The Economy Is Rigged for Billionaires — ft. Gary Stevenson

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Try Odo for free at Odo.com, that's OdoOo.com. Megan Repino here, this week on a Touchmore, I'm talking to my good friend, former soccer player, and current soccer analyst, Lori Lindsey about all things in WSL, the past, the present, and the future. Plus, I'm taking a look at the athletes who crushed at the Met Gala, and Angel Reese's

firm boundaries with the media. Check out the latest episode of a Touchmore, wherever you get your podcasts, and on YouTube. Episode 395, 05, Ziraeco, belonging to the Liesco Mexico in 1995, the PlayStation launched globally. I had a Mexican girlfriend, and I should have known she had a drinking problem, and I asked her what a favorite book was she said to Kila mockingbird. probably a hate crime. go go go go.

“Welcome to the 395th episode of the PropGPod, what's happening?”

In today's episode, we speak with Gary Stevenson, a former trader turned economist and activist behind Gary's economics. I generally believe the biggest problem facing American the West right now is income inequality. And that is if you look at the genie coefficient, which is essentially a measure of variance or inequality, I think it's an Italian mathematician named genie. Anyways, Ziraeco is everyone has exactly the same, you know, communism. One is one person has everything, you know, musk is getting close.

Where we are now is the U.S. is at 0.85. When France was at 0.83, they started separating people from their heads. And so income inequality, the resentment, I think is tearing us apart. You result in class warfare, it results in an inability to invest in the middle class, essentially the cycle is over and over again, and that is a small group of very talented hardworking and lucky people. The subsidies better talk food polls and they essentially run away with it. And we have a society that collapsed. This is absolutely the story of Central America and more broadly history throughout time. And I think it's happening in America and the West.

Anyways, I found Gary because he talks a lot about income inequality, he speaks with very eloquently and very forcefully. And it was I'm a big fan of his work and I think he'll enjoy the episode. So with that, we hope you enjoy our conversation with Gary Stevenson. Gary, where does this podcast remind you? I'm in my flat in London, East London, close to Canary Wolf.

Let's first try to do it. You're on property markets about a year ago. And at that time, the well tax conversation is picked up significantly in the U.S.

The top 1% of households now hold a staggering 32% of all wealth. The greatest share since the Fed began tracking in '89, roughly equal to the combined wealth at the bottom 90%. I should also have the top 10% on 90% of the stocks. And at the same time, the portion of GDP going to workers just hit its lowest level in 75 years. So this is given rise to a bunch of different proposals, one of which has gotten a lot of attention is in California, they're actively debating a one-time 5% tax on residents, essentially a well tax within that worth exceeding $1 billion.

I think there's obviously been an increase in the salience of discussions around in particular taxation of the rich. If I'm totally honest, I think still when these conversations take place.

As much as obviously from my perspective, it's great that they're taking place more often. I think they are still often a little bit facile in the sense that they and I think that is because especially the US context, they're happening in this context of this incredibly functional political debate where it's very much my side, your side. And it's very frustrating for me because my background as you know is I'm an economist, I'm a trader and what I see is rapidly growing inequality of wealth, which I think is increasingly obviously pretty directly causing rapidly increasing poverty, rapidly falling living standards, and what I would like there to be is like a growing up sensible conversation where we say, okay, how do he stop this?

But in reality, that's not really what is happening. What tends to happen is people like, well, to be honest, it's often not people like me, it's just sort of become too sad, it's like tax the rich and no don't tax the rich because it's impossible. And the conversation has, it has become factual in this way that it has not really created the space which I would say really allows anybody, even me, to have a really sensible conversation about how can we actually do this in a way that actually works.

“And I think that's true on both sides, really, I don't think anybody, and you know, I work quite hard out here to try to find the people who are really doing the work on how can we do this sensibly.”

And if I'll be totally honest, those people are not getting funded really by either the people who are actually working on how do we really design this are not really getting funded and it feels a little bit like it's being sucked into the sort of whirlpool that is politics. But, if I'm totally honest, that is a significant improvement on where we were one year ago two years ago because at that point in time really, nobody was really talking seriously about reducing inequality at all.

So have we moved into a better place? Yes, are we on the verge of fixing this problem? I don't think we're quite there yet.

What is your view on wealth taxes? And this is a question that is loaded with a comment. Most of the research I've done on wealth taxes shows that to be blunt, they don't work. That's 16 or 13 of the 16 countries that have tried to impose them, I get them theoretically and it makes sense to me. But I think governments, especially what are the UK government struggles with the difference between being right and being effective. And the wealth taxes are potentially right, but that are no just picks up and moves to Brussels, that the wealthiest among us are the most mobile and kind of void wealth taxes.

“And I think there's also a decent argument that once someone has cleared the initial hurdles of taxation, it is private property.”

So, I would argue they're not effective. I'm curious to hear your viewpoint on wealth taxes.

If they are designed well, then they are effective. If they are designed badly, then they are ineffective. I don't think it's really any more complicated than that. I think inheritance tax is a form of a wealth tax. I think it worked relatively effectively to stop very high-level wealth accumulation in the US and the UK, in at least the sort of 34 years immediately following World War II. Once you see these inheritance tax effectively removed, inheritance tax is already effectively removed, especially for the very rich in the US and the UK.

That's when you start to see this wealth transfer start. So, you know, we had a form of a wealth tax and that limited inequality and we removed that wealth tax and inequality started to increase.

“If you want to find examples of wealth taxes designed and implemented badly, you will find them. And if you want to find examples of planes that were designed and implemented badly, you will find them.”

And if you want to find examples of spaceships that were designed and implemented badly, you will find them. The result of designing a plane badly, the correct response to that is not to stop trying to design a good plane is to design a good plane. It's as simple as that, but listen, because exactly as I've just said, the debate is in a fassile place and the debate should take place on, okay, we have an urgent crisis of growing inequality. Badly designed wealth taxes are not going to work. Let's really get some sensible and smart people together and design a wealth tax. And listen, I've been lobbying the government out here, as you probably aware, the labor government and before that the Conservative government for a long time.

And what I say to them is put a little bit of money into a team of good economists and let me have access to them, let me speak to them. It's not going to take much because I cannot describe to you how horrendously underfunded this area is.

So really, like, of course, you're going to get badly designed wealth tax. I'll tell you exactly why, because we urgently need a wealth tax and people like me are massively ringing the bell on that, but we do not have the funding to design the wealth tax.

So what you will get is to be honest, quite childish political parties, saying we're going to give you a wealth tax without giving us the funding we need to design the wealth tax.

And what they do at the same time is they're going to try to keep their funders happy and they're going to try to keep their donors happy, which means they're going to put loot poles in the wealth tax. And that's what's going to happen, but the response to that is not to give up fixing the problem. The response to that is to fund a good thing to design the tax well, and I wish, and you know, I guess we're having it now, I wish there was space in the media to have this conversation of look, these taxes are hard to design, but they're important.

So let's do the work and design them well, but it's become this stupid debate of, oh, this essential thing, which if we don't do society's going to collapse, it's quite difficult and has been done badly.

“Let's give up. And I think that is an absurd start to say for one is.”

I think people do just to distinguish and to stay tax from a wealth tax, and I want to acknowledge and I've been talking about this for a long time.

The idea of diagnostic wealth is not healthy for anybody. I don't think. I think that's one of the, actually one of the really wonderful attributes of America versus Europe is we tip or traditionally did not believe in diagnostic wealth. And the difference in happiness, what do we want? We want taxes that are at least taxing. The basis of errors inherit a hundred billion versus a hundred and sixty billion, no one's happiness is affected, but that sixty billion dollars is inefficient as you might argue, government is can create a lot of incremental happiness in terms of child care or better fun in the end.

And it just, you know, pick your pick your social program.

“I don't think of that as a wealth tax, but I get your argument that it kind of is a wealth tax. So let's, it sounds, it sounds like there's common ground around I think the easiest means of increasing revenues would be.”

There's going to be I think seventy five trillion dollars in wealth passed on to the next generation over the next just twenty years to lower the exemption from thirty million to one million.

Because it doesn't hurt anybody as far as I can see in terms of happiness and would actually create a great deal of tax revenue. I'm pretty sure you're agree with that. The notion though that they're talking about in California. In actual wealth tax where they attempt to value your asset base in the taxes certain amount of it do you think that is do you think that can if design correctly could actually be an effective tax or do you believe the wealth taxes as I've described them are not effective.

“If design correctly it can work I think you obviously obviously if you're talking about annual taxation on wealth if you start that at a low threshold there is an administrative burden.”

So I would probably say your ideal solution is a combination of as you say estate taxes on high amounts and wealth taxes, but if you're going to talk about wealth tax is you probably do want to start at relatively high threshold because of the administrative burden. Also let's be realistic. The income tax system has an incredibly high administrative burden you know I think if we were in a situation now when we didn't have an income tax and because I have that conversation now about income tax is it would be widely claimed by the press that income tax is impossible because the administrative burden you know so this is this is possible you know of course it is possible but I think unfortunately this thing kind of happens where I think there is a lot of bad faith argument from rich people who do not want to pay more tax.

That what they want to do is split hairs on the exact design of the taxation to try to avoid being taxed at all but the reality of the situation is we live in a country the UK and you know the Americans who we're listing also live in a country where very rich people want to talk about people of wealth of above 10, 20, 30, 40, 50 million pounds or dollars pay significantly significantly lower rates of tax on overall life time income than poor people. And they are rapidly accumulating wealth and enormous rate far faster than the rates of growth of economies at the same time as other groups of society most obviously governments but also including the working class and the middle class are rapidly losing their wealth share.

I think well tax is could work if they were designed correctly I think capital flight is a legitimate risk I think it can be managed and minimised if the tax is designed correctly I think inherent tax on larger states should obviously be part of the game here but they've been massively demonised by the press I understand why they've been demonised because what you've created now is an economy.

The economies that we live in the UK and the US if you are not giving a significant inheritance to your kids if your kids aren't getting realistically something close to million dollars your kids are in trouble and if your kids get close to nothing they are basically fucked that is the economy that we've created. What we have created to be honest is an inheritanceocracy is not capitalism in any way. Outcomes for individuals especially for younger generations are incredibly related to the amount of his heritage they get from their parents.

So we've created and that is because that is entirely because we tax working come and we do not tax horses wealth right but then obviously people have become very defensive because they don't touch my inheritance don't touch my inheritance but the truth is if you do not touch the imported wealth of the very rich then everybody else is going to get squeezed out but the very rich do this very very clever thing where when I say tax them they do this based which is what Gary really wants is to tax you.

“I would love for for you to kind of walk us through what would non-dom and the impression of I think people in the press in americans myself included is that.”

Again this is another example of being right but effective and you may disagree I would love for you to explain what the non-dom taxation change in policy wasn't the last year the general impression I have and I'm open to feedback or correction here.

Is it while theoretically it made sense the number of wealthy people who have actually left London in order to avoid this tax is actually going to reduce.

Receipts to the treasury that this is a perfect example of something that was populist read me but actually isn't achieving the objective of raising revenues so. One can you describe a tell us actually what non-dom policies were what the and what happened. You know what this is actually a really good story for describing how to do this badly right so that the non-dom principle is like a really old principle of British taxation that dates back to like colonial times which was basically you've got all these like.

Foreign colonial breads are making tons of money overseas and they're not paying their tax in the UK because they live overseas and basically.

The UK says well you guys can come back and you know you can live in London presumably where everyone live and we're not going to tax you on your overseas income all of your overseas earnings and this is the basic encourage. Historically you know these foreign very obviously Britain was this massive colonial empire these foreign breads to come back and spend time in the UK and spend the money in the UK.

And it's been unpopular obviously because well obviously that's historically nowadays it's not used by colonial bricks obviously empire's long gone now this is used by.

You know stereotypically Russian billionaires but you know a variety of foreign billionaires it allowed them to. Living London and enjoy the benefits of living in London and have these enormous incomes and basically pay very little British tax because that is on overseas income billionaires assets that you don't ever see.

“And this is a good example of exactly the wrong kind of people you should go after from a practical perspective because these are people who have very weak ties to the UK and can leave right because when we talk about billionaires right.”

There's British billionaires that own British assets there's British billionaires that own foreign assets there's foreign billionaires that own British assets and there's foreign billionaires that own foreign assets right and it's you can obviously take that to the US. And the group of billionaires that you have the weakest power to tax is pretty obviously foreign billionaires who own foreign assets right these people is just to be clear you're not totally powerless on tax these people. And this is a group of people who are relatively weak to tax and they can leave.

“What you should be trying to tax in my opinion is people who own your domestic assets because then they can leave and if they're owning assets in your country they're still generating income from your country and you still have power to tax it.”

So I think but this is it's a good example of what I'm saying where the media salience has come through on okay inequality is a problem you know and I would like to claim you know a partial credit for that. But we have it really clear that because it has become so functional and the whole thing has become you know is Gary needy or is that landscape needy or a resort and I'm done in India.

Left right consensus on doing this and the conversation is not really happening so what you end up and what you will continue to end up with in my opinion is bad design populist policies.

“But that's not what it should be what you should really have is a group of you know experts who come from a starting point of something has to be done in inequality.”

But at the moment unfortunately you know we don't have that but I'm hoping the end result is what it ends up with is people like me unfunded running a YouTube channel. Trying to build like a global tax think tank and it's absurd it shouldn't be done by me but what are the Democrats doing on this the fact that labor have not done anything. It's just a comedy to be honest it is really absurd. So my understanding is the non-dom was all of a sudden people who had people who had come from abroad could maintain their tax status in London and avoid what they see as a pretty onerous.

Is state tax or wealth tax and as a result? I don't know if it was a thousand or ten thousand million or so of left. I know a couple of people have moved to Malawner Dubai.

But there's a lot of questions about the exact numbers here and there's a lot of speculation that perhaps some people and some groups have tried to about misleading or inaccurate numbers but you know I'm sure some people will have left before we don't know the exact numbers on it. But explain the effect of it. If I live in the UK and I'm worth a hundred million dollars and make five million dollars a year what does a new taxation policy mean for them and why have reportedly so many people decided it's too onerous and they've lost.

“Well these people were basically allowed to not pay effectively a tax is all right, at least for a million. That's what the non-dom situation was there for.”

It's to be honest you know different people different opinions on how this affects the UK these people leaving because these people were not paying tax in the UK anyway and they were definitely have been driving up rents and house price in London but some people would say there would be bringing economic benefits to London. I think it's listened. You can have a question about whether you want to allow foreign billionaires to live tax free in your country. That is essentially this is what the non-dom rule is about. It is a question of do you want to allow foreign billionaires to live tax free in your country?

It's probably from a sort of moral ethical stance. I think it's questionable how good a choice this is but some would argue it has economic benefits. The big question is do you want your domestic assets the assets of your country to be owned by foreign billionaires? I think it's important to recognise that these are two separate questions and to be honest I don't have any particularly strong opinion on whether the UK or the US should allow foreign billionaires to live tax free in their countries. Because to be honest that's not what I'm concerned about. What I am concerned about is the loss of wealth holding or British and American families and the British and American governments.

And if these foreign billionaires don't own British and American assets then they are not the people who are squeezing out the British and American public. So in a sense it's not really connected to my campaign in any way. What I'm talking about is taxing the people who own your country, who own your wealth. Because that is the wealth ownership which you can affect and which you can influence with your taxation policy. We'll be right back after a quick break. [Music]

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Where essentially, if you're on a second home or worth over $5 million,

“you start to pay an annual tax and I think you've been a $10 million condominium in Manhattan.”

And I'm asking for a friend here. It taxes you about $100,000 a year. And my sense is, no one likes taxes. I especially don't like taxes that are going to impact me. But as far as the taxation goes,

taxing what very wealthy people have a second home somewhere. It effectively is almost like a wealth tax, right? Because it just reduces the value of their second home. They transfer the value, you know, a certain amount of the value of their second home to the government. This to me, and I haven't seen, I'm sure this costs, they can be cut in New York.

But I find this a fairly, I don't know, the idea of a decent tax policy targeting the very wealthy.

If you're on a second home worth $10 million in New York, you're probably making pretty good money.

And this is not an easy tax to avoid if they decide to sell their house. Someone will pick it up. It's basically a transfer of wealth of the value of second homes to the government. And this to me strikes me as a decent tax, apologize to the word salad, your thoughts.

“It's clever, because, you know, if we compare it with what we just discussed, right?”

Which is the non-dom, the non-dom tax. The non-dom tax, you're trying to raise tax. On foreign billionaires who own foreign assets. This is a group of people over which, you, the British government, the American government, has a pretty weakhold, right? Because they're not citizens of your country.

And they own an enormous amounts of wealth, not in your country. These are the people who most easily can leave. And what I said to you was, you want to tax people who own the assets in your country. Because these people cannot escape the tax. And I think what Zoram Amdani has done there, I'll be honest.

I was quite impressed, because you probably picked up from our conversations so far. I am worried about bad implementations coming into place. And what I saw when he did that was pretty much exactly as you say. This is candy in the fact that it's targeted. It will effectively hit, obviously imagine, pretty much exclusively very wealthy people.

And very wealthy people who cannot avoid the tax. And that is smart. But want to be clear, in theory, in principle, it is a lot less fair than a wealth tax or in a state tax, right? Because this is taxing a specific subset of wealthy people.

People who own very expensive second homes.

It's a pretty good proxy, because a lot of wealthy people will own second homes. But, you know, how much is it going to hit the real problem, which is like Jeff Bezos, Elon Musk. In reality, it's not. So I think it's a cleverly designed tax. It's well targeted.

It reassures me that there are some people working on the design here, who are candy and practical. And our cognizant of the risks of flight. But the real big problem, especially in the country like America, is the real big dogs, right?

It's the Bezos. It's the billionaires. And this tax is not going to hit them. So clever tax. Well designed, not the complete solution.

“But of course, Zorin Mamedani is not the president, right?”

He's the mayor of New York. I think he's designing a good, is what he designed well with tax. In the context of the powers that he has. But I think we could do more to fix the real problem if we start talking about what national governments can do, which is obviously more. I'm passionate with tax policy.

I was excited about this conversation. So I'm a fan of the idea of, if you think about it, basically, assets grow tax deferred and come as tax hit every year. I think that at a very simple level, that is one of the major jobs of wealth inequality. And because because earners are taxed every year, it's hard for them to ever become owners, the people are fortunate, become owners, become super owners. Because their assets increase in value tax deferred, whereas your asset, your sweat gets clipped 30%, 40% every year.

So I like the idea of going after assets in the sense that if you borrow against the common strategy of the wealthy, you buy stocks, you never sell, you borrow against them to fund your lifestyle, you die, step up in basis, they're never taxed.

“What about the idea of taxing, it triggers a capital gain event in your tax when you borrow against your assets?”

It feels to me a little bit technically messy. I think you would be, I'm not necessarily against it. I think the most obvious and graceful solution is to just stop step up at death, which seems, I don't see, if for those who don't know, this is the idea is you pay your capital gains tax when you sell, and rich people can solve that by never selling, and every time they die and give their assets to their kids,

the purchase price gets re-updated to the price when they inherited it,

which basically means capital gains tax never gets paid by the rich.

The reason again, this doesn't actually solve your besosk, musk problem, and I think I know besosk are only two people, but what they stand for is the billionaire class, which these are the guys who are really going to eat everything, the rate of which these guys are going to go. It doesn't solve that because people like besosk, they use, as you say, this borrowing solution. So the reason they borrow is because it means they never have to claim any income, right?

And they're using the borrowing to cover their day-to-day spending. And of course, the day-to-day spending of somebody like, like besosk is obviously massive, you know, famously he rented out the whole of Venice for his wedding, whatever, from the perspective of an ordinary person, his day-to-day spending is enormous, besosk's lifetime spending is nothing. It is a drop in the ocean compared to besosk's lifetime income.

So if you try and fix this problem, if he's borrowing again, this thing that gets made a lot of in the, you know, on social media and the press, which is these guys don't pay tax because they borrow against it. To be honest, it's actually not really the problem, because that is the cover they're spending. And their spending is less than like 0.1% of their lifetime income.

The problem is quite simply that they pay an incredibly low percentage of tax as a percentage of their lifetime income.

But to be honest, it's not even that, it's not even that. The problem is quite simply, if you do not tax very rich people like besosk at really, very high rates, the problem is quite simply compound interest. It's as simple as that. It even if you were to successfully tax besosk and mask at 40% of lifetime income,

excluding inheritance. Once you start including inheritance, then you can actually stop aggressive wealth growth. But if you were to tax an even at 40%, which is, you know, a million miles from where you tax them now, their wealth would still grow much faster than the economy. The question here is really, it's quite a simple mathematical question, right?

Do you want everything to be owned by the tiny elite or not?

“If you do not want everything to go on by tiny elite, you have to aggressively tax extremely high levels of wealth.”

Because otherwise, if you were just besosk, what is what's he worth $300 million?

$300 billion, right? Even if he makes 5% a year, right, which he's going to make way more than that. Even if he makes 5% a year, he's making 15 billion dollars a year, right? And it's just going to grow, right? It's going to grow unbelievably quickly, right?

So really to be honest, I think the borrowing thing is it's a bit of a myth, because the amount of these guys borrow is immaterial relative to how much they are. So I think that's a little bit of a red herring. It strikes me that the most effective and simplest way to get it this problem would just be an AMT. Corporations in the US, I don't know how it is here in the UK, paying their lowest taxes since I think 1929.

or the super wealthy now paying the fair share, absolutely the same thing.

“And this occurs because of loopholes that are inserted into the tax code.”

It's actually, I find that the argument, and you made this point, is a false argument, and that is, we argue about tax rates when we should be arguing about tax code. There are 5, 4, 100 companies that don't pay any taxes.

I took advantages, and they called 12, too, with the first 10 million improvements when I sold my last business.

This was tax rate, which quite frankly, it just makes no fucking sense. I don't understand why entrepreneurs don't pay taxes on again. Anyways, wouldn't the simplest, most effective means of maintaining a progressive tax structure, raising revenues, and addressing these problems without going after individual loopholes, just being alternative minimum tax?

“Yeah, so the big proponent of this minimum tax is Gabe Rosukman.”

Have you spoken to him, have you had the money? I have him. Oh, well, you should. I mean, if you're interested in this, like, he's the guy on tax code, you know, much more than me, that this is, anyway, don't know, doesn't know, Gabe Rosukman is a French economist working out Paris.

He's trying to basically bring in a minimum tax, based on exactly, as you say, on billionaires.

And he's basically saying, everybody should be paying at least 40%, you know, including billionaires. First thing to say, I'm 100% supportive of a minimum tax rate. And at the moment, ordinary people in America and the UK are paying their 30%, 40% and billionaires are paying effectively nothing. It would be an improvement, but even if you were to tax billionaires, 40% like an ordinary person, it would not be enough.

Unless you have a rapidly growing economy, which we don't, it would not be enough to stop their wealth growing. And if their wealth is growing quickly, in economies that are not growing, that will also be coming from somewhere.

And I think that the big part of the story that we've had in the last 20 years, but especially the last five, six years since COVID,

we've had this context of simultaneously rapidly growing wealth at the top end, in particularly billionaires, and this collapsing government wealth, and significant falls in middle class and working class wealth. And what constantly amazes me is how few people seem to recognize that these two things are the same thing. Our economies have not grown. billionaire wealth has exploded, and government wealth has collapsed, and middle class wealth has collapsed. That is the same thing. That is wealth transfer.

That is two sides of the same coin, and that is quite simply what happens if you allow a billionaire class to go on tax.

“But the truth is, if you were to raise billionaire income tax effectively up to 40%, which it should be because that's what ordinary working people pay.”

But you kept billionaire inheritance tax on wealth tax at zero, you would not stop wealth transfer from continuing, you would only slow it down. That's the truth. And I think what, if you look historically, the reason we had these like 50 years, well, well, you're going to call it, 30, 40 years, the golden age of capitalism after World War II. We kind of locked into that by accident, right, because we had these very high rates of income tax, and we had these very high rates of inheritance tax. And for people who don't know, both in the UK and the US, we're topping these out at sort of 90%.

Back in these 30, 40 years after World War II. Even though I don't think that was a perfect tax system, but because it targeted a lot, it didn't hit the very wealthy more than it hit your high earning workers, like famously, the Beatles paid 95%. You know, this kind of thing. And, you know, much, much richer people are not paying more. What it did was, it stopped there from being a class of incredibly rich people who are rapidly growing their wealth share. That's what it did. And as soon as you cut those taxes down, which we obviously did in the 80s, in the UK and the US and eventually all over the world, suddenly you open the box.

And you allow there to start to be a class of people who aggressively increased wealth share. And that comes from everybody else's wealth share. And this was such an unbelievably naive thing to do. And I think this could only have happened, in my opinion, because of those 30, 40 years, where we thought, you know, everything could just be perfect for everyone. And we forgot that the last 2,000 years of human history is everybody being unbelievably fucking poor. Well, 10 people don't fucking everything.

You know, that is the history of Europe, right? And we managed to stop that for a period of time. You know, if you look at the sort of the founding fathers and start the founding of the US, they have all of these ideas about we have to stop aggressive concentration and accumulation of power. We have to prevent them. We have to have division of power. We cannot allow the America to reproduce the mistakes that have destroyed Europe and created a Europe of disgusting inequality and poverty. And then we created finally, you know, in this 34 years after World War II, we had this situation where ordinary working men and women could go out, get a regular job, buy a house, have a family, get a retirement, get a pension, have holidays, have a good life.

And we did not have, essentially, repatious, super wealthy class owning everything. And then in the 80s, we were like, you know what, let's just give it back to him. Let's just give it back to him.

If you allow the people with all the wealth in the power to use that wealth in power to take the rest of the wealth in the power from the less powerful, they will do it.

All of history tells us that is true. It's as simple as that. All of history tells us that is true. You have a choice, either very high rates of tax on the very rich or extreme inequality in poverty. Those are, and all tell me one point in history, that it is pretty stuff. The, I think the only exception of the role is occasionally a nation is blessed with some sort of natural resource to give them abnormal, parent wealth, and they can have both low taxes and support the middle class because they're making billions in oil revenue or something else.

“If you look at the early US, the early US has effectively infinite land to go into, right?”

And then what you can have, a repatious billionaire class that wants to rapidly expand without eating its own, because it has infinite resources to eat into.

But once they hit the boundaries of the infinite limited resource, if you allow them to keep growing their wealth, when the economic opportunities rapid growth have stopped. Then you know, I mean, this is why obviously you see, this is why colonialism happens, right? Because you have this rapid growth, you have the creation of being in their class in Europe, and then they rapidly run out and eat the entire world and what happens when they eat the entire world, world or one. You know, this is what, this is what happens. You simply cannot allow a tiny group of people to own everything, and if you don't tax them, you know, this is just the force of compound growth, you know, if you allow these guys to grow.

Then that means, you know, the people listening to this now, how are their kids going to compete for ownership with with bezels is a mosque's kids? When they're growing their wealth at 10-15% a year, and if you tax them at 40%, and don't tax them on a wealth, don't tax them on inheritance, then all that means is, instead of growing at 15% a year, they grow at 10% a year, and it's still too much. That's the truth. I see it as, and I think it's just different sides of the coin that conservatives or the incumbents have managed to convince the general population that the middle class is a naturally occurring organism.

And I don't think there's any evidence of that. I think it's actually an accident in history by a group of progressive who said, unless we redistribute income, the middle class dies.

“And it feels to me that the only way we may progress is for economists and historians to say, the middle class is an experiment.”

And something that requires, and I'll use the R word, it requires redistribution that the luckiest and the most talented among us who become very wealthy, have to give a disproportionate share of their wealth back to the middle class or the middle class dies. And we're returning to your point to the way history has been 99% of history. From 45 to 2000, the equalization of equality was the anomaly. And it doesn't happen naturally that if we don't interject and recalibrate the law of the jungle, it goes back to the jungle.

And it just, we need to puncture this myth that the middle class is is a naturally self occurring healing organism.

“Once you allow that to exist, this this class of people that rapidly rapidly rapidly grows their wealth share.”

What you will see is the weekholders of wealth will be picked off one by one. And I think the first weekholder of wealth, which to be honest, we've already lost was the western poor. So, you know, I talk about my dad quite a lot, my dad worked for Royal Mail with the post office here in the UK for 35 years earning 20,000 pounds a year, lower and up. And he's born in 57, so he's working in 70s, 80s, 90s, and he's able to buy a house and I've got a pension and get retirement. And what you see here is this like free cacurrence, which is incredibly rare in history of people in the bottom 23% of society, being able to accumulate wealth.

And that's gone. That's gone. This is the first group of people that lost out when we start when we start creating a super rich class.

And the reason that they were able to be lost is because they thought we lived in a world where I don't need to give assets to my kids because work kind of accumulate assets. And as you say, that was only possible because they lived in this very unusual period of time where you did not have a tiny group of people eating everything. So they thought I don't need to worry about, like, protect my wealth, protect my wealth because we live in a world where working gives you assets. And you see it's really interesting. So I grew up in a very, very immigrant area of East London.

And you see this difference between, like, the English families, the immigrant families, which is the English family, we don't need to give wealth to our kids because work gives wealth.

You know what I mean? So I think people need people need to recognize, yeah, it wasn't normal, but it can be normal again. You might use the term accident of history. And I'm going to push back a little bit on that because it wasn't an accident of history, Scott, this is the result of generations and generations and generations of working men and women. Get in their heads down in abject poverty and working and struggling together so that their kids and their grandkids will have a fair share. That's what it is, Scott. And to be honest, whether this country, or whether the future of the UK and the US, is the kind of poverty that my granddad lived in, or the kind of relative security that my dad lived in, is a simple question of whether the men and women today, get their heads down and work together to protect the position, the collective power position of their kids.

“The way that our grandparents and great grandparents and great great grandparents did. That's for me, to be honest, I don't not use in this term, but it is class struggle. It is class struggle, because that's what's happening.”

We'll be right back.

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Hey, it's Francis Lamb, host of the splendid table podcast. Every week on our show, we celebrate the intersection of food and life. This month, we're highlighting some of those iconic people in the food world. It's a new collection called culinary masters, and we revisit interviews with some of the people who have really changed how many of us cook and think about food. People like Martin Yan.

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We're back with more from Gary Stevenson. The next topic I'd love to get your insight on is I'm constantly asked what is the difference between the UK and the US. And I struggle to explain why the UK has done so much less well than the US.

“Because when I look at the underpinnings of the UK economy, I think the education system here is superior to the US.”

I've had my kids for extended periods of time in the US education system in the European and the British school system. And while obviously it's situational, I find on average the approach education here is better. There's tremendous IP. There's a decent argument that AI was actually invented in UK universities. Great culture, rule of law, a general kind of zeitgeist of fair play. People from all over the world want to live here. It just feels like all the under and a strong immigrant popular. It feels as if all the underpinnings are here.

And yet if you take out London, the household income of the UK is lower than the poor states in the US. And it feels as if there's no growth here. I'm curious to get your, if you were to summarize and also growth solves a lot of problems, right? The way I think the US, if they ever address its deficit will not only be fiscal responsibility, but the fact that we're growing that just kind of helps everything. Whereas the UK doesn't appear to be growing.

I'm curious, are you a metal level here? What do you think the big difference is between the US and the UK, both in terms of culture and economic policy that was resulted in one.

1995, same GDP per person in Europe as the US, now I think we're 30 or 40 percent more.

I think just first before I get into that is the point to recognize that I think sometimes these narratives of US out performance do sometimes gloss over the fact that a lot of the better big level macro numbers from the US are really not filtering down to a lot of the American public.

So obviously US has had higher GDP growth and this is travel versus mean.

“Yeah, and I think it is the point to recognize that living standards for a lot of Americans have really significantly fallen.”

And poverty has significantly fallen, but that's not to say your point is untrue. I think the UK, I think when the UK, the last 15, 16 years, the UK has been really the stand out week performer in the Western world in terms of economic growth. Some interesting things have been happening in Japan the last couple of years, but I think really the UK is, yeah, it's the big one.

I started working in 2008 and at that time, I think the UK was probably seen as one of the strongest if not the strongest economy in the world of big countries.

And the collapse has been pretty catastrophic.

“And you can trace that back to quite simply a number of really catastrophically bad economic and political decisions.”

The first of which is austerity, you know, so from Americans that don't know, you know, and this is very relevant from Americans given, you know, the doge and the recent aggressive attention on government cost cutting. You know, we had our cost cutting experiment in the 2010s, right, so we had the David Cameron, the start of the conservative government was in 2010 and their big economic plan was to aggressively cut back the state, right, was austerity. And then what you have is this insane period of 10 years of zero interest rates when the government could have been borrowing and investing essentially for free.

When what they're actually doing is just basically dismantling the state and dismantling all of the protection systems for the poorest people in the country.

And basically creating a permanent unsupported underclass in the country, like this is, and you know, other countries did this to various degrees, you know, you look at, for example, Greece, which is effectively forced into doing it. But, you know, with the benefit of hindsight now with, you know, long-term interest rates in the UK 5% the fact that we had 10 years of zero interest rates and chose rather than to invest at that time when investment was free. Like, they could have literally just borrowed and bought the stock market and they would have been like incredibly rich. But instead, they basically did the exact opposite of that anti-investment.

It was a catastrophic economic error. You know, I think this is really relevant for anybody watching now in the US because, you know, the US is starting to look at this narrative as, you know, the way to solve our economic problems is to dismantle the state. You know, did it work for the UK? You know, did it work? It was a catastrophe. And then, obviously, you know, after that, you don't need me to tell you, obviously, Brexit, you know, I don't think you'll find many economists, you think that that was wise or at least the wise, the implemented economic policy.

But you know, what is happening now in the UK? It's happening all around the world. I did a video a couple of weeks ago, which looked at the share of, like, seats in Parliament, going to the mainstream political parties. So, you will be aware that, you know, across the world, we have had for a long time essentially two party politics with a big sense of left party and a big sense of right party. And since 2008, the financial crisis, that has basically ended. And you can look all across Europe and you see these parties used to take something like 80 or 90% of the seats, depending on what country you look in.

And now they're down to 30 or 40 or 50% of the seats. And in many cases, it's not over the same two parties because they've collapsed. And what that is, essentially, is the Western world, across the Western world, and it's definitely happening in the US. It's the Western world that has seen living standards consistently full since 2008, and has not been given a solution by any major political party, which is turning on itself and saying, "Well, what the fuck do we do? What the fuck do we do?" And every country is trying to figure out how to stop living standards in falling. And the UK settled on Drexit, which was to be quite honest, a shit answer.

You know, the US is looking at Trump. That's not going to work either. You know, I'm out here making the pitch, I think, unless you stop aggressive increasing inequality, you are going to see living standards collapse everywhere. And it's really important to recognise as much as the UK has become the sick man of Europe, and I don't deny that. Living standards have collapsed everywhere, Scott, in France, in Italy, in Spain, in Japan, in Australia, in America, in every country, living standards are falling.

So yeah, look, I don't think the UK's done a great job of it in the last 15 years, and if you want me to put that down to two things, it's austerity and Brexit.

“But the truth is, this is happening everywhere.”

What? By the way, Gary, I was having a talk to the time. Literally, the time space continuum goes on pause. I can't believe we've been talking for 56 minutes.

searching too far to the left and stopping growth, there are some dangers. We have a tendency to clock appears to never be at center.

We have a tendency to swing back and forth, and I would argue that some of the taxation policies for aggressive policies in the 70s and 80s may have actually, you know, done what the rich

“catastrophes about, and that is slow growth. What are the one or two policies you would want to see implemented across the West to try and address income inequality effectively?”

So I push more on wealth inequality in particular, because I really, if you're working for your money, you've already lost basically, it's about wealth inequality. I think the two. It needs to be taxes, which aggressively go after the top 1% not of earners, but of holders. This is this is really, because at the moment we have an unbalanced system, which, which does aggressively in most case tax high earners, but does not effectively at all tax high holders, high owners, high hoarders. I think the two taxes, which have the real power to get wealth back into the hands of ordinary families are wealth taxes and estate taxes.

When you bring them in, there's going to be debate always tends to focus on rates, but really the question should be entirely about avoidance.

How do we bring these taxes in in such a way that the super rich cannot avoid them? And I think to be honest, the real way that you do that is exit taxes and tax on foreign owners. Because if they leave and they're still being taxed on their holdings of American assets or British assets, then they can't avoid the tax without selling the assets.

“And then that means you can get your assets back. I think this is the key here.”

I look China would not allow you or I to own $10 billion of Chinese assets, and when they come to us at the end of the year and say, "Hey, can we get our tax on your Chinese assets?" We say, "Hey, I live in Marulabone because it's good for my dogs." You know what I mean? Then we're not going to listen to that. You know, and I think we're stupid, but we're not the thing is we're not stupid, because the people who set the tax policy, it's fucking working for them. And that is why I don't talk really, well, I mean, I do increase anymore and more, but I don't talk primarily to politicians. I talk to the public, because I honestly believe the politicians, especially the high level ones, listen, they become a 10 million pounds within a year of leaving office.

It's he going to be the guy, you know, Rishi Sunak's father-in-law is one of the richest men in the world. These guys are going to be the guys who change tax policy against the very rich.

“It's not going to happen. So really, my message is not so much to the politicians. It's to the British and American people. I guarantee you unless this is push for aggressively by the public, it will not happen.”

And ordinary people see their kids and their grandkids be significantly poorer than they are. So to be honest, I don't want to talk to the politicians. I want to tell the public, because they are the guys who will fix this, if they ever get fixed. You'd like to think we have a democracy and if enough people buy into this philosophy, they'll elect people who will also, they can hold accountable. The notion of taxing wealth where it is, or I would argue, it's been created, has trickles down to I think state taxation policy. So for example, Jeff Bezos just announced he's moving to Florida to spend more time with his dad, which is adorable, but is a lie.

Because he aggregated $120 billion in wealth using the great infrastructure, the great state of Washington, their schools, their hospitals, their technology.

And then about the time he's going to register those blessings, he pieces out to Florida, so he doesn't have to pay back to Washington taxes. I mean, it seems to me that a very basic policy of paying taxes on where you have assets and where you aggregate wealth. How to make sense in tier notion of the tax gap and tax enforcement. Suppose they're $750 billion a year in the US of taxes that are owed to go uncollected. And I don't know if the same, and this is probably my final question, but in the US, the biggest tax cut that no one has ever seen is that they basically neutered the IRS.

And if you're very wealthy or encouraged, not to hide income, but to be as aggressive as possible, because AI can't audit your taxes. It can audit lower and middle-class households, but it takes an army of auditors to come in and audit the wealthy, such that again, you neutered the IRS. That's the greatest tax cut in history. It's the same thing happened in the UK. I think they definitely should fund it more, and they would get more. But I think the reason that they've been able to sort of defund the tax collection agency is because nobody's protecting the brand of tax in the eyes of the public.

So it's like really put, this is why market tax trend, and Ronald Reagan could do what they did, and slash taxes, and basically destroy the poor, and have the poor actively cheer on their own destruction.

Because people hate taxes. People need to understand what tax is. Tax is your army that protects you from your domestic billionaires.

If you do not have an army, then you can't stop Putin. And if you do not have an IRS, then you cannot stop muskenbezos. And both of those groups of people want the exact same thing. They want your mom's fucking house, and they're going to get it. Unless this is it. Listen, if you do not fund your army, you'll get invaded by foreign army. And if you do not fund your IRS, then Elon Musk will have your mom's fucking house. This is your army to protect your assets from your domestic billionaires.

You'll domestic, and they are the real threat to the American public's wealth.

“Well, let me provide a suggestion. I think, I think so much of this, because you have such a huge following.”

Thanks so much of this comes down to words. And I think we would be much more effective in restoring a progressive tax structure. If we instead of calling it, in a state tax, we called it, or a well tax, we called it a hoarder's tax. Because that's effectively what I see as going on is our hoarding. And just as we felt, we built up our sentiment towards people hoarding hand sanitizer or toilet paper during COVID.

Is it any less damaging to be hoarding wealth, well beyond what you and your kids will ever need?

I mean, shouldn't it be a hoarding tax? Your thoughts? Yeah, you know, I've thought about using a term hoarding mall. The inherent tax is state tax.

“We massively massively massively demonize for a long time, and I understand why. I think the most obvious thing that you should do to change a state tax is change the timing.”

There's no reason why. There is absolutely no reason why that tax needs to be timed at the time your dad dies. There's no reason. You know, your dad dies when you're 30 and my dad dies when he's 17, we pay the tax at totally different times. Set it on your dad's 110th birthday and set it at an incredibly high rate on incredibly high amounts. Simple as that, and then it's not, it's not a death tax anymore. It's a hoarding tax. But what really needs to be done is people need to understand that if you allow the super rich to accumulate wealth very quickly, what that means in very literal terms is your family loses its wealth and your government loses its wealth.

You know, that's that people need to understand that we do not live in an infinite sum world, and you cannot have a group of people who own everything unless you and your group of people own nothing. I think if you if you generate that understanding to be like, and that's the number of what I want is to be in a very situation where if I walk out here and go on the street and pull some guy over and say, why do you think living standards are falling? Why do you think your kids will be poor than you? And I want 70% of people to turn around to me and say, because of growing inequality. Simple as that. If I achieve that, then this problem will fix itself.

Gary Stevenson is a former trader turned economist and activist behind Gary's economics. His work focuses on rising inequality wealth concentration and economic policy.

“I always love listening to, I think you're able to kind of distill fairly complicated concepts down to kind of basic human emotions and and I don't know this rational reason to do a great work very much appreciate your time here.”

This episode is produced by Jennifer Sanchez and Laura Jenaire, Kami Reak is our social producer, Bianca Rosario and Mirus is our video editor, and Drew Burroughs is our technical director. Thank you for listening to the property pod from Prop G Media. Support for the show comes from Square. The easier way for business owners to take payments, book appointments, manage staff and keep everything running in one place. Think of your favorite small business. I love this restaurant concept. I think that got several locations called dig in and it's basically a home quick food. And this place just makes it feel like home cooking and they do a great job. I like Square. I think it's very elegant technology.

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