Gary's not really doing economics

Many will have heard of Gary, that former star trader who now gives us YouTube videos. And, well, one of the problems might be that Gary’s not really doing economics - he’s acting like a trader. He’s running on what people generally believe, not what is actually happening.

Take this particular video. The central claim is that the rich are getting all the money because inequality is growing. That’s why the mass of the population are worse off even as we have - anaemic, but still do have - growth.

Hmm, well, could be. The thing is, actually, it isn’t. We could look here, at the ONS numbers for the Gini. The country is (mildly) more equal than it was in 2007. Or to look at the long term here. The UK is markedly more equal than the average over the centuries. The low point for inequality was in the 1970s - which, as we all recall, were such fine economic times for the country.

It simply isn’t true that there’s been some recent mass outbreak of inequality. Sure, there have been many claims that there have been, to the point where we’re wholly sure that most believe that there has been. But inequality in the UK economy is about where it’s been for the past 30, 35 years.

It’s entirely possible to say that that’s bad. It’s possible to say it doesn’t matter very much, all sorts of things in fact, but it’s simply not true that this is something new, something of the past few years.

The art of trading is working with what people believe is true. Not, wholly not, what is actually true. We think that’s the little trap that Gary has fallen into there. Sure, everyone believes that inequality is soaring in the UK. Actually, it’s a little lower than the last time Gordon Brown was Chancellor. Traders work off what people believe is true - Gary was a trader. QED.

It’s true that we tend not to have quite the conniption fits some others do about inequality. It’s also true that we differ with many to most over the actually desirable level of inequality in a society - we’re really very sure that differences are necessary in order to provide incentives. But this here is about facts. The UK is currently less unequal than it was in 2007, both then and now being fairly mild variations on the levels of the past 30 to 35 years.

Those saying different are not in fact doing economics.