about, which is

the more power they have, the more they can...

The quicker they can take the rest of the power-

which means they will then have more power.

And I think that this is the kind of

spiral that, that we are in, and

yeah, I'll be honest, I speak about it a lot.

I'm really worried about where this goes.

Like, on the first level in terms of living standards,

but also in terms of, in terms of politics, because...

Well, first, I suppose, I'll ask you this question.

I think, unfortunately, that unless we get some

change on taxation inequality, which I don't

think we will get, at least in the short term,

I think living standards in... for

the West, for the working class, for the

middle class, will continue to decrease.

Do you think that's likely?

You have so-called Labour Government

cutting benefits, yeah?

Yeah.

Disability benefits of all things, yeah.

I think unless... I know, you know, I'm trying

to get some influence with, with the Labour Party

obviously the government of this country. Why do you

think they're so reluctant to discuss taxing the riches?

Well, I mean, a a kind of

charitable interpretation is that

they are scared of the financial market, yeah.

Yeah, but you know...

Yeah, but I think-

If you borrow a lot, so I think at the moment

we're in this space where they, they want

to borrow, it's just borrow, borrow, borrow.

But if you borrow from the financial markets,

you know, you are essentially borrowing from the rich.

Yeah.

If borrowing is your only plan

then you are a slave to the financial markets.

You know, if I... if my plan is to borrow from you,

then I need you to agree to that.

If my plan is to tax you, I

don't need you to agree to that.

So I think really the way to break out

of that fear of financial markets is to start

talking about, about taxation and, and...

well, I'll tell you what I think.

You didn't ask, but I'll tell you what I think.

I think these guys, they're being

pressured by their rich funders.

I think they don't want to push back on it basically.

But I think also, I think there is a real lack of

economists in looking at things like the distribution.

Yeah, so unfortunately I think that

economists in the Labour Party, they

are still living in this mental cage

built by Margaret Thatcher, yeah?

Yeah.

So the high taxation for the rich is bad, you

know, the private ownership of everything is

good, that kind of... I mean, unfortunately,

I'm sure that they are uncomfortable with it, but

they haven't been able to develop

a counter-narrative, yeah?

No, let's look at some facts.

You know, in the 1960s and '70s, Britain was one

of the most equal countries in the world, you know?

People don't often realise it.

The country was growing faster than

what it is... has been growing

in the last 30 years,

despite having, you know, top

income tax rate of 80%, yeah?

Yeah.

In the US at the time, the top income

tax rate was even higher, 90%, yeah?

But it was growing much faster

than what it is doing today, you know?

At least try to use those historical

facts to develop some counter-narrative, you know?

But since they haven't developed this

counter-narrative and basically given up on

the taxing the rich taxing wealth and so on

what do they do?

There's only one

way to spend more which is

borrowing which that creates

the problem that you just talked about.

Yeah, I th- I think it's, I think it's kind of

the same thing which I said before, which is like

a bit of an inability, and I think maybe we kind

of teach this a little bit in the way that we...

the way that we educate people in university now. An

inability to step back and look at the big picture.

And the big thing which I often talk about

was, you know, and the reason I started

my channel was at the beginning of COVID,

it was very clear that the UK government and the

US government and basically all Western governments

were going to give a huge amount of money out.

And the UK deficit as I said is £1 trillion, and all

wanted to know, because my background is distribution

inequality, who is going to get that £1 trillion?

That's the only thing I wanted to know.

Because you know, the US number is, I

think, $13 trillion, you know, huge numbers,

you're obviously going to change the distribution

here, you're obviously going to change the distribution

but I think it was so amazing, just nobody asked.

Nobody, and I think we've... I think personally,

it goes back, I honestly think it goes back to

the way that we teach our economic students.

This way that we just whip them into do the maths,

do the maths, do the maths, don't question the model,

don't think about the big picture, and then you

reach a point where, you know, we can give out £1

trillion, the Americans can give out $13 trillion,

and because our models never question distribution,

nobody even asks where it's going to end up.

I think it's, I think it's amazing.

Well this extra money was basically

given to banks and other financial institutions,

which they refused to give it to productive

enterprises that need this money for investment,

to give to ordinary consumers...

sorry, ordinary citizens, yeah?

Yeah.

I mean, why couldn't they do it with

more kind of taxation

you know I mean?

Okay, I mean if you think generally high level

of taxation is not a good thing, at least

you can, have emergency taxations, yeah?

A lot of countries did that, yeah?

Yeah, yeah, yeah.

During wartime and in the post-war

reconstruction, they would kind of,

occasionally impose a special levy

of whatever percent on the rich

people for five years or whatever.

Yeah.

Yeah, I think it's interesting you mention

wartime periods, because, you know, we've... So the

channel has really been growing and it's becoming

really popular, and you know, this... this argument of

why are you not taxing the rich is growing and growing

and growing and growing. And I think we actually

made some good progress, because for a long time we

would get this kind of economic pushbacks, it's not

good for the economy, it's not good for the economy.

There's no evidence for that.

No, there's not

and, but increasingly people are not believing that

but the argument against has kind of shifted

to this like, well, it's not possible

you can't tax rich people

and this kind of fatalistic,

well, things always get worse

you can't do anything.

But then if you look back at especially the

Second World War in Europe, in the West,

there was a massive decrease in wealth inequality.

Oh, absolutely.

So it's obviously, it's obviously doable.

Why... I don't know, have you got anything you

can say about whether it's possible, and also

why so many people are so quick to say it's

impossible when we have this historical example?

I think one reason why it is more

difficult than before is that downward

spiral that we have talked about, yeah?

Increasing inequality feeding into

increasing inequality of power

and democracy being more

and more constrained.

Yeah, yeah.

So, that's one reason why I think

it is more difficult to do that now than

Yeah.

it was possible in the 1950s or '60s.

I think this is a really good point because I

think people push back and they say it's impossible

because you can't do it technically, but the

Second World War proves it's technically possible.

The truth is, what makes it very, very difficult,

in my opinion, is that control of the media

and the control of politicians because

whenever I go on TV or radio

to campaign for wealth taxes,

I'm always doing it for free

and I'm self-funded.

And I'm up against somebody who works for a think tank

funded by billionaires.

And sometimes people... if you wonder why

there's not more voices like me in the media

because who funds it?

The billionaires are actively

paying for people to go on TV

go on the radio and say it's impossible to tax the rich.

Who is paying

for people like me to make the counterargument?

You know, basically nobody.

So that shows you

really, the way they block it

is by fighting that narrative battle.

And winning that narrative

Yeah, exactly, yeah, but there you have,

Nelson Mandela once said, "It always

looks impossible until it is done," yeah?

Yeah.

We can do it, we have to do it.

We have to start somewhere, yeah?

I mean,

okay, I mean change the narrative,

maybe put more pressure on your

politicians, yeah, and do more

mass economic literacy campaigns so that

more people know about these things like

you are doing in a very, very effective way.

I mean, we have to change this, yeah?

Yeah.

And it can be done.

Okay, maybe the 90% is too much, yeah?

But why should it be 40% or 50%?

It could be the 60%, 70%, yeah?

And I always talk about how it's not even

necessarily just about what rates we tax income.

You know, we have these very, very wealthy families-

That's right, we have-

they don't pay income tax.

tax wealth, yeah.

Yeah, I think this is the big thing.

They don't have income in the-

Yeah, their

income is not classed as income.

Exactly.

But, you know, they do receive billions

of pounds in their lifetime.

I think... I think often what is, what is often done

is when I say want to tax the rich, my opponents try

to convince the public that means you, that means you.

And they, they try to ignore, you know,

there are families out there with hundreds

of millions, billions of pounds of wealth.

Their wealth is growing and growing and growing

and they're squeezing people out.

Yeah.

They're squeezing people out.

This is the worry I have.

But, I think... I look at

the growth of this narrative

the massive growth and support for it.

I think we can win the public battle for it, but

I think we need more support from economists.

Which is why I'm always glad to hear

you're doing the work you're doing.

And I'm hoping we get more young people going

into economics to push this... push this narrative.

I think that, I think that's really good.

I guess I would like to end on just asking you,

I can often be a little bit pessimistic and a

little bit depressing, but I do this work

because I think we can make things better.

So at these times when living standards

are falling and we have increased political

turbulence, what is it that gives you hope for our

future as a society and our future as an economy?

Yeah, well, I, yeah, you know, try to live

by the dictum of the Italian Marxist

philosopher Antonio Gramsci who said

that we need the pessimism of the intellect,

but optimism of the will, yeah?

Yeah, so you have to be realistic about

what can be achieved at the moment.

Yeah.

You know, so that makes you pessimistic because

debts kind of stack so much against

the ordinary people, but in the long run, you

know, the world has changed hugely, yeah?

If changes weren't impossible

you know, we'd be still living in a

society with slaves and most people are

you know, tied to their land and do not have

any freedom to choose their profession.

You know, the women will not

be allowed to vote, you know.

There'll be explicit

racial discrimination.

But these things all have changed

because people have fought for it, yeah?

So if you take the perspective

of 50 years, 100 years, yeah?

We can change this, you know.

I think that's the key thing is

because people fought for it.

Yeah.

Because people fought for it.

Exactly.

I think we can.

I'm fighting for it.

I know you're doing your bit.

Yeah, thank you very much.

Thanks for coming on the channel.

That's great for me.

Is there anything you wanted to, you wanted to

bring up or anything you want to speak about?

I mean, I'm very honored to be the first

outside speaker in your great series.

Yeah, I mean, please get other

speakers so that you can diversify

your... I mean, what you are doing

is great, but, you know, we need

kind of different people coming in too.

Yeah, I think we need-

Give, different perspectives.

it's important for us to have more economists, I think.

Because this channel is like, it's getting so

popular with the public, but, you know, we have

all of these rich posh guys, "Oh, no, I never work.

Oh, no, I never work." And, you know, we live in a

very class-focused society. And, I think... I'm

from a working-class background, and think one of

the reasons why the channel is popular is because

the country's from a working-class background.

They're happy to hear that.

But the fact is, the guys who

control the levers of power

they're normally not from working-class backgrounds.

Yeah, but there are some kind of

good economists working on these issues.

You know, get Piketty or Zucman, yeah?

Yeah, you know, I think we'll reach out.

We'll reach out.

I think Piketty and Zucman are great.

They're French economists working in inequality.

But yeah, thank you very much for coming on.

Ha-Joon has not asked me to, to recommend his books,

but, I think Ha-Joon has a lot of books out.

His recent one is Edible Economics,

which is here on the table.

He didn't ask me to do this, honestly he didn't.

I think Ha-Joon writes really well economics in a

way that is enjoyable and relatable to ordinary people.

So, if you're watching and you find economics

inaccessible, and you want... I obviously

haven't written any books about economics,

like straight books about economics, but

I think Ha-Joon's books are really good.

And if you've got questions for Ha-Joon, send

them in and maybe we'll get him on again someday.

But, yeah, basically, thank you very much-

Thank you.

for coming on.

I really enjoyed this time.

Great.

And, yeah, good to see you again.

Thank you very much.

And thank you very much for your support.

Keep watching, share the videos

with your friends, with your mum.

It's all about stopping the economy from getting worse.

It's about taxing wealth and not work.

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Thank you very much.