Is Wealth Inequality Actually a Problem?
HTML-код
- Опубликовано: 12 май 2024
- This video was made possible by our Patreon community! ❤️
See new videos early, participate in exclusive Q&As, and more!
➡️ / economicsexplained
▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀
The wealthiest among us today live a life unparalleled by any other human throughout history.
The greatest Kings and emperors could only dream of the life afforded to today’s billionaires.
It doesn’t end there, even mere multi-millionaires are living through a time where they have access to limitless information, unhindered mobility, and personal comforts.
But this is all taking place at a time where a swelling population of people are struggling to make ends meet.
▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀
Enjoyed the video? Comment below! 💬
⭑ Subscribe to Economics Explained 👉 bit.ly/sub2ee
⭑ Enjoyed? Hit the like button! 👍
Q&A Streams on EEII (2nd channel) → / @economicsisepic
✉️ Business Enquiries → hello@economicsexplained.com
Follow EE on social media:
Twitter 🐦 → / economicsex
Facebook → / economicsex
Instagram → / economicsexplainedoffical
#Inequality #Economics #OnePercent
▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀
EE Fan Exclusive Offer:
Sign-up for Acorns! 👉 www.acorns.com/ee (after registration, Acorns will deposit $5 in your account to help you get started with investing!)
▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀
ECONOMICS EXPLAINED IS MADE POSSIBLE BY OUR PATREON COMMUNITY 👊🙏
Support EE by becoming a Patron today! 👉 / economicsexplained
The video you’re watching right now would not exist without the monthly support provided by our generous Patrons:
Morgon Goranson, Andy Potanin, Wicked Pilates, Tadeáš Ursíny, Logan, Angus Clydesdale, Michael G Harding, Hamad AL-Thani, Conrad Reuter, Tom Szuszai, Ryan Katz, Jack Doe, Igor Bazarny, Ronnie Henriksen, Irsal Mashhor, LT Marshall, Zara Armani, Bharath Chandra Sudheer, Dalton Flanagan, Andrew Harrison, Hispanidad, Michael Tan, Michael A. Dunn, Alex Gogan, Mariana Velasque, Bejomi, Sugga Daddy, Matthew Collinge, Kamar, Kekomod, Edward Flores, Brent Bohlken, Bobby Trusardi, Bryan Alvarez, EmptyMachine, Snuggle Boo Boo ThD, Christmas
If you want to see videos early (before they go live on RUclips) please consider supporting EE on Patreon! Your support makes the show possible! ❤️
👉www.patreon.com/EconomicsExplained
hmm weird
Economics Explained there has to be inequality for innovation
Ecnomic Explains ,pls make a video about
"How Robot take away the jobs of human and how can human live without jobs or income"??????????..?????????????????????????????????????????????????????.......
,??????
Amazing video as always, please take a note to make a video about Chile's economy!
Really enjoy your videos!
You missed the most dire drawback of wealth inequality:
A handful of people having massive influence over governments all over the world.
What rich people don’t corrupt government your insane
Or they take over the government directly and transform the governmental system to their benefit. City Republics in Europe? Dominated by the filthy rich, who levied taxes on everybody but their own families and companies.
On the other hand, impoverished disenfranchised citizens tend to follow every leader who promises them a better life. Imagine a country with corruption to the highest ranks, a political process stalled by hateful division, ambitious egomaniacs with big bank accounts gaining huge followerships and constantly testing how much they can undermine the law and the constitution for their own gain, eventually transforming the government into a one man show...Of course I´m talking about the late Roman republic.
Official Ancapistan RUclips channel thank you for that amazing insight “Official Ancapistan RUclips channel”!
@@antyspi4466 Or much more extreme in the US where electoral campaigns have to be paid for by "donations" from the wealthy, which then gain huge influence regarding policy decisions. As a privateer in the US you have a statistically insignificant chance of winning when running for office.
@@antyspi4466 Just have a look at South Africa. The government is drawing prosperity from their own country via greed an corruption, using racism as an excuse and making us all worse off for it while banking billions.
I think one point you forgot to mention was how wealthiest people have a greater say in the political decisions. I guess that is one reason that drives opponents of capitalism crazy.
That's not an economic issue. That's a political issue. Supporters of capitalism also hate it; economists call it rent-seeking. Something we can agree on!
@@fatpotatoe6039 but it is a wealth problem.
Capitalists control policy, therefore true democracy is impossible, without socialist elements.
@@applez4life200 or make lobbying illegal?
@@fatpotatoe6039 If they pay their way to say, making unionization more difficult or deregulation of an entire industry so it can be moved overseas while still reaping the benefits of being a domestic company, then it is an economic issue. Those actions directly effect their employees and consumers in the nations where they nominally are counted on the same scales as the billionaire owners, so they're relevant factors in changes in economic reality of those nations.
@@fatpotatoe6039 Stop treating it as seperate issues. The ruling class is naturally the dictator of the state, no matter which mode of production is in place. In slave society slave owners control the state. In feudal society feudal lords control the state. In a capitalist society capitalists control the state. In a socialist society socialists control the state.
"The bottom dredges of society, like grad students." This line made me laugh so hard I almost fell out of my chair. THANK YOU!
Ah those grad students who invented modern medicine, all technological advancements in human history, complete dredges of society.
Only trades and stem add value .
Pick a trade pick it young get good.
If particularly academic do stem.
Everything else is a road to retail.
@@georgepeterjoubert7482 i'm about to enter college as a freshman and i took up stem for my senior years. i'm planning to go into a business major instead of stem because of that saturation u just talked about. but even business is saturated and it's a bit scary knowing that there's a huge possibility that i might not even get a job (though i wasn't planning to be THAT invested in having a job, anyway. because i'm planning to help my dad run his business.) i already knew this as a child, but, surviving in this world is hard. but i'm lucky that i have my parents to support me financially. but even that won't be enough when sht hits the fan
@@gajjang968 It may seem hard to you but as the video said this generation is the most privileged ever. Many of the things that your generation complains about possibly not having would not even have been dreamed of by your grandparents. If you have a smartphone, computer, car and A/C you are extraordinarily privileged.
@@darleyt1 did someone hit a nerve? 99.99% of grad students contribute nothing to society. Other then basic science, it’s the private sector that contributes most of societies advancements.
I think this video completely missed a very important nuance about wealth accumulation and innovation; it's not wealth that creates innovation, it's wealth invested into innovative institutions that *facilitate* that innovation. It's hundreds of thousands of dollars in education and research, both public and private, across hundreds of universities across all of academia. It wouldn't make us more efficient if we just pooled all the resources to one dude because concentration =/= innovation. That innovation comes from the sensible *distribution* of resources into *institutions* that facilitate that sort of learning. He mentioned the Italian renaissance which yes is famous for it's economic boom but it was an economic boom amongst the nobility and urban middle class, *not simply making the richest people in Northern Italy even richer*. It involved dozens of cities and individuals investing that newfound wealth over the long term into artistic, cultural and learning institutions, not just hoarding.
Well said.
It's been a year. Has your narrative changed? After reading your reply to the EE discourse. I am more confident that all players in the equation contribute their part. The ones at the top are simply more visible.
Innovation needs wealth, look at story of Tesla. Musk made some money on zip2. Then he created Tesla. Lots of money and hard work and innovation were needed before Tesla became profitable. Now… on of the most if not most innovative company in automotive sector.
sensible investment in institutions? sounds like a great way to waste money. Let the market flow baby! If people want stuff, someone with money will figure out a way to give it to them. Then that company gets really good at it, makes it more quickly, competitors step in for a piece of the pie, prices go down, product becomes accessible to everyone, the end.
@@timbutlerr6246 Have you considered that maybe that sort of company your describing could be viewed as an example of an institution that many different people put money into, which is what the original comment described.
Like, you do know what a share/stock market is, right? It's a medium through which financial capital from many different people is able to be concentrated into companies (Institutions) which in turn spur the development necessary to create long term wealth.
That both fits your point on private companies being created and becoming efficient at producing through competition, and the original comment's point on Institutions.
You're describing the exact same thing as the original comment, just you seem to think that this term 'institution' somehow doesn't include private sector entities, despite the original comment explicitly stating, "It's hundreds of thousands of dollars in education and research, both public and PRIVATE".
Private, as in private sector, private owned, private capital investment. Did you like skim read the original comment and miss the point?
you forgot the the most reliable investment: politicians. you got all this money, you need to spend it on something, why not lobbying, the roi is amazing.
*Taking notes*
The government is the biggest investment for the owners of big box corporations because of how the regulatory and tax systems are set up in favor of such corporations. Well, thet and politicians are corrupt enough to take bribes.
@@suthinanahkist2521
They don't need to take bribes. That's the frightening part.
Just assume two things.
1) Corporations tell politicians to vote for bill X (or against it)
2) Corporations will spend money on ads that promote their interests. Which also just happen to align with politics. Who knows, a green energy company might point out that they have a fantastic product, and it would make your life better if not for naysayers like senator E. McSinnerson.
What happens next? Mr Sinnerson can still promise to vote against bill X. Nothing stops him. But if he does, he knows those ads will go up, and soon he'll be replaced by someone who will vote for bill X. Either way, his seat will vote for bill X, his only choice is whether he'll be in it.
As a closing note, in case you have any optimism left: you can't stop it either. Even if you could pass a bill through congress that bans any and all political ads from corporations, and if you seal all the loopholes, and if somehow the politicians vote it in despite their donors' requests... billionaires like Jeff Bezos can just print it in a newspaper, labeled "news". Who knows, Exxon could buy CNN some day. It would only give the super-rich a bigger slice of the power pie by completely wiping out the smaller business options.
@@sorsocksfake Oh and without wealth inequality media would be free and do only things for good. In communism, socialism even without wealth inequality would be status inequality. And they will use their status to make movies with narrative they like, media push their ideas etc.
@@dmitrizaslavski8480
Yeah obviously that didn't work either, and we understand why.
Social liberalism seems to have a more stable solution, where there is a floor but not a ceiling. Strengthening the bottom of the pyramid foremost, without trying to crush the top.
I think when one digs a bit further, the criticism of wealth inequality stems from two forces which aren't being represented well in this video. The first is often that economic analysis and the markets we have created are not properly capturing costs that have been built up from industrialization and modern society. For one, we face a slow-motion existential crisis in the form of global warming and the general ecological collapse we are seeing around the world. Some people are getting quite rich off that destruction but it is everyone who will eventually pay that cost. The other side to this is that wealth at the billionaire level isn't just increasing one's purchasing power, but weighing in on topics of government regulation and judicial impartiality. The wealthy can afford good lawyers to get them out of trouble when they drunkenly get into a car accident and kill several people while the poor often find themselves better off admitting to crimes they didn't commit rather than face a trial based on the ten minutes of time they were given with a public defender. Further, the wealthy have access to policy makers that the average person doesn't have. This means when deciding on regulatory reform that could determine the extent to which we, say, continue to tolerate the release of green house gasses into the environment, the wealthy tend to have an overstated role in determining those outcomes. When so many of the wealthy make their money through the release of green house gasses, this provides at the very least the image of corruption. A key problem many will have watching this video is that economics is not an all-encompassing view-point and certainly doesn't solve all our problems.
Yes, but we saved a ton of money by having one dude on Excell, and 19 others unemployed.
Great response!
but thats not a problem caused by wealth inequality. even without wealth inequality people would still take the path of least resistance to economic growth. Also there will still be good and bad lawyers
I agree with you, but corruption can happen with any system, the USSR was an incredibly corrupt government, even though there weren't any billionaires there.
(I'm not trying to bash the USSR, just saying that there are many more issues rather than wealth disparity which contribute to differences in power)
He actually made the point in the video, but it's a bit subtle. He basically said in some cases wealth inequality comes at the expense of others, for example the leeches of society like criminals. The only difference between criminals and, say polluters, is that some of the worst polluting industries hasn't yet been outlawed. The guy who gets away with murder is also another example.
Spoken like a man who hasn't invested in guillotine manufacturers.
Profit off the revolution :thinking:
Someone's going to and it may as well be me.
@@magnusanderson6681 The revolution's instated rulers have this annoying tendency, to get rid of their instigators. He couldn't be trusted against the previous ruling class, and no socialist ruler has ever cared for anything other than his own pockets. So the instigator will probably at some point, turn against him... so the instigator must go where he can never in eternity make any trouble for the socialist.
If AOC and her squad truly cared about the environment and the poor as much as they love instigating them against people who dare to work for what they have, they'd have scaled down their living quarters to afford doing charity, and taken the train and buses wherever they go, don'cha think?
Did you notice her celebrating extending poverty and unemployment in Queens, NY? Her followers are her "useful idiots", to get her and her cronies in power and thereafter, their faithful serfs for time immemorial. For that is how every socialist leader gets into, and retains, power.
What your history books most likely leave out, is that Robespierre's revolution became a witch-hunt thereafter, against any who dares question him - much like any who dares oppose Blank Lies Makers. It became so bad, that Robby himself was eventually executed for some crime against the revolution.
@@JFDSmit-rm6tw Lol one of the few things I do remember about the Revolution was that Robespierre was executed. But yeah, I was writing a 1 sentence comment, not an epic business strategy. Also, I don't agree with what the left is doing right now.
Many of the people guillotined were members of the revolution. Ignorance run rampant with failures like you.
Great video as usual man, thank you.
One point I disagree with towards the middle of the video and on which I wanted to share some thoughts: "All these innovations would not have been possible without wealth inequality." -> When you look at some more innovations beyond the steam engine, you find that innovations are not just driven by wealth but also by spare time of some individuals and their intellectual skills - these individuals were not always wealthy (e.g. Nikola Tesla, Niels Bohr, Albert Einstein...). Today, it is driven by companies, and the most innovative companies are the ones trying to attract the most skilled workers, offering them big pay and better work-life balance (the modern equivalent of more "spare time"). In these companies, the top directors running the business and making millions / billions are not the ones innovating most of the time, but rather their employees, at various levels. So one could argue that, if there were less inequalities and if people around the world had more spare time to educate themselves and imagine new things rather than spend their days worrying about how to make ends meet, we would have many more brains working across the globe on solving problems, and thus we would see more innovation.
Well said! The rich don't usually have a reason to innovate.
I love this response. Very true. The mind is only creative if it has the capacity to be rather than focusing on working day in and day out to survive.
But such innovation use to come out once every decade of 2 only. And someone got rich on the back of innovations done by Tesla, wright brothers, etc. It's just that tesla and wright brothers didn't get the fruits of their innovation and labour.
@@marshalLannes1769 We also have a lot more people who can innovate now though.
@@marshalLannes1769 yes but the point was that the innovations werent made by rich people, someone got rich off of it but these things but they werent invented by rich people.
As an Australian, as well as watching China rise to become a juggernaut, people won't ever revolt or really start getting upset about inequalities as long as their needs and wants are being met. It's why Australians totally forgot about the brutal fires in January and why the Chinese don't care about the uyghur camps; as long as we have our holidays, steady jobs and netflix, we're good fam
Divorce rate of ~40% in Australia. Do you think that we are a completely fulfilled nation?
@@danielt6856 , not an Australian but why would a 40% Divorce rate be a bad thing? that simply means that 40% of marriages weren't working out.. should those folks be forced to stay miserable (or at the very least in marriages that aren't making them happy) or should we trust them to behave like adults and figure out what's best for their individual situations?
"Bread and circuses."
@@danielt6856 I would say that has nothing to do with our economics. If everyone had all the money they need it won't necessarily change that. If anything it's a cultural or philosophical issue.
@@Gorilder It just means that more people are thinking of marriage as a status change rather than eternal partnership
Ah yes, my washing machine, or as most people call it *laundry slave*
And don't forget that many poor communities in cities are reliant upon laundromats owned by rich people, who are basically taking advantage of people who can't save enough money to buy their own.
@@Dthatsmi "Taking advantage", really? It's an alternative. If you can't afford your own washing machine, you can instead pay a small fee to effectively rent one for each laundry. It's also convenient in cases where you wouldn't get your own anyway (lack of room, temporary stay, etc). I suppose you could also wash your clothes by hand, if you really don't want to feel "taken advantage of".
@@gaohkai9441 Funny how dumb it sounds with laundry machines. Maybe if I blow the concept up to the huge housing crises in Boston, NYC, San Francisco you can make more sense of it. The difference is that people who are looking to buy a house are an entire different class of people who are looking to buy a washing machine. You're so blind to the reality and depth of wealth inequality (even in the US) that you assume everyone using a landromate is just doing it because it's a wise economical decision on their point. No, they have no other option, the prices are set to keep the landromate in business by leeching money out of poor communities. I can understand laundry machines in college dorm buildings, but please explain to me why every poor community in an urban environment is chalk full of laundromats. I would love to understand your point better.
@@Dthatsmi What are you trying to say? Are landromates bad because they are leaching money out of the poor and are the "only choice"? What is the solution to the landromate problem? SHould we close them? Should we regulate them so they can't charge "unreasonable" amount of cash?
Pardon me but I have difficulty understanding your point. A bit of elaboration will be greatly appreciated.
Or as the neighbours call it *my wife*
Works as a dishwasher too
So.... if more of us had more money we would have more time to spend on "hobbies" that have the potential to create "innovations" that would better all of society?
Isnt that more an argument for more equitable wealth distribution rather than one for wealth accumulation?
@@Ren33469 What class do you fall in?
@@Ren33469 Fair enough
yes
@@QuackersMcCrackers he was being sarcastic
@@liblib89 Ahhhh
There's something I would like to add, workers compensation compared to their production, since 1989 people have become 200% more productive on average, but compensation only increased by 100%
Did people become more productive, or do we have better machines?
@@Noam_.Menashe both, since people did have to improve and specialize their skills in order to man the new technologies.
However beyond that I believe the workers deserve it because without them nothing would work. This causes no harm to you, and would improve the lives of millions as well as create a more prosperous society. I see no logical reason to not support higher wages for workers.
people on average... the truth is most of that productivity increase was concentrated among the people at the top.
@@vexed5567 that's demonstrably false, productivity increased for everyone in general.
@@shakshukioflibya6633 - it comes back to supply and demand for the worker’s value proposition. If 5 workers are capable of doing a job and there is only 1 job opening, competition will drive down the wage. Compensation tends to go to productivity that is both highly valued and relatively scarce.
"Inequality motivates people and drives innovation." Shortly after: "Innovations in the past were driven by the rich nobility as a hobby". It's not either or but money is certainly not the unique nor primary factor motivating people, we just live in a world which doesn't know how to function without assuming that it is.
"doesn't know how to function"
As long as people are alive, which means they have the means to take in food, it functions.
Doesn't mean it should function in a way everyone is happy. But it functions.
A car with only one headlight and running on 3 cylinders
- still functions
I didn't say it doesn't currently function (albeit with many issues, as you concede). I'm saying our culture has not conceived a viable model that puts something other than accumulation of capital as the main driving factor for the economy.
@@Anatolij86 thanks man. i can look Egoism (anarchi) with another view, but not from a good way to seized materialisme as a whole.
But those rich people can't exist without inequality, the statements aren't contradictory, you failed to understand them.
@@pneumonoultramicroscopicsi4065 Good observation. But I was focusing on the mistaken argument that it is only or mostly the pursuit of financial reward that drives innovation.
I wish this made some attempt to answer how MUCH inequality is good or bad, including things like welfare/education via taxation which reduce inequality but can also fuel economic growth.
Or the different kinds of inequality, like how South Africa is growing more unequal, but because the poor is getting poorer there, not necessarily the rich are getting richer.
Likewise, he didn't address how countries that get richer while reducing their inequality tend to be better off than countries that get richer while gaining inequality.
Absolutely, it feels like an oversimplification
@@optimize. it's a complex topic. There's only so much you can say in 16 minutes
I do not think its possible currently to solve this issue without degrading our society into anarchy. The rich control infrastructure and most of technology so we would have to topple that in the process. Also wealth inequality is too ingrained in society for it to change, and what social structure would replace it if it were to change. So in summary wealth inequality is too fundamental to our society, so it cannot be toppled without destroying modern society in the process.
One of the things that bother me so much is that the idea of having a roof over your head is getting more expensive everyday because we allow speculators to speculate with land ownership. Young people are getting priced out of the idea of having roofs over their heads.
Also, with regards to the video, while in the grand scheme of things we are better off now than 300 years ago, I don't think we're better now than 50 years ago. At least not if you're a middle-class person.
A middle-class wage used to allow families to live with many comforts.
To everyone saying he was out of touch:
1) This video was not about regulatory laws but about wealth accumulation. A lot of people are saying that those with great wealth influence those in positions of power. While this is true, it is outside the scope of economics and thus a channel called "Economics Explained" did not touch on it, which makes sense to me. Yes obviously we should have more robust laws that limit how much you can influence politicians with lobbying, especially in countries with high rates of corruption.
2) The presenter regards Scandinavian economic systems as very good, and people there pay very high taxes and as a result have low income inequality when compared to other countries.
3) In my personal opinion, wealth inequality in and of itself isn't an issue as long as long as the base standard of living is high enough to where everyone can live comfortably doing what they like to do. Take Sweden for example, they have some of the highest standards of living in the world, everyone can afford housing, food, and to not be overworked and live comfortably at the same time, yet the country has some of the highest wealth inequality in the world.
You should look at the data for point (3). It really does appear like wealth inequality itself is a better predictor for societal ills such as violence and suicide than poverty.
@@endlessxaura I would not argue it is the best predictor though. While high wealth inequality does correlate with the things you mentioned, it is not always the case. Sweden for example has very high wealth inequality but low levels of violence and suicide. I think this is likely due to the high base standard of living present in Sweden, meaning that even the poorest there are able to make ends meet without having to overwork themselves. The reason for this is that income inequality in Sweden is very low, and income taxes there are used to prop up the most vulnerable in their economy. Therefore I would argue that wealth inequality in and of itself isn't an issue, but rather the issue is what leads to wealth inequality and how "high" those at the bottom of the ladder are, so to speak.
People thinking wealth inequality is ok are people assuming a certain baseline equality exists. I think there is a lack of understanding the term. Different levels of wealth isn’t wealth inequality
@@JacyndaMinor Yes exactly.
Yes as long as the wealth gap isn’t too big then people tend to be happier and less crime in those areas.
I know I'm late, but I dont have a problem with people accumulating unfathomable wealth. I have a problem with those people not paying taxes, and yet still having immense political sway, lobbying to keep minimum wage down, increasing taxes on the poor, and keeping Healthcare a private industry run more like a business, and buying their dumb children an unearned spot in a university effectively buying their diploma.
Increasing taxes is something that socialists/communists do. And you say that it’s the same people that increase taxes on the poor that privatize healthcare? Isn’t that the opposite of a socialist policy? Think
@@obamama4632 who said anything about communism or socialism? Trump passed legislation to increase the tax on poor and decrease the tax on corporations. The same corporations that keep the health sector privatized. You can think all the stupidity you want, it doesn't change facts. All you know how to do is spew buzzwords and think that makes a compelling argument. It doesn't. Go educate yourself.
@@obamama4632 Increasing taxes is something capitalists do as well, they just do it more to the poor while reducing taxes on the capital owners. It's not like taxes weren't being collected from serfs during feudal times.
If their children were really dumb they would squander the wealth in a generation. More likely the children are smart but they spend their time on horse riding , attending fund raisers and other social activities which will enable them to actually manage their wealth. The college degree is not going to make a difference in their lives but it is a necessary social cachet they need to have so they spend the money so their children dont have to waste high school prepping. Once in college they are plenty smart enough to get through.
You don't have a problem with people accumulating unfathomable wealth? Whose approval are you seeking by saying that? I love you so much 💀💀💀
The issue with wealth inequality is not necessarily material, but an issue of power. I'm afraid you overlooked that.
The mother struggling to pay bills is in fact deprived of power and being forced to act in a certain way by those that have more power than her. Generalize this at the level of populations, and there you go.
@Richard Casterly a worker woman is forced to act a certain way. she can't decide buisness policy, she cant decide any policy outside of her home. not even that because probably she has no home and is renting so can't even decide that. She can only decide what dictator she prefers and they all look quite the same. the alternative is homelessness and hunger so not much of a choice. If I hold you at gun point you can not say "oh well at least I have the choice to be shot"
@Richard Casterly I think the idea is that a minimum wage earner shouldn't "struggle" with a kid or two. That is the goal, but given the direction of our wealth inequality that ramps up prices and barely changes wages hinders that.
@Richard Casterly I think what Rasmy was getting at, was that there's often a trade off between what a person really wants to do and what they can get paid to do. A good example is that no one pays you to stay home with your kids. Having the option to pause your career to focus on your family is increasingly a privilege for the minority.
Another good example is that a majority of people work in jobs they don't really care about. A gallup poll from 2017 found that only 15% of global workers (and only 30% of American workers) are engaged at work. Lower wealth inequality might allow people to work in areas that they love, even if those areas are economically riskier.
Who’s making her act in what way? That’s what you need to work on. I don’t think it’s rich people’s fault. Even if it is rich people’s fault, I don’t think it’s inequality’s fault, it’s just those certain actions of the rich people that would need regulation
Richard Casterly i think we are in an atmosphere where cost of production is invested in automation to scale things and no longer by increasing labor. Everybody needs everyone else, whether youre a businessman or a cleaner or low skilled worker. Someone has got to do the job until we’re all easily replaced by machines. It’s mutual agreement that society needs your skill and for that society has to assure you live the most humane way. And dont be throwing that it’s only the mother’s responsibility to take care of the kid when everyones preaching that it takes a community to raise one. After neglect, all the government wants now is the “unleashed” potential of its youth which is quite delusional
"In December 2008, Goldman Sachs paid out $2.6 billion in end of year bonuses in spite of it's $6-billion-dollar bailout by the US government justifying these on the basis that they helped to ' attract and motivate' the best people
Economists are dumb, they don't understand things. Or care about things like humanity. We produce 4x the world's food needs. Why are there people starving then?
@@Jmanblack22 Because it is hard (expensive, way more than producing it) to transport the food to the one who need it.
@@Jmanblack22 because defining "needs" is far from objective. Also I know economists that double your IQ
Ohh look here, an edgelord i am so impressed. Do you not at all understand private property or is that something you know a few levels above your level of understanding?
@@apc9714 Great job by the market forces to allocate resources. Oh wait
The part about prosperity reminds me of a joke from my former communist country
"Is it true that everybody is equal here in Romania?"
"Yes, everybody is equally poor"
Really interesting video essay, love your work and your dry humour! I may not agree with everything, but your videos often question my biases, forcing me to reevaluate them :)
i'm very suspicious of the notion that wealth inequality breeds innovation as I haven't seen studies that really link those in an way other than conjecture, but I can easily find MANY more peer-reviewed articles that provide ample support for how wealth inequality breeds crime, illness, social distress, and increased financial burden/stress. What is the opportunity cost of NOT distributing wealth in a more equal manner?
100%
Wealth inequality breeding innovation is an outright lie, and easily disproved. Innovation comes almost 100% from prosperous nations, one where resources and knowledge are easy to acquire. Third world nations have the greatest inequality and have the least innovation, while the greatest innovation in the US almost always comes from at least the middle class.
An example could be someone working hard to become the manager of a place in order to earn more money. A good manager is more skilled and can deal with the various issues that the employees either can't or don't want to do.
Another example is entrepreneurship, where the chance of becoming rich helps motivates start ups and inventors.
The opportunity cost would be... not as many people would be buying their 30th private jet.
It actively destroys innovation.
It's like depriving a brain of nutrient-rich blood; coagulating it in tiny portions of the body.
In addition - trauma damages DNA, and the damage is inheritable. The claim that "quality of life has improved for everyone" expressed in the video requires a delusional sampling / survivorship bias to make.
Further, these privatized "huge concentrations of wealth" are born of *socialized* risk/cost.
I'd say this video suffers from the usual problem of some of this channel's content - the unspoken presupposition of the fundamental goals of the economy. "Leaving aside the morality" is a good point when abstracting away from the injustice of the super-rich not having to work for their wealth to grow and looking at the wider effects of their existence, but it also cuts out the discussion of what the economy is even for. What are we optimizing here?
The example of having to save money to get a spaceship to work your second job is actually very demonstrative here. The free market economy optimizes productivity. Even when the average person becomes wealthier, they don't get to relax and enjoy their wealth as they have to keep doing the maximum possible amounts of ever-more-productive work to sustain it. If more wealth stayed at the bottom of the economy instead of being channeled to the top then people would get to work less to maintain the same effective income, living better lives as a result. This is, of course, utterly impossible in the free market, where the investors would rather see worker pay cuts and layoffs than a reduction in their own profit margins. And it would have to come out of the profits, since passing it on to the customer would either make the product uncompetitive or drive inflation and just add an extra layer to the mess.
The arguments for wealth concentration being natural and coming back as innovation are disingenuous. Richer economies have more "spare" resources to channel to the rich, but that doesn't mean that they have to be channeled to them, it's a case of correlation not equaling causation. And the concentration of resources required for innovation can just as easily be done by state actors rather than private ones, with the innovation itself being created by engineers rather than capitalists. The role of inequality in driving worker self-improvement is fine in theory, but in reality it may restrict access to good education for the poor people who need it the most to escape said poverty, leaving their potential unfulfilled and forcing them to the bottom of the economy regardless of their talent.
Yeah, this is my main disagreement with the video as well. The purpose of the economy should not be to just increase the average wealth, or even the wealth of most people, because there's more to life and standard of living than that. Extreme inequality *is* inherently unjust, and benefiting the economy doesn't make up for that.
@@oterceslanaclevvo9855 Is there some line where you don't care if you and everyone else gets wealthier, but you have to bring down someone who's doing better than you, even if it comes at the cost of the rest of society?
This is just pointless envy. If everyone is better off with an increased amount of inequality, then society is better off with it. I get that humans are comparative creatures, but if you try to think rationally about this what you're saying doesn't make any sense. It's the same spiteful logic some people tend to use in relationships as well. If they didn't have a good relationship with their mother, then neither should anyone else, because that would be "inherently unjust". The "if I can't have it, nobody else should"-mentality is counterproductive nonsense.
Note that this isn't necessarily an argument for inequality in the real world, but you said that inequality is inherently unjust, even if everyone benefits which is completely ridiculous.
So what's the alternative?
New tv show. Bear grylls drops 20 billionaires on an island with limited tools and wonder how quickly hunger games kick in
@@chrissi.enbyYT 😂
If you dropped 20 normal people on an island do you think the outcome would be different?
@@Crack-Insomniac no...but id get less satisfaction from it
@@xanderjames8682 ma man
55.8% of billionaires are selfmade. Most had a lot of stem background. I can guarantee they are individuals with high intellectual capacity and would have a greater critical understanding of certain things. I would say, it would not be that hard for them compared to intellectual deficient plebes.
Some interesting points here, but I'm not sure about this image of inequality stemming the wealthy (from medieval kings to modern industrialists) getting wealthy while others didn't actively lose out. There are clear moments in history (such as the enclosure movement) when great swaths of people lost rights to property (or the rights to use public property) directly due to the actions of the wealthy and privileged. This, for instance, is an example of wear the wealth of a few came at the expense of the many.
Arguably that sparked the Industrial Revolution, but there are a couple of issues there: firstly, that's a pretty speculative hypothesis, and secondly, there are a couple of hundred years of suffering in the interim for a LOT of people...
Interesting, then the US must have grown significantly poorer 1940-1985 as the share of wealth owned by the richest 10% decreased from 82% to 64% in that period. Then the country obviously got super-rich during the second Reagean term and after, when the inequality skyrocketed. Now go and pitch that idea to the auto-workers in Detroit and coal miners in West Virginia ;)
@@SigFigNewton or maybe people should aquire better skills and not regulate themselves in declining and obsolete industries like coal or cars. America became wealth cause the skills required to be marketable yields the most wealth. You see this everytime in every information and industrial revolution
Ie. Learn to code
@@bellphorusnknight supply and demand. If everyone learned how to code the supply would go way up and the wages way down, ironiccly what happened in car manufacturing. If you need three jobs to pay rent then you don't have time for education. A UBI would be great for this but only then could your solution be viable in some extent
But, forgive me if I'm mistaken, that reducion in inequality was a CONSEQUENCE of poorer americans getting wealthier, not the cause of it. Like, if we were to just kill every billionare alive, inequality would descrease, but that probably wouldn't directly improve the economic lives of common folk, at least not directly.
@@bellphorusnknight that would only be a free choice if aquiring new skills was free. But it isnt. It costs a lot of money, thats lacking way too often. Thats where your idea fails to meet reality. If students got funding so nobody was relying on private money to get new skills, then you have a very valid point. But at the moment, thats not true.
I miss some downsides of Wealth Inequality:
1. The wealthy receive a large part of the general increase in value. This leads to an increasingly uneven distribution of capital. The normal population degenerates exclusively into labour. In our modern society, however, almost every innovation requires capital, which excludes a considerable part of possible improvements or makes them fail due to gatekeepers.
2. Wealth Inequality transfers to democratic inequality. Either by influencing public opinion through (owned) newspapers or television channels or by having better access to politicians. The mere difference in the frequency with which political decision-makers meet with representatives of business as opposed to civil society is enormous. In addition, they are often major donors to the parties or election campaigns. This lever is then used to pass laws that directly (depriving criminals of voting rights) or indirectly (registration hurdles or fees) disadvantage poorer people.
1. Even though the wealthy receive "most" of the increase in value, the other hundreds of millions are still getting an increase in their basic living year after year. Having it the other way around would leave no incentive to invest in creating value thus standard of living would not increase at the same rate as it does now.
2. I agree for the most part
@@Harvindg40 1. the idea that income is the only possible incentive for creating value is very much bs.
a sense of agency which people would experience through actual democratic involvement would be arguably just as powerful.
@@Harvindg40 Then explain why life expectancy has stagnated in the US. Or why minimum wage from the 1970s adjusted for inflation would be over $20/hour.
I think he actually did sort of cover 1- How the wealthy invest in large but dumb ventures, when there are loads of reliable smaller ventures to be had and small improvements to be made. If the general population is living meal to mean while the rich sit in their golden hills, society won't improve as much as if the general population each had a bit of extra money to kick in to, say, build public works like roads and clean water.
Well put, sir.
8:30 "......none of these technological marvels would have been possible if it weren't for the Hugh concentration of wealth" What absolute BS, and contradictory of previous EE vid that argued that many of the innovation such as the internet were the product of government spending that were then usurped by the few.
Sorry, this is pretty late, but I think it's interesting that governments and corporations both lead to innovation. I mean, governments and large corporations are both organizations that only make sense in a large society. I would say innovation is inherent to humans, and those who have the means will pursue it, whether they be 7 billionaires all hiring specific innovators with their vast wealth or the entire population who create a government to, among other things, invent on their behalf with their tax dollars. Innovation will reflect the desires of those who fund innovators, so if the public funds the innovation then it will be more useful for the public. The example of the industrial revolution is kind of counter intuitive because while some inventions were made by tge wealth the broader context was one where a growing middle class meant that their was demand for practical inventions to take hold and their were people willing to fund them because demand more accurately described need and inequality decreased.
Many not all of them
I think Government funds should be considered as the biggest type of wealth concentration, so I don't see any contradiction
@@sdrk1125 Is the US government considered in inequality calculations? No. Basically, the argument is that EE doesn't expand their point about concentration of wealth to concentration in organizations and only in concentration of individual ownership. If this point applies to government, then it defeats it's purpose to argue for the good wealth inequality
"One person with excel can do the work of 20 people with an abicus" *laughs in Libre office*
But it's the same thing, relative to what he's saying.
@@andreipopescu5342 The point is, Microsoft isn't really an innovative company. Even if Microsoft never existed, we'd still have all the same types of software they're known for today. DOS? Look to Digital Research with CP/M. Windows? Look at Xerox. Microsoft Office? While bringing them together might be considered a Microsoft "innovation", all the types of program they bundled into Office already existed. In fact, I can't think of any major innovation Microsoft is responsible for.
@@rodh1404 I don't think the point made in the video was that Microsoft is either good or bad. Anyway, it's the same thing with Edison and, historically, it turns out that actually having a debatably new idea isn't exactly the main force of progress. Did Rockefeller invent anything new per se?
@@rodh1404 That's the case everywhere, wasn't it Visicalc who was first? The innovator may not be very good with the follow through, Microsoft was, they made it a product every business needed.
Also think, if it wasn't Microsoft, it would have been some other company...
EE - "...the real issue is outrageous investing."
Me - *closes portfolio tab full of meme stocks*
I hope you only hold leveraged derivatives on those meme stocks for some true degeneracy
Err nerr, mah stonks!
Dogecoin time...
man of wsb?
buy more hentai!!!
Some comments have already touched on this, but the argument that inequality breeds innovation is not guaranteed. In fact, you contradict it somewhat in your own point later about the 5k loan...if there is not enough profit, then what's the point? Thus excessive wealth may slow certain types of innovation. This video also assumes people are completely motivated by wealth. I won't say they're not, but it becomes...attenuated. As a person progresses in their career, they may stop caring about sheer money and more about things like time, vacations, etc (wealth, but not necessarily for economic gain...). In other words, caring about money until basic lifestyle needs are met. More is nice, but stops being a main motivator.
The other assumption I thought this video went on is that large capital projects require accumulation of wealth. I'm personally really curious if this is true - space flight, for example, was the government (a stockpile of cash from mostly not super rich people) the main funder of this project? It is in some sense a use of distributed and small amounts of wealth, so I don't see that it is required we enable people to be super wealthy for this to happen.
I think the other common argument I'd be curious about that wasn't really addressed here is, yes, Bill Gates has massively impacted the world, but has he impacted it a mind boggling amount of dollars worth? If rich people cannot conceivably find a use for their money, should they not distribute it to people with very real problems causing literal stress and health issues and other issues? There are studies about how no-strings-attached angel funds and such can really help kickstart smaller economies, help people escape poverty, homelesses, etc. I think the common idea I heard is "maximum wage" - an analogue to minimum wage that says "okay, you can buy everything you've ever dreamed of, stop now". - the wealthy would be motivated to continue working to maintain their lifestyle, but that money could be used by non-profit driven institutions (govt, charity, etc) to perhaps fix more systemic issues.
Very good points 👍
@@Inquiring Weird, all I see is "Ree, better ad hominem since I'm wrong." Maybe I left an extension on.
Thank you for such an intelligent comment. I agree with you but i would not of been able to say it like you did.
@@Inquiring "Obviously if someone says something I disagree with they're wrong and dumb REEEEEEEE" live your life
A maximum wage is the same as a maximum limit on innovation.
Just had to say how much I love your videos!! Economics is kind of a tough area to penetrate but your videos do a great job and so many questions I've had have been answered in your videos!!!
It’s actually a modern misunderstanding that hunter gatherer tribes struggled day in and day out to scrape by a survival existence. In fact, because of their versatile diets and connection with the environment some experts think they worked as little as 15 hours a week on survival activities. Read James Suzmans great work, “Affluence Without Abundance” where he lays out this argument.
We have modern day hunter gatherers living quite well. I can't speak for their working hours, but they're nomadic, healthy, and happy. Check out the Khoisan people.
That book is based around one tribe, brainlet. Believing that one tribe would be the rule for most people for most of history is what we call and ad hoc falacy.
@@juanjoseph You sound like a fun guy.
Ahh yes, only 15 hours a week for the bare minimum to survive. What a great deal!
@@jaustin2737 u too
As a relatively well to do (very by South African standards) I can tell you that the political risks of wealth inequality here could dwarf any of the drawbacks that you've mentioned.
Your opinion does not matter. Respect mah authoritah!
For those who are interested, Economics Explained analyzed South Africa's wealth inequality before this video was posted.
@@user-sr3ip8ut5k I'll check it out.
I feel like this video didn't touch on the economic reality of non-first world economies. Extraction of natural resources of a poor country by multi-million corporations are a reality that hyper capitalists tend to ignore. Even labor is exploited in poorer countries so the economic viability of a product is maintained. I wish future videos get more in-depth with the analysis as this felt like preaching to the pro-corporation choir.
Of course the video didn't, that would make wealth inequality look bad.
Economic reality of non-first world economies largely bases in someone who already has power using said influence to obtain money. Talking about wealth inequality in such countries is self-defeating, it is not rooted in economics to begin with.
> Extraction of natural resources of poor country by multi- million corporations
What you mention basically sounds like the Prebisch - Singer thesis.
There have been serious doubts regarding the thesis. Techically, reality gave opposite results to those expected by theory (policies created following Prebisch ideas didn't redult as intended in latín América; and in the case of China, literally happened the opposite to what was predicted by the theory).
The net result of the 2000's commodities boom basically debunked this thesis.
15:17
Protectionism and subsidies by the governments of rich countries are much more damaging to poor countries than whatever corporations do. For example if the EU got rid of protectionist policies and the CAP subsidies, most european producers would move their production to poorer countries bringing trillions with them, and with that money those economies would thrive, just like Asian countries thrived when manufacturing was moved there.
I’d love to see you examine the relative costs of inequality between equal and unequal countries.
“Equal” and “unequal” countries have earned their spots
6:12 the fact that many people who have gone through college have not seen the benefits that was promised is also a point of contention for a lot of people.
“The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition is the great and most universal cause of the corruption of our moral sentiments.”
-ADAM SMITH
, SCOTTISH POLITICAL ECONOMIST (1723-1790)
Adam Smith was referring to the feudal lords of old, not the billionaires of today. Specifically he was against parasitic landlord.
@@sangeetanarendrasingh5416 You really are going to split hairs between how banks behave today compared to feudal lords in England? Its far more prevalent today.
@@sangeetanarendrasingh5416 You mean like... All the people that hoard real estate and rent it out?
Landlords are still very strongly represented among the wealthy...
A bank is also by definition something whose existence is largely built on 'rent-seeking', which is in the same category as a landlord.
(rent-seeking: The desire to find a way to be paid not for doing anything productive, but merely for owning something.)
This behaviour is rampant, and it is pretty much guaranteed parasitic in nature most of the time...
@@KuraIthys stay mad, nothing wrong with renting out your house
I don't understand how this quote is being framed. Is this a statement about this video is worshipping billionaires or how this video shows worshipping anyone for their wealth is dumb because they're just acting based on the sum of the economic forces imputed on them?
1. The super rich often use their money to influence government policy to the detriment of the general population.
2. They often keep an outrageously disproportionate amount of the wealth generated by their businesses by underpaying their employees.
People are free to take their labor elsewhere. People are free to not buy those products made by those businesses. You can do with a cheap phone from Cricket, but you want the latest iPhone. Who’s fault and decision is that. What examples do you have of those rich people creating a disadvantage for the regular people? A lot of those rich people donate great sums of money for worthwhile causes and invest in other ideas that noN wealthy people Come up with. Creating money for both. There also is nothing stopping regular people from coming together with their money as a group to influence government policy. But they’re too busy buying lottery tickets and buying the newest iPhone and wasting their money. Obviously not all, but a great deal.
@@joedirte8355 this the problem with the victim mentality we have today. The rich have more than me, I am a victim of oppression. To absolve myself from the decisions that I am free to make, I must be a victim of oppression. Its easier to say others must change to than to make changes to yourself.
Joe Dirte' with healthcare tied to jobs and the vast majority of americans living paycheck to paycheck, there is not the liberty to take labor elsewhere. Fact of the matter is that a significant amount of americans cannot afford an emergency payment of $400. Let alone a hospital bill - even with medicare. That significant majority in that position is stuck there due to skyrocketing costs of living with wage stagnation. The question then becomes, do we sit and watch our middle class disappear making these problems worse? Or do we try to fix it with better worker protection, updated wage laws, detaching healthcare from employment through public healthcare. The developed nations of the world have made their choice and are better off for it while we continue to suffer more and more due to inaction and attitudes that blame those caught between high inflation/over valued markets and stagnant wages with the risk of everything to change work.
@@joedirte8355 "People are free to take their labor elsewhere."
Noncompete agreements: Allow us to introduce ourselves.
@@OopsAllFrench I'm also curious about the proportion of Open jobs and Unemployed+unsatisfied workers. If its less than 1, then even if any individual has the chance at getting a new job, its impossible for everyone to, thus there would always be a number of people who lack the practical liberty to control their own life. Maybe in the past a person could go out and build a log cabin or start a farm, I don't know how possible that is today (or if that was even possible then). Also, businesses are expensive to start up today, meaning you need to take out loans to even try, but if your credit is bad since you didn't make enough to pay other loans, you're kinda screwed. Social mobility is a real problem; the US at least is lagging behind where we really should be. From geography, to ideology, to geopolitics, we really ought to be able to be #1, but if I recall, most of Europe, Canada, Japan, Australia, New Zealand, Singapore, and South Korea all rank ahead us. That being said, I am open to new information in case I missed something, sometimes I'm wrong.
Hello
Long time viewer here I just wanted to say that I respect your courage in discussing such a thorny issue from a different perspective than the usual one.
and while I dont necessarily agree with the conclusion, I can see the logic behind it.
so thank you and good luck
Thank you for the video’s i have seen 3-4 vid’s, can you make a video about enviromental issues seen from a economist viewpoint?
Inequality isn't inherently a problem, but letting the rich hold everyone else back is a problem. It's also a problem to let poor and middle class steal from and hinder other poor and middle class people.
The real goal should be to help everyone be all they can be and to have the wealth that they want and need within reason. No one should be rich enough to buy entire countries, or to force others to live a certain way.
you have a communist way of thinking, in a bad way I mean. No one can have "as much as they want" but should have as much as they can afford - people who do not participate in an economic or technical development should have the least, that's it.
This video seems very incomplete, we need a part two addressing a lot of the things talked about in the comments.
It's not an analysis, it's pro elite propaganda made by a bootlicking maggot.
its supposed to be incomplete. if they showed you whats really going on, put the spotlight to guys like lucky larry silverstein, weinstein, and the rothschildes, youtube would ban the channel.
youre not on a free website, this place is owned too. dont expect to find the truth here, because that wouldnt be beneficial to the guys in control.
@Seven V Welcome to youtube^^
@@sobloed6010 the internet*
This ignores people like Jeff Bezos and Musk who basically do their best to limit unions or any attempts to collectively negotiate salaries. Or landlords who negatively effect the economy through greedy methods. or vulture funds.
So the problem isn't wealth inequality itself, but the rent-seeking behavior and inequality of RULES (where some people follow them while others manipulate their way out of them) that are the problem
Which is good. For every pay increase the unions acquire, some must be fired in order to get the payments for the rest up to the next level. What unions/ socialist/ legalised extortionists conveniently forget, is that the company's overheads are included in the company's income/expenses. No union has ever fought for the good of the people, only for the good of the few whom the company can afford to keep after.
Those enforced salary increases? They force price increases of the company's product. Which in turn, forces other companies that use this company's product, to raise their prices in order to afford enough. The best way to kill an economy, is by unions. And thereafter, the government (which uses products from pretty much all producers), makes up for the loss by raising the prices of fuel and electricity and taxes. (Did you notice how the collective crime gang called DNC, lamented the tax cuts DJT implemented when he took office? Exactly.) Which again, forces the producers to raise their prices in order to keep up with demand vs cost of delivery.
Trade unions are the evil that kills everyone it touches. Socialism is the curse that kills every nation it touches.
@@JFDSmit-rm6tw This is really bad analysis.
@@voxomnes9537 It's not an analysis. It's what I got from producers, how they need to work against my country's (heavily Socialist leaning) government's monthly fuel price increase and yearly union-demanded wage increases, in order to save the company from liquidation and bankruptcy.
"the ultrawealthy are running out of safe havens and investments to sink their piles of money into"
oh no my heart sinks for them, how will they manage
Lol
It's a problem for the whole economy
This a very shallow analysis that doesn’t take into account how billionaires can change laws and control governments to further enrich themselves.
Once only one group can have guns, control, and lobby for regulations these will thrive. Others, like normal people, got their freedom reduced, and so cannot walk up the wealth ladder. Inequality is natural on any sense objectively. Protectionism is the issue in this case. Give all man the same freedom and remove killing legislation and see how it goes.
this whole channel is this....
This analysis lacks so many crucial factors, that it can be easily discarded. Besides, his view on human nature is just so simplistic.
@@atomikgeist6795 Maybe money to begin with is inherently faulty?
@@Danskadreng Centralized state controlled money is evil by definition. It is just a soft variation of socialism/fascism. There is just a group of people that can make your "capital" loose value in one minute. Billionaires created artificially by state influence have a play in dictating at least economic trends.
6:32 "higher pay leads to lower results" Well, my employers must have agreed with this.
:'(
BUT... (imagine it in EE's smooth accent!)
'The PROMISE of higher pay in the future if they show good results is a good motivator!'
Lol higher pay can never lead to bad results! The don't want the works to leave and become investors like them
@@onyimahumphery1961 you're right!
But what I don't get is how some investors are able to double their profit within a short period of time. I understand that the market crash is the best time to make money but there's this particular investor who made $100,000 in few weeks trading with about $15,000.
Does it mean they stand a better chance than others?
@@onh1137 No they don't stand a better chance they only did their homework and proper research
Great vid! One major flaw here is that technological progress is attributed to the concentration of wealth in advanced societies. The problem with this is that most of the amenities which we enjoy (smartphones, etc.) today and leaps in technology we've managed (space flight etc.) are based on research and funds granted by governments and NOT private capital. Mariana Mazzucato The Value of Everything is a worthy read on the topic.
I too find it little mislead.
Flux. You wrote that 6 months ago,, and wth the advent of SpaceX. Would you say your narrative is in flux?
Interesting because I have heard something similar. Private companies are improving existing technology. The state is responsible for the invention of new technology, often in connection with war.
That's not really true Nevl. Because the government itself is SOLELY funded by successful businesses who employ people and are themselves taxed. Government gets it's revenue, one way or the other, from business success. Meaning business was sucessful and government made an invention here or there off the backs of business, not the other way around.
I like how the title of the video makes it sound like you're going to show how wealth inequality isn't actually a problem, but instead, you ask a question to which the answer is "yes"
*Every CEO furiously shaking their head when reading the title of this video
I know some CEO's who live paycheck to paycheck. (They still act like they're the most important person on Earth though)
As long as they spend it on something that will bring value to society, it doesn't matter if they are extremely wealthy.
@@MrC0MPUT3R mad bro?
The two Co-CEOs of the non-profit I work for probably wouldn't shake their heads furiously at the title of this video. Even though their salaries are about four-and-a-half times the wage an entry level worker in our company makes.
@@michaelstollairetbarceo3287 Not mad at all. I jumped ship from the one company and I'm watching from a far as it slowly sinks.
Your thumbnail should've been 1 guy on 100,000 coins and 100 people with 1.
Just so things more proportionally match reality.
Actually it's even worse than that! The richest person in the world, Jeff Bezos, has $117B. The median American household has $97.3k. So Jeffo is 1,205,154 TIMES richer than they are. So he should have 1,205,154 coins for each one coin the other guy has.
I mean, how many are there smart and lucky people like Jeff or Bill. Not much. And how many are there waiters or simple office workers. A lot.
@@tannerman46 Bezos is worth $180B
The real question is: "When is wealth inequality actually a problem?" and the answer is quite simple "Wealth inequality is a problem when it grows faster than the economy"
yeah, right now the top 20% and bottom 20% of wealth is growing further apart, that was stable for a long time until the 21st century
@@nathanc7566 untill the 80'ies, when Milton Friedman convinced everyone in USA that greed is good. At least the Business Roundtable recently announced that they finally realised this was a shitty idea.
Damogen I mean we need some level of that, people wanting to be as rich as possible, that’s why we need the government to make sure they don’t harm society as a whole. I think that’s what Milton meant
@@nathanc7566 Yes, that is the idea. However, there are two obvious dangers with throwing all moral and personal responsibility overboard:
1) The government might not succeed in stopping it from going to far.
2) Politicians might also start believing that greed is good.
@@nathanc7566 oh, yeah:
3) 100% focus on short term profit, is gong to have a negative effect on long term viability.
I've said this myself. A few hundred years ago cinnamon cost half it's weight in gold. Today you can pick up a tin for a few dollars. I'm average income and I live better than a king a few hundred years ago.
Exactly! Part of the problem as I see it, is that everyone these days expects to be rich right away. And when they don't achieve this financial status they look for someone to blame amd the obvious target is other people that are rich. People have to temper their expectations or if being rich is the only option for them, find an avenue for success and work like crazy till they get there.
Some wealth inequality may be necessary to incentivize work, but there are diminishing returns. It is doubtful that increasing a CEO's pay from $5M to $10M would double their performance or attract a replacement who is twice as talented, meanwhile that extra $5M would be better spent literally anywhere else.
People should not be satisfied that they are living better than medieval peasants. Human rights has always been about achieving a basic level of guarantee that is within our capability, to make sure that people are not left behind as our capabilities increase.
And more people *are* getting pulled forwards. And sure, there may be some benefit to more appropriately distributing funds- but it's almost impossible to "properly" assign wealth in a completely optimal manner. Where would you want that hypothetical $5M to go? To the employees? The suppliers? The contractors? Where should it go, in what ratios, at what times?
@@travispluid3603 So.. We better give $5M to CEO for no reason.. Anyway, my opinion in this case is that employees should receive this money.. Why? Because suppliers and contractors are "other" businesses. its not "our" and if CEO deserves salary increase, I think that employees deserve that too (this statement is ofc applicable in basic situation where CEO-employees are directly related)
@@Cermix14 But then, how much *is* the right amount that should go to the CEO? You've got the option to pay him anywhere from minimum wage to all the money the company profits, except the money that is used to pay minimum wage for every other employee.
@@travispluid3603 If the CEO and the front line worker both work 40 hour weeks, and both jobs have the same daily difficulty, why should they get paid differently?
@@wylantern ...They don't have the same daily difficulty, nor do they do the same hours.
I am surprised you didnt talk about how money influences politics
What with big box corporations lobbying for increased regulations and red tape.
That's a different beast entirely
It called economics explained for a reason.
Money is power. Power influences everything. Thus why my lifes goal is to accumulate as much money as possible.
how do you select the video sequence? I was pleased to see Port Jefferson harbor (11:22) although it is far from extreme wealth
As someone who currently just barely manages to make ends meet, I find that, curiously, I have no interest in suddenly having a whole bunch of money. What I would really want to see in terms of equality is having some kind of safety net to help eliminate some of the stresses that come with not having enough money. There are certain constructs within society that I think absolutely need to go, like losing benefits that keep you alive if you have some sort of disability, but the second you get a job, even if that job makes you less money, those benefits instantly evaporate and you end up with less money, more stress and a lower standard of living. And furthermore, I think it might be an idea for those with masses of money to think that they perhaps don't need a second million dollar yacht or car or whatever fancy paperweight they fancy owning, and that one is quite enough.
Let's just say that quality of life and social mobility are more important than inequality. Inequality is bad when it compromises them.
Very well put, in such few words
Pretty much.
I like this, it is simple and elegant and beautifully summarised the point of this video!
@@EconomicsExplained wierd, I did not get that from watching this video.
So basically you want just the right amount of inequality jut like unemployment and inflation
The last part where you say the issue is with “outrageous investing” really is spot on, on the environment we’re living in today
"the space programs were funded by rich individuals pooling their resources"
in other words the rich paid taxes... NASA and space travel were not started by market forces. they were taken over but government spending and innovation started it.
Elon Musk and Jeff Bezos's space-faring ventures SpaceX and Blue Origin have cut the cost of attaining orbit greatly benefitting all of mankins. These are the passion projects of wealthy individuals -- essentially hobbies.
@@gallaxian
yes, except the technology had to be invented by a non-ROI source, before they privatize and streamline it. there is a reason why space x and blue origen came AFTER NASA and not the other way around.
@@nigen I don't know if it had to be this way. Certainly government expenditure accelerated rocketry and related technological innovation dramatically but I don't think we can say that, absent government investment, mankind would not have eventually ventured off the planet.
@@gallaxian
well, what market force would cause you to need to leave the planet and invest the trillions in mistakes required to get the R&D right based on a profit model?
@@nigen A passion project of billionaires (as seen with Musk and Bezos) or many people of modest means pooling resources (e.g., Planetary Society) or profit-seeking companies seeking to exploit the mineral wealth of the moon or asteroids. Innovations in many sectors (such as computing and material science) have lowered the cost of space faring independent of the efforts of space programs - whether public or private.
Oh please, what has the Amazon (featured as a good guy here apparently) brought to society other than just the capacity, soon to turn into coercion, to purchase and sell a bazillion of wares under the same virtual roof? This is not based on any brilliant idea - it is just putting huge capital to use by eliminating small competitors and increasing pressure on the labor market. Any storekeeper could have come up with such a vile strategy, the difference is none other than the investment they got. Wealth inequality mostly brings us vicious monopolies - see Picketty 101.
What's more, why wouldn't wealth be better distributed to those vital small businesses and households through government spending rather than some billionaire's whim? A government, for all it's worth, is more likely to be capable of making informed investment decisions at that scale. Plus, Bezos really has no interest in making his own workforce less desperate for pennies.
Yup, these are just government subsidized monopolies. There has been no great invention or contribution to society made by these companies that is worth all the small businesses they put out.
Bezos is only worth $200B because the entire WORLD likes what it does enough to value the company in the trillions. Bezos' net worth is 100% a vote by anyone who cares to buy or sell Amazon. Nothing could be more democratic or fair. Losers like Bernie and AOC actually believe that 435 members of the House and 100 Senators are better judges of how much "worth" someone should have. It's laughable.
@@rufuspipemos Well, in Poland, where Amazon came as an employer some 7 years ago and as a seller around 2 years back, they are still more commonly known as a company where one could be worked to death quite easily than (note: this does not typically happen to career junkies but to people who struggle to earn their bread and a tacky roof over their heads, as of 2021, both in Poland and in the US) than as a marketplace. Let's see if the advantage in shipping cost and possibly things like stepping into Polish TV series with their unobtrusive occurances (like say Uber in every f# Netflix/HBO offering) will allow them to crush the competition. Who are no heaven's send either. At the end of the day, consumers don't care much about a random guy dying, even within their own country. It won't be brought about much anywhere around you. The cost-profit spiral has more momentum than decency. Unless you decide for yourself it won't be so for you. And pay what it takes. After all, when you decide to shun decency, you may sooner or later trick yourself into coercion and see who has the last laugh.
Good video, but no mention of the Gini coefficient or its associated impacts?
Also, this is USA centric, but the purchasing power of our people has been deteriorating since the 70s, due to a combination of stagnant wages, and inflation.
Obama admits that 95% of the wealth generated under his tenure went to the top 1%. The rich are getting richer in real terms, while the poor are getting poorer in real terms, *as a matter of policy* .
Exactly correct. The extremely wealthy have a stranglehold on our policy and thus our democracy, and have routinely furthered the wealth gap to line their pockets.
Very well stated.
That's not completely true. It only looks at wages, and when we look at wages AND others sources of income everyone got richer. Also: did the poor have computers, internet and delivery services at their disposal back then? They didn't.
Fiat currency problems
@@thrawn9115 The prices of certain products can be lowered for the sake of demand. All for American consumption. The price of land, property and rent have gone massively up. You can get a cheap smartphone for 40$ nowadays instead of a 1000$ iphone. But I bet that the country that suppies the materials doesn't earn enough. So tech is extremely cheap in America and some first world countries.
Western civilization: Relies on rewarding people for doing the things that civilisation needs.
Also western civilization: gives people vast amounts of money because they already own vast amounts of money.
The reason for the basketball shots missing at higher prizes is pressure if your taking a shot for 5 bucks you don't really care but if it's for 1000 dollars it's a big deal and you'll overthink and miss
I must say I really appreciate your videos. They are excellent food for the thought and discussion. A great example of supply side economics. For us to have great conversation, you first had to supply some videos.
"Even the bottom dredges of society like grad students"
-the man who knew everything
How many comments are u going to make.
This is casually explained’s joke
EREX98
Actually it's probably because EE was a grad student himself. Speaking from his experience you know.
@@amoghus just a few
First time that I disagree with Economics Explained. I am a sociologist. Your argumentation, "general prosperity increases, so does inequality as a result of it", is flawed. You use the Middle Ages as reference framework, while general levels of prosperity have been rising a lot more slowly during last decades than the global wealth inequality is increasing. Referring to the Middle Ages is implying that there is a lineair association between that time period and now, which is definitely not true. There have been times in which economic growth was not associated with a large increase in inequality. So the lineair curve is a false assumption. The current situation in western countries is that wages are barely increasing, while the capital of a few has skyrocketed to unseen proportions. There will always be some inequality (which is inevitable), but this much inequality is nothing more than a deliberate and despicable political choice. I am not planning on unsuscribing, since I like your previous content a lot. Your channel democratizes knowledge about economics, which I fully approve of. But I do believe the quality of your other videos is way, way higher (and the argumentation solid proof). Perhaps time for an update, since I see a lot of the viewers make similar points as me! :) Peace out!
I'm sure if you looked at global wages over the same period, you would see great growth. As an American, I know I am losing out when businesses go overseas, but those countries benefit.
@@shorewall Well, not necessarily. You are in a way right that outsourcing production to countries with e.g. a comparative advantage in labour costs might make those countries richer in the long term (although in practice that depends on a great variety of variables, from the size of outsourcing to relative labour power and the political economy of every individual country).
However, in the 'Golden Age of Capitalism' (approx. 1950s - 1979), we saw overall growth of every country in the world at aggregated levels which haven't been achieved since then (with the notable exception of China). The idea at the time was that the Kuznets curve proved that inequality would widen as countries' get richer, but that after a certain point of wealth, inequality would first level off and then start declining. This was generally true till the early 1980s, after which the picture got completely lopsided. Since the early 1980s, we have in general seen widening inequality across the globe as economies grow at a lower level than before.
This suggests, if not outright proves, that inequality is not a necessity for sustained economic growth, and thus not a requirement to foster the sort of wealth accumulation necessary to foster technological innovation and investment. To say the same thing in other words, the 1960s and 1970s were not less innovative and saw higher growth rates, which casts a shadow of doubt on the idea that significant private wealth accumulation is necessary for sustained economic growth.
@@shorewall the rich of those other countries benefit. The people do not.
As An economist I absolutly agree. This video is more about motovation Then inequality. Psychologist agree that motovation and purpose are much better motivators and salary is only important if People don't get enough for a decent standard of living. After that, more reward becomes a demotivator
@@shorewall Hi Shorewall. I completely agree on a global scale. Absolute poverty diminishes very quickly, a point that Hans Rossling has made extensively. If you go from 0.50 dollars a day to 2 dollars a day, your income has quadripled. Seems strange for people who make a hundred dollars a day, but that is a very important change. But a lot of the inequality growth in our current time period stems from a very small number of western billionaires in high tech sectors (which are often about data gathering, a centralized industry). In those countries, salaries are not increasing a lot anymore. Moreover, a lot of lower educated people have difficulties finding a job, threathening them with poverty. So the point of Economics Explained is simply not true. You can have economic growth with a decreasing inequality, with a more or less stabilized situation and with forms of inequality going through the roof. The latter is the current situation on a global scale. Eight people who own more than 50 procent of the planet, that is becoming a danger for every democratic structure worldwide.
According to Marx, who wrote the most scientific critique of capitalism, inequality is built into the way capitalism works. The labour theory of value says that all wealth comes from labour and if goods are exchanged for their equivalent value then the only way to get profit is to pay a wage labourer less than the actual value of his / her labour. So overtime this results in massive inequality.
Marx was an idiot. Inequality is built into ALL political and economic systems because every family and clan is in competition with every other family and clan to some degree in a race that in its rawest form is about who gets stabbed to death and who does the stabbing. All systems beyond the family and clan are coalitions to either keep from being victimized or victimize others for the benefit of the whole coalition.
Cheating in all cases is part of the game, and often he who dares wins.
@@sophiam2095 Hi there - interesting perspective but if you've read any of his works it's clear that he wasn't an idiot as had a lot of interesting things to say about how capitalism works as a system in motion and how it can be disguised from other means of production such as slavery and feudal system. The point about inequality is about who owns the means of production - as whomever owns this own the surplus value and can therefore increase their wealth much quicker than one individual that can only sell their labour. This seems obvious as there are so many hours in a day that a person can work but a capitalist can scale up their factory (as an example) with hundreds of workers. So whether you think this is a good thing or a bad thing, it's clear that capitalism leads to inequality as only a tiny percentage of the population have enough capital to buy the means of production.
I think you're right that inequality is built into other systems such as slavery and feudal system (master and slave, Lord and surf) but that doesn't mean we couldn't envisage a political system that didn't have this oppressor and oppressed relation. I think we should aim for a world where people are truly free to spend their time pursuing their own interests and not just stuck in meaningless work. I think capitalism provides a lot of freedoms but also constrains people and provides un-freedoms like the freedom to die of curable diseases and the freedom to starve to death if you don't / can't find employment etc. I think we can and should aim for something better.
But the labourer is also using the equipment and resources of the company. These examples do not work when considering the complexity of supply chains.
@@PointNemo9 yes, correct - tools and equipment that were created human labour that was employed at a different company. This is an abstract question - how is value created, I don't see what it has to do with supply chains. Try and turn a tree into a chair - you will need human labour or a machine that was created by human labour.
@@pbeeby Because there is value in putting supply chains together. The value of a product is not simply a product of the human labour required to create it.
The other problem is the rich (individuals & corporations) benefit from society but shield their profits from benefiting soceity by questionable & at times illegal taxation practices
Conclusion: Some inequality good - too much or too little inequality bad!
Oh look the only non retarded comment goes largely ignored.
@@likira111 yeah
Not really??? The point is that once someone is so rich that they don't really care about it they start creating useless things like electric cars. But yes, too much of the problem.
Unfortunately, the "too much" threshold was passed about 4000 years ago and has only gotten worse over time.
When talking about wealth inequality throughout the ages you approach it materialistically and fail to see how wealth is leveraged to affect other aspects of life. An example would be leisure time. A medieval king whilst not having access to the technology and consumer goods of today, had the opportunity to engage in leisurely activities at a scale unimaginable for a member of the working class of today. What's the point of having central heating, smartphones, Netflix etc if you're having to work 60-70 hour weeks to stay afloat.
agreed but i think he wanted to keep it strictly in an economics discussion, rather than socio-political.
@@titolovely8237 Sure, but what is money except a measure of value. We say time is money, and while that is not always true. Leisure time has obvious value. This is DEFINITELY part of the economic analysis.
@@titolovely8237 Well, he was stupid to do so, as the two are intertwined. Money is power, and politics is the use of power.
@@titolovely8237
So, economically speaking, there's no difference between someone who makes $100k a year and doesn't work, and someone who makes $100k a year and works 80 hours per week?
If that is true then why is it useful to analyze wealth inequality through an economics lens? I don't care about how wealth inequality affects the stock market, I care about how it affects people.
@@titolovely8237 Any attempt to separate politics from economics is foolish or dishonest and should be disregarded outright in either case.
I dont really understand why investing would be any different from spending though. Sure the business might not be generating profits but it surely do employ labors as well which benefits the economy no?
But if the business isn't generating profits eventually it will go bankrupt and those jobs will be lost. Whereas had the money been spent it would drive demand and job creation at viable profitable businesses instead. At least I assume that is the point he is making.
1. Exponentially increase productivity while keeping wages fixed
2. Amass large quantities of wealth
3. “Give back” in the form of charity to the poorest so that everyone gets richer
4. Profit
How am I supposed to know whether or not I agree with you if the comments don't have any opinions for me to copy yet?
hahaha, wow that's actually a very concerning insight. but unfortunately all too true!
I am going to copy that.
This is why some websites like Reddit hide the likes from some post because if someone sees a post with alot of likes and support they're more likely to agree and like the post themselves same the other way around with dislikes. Most ratings are artificially inflated by mob mentality. It all depends which way the first brave souls get the ball rolling and the hive will follow.
There’s a good comment from ZoonEconomics
@@themongolsarecoming_9437 Communist behaviour xD joking
You know, here 5:30 it's actually very frustrating and even somewhat depressing that in 300 years some people will still live from salary to salary and with the constant fear of crumbling under economic pressure. Why can't we prioritise to minimise human suffering from economic asymmetries starting at least now? For what we are even going to colonize other planets if we just export our problems to outer space even considering that without billionaires' investments we wouldn't acquire cheap interplanetary commuting in the first place
But the thing is, how are we going to fix this? We're very far from a utopia where people can work without worrying about their neccessities.
@@JNM578 As our technological progress moves forward we find new ways/machines to improve our production that far outweighs effort needed to produce such amounts. Yet we are stagnating when it comes to giving people their production's worth.
Reading your message is infuriating on the same level as someone in ancient Sparta saying "What? Slaves living on same level as citizens? That's an utopia!". Especially how your post shows someone working (so not a leech) can still be forced to worry about their life.
The point is, you need to take care of yourself. What prevents you from doing so is government. A free man responsible for himself only thrives and if he does not he cannot blame others. There are only negative rights that can be deducted by axioms. The world does not owe us anything. We have to create things and be free to pursue happiness. If you are threaten protect yourself. If you wish more or better, create it. Fight against what blocks you from that. Those who do that are not a richer neighbour but the government.
A few thoughts:
1. Technological innovation often sponsored by few wealthy individuals means they chose which aspects of society gets improved and which are ignored.
2. If more people could afford to invest in technological innovation this would lead to more discoveries and greater wellbeing across all regions of the world.
3. In economics profit signals an inefficiency in the market. The increasing wealth of a few is an indication that they are costing the society more than they are offering. This is called negative externality. One obvious consequence of this is climate change. Wealthy nations' contributions far exceed those of poorer nations.
4. Society is poorer for the inequitable distribution of wealth. That's a fact.
Please don't comment on economic topics, you are incredibly ignorant
Your #1 is the most important one. Investments are made essentially -only- according to how much profit they can make the investor, not into how much benefit they can bring to society. So large collections of wealth no longer effectively serve to drive humanity forward.
#2 is an extension of #1 really. Not just for investment but also simply more free time for individuals to explore their passions - which might include playing with photovoltaic compounds in the backyard.
Need much more govt-funded programs and research into services that benefit society. Tax 'resting wealth' regardless; but give capital gains tax breaks for investments in projects certified as benefiting the community.
@@nowandrew4442 The investments that make profits are usualy that help with a certain problem or provide a service people like
@@shaunsensei6948 what utter nonsense. Most investments are in business stocks, shares, speculations, potentially-lucrative startups, etc. In fact "potentially lucrative" is the key word, since that's exactly what a makes an investment viable in the first place. It could potentially be argued that Government bonds is one way investments "help society" since they provide the govt with funds to operate; but since the govt then needs to actually do good things, which is not a given, that argument can be trashed.
When I read statements like yours, I think, "that's what a funded AI bot, run precisely by one of those who have amassed the majority of our society's wealth and would like to keep it that way, would say."
A lot of folks who are not rich squander while they super rich run out of things to squander with a lot of capital left. Jeez. A crazy world.
Two points/questions:
Firstly, is the ability to contribute positively to society truly the main driver for the accumulation of wealth? Is skill and education the dominant factor that allows some to become rich compared to others? How many of the world's richest reach their position by going to school, studying hard and not taking risks with negative outcomes that would have meant financial ruin for the average person?
Secondly, accumulation of financial wealth seems possible to me without it belonging to a few individuals. I guess the draw back is that it would be harder to organize concentrated efforts in funding particular research, with the benefit being that you no longer rely on a few people to make decisions on where funding is directed for everyone else (kind of like how democracy is supposed to work).
Would love to hear anyone's thoughts on these.
With your second point I often see capitalists suggest that people vote with their wallets. This gives the businesses and people who serve their customers the most money as a reward and so they can choose how to invest their money that they earned from their customer. With regards to your first point, 'ideally' doing what the customer wants better or equal to your competitors is how people get wealthy. Capitalists do not like it when people get wealthy through force, either political force, threats of force or actual force.
The way I see it, yes the desire to make money has been the main driver of innovation throughout history. People pick skills to learn and invest their money/time in places where theyll get the most return. This generally leads to an improved quality of life. I think you overlook what it means to be educated though. In the traditional sense, you seek knowledge to learn a skill and then generally someone hires you for that knowledge. Yes, the most successful people often got that way generally by taking risks and maybe not getting educated in a university, but they still sought out education to be able to understand which risks were the right risks to be taking in business. They are educated, but maybe not by the textbooks. And onto your second point, I think we misconceive that rich people accumulated their wealth “legitimately” by working harder and smarter than everyone else, but that’s kind of a flawed view of things. In a fully functioning capitalist democracy, a country creates a fantastic business environment which allows for their to be massive amounts of innovation and a few people get really rich, but society then gets a cut because the society was designed for that kind of innovation to be possible and benefit everyone financially (think Norway, sovereign wealth fund). However, the way it generally goes in America is that society does not take a small chunk of the profits, an even smaller sliver of the profits end up in the hands of politicians through lobbying and campaign donations who then make the tax codes favorable towards the businesses that donate to their campaigns, essentially destroying other potentially innovative businesses. Ill give you an example, both walmart and amazon often get huge tax credits for building stores, warehouses, or recently headquarters in whichever local city. The problem is, because of their size, they get an unfair advantage, not because theyre better in any way, but because they paid off the right politician. Amazon is also currently lobbying for a $15 nationwide minimum wage, but this is clearly to just make other retailers suffer because prices tend to be much more tied to wages at companies which arent amazon. In the past, the wealth came back to society through income tax, but profit is less and less ties to wages as we live in a more gloablized and connected society. Essentially, society is not benefitting in the way it is supposed to from capitalism when we have a system which awards people power based on their wealth and ultimately need a unavoidable tax system that does not discourage innovation (like a VAT for example). If everyone had the wealth to start a small business and no business was given special treatment, I get the feeling we would have a lot more successful small businesses in the US.
@@SimonTimbers The amount of new bussiness and innovation that you have in US is amazing,i don't see how you would explain that the system is going wrong with that result.
1. Yes. Just think about how wealth is accumulated in modern, Western economies. People produce or invest in something that millions of others are willing to purchase and efficiently enough to make profits. Furthermore production itself distributes wealth in the form of workers' wages. It's important to understand that most of the wealth of the ultra-rich is in their businesses, it isn't idle money.
2. 'Democratic investment' already exists in the form of public funding and central planning. Instead of a number of investors an even smaller number of politicians, bureaucrats and activists decide what to invest in. Besides government is terribly inefficient; take schools for example: spending per pupil goes up, scores barely change and this underperformance is usually met with more money. OTOH for-profit schools like charters are better or the same and cost less.
@Qwert That only makes sense if you think of entertainment, food, housing, healthcare and education generically but that would be a mistake. People have different consumption patterns depending on their income; there's alot of flexibility. If one can't afford a house one rents an apartment. If lobster is too costly one can buy tuna instead and so on.
A millionarie person is someone who solved an issue with better cost/quality then their opponents, the more the person in charge profits the most he can invest to increase the produtivity wich would make employers work less or/and gain more or/and cheaper products.
I don't have sources but the majority of the millionaries earned it by themselves it was around 90%
You're 3rd paragraph is useless free market already works like a democracy but better, the money u use to buy things would be equal to money the people who consume would be the voters and the owner of the business would be one of candidates (there would be more unless the market was monopolized i'll talk about that possibility after), I say that it is a better democracy beacause if ur not pleased u can stop voting right away unlike in a democracy in the politics.
Keep an open mind but still question the economy or market Well, asking questions would enable us look at different perspectives of the market that we initially may not be aware of, it's vital.
Let's just not stick to simple and random questions like “is the market crashing?”
By questioning, I mean that we should ask what the market “should” do in light of all the information - fundamentals, technicals, and sentiment - available at that moment.
Let me ask you a question, are you an economist or a benefactor of the market? Cause you sound like either of them.
The enigma of the economy as well the various financial market would definitely make either of those out of you but in as much as you attain profits from the market with all the sentiments in the way then you're good to go.
Ethane I believe that much of the information we need to catch those good economical opportunities are already available to us. It’s just that our biases often make them unclear.
Wisely interpreted Ethane, which services are you most thankful for so far?
Even when we are unemployed, we do not starve to death. This is the power of modern-day abundance.
I would mighty love to be able to read your sources, really interesting and I wanna see if I can understand them without you explaining
“A bank is a place that will lend you money if you can prove that you don't need it.”
Wow, now that I think about that is surprisingly accurate!
Banks after all only lend you money if they know you can pay them back with interest, meaning that they'll only give money if you already have some to begin with.
@@livethefuture2492 To add to that, you mentioned interest. It would imply that you'd have to also be able to pay more than what you're borrowing lol.
Because that's essentially free money for the bank ¯\_(ツ)_/¯
The say its capitalism - in reality its feudalism. Those in power (FED, government) give assets to the vassals (finance system/Wall Street). They make the workers (serfs) sign up for a debt trap.
@@ellengran6814 no it isn't vassals didn't have much choice in the middle ages. They were born into being a vassal and couldn't do anything else thaen toil the fields. People nowadays on the other hand can live debt free if they so choose.
My biggest criticism is that it's not that easy for people on the lower end to invest the time and money in education and improve their lives. Speaking as one of those, sure I've got the incentive. I just don't have the time or money.
We all have the same amount of time, and education is becoming less and less expensive thanks to online classes and courses. Let's say you work every day, eight hours a day to survive. Sleep nine. This leaves you with seven hours to eat, shower and do everything else. Sacrifice fun and distractions and you'll always find a couple of hours a day to study and improve.
It is so easy to get education when you are poor. The government will literally pay for it.
Education is a sacrifice. You have to be willing to make that sacrifice of time and hard work. The problem is people want the government to coddle them instead of making that sacrifice.
High School is free. Teenagers have time. They live with their Parents.
McDonald's hires the young, uneducated and unskilled.
We all have these same choices. There is a Chinese Proverb "If there is a thing to do to that makes things much better that anyone can and should do so many people are too lazy and stupid to do it."
Please give me a break about no opportunity.
@@jameshudkins2210 I see your point. High school is free, and entry-level jobs exist that require little to no education. I can't argue with this because I took advantage of a free high school education and took an entry-level job that required no education. After working at this company for a number of years, I even started to earn (barely) a living wage so that I could finally afford to move out of my parent's house and get my own place at age 31.
I would now like to improve my life even further by making enough money to start a family of my own without falling into a world of constant stress, hopefully some time before the age of 40.
What opportunities exist for someone in my position to achieve this goal?
@@dylanjones9061 Go to Community College. They don't cost very much and are often in evenings. If you work nights they have classes during the day. One of the Spreadsheet teachers said someone would pay us to do it if we learned the software he was teaching. He was very right.
Your employer is already OK with you and might do something to help if you said you wanted to gain skills.
If you move back in with your Patents you could save money, help them and devote more time to school. Do not get Student loans and do not study art or something which would not help you earn more money. Study art on your own leisure time.
It takes years of study and doing with out income and nice things when you are young. It will take the same after you are older. There is no easy way to do it.
Look around at people who are doing things you admire. Ask them how they do it. Some people will take a greater interest in seeing you succeed than you might. Be ready to try and work at it. If you don't follow through they will give up on you really soon.
Do not give up on yourself.
No wonder so many CEO's get huge raises, etc. for poor performance.
Although I almost agree with you on that from an economic POV, I can't overlook the ethics below.
Yes, Wealth Inequality might be to some extentend nescessary, but the benefits you are talking about, like innovations, can, have been and will be also accieved by companies owend by the workers (or states).
And it is ethically wrong to let people struggle to feed and make a living, while others buy there 5th company.
But I'd say let's meet in the middle: We keep inequality, but ensure all existencial and cultural needs to everyone.
That should be possible.
(sorry for the bad spelling, I wrote this on me phone)
Why is it ethically wrong if that system means society is far better off in the long-term?
You haven't really touched on a lot of important aspects, such as political power and social problems
Read the RUclipsr's name twice and ask yourself why a channel called Economics Explained focused solely on the economic aspect of the issue.
@@hjalmarjonssonrantala5375 Issues of social and political power ARE inextricably linked to economics, so that's a dumb comment. For example, the concept of subjective value is a socioeconomic issue. The value people attach to things are driven by social cues, which then dictates how much they are willing to pay for these things. Similarly, accumulation of corrupt political power (e.g. buying politicians that favor deregulation) by the elites is a cheap and rational way for them to maximize profits. If left unchecked this leads to disasters like the 2008 financial crisis. This RUclipsr actually talks about these social, political and economic issues all the time - as he should.
And what about wealth and lobbying? For me, it looks like a huge threat to democracy
You won't say that if companies lobby for things you want
Arguably, in a world with the Patriot Act and a President Trump, the relative threat to democracy is minor.
Lobbying is an issue, yes. i am a huge supporter of capitalism, leaning very much to the anarcho capitalist side. lobbying should not be a thing as the private and public sector should be separate, and it is unfair, especially for small business. that being said i think a very small government will solve a lot of this as then the companies wont spend money trying to influence laws when the government doesn't meddle in the free private market to begin with
I don't think that lobbying itself is the problem, The problem is that our politicians are accepting the kickbacks from lobbyists, while telling us to our faces that they're in their positions of power to act in our best interests. I could throw $1000 at you until I'm blue in the face, but nothing will change unless you decide to take it. Government corruption and fiscal waste is hugely detrimental to our success and security as a nation and as a people.
FYI, I would consider supporting you - either joining here or at Patreon (despite it's problems) if you start answering the questions at the end of this video. Those are juicy.
One interesting question is do luxury goods produce fewer man hours per dollar spent. If they do they provide fewer jobs.
An even better but harder question to answer is do luxury goods produce smaller or larger net benefit to the economy per dollar spent. It probably differs on a per product basis but one could argue jewelry doesn't really provide a huge bonus to the economy while supercars may at least boost the technology that will trickle down to regular cars (not all of it does of course since some of the tech is just too complicated to be financially viable ie. Multi link complicated suspension). But generally luxury goods like the yacht you mentioned may be a problem if they have a lesser net positive effect on the economy vs regular price consumer goods.
8:30 that is quiet fallacious and unsubstantiated. Ingenuity does not only come from an abundance of resources.
This statement also does not take into account the vast amount of potential inventions that we are missing because the people that might come up with that happen to be on the lacking end of inequality.
I feel like you've seriously glossed over the fact of the relationship between money and political and legal power, and the fact that all of the amazing medical science and wonderful homes that exist today, the vast majority of americans simply do not have reasonable access to, as houses are far out of financial possibility for most americans, and serious medical care will often cost so much as to not be much better than the alternative of death. Overall, I think that saying that wealth inequality is important in driving motivation is in somewhat poor taste and almost malicious, when over half of americans, I imagine most of which are as motivated as the next person, have under a thousand dollars in the bank, and whose world would be crushed by even relatively common untimely expenses. Wealth inequality may, in some fashion, not be an inherent negative, but surely it must apply that the floor of applicability of that must be that even the bottom members have humane conditions. Perhaps it is fine for the wealthy to stand as symbols of possibility (disregarding for a moment that very many are more the product of networking connections between wealthy individuals than hard work), but if the lower levels of society still must spend the majority of their existence simply concerned for survival, in a time of unparalleled plenty, is even morally acceptable?
Also remember that almost ALL the advances in medical science (including pharmaceuticals) were paid for by taxpayers through government grants to university researchers. Ditto advances in technology (internet, GPS etc etc etc). Little advances come from private money -- their time-window for ROI is too short to permit the kind of investment that you need for major tech advancement.
"Almost malicious"
Lol you are too kind.
As far as housing goes, there is plenty of affordable housing in the US. Just not in places like California and NYC. I am 28 and have all of my debts including mortgage paid off living in Indiana. I have never made more than 50k a year and that was only for 2 years before I was laid off for corona.
@@ColinTherac117
Okay so everyone just go live in indiana now oh wait. . .
okay everyone just move out of those places now we don't need those people to work there! oh wait. . .
@@otsoko66 87% of pharmaceutical innovation comes from the private sector
patientdaily.com/stories/511201422-medical-innovation-driven-largely-by-private-sector-not-government-funding-professor-says#:~:text=September-,Medical%20innovation%20driven%20largely%20by%20private,not%20government%20funding%2C%20professor%20says&text=And%20he%20said%20at%20the,percent%20from%20public%20sector%20research.
Comparing apples and oranges. Why compare today western Middle class living standards(many dont even have that) to the middle age and then pretend we have nothing to complain about
It's not apple's to oranges, it's a demonstration of progress meant to debunk the fixed pie theory (the idea that wealth is finite)
3:29 Oh, an aerial view of the Sigulda castle in Latvia! The actual castle was built of stone, and vanished completely, with people only knowing that a stronghold of Teutonic knights once stood there. A brick replica was built in the late XX century, and houses an excellent museum.
1: It does not have to be an individual holding that accumulated money, it can be put into a reserve that uses it for the purpose of whatever common good it is intended for, an (uncorrupt) organization is actually much more suited then an individual to hold such a responsibility.
2: You fail to take into account how the choices of the rich is putting all of society into an existential crisis, we are in the midst of a climate crisis, created by the system that favors short term economic profit before everything else. Take this into account and the list of people getting rich by pushing others down will have to grow ridiculously long, failing future generations is pure evil.
Addressing 2
I always find this to be a poor argument.
Granting that the claim "the wealthy created the climate crisis" is true, (No one is innocent, not even you) this ultimately was to create technological innovations that allow our lifestyle. Electricity and fossil fuels created global warming and the climate crises with it, but that's so you didn't have to worry about people burning down your town because someone dropped their oil lamp, and so that we could have access to electricity for the things we do every day. Not to mention, driving around and getting from place to place in the span of minutes or an hour instead of the days it might take to walk the average salary man's drive to work. Fast transportation and electricity are also good if you want to bring food and store food in say, a market, for a while so that there's generally always a plentiful amount of food, so people aren't starving. And it's not like you always had a wealth of good options to achieve all of those things. Thus what you end up with people who use fossil fuels because it was the most abundant and efficient way of creating the energy necessary for them.
The list of technological benefits continues, but the point is, that the reason we relied on fossil fuels for power and "the rich" made those short term decisions is because ultimately it generated wealth for people at the moment as well as allowed people to live longer more comfortable lives and dealt with the problems they faced at the time.
But the thing is, when people live longer more comfortable lives, they don't have to worry about their immediate circumstances and can look ahead and see a new set of problems.
In neolithic times, the problem was inconsistent amounts of food and lack of security from the elements, but we developed into agriculture and a more sedentary lifestyle, so that became less of a problem, and new problems arose, and new solutions to those problems and new problems with those new solutions, so on, so forth, until you reach the modern-day, where the previous solution to some set of our problems created a new set of problems, namely global warming.
Even at that, it's not like nothing is being done. That problem is ultimately being handled by the collective order generated by the individual chaos of human civilization, through people innovating and coming up with new small solutions to that problem (that, in turn, will likely create other problems).
Worse than failing future generations, they've been selling future generations in every first world country since the inception of central banks. Your national debt is literally monies borrowed from and owed back by children that first and foremost may never be born.
an "uncorrupt organization" is much more suited than an individual huh? Well you basically just said a "fairy" is more suited than an individual. Since the fairy doesn't exist, I'll leave it in the hands of the individual since all organizations are corrupt and have motives that someone will disagree with and call corrupt. Unless you're saying only 1 brand of politics is right and can solve everyone's issues.
@@jfast8256 A governmental unit is on average much less corrupt then an individual - Just look at how much of the income is spent on the common good compared between governments and rich individuals and it gets super obvious that the individuals are the more corrupt/greedy ones.
"even the bottom dredges of society, grad-students" that hit where it hurt mate... XD
Back on topic though, i think a major issue with wealth hoarding is that it does prevent the advancement of society to some extent, some people who contribute to society like Bill Gates do become rich, but it also has to do with opportunity, a lot of poor individuals may be able to greatly contribute to society but have no means to present their ideas or skills on the market, and some people who become rich contributing to society no longer do after their deaths but the wealth stays within the family or a select group with it stagnates without it contributing to society any longer, there are plenty of rich people today that have never known work or how to contribute to society because they live off of passive income. Progress slows down when resources aren't efficiently distributed.
I think that is the key. Getting money to work. But I don't think any rich person lives off of passive income, contributing nothing to society. The way they get passive income is by investing, and that money is then used by society. It can still be misallocated, which EE mentions a lot, but it is being used.
Bill gates does not contribute much to society realistically, most of his efforts have led to increased poverty and the deduction of taxes from his forms (putting money in a Roth ira for “charity” and never using it)
Bill became rich by selling other person work (selling dos to ibm, then buying dos from its developer), i would not call it contributing
Hoarding of opportunity
The accumulated money is spent, no one sleeps on a pile of cash. Even just by keeping it in the bank you facilitate the bank to finance home loans and business loans, which generate more wealth.
The video didn't even touch any of the social issues "caused" by RISING wealth inequality, which are actually the biggest problems related to wealth inequality...
You don't "throw" a basketball, you "shoot" it 🤣
sad Joakim Noah noises
Economic inequality has shown to have a strong inverse relationship with social mobility - more inequality = less social mobility. Economists call this "The Great Gatsby Curve"
Denmark and Sweden both have very high wealth inequality (almost the same as USA), yet have high social mobility.
I think you missed the mark on a couple of points in this video. First, as has been pointed out by many people, is the political corruption that comes with inequality. Second, it's important to differentiate between wealth creation and wealth transfer. I think few people have trouble accepting wealth creation as a source of inequality, but wealth transfer can seem blatantly unfair. The banks in the wake of the financial crisis are a clear example of this: bank executives got millions in bonuses, paid for by tax payer dollars, while overseeing some of the greatest wealth destruction in a generation. Heirs to fortunes are also subject to much social ire.
Really, the issue boils down to politics rather than economics. Wealth inequality is sometimes good sometimes bad for the economy as a whole, but politically, most people find unacceptable that we COULD be helping lift the entire country out of dire poverty but CHOOSE not to out of some firm belief that doing so will destroy the market (when firm evidence shows that a rise in taxes on the wealthiest would have minimal impact on actually economic growth).
Always interesting, thank you.