Rising YouTube star Gary Stevenson from Gary's Economics, has recently made huge waves with his message that average people in countries like the UK will collapse into poverty, desperate poverty.

I'm talking about Charles Dickens Oliver Twist that is the future of this country. If we don't deal with growing inequality, there is main message is that inequality can explain essentially everything, ranging from the weak recovery from 2008, the cost of living crisis during Covid. Stock price rally in the mid 2010s to the rise of the far right.

And and if you don't take action on it, it will get worse and worse and worse and worse.

Luckily, Gary says that inequality is the core central problem.

I would encourage people to care about it because if you don't take action on it, it means living standards getting worse and worse and worse.

But是 he actually correct? Can you trust Gary Economics?

To tell you the truth, according to Gary. Academic economists like me, well, we are part of the problem because we've created we've created a system which obviously takes all the good economists and said, we are going to fill your mouth with money if you shut the f up.

Yeah. Well, Gary, this economist just so happens to do a series where I fact check famous YouTubers talking about economics, using data and academic research.

And a lot of my viewers asked me to feature your channel today. So here we are in this series.

I try to stick to the main message only, which for Gary starts with the UK inequality crisis or in Gary's voice.

The UK is in an inequality crisis because inequality is increasing, inequality is increasing rapidly.

And in this country we're talking right now, 150 years ago, all the ordinary men and women lived in desperate poverty.

Okay, that's going to happen again because there's a worryingly accelerating nature to inequality, which is the bigger inequalities, the higher the amount of transfer payments made from the poor to the rich, which means the higher the rate at which the rich dispossessed support, which means the higher the rate of transfer payments.

So this is and probably the thing which sort of caught me the most and worried me the most about this. Mathematically, this is not self-sustaining.

The fact check these statements I first search for evidence that Gary uses himself to back them up.

But strangely enough, in his own videos, Gary hardly ever uses any concrete evidence or data.

This is no accident. Recently on the Desk Rates podcast, Gary said that it's because I know the graphs are all bullshit.

I know the Fairness Foundation and from this and all of the graphs are bullshit.

Now for context. In this discussion, the podcast host essentially says, look, most data about inequality is actually produced by non-profits such as the Fairness Foundation that are explicitly fighting inequality.

So you should be able to trust them, right?

But when pressed a bit more, Gary said that the reason why he believes that graphs are still bullshit is that we cannot accurately measure the wealth of the very rich.

It's very, very difficult. You know, we have economists doing that if you want. There's the economist French guy Gabriel Zucman. He's really good.

And yeah, there's actually some truth to that. It's well known that the super rich hide a lot of their wealth, especially in tax havens, but actually based on new tax haven data.

Gabriel Luqman, Gary's favorite economist, has estimated that this only accounts for about 2 to 3% of total UK household wealth, because it is really only the top 1% that can afford to use tax haven services.

So yes, wealth inequality data misses some wealth for sure, but it's actually not that much, at least not for the UK.

If we were studying Russia, we're much more. Wealth is hidden offshore then yes, Gary would have a good point. We cannot trust the data, but for the UK and other democracies, the data is probably pretty accurate.

So to fact check Gary's claims about inequality, I relied on the database that Gabrielle Zuckerman then sues himself.

The World Inequality Database, The Economist that made this database, explicitly designed it to find hidden wealth. By combining a lot of different data sources, such as tax data, private estimates and so forth.

As we can see here, Gary is right that UK wealth and income inequality have come down since the days of Charles Dickens.

We can also see that inequality is now trending up again.

The top 10% of British households now own more than 50% of total wealth. That's a lot.

Meanwhile, they earn about over 30% of its income.

So yes, Gary is right about the trend going back up.

But does this trend look anything like a wall collapse into poverty? Desperate poverty? I'm talking about Charles Dickens Oliver Twist. That is the future of this country. If we don't deal with growing inequality. No, it does not.

In fact, if we compare our top 10% wealth across the world, we can see that Britain is alert yellow, meaning it is actually one of the most equal countries in the world.

Interestingly, if we look at income inequality, we can see Britain is dark yellow, meaning it's doing slightly worse still.

As we can see, Britain is one of the more equal nations on earth.

But hold on, Youri, you sneaky economist. Gary is very clear on this channel. He does not talk about working millionaires. The top 10%. He talks about billionaires the top 1% or even 0.1%.

What have they been up to?

Well, as you can see here, Britain's 1% wealthiest own about 21% of his wealth.

That's slightly higher than it was at its lowest point ever, but actually comparable to the 21% they had in 1980.

We can also see here that compared to South Africa, the US and even the world, average Briton is relatively quite equal.

And strikingly, the claim that there's a worryingly accelerating nature to inequality does not appear to be true at all.

So when it comes to Fact-checking Gary, he's not off to a great start.

Yes, inequality has been trending up for the last decade. That is worrying for sure. No doubt about that.

But these graphs don't really fit with Gary's message of a will collapse into poverty, desperate poverty.

I'm talking about Charles Dickens, Oliver Twist. That is the future of this country. If we don't deal with growing inequality, could it be that when Gary says that I know the graphs are all bullshit because they are far less dramatic than Gary's message?

I'm not sure. Let's give him the benefit of the doubt for now, because there's actually some compelling evidence to support Gary's other claims.

But for diving in, I first want to address a common criticism.

People comment under videos critical of Mr. Gary. So you criticize Gary. Are you funded by the rich?

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Okay, with that being said, let's get back to Gary's second core message.

Inequality drives everything concretely.

Gary seems to believe that. So I think this makes sense, right?

If you take the consumption power away from ordinary people who spend, you give it to rich people who save what it is awful.

Therefore making a lot of money, betting that inequality would devastate living standards and keep interest rates low and push house prices up and push stock prices up.

And therefore, when it comes to the housing crisis, Gary says the housing crisis is not a housing crisis.

The housing crisis is a crisis of asset affordability.

All asset prices have gone up enormously, and that means you can't afford them and you're not going to deal with that by building more houses.

You need to deal with that by stopping the inequality growth.

Is that all true?

Sadly, just as with this inequality explosion claims, Gary hardly ever backs up any of his claims with evidence in his own videos.

At least that is a real shame, because when I started looking into it, I could find a lot of research that backs up many of his claims.

For example, there are some really good studies by economists from the IMF and world Bank which present evidence that rising inequality makes economies grow more slowly because rich people spend less than poor people.

Second, I found some really interesting studies that present evidence increasing wealth inequality can cause asset bubbles because rich people buy more stocks.

Third, I found a study which finds evidence that increased inequality may indeed have driven down interest rates in the US, as rich people tended to invest a lot more in government bonds.

Fourth, I found a lot of studies that confirmed that increased inequality, together with cultural factors, can help explain the rise of the far right in, for example, Nazi Germany and the USA today.

On top of that, economists have found that rising inequality can be linked to more crime, worse health, and that it may make it very much more difficult for smart people from a poor background like perhaps Gary himself, to make something of themselves.

Inequality research even helped economists like Angus Deaton and Daron Acemoglu to win Nobel Prizes for their work.

So no, Gary, economists don't ignore inequality.

That being said, I do understand where Gary is coming from somewhat when it comes to talking about inequality in undergraduate economics classes.

Much can be improved.

While some recent textbooks discuss inequality at length, other popular economics textbooks don't talk about it at all.

But besides education just being a bit slow to adapt, there's also the reason that while there is evidence inequality has a role in driving almost everything, it is probably not that only thing that is significantly driving our economies, as Gary seems to think.

For example. Well, Gary's theory predicts that higher inequality would lead to lower interest rates and high government debt.

If we look globally, we can clearly see that this is not the whole story.

For example, more unequal countries like South Africa and Brazil tend to have higher interest rates.

Then more equal countries like for example, Japan and Denmark.

But if we look at government debt, we can see that a relatively equal country like Denmark has very little, while unequal countries like Japan has a lot, well, very unequal countries like South Africa and Brazil are somewhere in the middle.

And then when it comes to housing, Gary may be doing himself actually a disservice by not talking about the data.

Gary seems to think that the rich are buying up all the houses as an investment, which is driving up house prices.

Rich people can only live in 1 or 2 houses.

What are they going to do with all of these investments?

Either they would rent them out driving down rent prices, or you would have a lot of empty homes sitting there doing nothing like you had in the US housing bubble in 2006, or like you have in China today.

If we look at the data, we can see rents are not going down.

But as you can see here, there are actually a lot of truly empty homes in the UK.

About 7% of homes in Wales are empty, which is depopulating.

And that's likely not really rich people's thoughts.

But London also has a lot of empty homes, particularly if we zoom in on central London.

We can see that about 20% of homes in Kensington and Westminster are empty.

That is clearly the ultra wealthy hoarding property.

So here I would say Gary Storey is a mixed bag.

He is right to point to inequality being important, especially in the London housing crisis.

But his various theories about how inequality is the biggest driver of just about everything, ranging from interest rates to government debt, that just does not appear to be true.

So then what about the issue that Gary campaigns for all the time? A wealth tax?

You see, giving Gary theory that wealth inequality is causing almost all of the UK's economic problems.

It makes sense that he believes that. So I think it's really important to recognize that these two things are.

But as we've seen, wealth inequality did not explode.

And that while increased inequality is bad for the economy, it cannot explain all of the UK's problems such as high government debt.

What does this mean for Gary's wealth tax idea?

Well, I found essentially two big problems with it.

The first problem is that overall wealth compared to income is actually relatively low.

For example, in the UK, total billionaire wealth was estimated to be around 182 billion pounds in 2024.

That's a lot of money. Absolutely taxing a bit more of that could help the UK government do many things.

But just for comparison, the UK government borrows almost 150 billion pounds each year.

So Gary's 2% wealth tax proposal, that's pennies.

If you'd said an 83 wealth tax proposal for UK billionaires, you'd only be able to cover government borrowing for a single year.

The second problem with Gary's optimistic wealth tax solution is the same that I've said in my previous video.

Reacting to Gary Ultra rich people are very mobile.

Yes, we are not sure how many millionaires left the UK after taxes rose recently, but there are various reports that quite a few rich people left Norway to flee its wealth tax.

And when France still had a wealth tax, many wealthy French people famously moved to London.

Similarly, many people are now moving from the UK to Milan after it introduced a very low tax for very wealthy people.

Almost all super wealthy F1 drivers live in Monaco, which is a tax haven.

Overall, there is a lot of evidence that many rich people will successfully dodge high taxes by moving to another country.

Gary has always reacted to this argument by saying that taxing the rich will be very, very difficult.

It's possible these people are not magicians.

These people are not Gandalf. They can't magic themselves out of the country and disappear.

All of the wealth out of the country. The wealth is here. It's the wealth of our countries.

In other words, while billionaires can move, they cannot move all their wealth.

The wealth remains in Britain when it comes to property. This certainly applies.

In fact, after seeing how many homes are empty in London, I think Gary could make a really convincing case that Britain needs a wealth tax on property rather than its current council and stamp duty taxes.

This could be great for the British economy, as it may allow more nurses and teachers to live in central London if the ultra rich start renting it out to pay for this wealth tax.

However, most assets that the ultra rich have are not property.

When our wealth tax was discussed for the US many years ago, economists were quick to point out that about 80% of the assets of the ultra wealthy are financial assets, such as government bonds or bank deposits that can be easily moved elsewhere.

They can do this because countries like the UK have free capital flows.

Similarly, when Norway introduce a wealth tax, many of its entrepreneurs fled to Switzerland thanks to free trade agreements.

Countries cannot tax imports, so this wealth is not tied to the country either.

Norwegian entrepreneurs can just take their company headquarters with them and then export to Norway.

These problems could explain why Gary recently talked about wealth tax complexity in the following terms.

I think really encapsulates the childish naivety that I talk about.

If people turn around to me, this okay, I show, all right. Show me the tax policy in, show me the tax policy.

You know, you know, obviously I'm here in my kitchen, right?

Which is real, like with a massive YouTube channel.

Like, I'm pretty much pretty obviously the world's biggest campaigner for wealth taxes. And I work hard. Right.

Do you think tax policies are usually made by YouTubers?

Yeah. Gary is of course right.

Tax systems are designed by economists and then they are implemented by politicians and lawyers, many of them who then often water them down living in tiny loopholes.

The bright side, if we look at the data, we can see that taxes do already decrease inequality.

For example.

As you can see here, income inequality in the UK before taxes is almost as bad as it is in the US, but after taxes it is much better despite that.

Yeah, I agree with Gary that the current tax system is not fair.

New research by US economist Zuckerman shows that US billionaires only pay an average tax rate of about 24%.

That's much lower than what the middle class would pay. Totally unfair.

A fairly recent study in the UK found that if high income earners paid headline rates, they would have to pay 23 billion more than they currently do.

That's a lot of money, no doubt about it, but a solution to fix the entire UK economy?

No, sorry, that's just 2% of total government income today.

So where does that leave Gary?

In other words, can you trust Gary's economics?

Well, to me, it's a mixed bag.

Gary is right that rising inequality is a big problem.

Gary is fighting for a fairer tax system which is needed.

Yet there is so much good research about how bad inequality is and why it's bad.

And Gary doesn't use it.

He rather relies on his own theories.

There's so many proposals about how to reform the tax system, but Gary doesn't appear to have read them carefully.

Instead, he makes a lot of exaggerated statements like how Britain will collapse because of skyrocketing inequality, which is clearly not true.

That is a shame because to get a fairer tax system, Gary has said that I think in particular we need what I am thinking of as academic cover, which is economists, people that think tanks, people with these kind of academic credentials.

And to get that, I think he needs to be a little bit less hyperbolic with his messaging and be a bit more evidence based.

This is, of course, easier said than done, because so far Gary has built a massive following precisely with very hyperbolic collapse messages that tap into very legitimate problems, like the massive housing and cost of living crisis in the UK.

He boasts about how great his predictions are about rising asset prices and falling living standards.

And I take this. And yeah, so far they've not been perfect.

But it's pretty good to be a successful trader like Gary clearly was.

That's all you need to be, right more often than wrong about financial assets.

This is how you make money.

But to convince researchers your theory should not only predict the future a couple of times, your theory should also be able to explain why inequality is not increasing so fast anymore, why super unequal countries actually have relatively high interest rates, and why some very equal countries have very high government debt.

If Gary can improve his theories to line up with all the evidence, such as how research has shown that ignoring inequality leads to a worse economy, more crime, worse health, and the rise of the far right then I think Gary can succeed to make his case with people with, as he says, academic credentials.

Gary, if you are watching, feel free to check out my sources in the description below and use them as you please.

By the way, I did reach out to Gary's team multiple times to comment on this video, but so far he has not responded.

So if you are a Gary fan, please ask him to come on my podcast.

I'd love to have him.

Money in Macro Talks is the name and we could then together go through the arguments presented in this video.

But yeah, what do you think? Have I been fair to Gary?

Have I been too strict or too generous? Let me know in the comments below.

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