I'm Gary Stevenson, former trader, peoples economist, this is Gary's Economics

Today we're gonna explain What is wealth

When I was a kid, all the money my family made was from my dad's job

when I got older and got a job myself in the city all the money I made was from working myself

most ordinary families are like this

when they think about money, when they think about wealth, its all work and job

but from working in the city what I realised was, for very rich families

things are different, for them its not about work at all, its about wealth.

Now wealth is not about what job you do or how hard you work

wealth is about what do you own

now, i think for most of us its so hard just to get a house

that we dont really realise how much wealth there is in society

its not just about houses and flats you know I live here near Canary Wharf

all of those big skyscrapers in the wharf all of those big skyscrapers in the city

they're owned as well and its not just the skyscrapers right

walk down the high street the shopping centres - they're owned

the banks, the restaurants, the pubs, the bars - everything is owned

OK you might be thinking i don't know anyone who owns a skyscrapper

i dont know anyone who owns a shopping centre

and the reason for that is; unlike houses where a lot of ordinary people do own some

all of this commercial wealth this commercial property

the vast majority of it is owned by the richest individuals and families in our society

So the point to make here is that theres a huge amount of wealth that exists in the world

and i want you to think about this next time you walk down the high street

look at all the shops, look at all the restaurants, all the bars, all the pubs

and think to yourself somebody owns this

all of the wealth that exists is owned

But it actually goes deeper than that...

Because there are a lot of things that ordinary people do own

ordinary people often own their own house or the flat that they live in

but a lot of the time the only way they are able to do that is through debt

now debt is like negative weallth

if you buy a flat for £200,000 and you borrow £150,000

you actually only really own 25% of that flat

that loan doesn't come from nowhere

it comes from the bank and ultimately the wealthy individuals who own that bank

so what that means is...

even the things which we do own like our houses and the flats that we live in

often even those things are indirectly owned

by the wealthiest people in our country via the debt that we had to take to buy them

Now this isn't just true for ordinary people and ordinary families

this is true for the government as well

Now, when we're talking about the physical wealth that exists in our cities and our country

there are a lot of things that are owned by the government; the schools, hospitals, police stations, fire stations

but if we look at the data gathered by French economist Thomas Piketty

He estimates that government debt is worth more than all of the wealth: all of the schools, all of the hospitals, owned by the government

what that means is indirectly, via debt, the wealthy people also own all of the schools and hospitals in this country

But it actually goes deeper than that still...

it's not just that the richest people own all of the wealth in our society

they actually make a huge amount of money just from owning that

and that money doesn't come out of nowhere it comes from people like you and me

Now the most obvious example of that is if you rent a house or rent a flat

You work, if you work here in London, probably end of the month

a third of your pay goes straight toward paying the rent and that goes to the owner of the house

if you own your own property the same things gonna happen with your mortgage

The money doesnt disappear, that money goes from you

to the person who owns the property or the person who owns the mortgage

which in most cases will be a wealthy person

OK but this isn't just the case for property this happens every single time you spend money

when you pay your bills, that money is going towards the owners of the energy and gas companies

and the owners of those natural resources when you go to the supermarket to buy your groceries

that money doesn't all go to the workers in the supermarket a big chunk of it goes towards the owner of the supermarket

and the owner of the building the supermarket is in when you go to work in an office

a big chunk of the money you make is going towards the owners of the office building

every single time you spend money every single time you make money

a big chunk of the money is going from you to the owners of all that wealth

Its easy for us not to think about this kind of money that comes from owning wealth

because for most of us we get our money from working a job

the richest people, they get most of their money from this wealth income, income that comes from the things that they own

and the size of it can be enormous

for somebody who has a wealth of £2million they can make an income of about £60,000 every year

just from the wealth that they own, that is enough to live a pretty good life for an ordinary family

but very wealthy individuals can make a lot more somebody who has £10million

they will probably make, every single year, £300,000 just from the things they own, without having to get out of bed

now once we start talking about super super rich people if you have just £1billion, you will make every year

£30 million - just for the wealth that you own. If we look at Jeff Bezos who has an estimated wealth of 200 billion Dollars

this guy if he makes just a 3% return on his wealth hes gonna make every single year 6 billion Dollars

6 Thousand Millions Dollars!

What i want you to be able to realise is whilst we are out here working for our money

these super rich people, they're making tens, hundreds, even billions of pounds or dollars every single year

without working at all. Just from the money they earned from this wealth

& its important to realise like i have said, that money is not coming from nowhere

that money is coming from the money that you and I spend

Recently the wealth of the richest people in our society not just the top 1% but the top 0.1% or 0.01% - has exploded

these guys get a massive amount of income every year from their wealth - tens/hundreds of millions of pounds

ordinary people like you and me they spend pretty much all the money they make over the course of their life

but im agine you're Jeff Bezos and hes making every single year 6 billion Dollars (six thousand million dollars)

which is, i dunno, 20 million Dollars a day or something, he cant spend all of that money

this tells you something important about the difference between ordinary people and the super rich

ordinary people spend the money they make whereas the super rich save the money they make

so what does it mean if the super rich are getting richer and richer and richer & that money is coming from us

well we would have spent it & they're gonna save it so if they're getting richer and richer and richer

they're taking more money out of the system more and more and more money is being saved

in a strong economy thats not necessarily a bad thing, they can save that money, invest it into growing businesses, the economy can grow

but when we have a weak economy, like what we've had definitely since 2008

the companies dont wanna invest and they dont wanna grow so it creates a problem right,

these super rich guys are making huge amounts of money every year from their wealth

and they cant invest it, so what are they gonna do? well if they can't invest it, there is 1 other thing they can do

They can buy your mum's house!

so that is what happens in a weak economy that is very unequal

the rich own all of the wealth, that means they generate a massive amount of cashflow from the rest of us every single year

they can't invest it because the economy isn't growing so instead they use that money to buy wealth from the rest of us

to buy our houses for example and that is why you're seeing my generation (younger people) are unable to get houses

when our parents generation were able to get them Because we are gonna have to compete

with the huge amounts of income from the super rich who wanna buy the houses aswell

thats why we've seen houses in this country go up from 2-3 times the average wage to 20-30 time

but what does that mean is gonna happen?

if the rich are getting more and more income and they're using it to buy our wealth

well thats means next year the rich are gonna get even more income from us which they're gonna use to buy even more of our wealth

and the year after that they're gonna get even more income from us which they're gonna use to buy even more of our wealth

when i say wealth, i'm talking about things that we need like houses we need to raise our families

what happens is, is you enter a really negative spiral where the working people give all their income every year to the rich

and the rich use that income to buy the wealth from the working people

which means the rich get richer and richer and ordinary people get poorer and poorer

I'm not just saying that this is gonna happen I've been betting on this for over 10 years now

and i've been right for 10 years I've made millions of pounds betting on this...

and it's gonna happen it's happening right now

So that's really important to understand Income is about work

whereas wealth is about ownership of things the ownership is super super unequal-

the rich own almost all of the wealth in society that means a huge amount of money

gets transferred from ordinary working people to the rich every year

they use that money to buy our stuff that makes us poorer

this cycle is gonna get worse and worse and worse unless we do something about it, so what do we have to do?

the big problem here is that the money that you and me make from working gets taxed differently

to the money that the super rich make from their wealth

our money when we work it gets taxed at source we have to pay that tax

but rich people they get their money in different ways capital gains, inheritances, trusts...

these methods of getting income, income you get from wealth its much much easier to avoid taxes

when you get your income in that way

if we allow that to happen it is inevitable that more and more wealth is gonna get transferred from workers to these super rich families

that is gonna mean that ordinary workers in the future are not gonna be able to afford houses

and if you go and look at the really unequal places in the world, look at Mumbai, look at Hong Kong

or go look at what England was like a 100 years ago and it was much more unequal

in those spaces ordinary working people, working families can't buy houses

unless we do something about this inequality, unless we make sure the super rich at least pay the same rate of tax that the rest of us pay

that is our future, our future's gonna be a space where all of our money goes on just paying for the basics of life

and we can never own houses and the super rich... own houses

what that means is if you were born poor you will die poor and if you were born rich you will die richer

for me, that's not the kind of future i wanna live in so that's why i am making these videos

my ultimate message is we need to find a way to make sure the super richest start contributing back to society

So look, thats the message of this video - it's super important to understand the difference between wealth and income

and money people make from working vs money that super rich families make just from owning all the stuff

You know when i go out there and talk about we need to tax the rich more

people sometimes ask me what is rich? is it someone who makes £80,000 a year?

is it someone who makes £100,000 a year? This shows...

a lack of understanding on the difference between wealth and income

because i'm not talking about taxing working people, what i want is for working people to be able to make money and buy houses

but we need to make sure we tax the super rich families who are making massive amounts of income from us

and using that to buy our houses

if we don't do that houses are not gonna be affordable for working people houses are not gonna be affordable for future generations

and that will mean future generations cannot get financial security to raise a family

so we need to look beyond just taxing working people and start looking at taxing the super rich families

who might have a £100million or like Rishi Sunak's family over a £1billion

because they're generating a huge amount of income every year and they are not paying their bit

instead they're using that money to push up house prices - which is affecting our future

If you wanna know what you can do to help make this happen we are gonna talk about that more in the next video

for now: like, comment, share, subscribe.

Lets make this a thing! Thank You