This is such a relief to hear, his masters thesis model has errors so rapidly accelerating wealth inequality isn’t a problem and the average worker will be able to afford a house any day now
This article argues that Gary is a horrible economist. If Gary wasn't claiming to be one of the best economists in the world, I wouldn't have written this.
I'm not arguing that house prices haven't risen.
But if you actually care about house prices, then you should advocate for building more housing. If there is less housing in London than people who like to live in London, then prices will rise, no matter how high you set a wealth tax.
I doubt you really care about the quality of his economics. All of that stuff is bye the bye vis-à-vis his overall message. He's near enough the only public figure with a big following in this country who is really banging the wealth inequality drum. If you're publicly trashing him, it’s likely not the finer details of his persona that irks you, but more that he's going after the rich and you don't like that. I'd have more respect for you if you just admitted that.
I didn't write this to convince his fans, this was a fun academic exercise for me. I didn't even write about whether the things Gary says in his videos are accurate. Nevertheless, you are allowed to believe that every single person who disagrees with you is secretly selfish or lying or paid.
I didn't say anything about selfish or lying or paid - or even imply it for that matter. I said I believe you don't like the fact he's going after the rich. That could be for a million reasons, granted selfishness could be one of those.
"I'd have more respect for you if you just admitted that." You are saying I'm not being honest. I agree you didn't imply it, because you said it directly.
Do you think it's possible that I genuinely believe that Gary is not a good economist and wrote this because I thought his master's thesis was not very good.
Secondly, can you point out where in my post I wrote that I don't support a wealth tax? I didn't even write about wealth inequality in the real world, solely within his model. This isn't a political post, it is an academic exercise.
You open with "Feeling that making millions from trading was immoral, he went back to get a master’s in Economics and started making millions from selling books about trading instead. Gary also owns a YouTube channel with 1 million subscribers."
You got to admit that, at the very least, if you started like this, it's 100% natural that somebody reaches the conclusion that you're proving that he is a bad economist to discredit everything that he is saying
Yes obviously. And if you are pro vaccine you are pro pharma because no one is standing up to forced injections. If you are pro global warming then you are pro big cooperation's making money from going green. You people are ridiculous. If you don't want to look at evidence and past data then don't pretend that other people who are doing so are in a cult doing it because they are somehow genetically wired to defend some billionaire that they don't know. If anyone stand up for something that is popular then we can't criticise that some of his claims is inaccurate.
This last paragraph is incorrect as the surplus between households and dwellings in London has risen 56% between 2001 and 2019 while the average price has increased 181%. That does not happen if the solution to house prices is ***simply*** build more housing. It is a simple solution quite simply because it is not a solution at all.
It's unconvincing to write this article then in the comments make a blatant ideological statement unsupported by the facts.
Edit: I found what you're referencing. But that 56% number refers to the number ( and not the growth of the number) of underoccupied homes, not empty ones.
Yeah sorry been away from the computer, Leslie Kern’s Gentrification is inevitable and other lies p. 52 which itself is referencing government data on dwellings, households and price per dwelling charted against each other between 2001 and 2019. I don't think the discrepancy between underoccupied or empty homes really matters here and is just splitting hairs. The initial argument is the building of more homes will result in a trickle down effect that will lower prices but as we've seen that hasn't happened
Look, regardless of some flaws with his masters thesis he’s now a long history of making accurate predictions about the economy and making money off it, when he starts giving false predictions then it’s fair to say he’s a horrible economist, you could ask 5 of the worlds top economists to make predictions about what’s going to happen with the global economy over the next couple of years and get 5 contradicting answers, why because to build these mathematical models in the first place you have to make a series assumptions which render them close to useless when making actual predictions about the real world economy
Nowhere has Gary said we shouldn’t build more houses, but you don’t need to be genius to realise it’s not a coincidence that’s there’s a housing crisis happening in the majority of countries across the western world and it’s probably related to the ease of global capital to acquire residential housing portfolios, so if we waved a magic wand and added 500 thousand properties to the London market tomorrow it’s not obvious it would crash the housing market there because these properties would be bought up by global investment funds
Does Gary have a long history of correct predictions? Not a single one of his old coworkers said that his claims about his time at citibank were truthful.
Secondly, in the predictions he made in his videos, did he ever show evidence that he was correct? (He never shows wealth inequality statistics, he just says "it's obvious").
You also misunderstand what economists do. Economists don't try to predict the economy, no one can do that reliably. Economists can tell you what the effect of an income tax increase would be on labor supply and tax receipts. But the unemployment rate in 10 years? Impossible for anyone to predict. (You'd have to predict everything, including covid, natural disasters, new technology. Thats simply not possible.)
As a last thing: The share of homes owned by corporations or other institutions is very small, around 1-4%. If you find contradictory evidence, feel free to share.
I think you’re getting a bit too carried away with that FT article, his bravado aside it’s easily verifiable that he worked for Citibank as a very successful trader and his success was based on predicting interest rates which was informed by making predictions about increasing wealth inequality, it’s irrelevant to me if he was objectively the best
Secondly it’s pretty easy to check the specific predictions he’s a been making on YouTube since 2020 regarding inflation interest rates asset prices and living standards and whether they’ve panned out, spoiler alert they have
No need for the condescension, I think it’s fair to say economists do actually try to make predictions about the economy, both from limited interventions and in a general sense. I didn’t say anything about predicting everything about an economy
And the last thing…yeah so that is current ownership, is it only 1-4 percent of new builds or sales of existing properties that are being bought by corporations and institutions? And it’s not just institutional investors it’s also very wealthy private individuals .
1. There are multiple occasions where his coworkers have contradicted Gary. There is not a single one, not one piece of evidence that support any of Gary's claims (other than the fact that he worked there)
2. Have they? He said covid would make people poorer. You dont get credit for that prediction, everyone knew that the pandemic was going to hurt people. He didn't make any predictions other than that.
3. No, economists don't try to predict how the economy will look like in 5 years. The closest thing you'll get to that type of foreecasting is what the fed does.
4. Do you have any evidence of widespread collusion being the cause of high housing costs?
1. His claims bascially amount to him having worked at cititbank and being sucessful, I can assure you that citibank would not have kept him around for 7 years if he wasn't. This is on the record, or maybe just trust the New Statesman or the Guardian to do some basic vetting. Was he the most successful? Really who cares? it is unimportant
2. Now with this point it looks like you went trawling through his masters thesis but couldn't be bothered to actually to read the article he wrote in the Guardian in 2020 or even watch the very first video posted. He doesn't just predict "covid would make people poorer" he predicts that covid would cause a massive increase in wealth inequality which would drive asset price inflation, and specifically refers to house price inflation, this was at a time when house prices were generally predicted to fall
3. Great you contradicted yourself in this point so I dont have to, many other institutions and economists who speak publically also make forecasts
4. Not sure where this is coming from, who mentioned widespread collusion being the cause?
“But if you actually care about house prices, then you should advocate for building more housing” that alone should be clear that you have no clue. Nice try though it’s always fun to see an average economist drowns in its own logic.
I mean yes most economics agree on that because that is what past evidence show. But it's always fun to see uneducated people use their "logic" instead of past data to solve complex issues. Don't look at why other countries don't have an housing crisis with hundreds of millions more people. Instead look at what makes you feel the best
“If Gary wasn’t claiming to be one of the best economists in the world” any credible source(s) where he proclaim this or are you just pulling it out of your derrière?
Interesting read, but this feels like a performative refutation rather than a substantive one.
The critique focuses more on vibes (“bad economics,” “copy trading,” fuzzy equations) than actually engaging with Gary’s core thesis—namely, that UST supply/demand dynamics, liquidity flows, and Fed/RRP mechanics are now more explanatory than the traditional macro models this post gestures at.
Dismissing liquidity-based analysis because it doesn’t wear the uniform of DSGE models or invoke “state variables” misses the point: those models haven’t worked for years in predicting bond markets.
Calling it “bad economics” while defending frameworks that missed 2020–2023 macro entirely is bold.
Thank you! Half of his content is him talking about being the best trader in the world and being so smart he went to LSE and Oxford… His debating style is so irritating, asking dubious questions and attacking his opponents as the super rich… One of his marvellous past predictions he keeps repeating: “Covid will be bad for the poor and increase inequality so tax capital” …Thank you for such amazing insights…
Re: footnote 15 - you're not using it against him. You can disagree, critique, even rubbish someone, and that doesn't imply enmity or even opposition. Critical enquiry is a shared enterprise that is good for all.
Thank you for writing this. Gary is a snakeoil salesman. The obvious lies (being the best trader in the world, for example) and the half-truths which are not challenged by obsequious interviewers is irksome.
His argument that wealth begets more wealth is functionally wrong and is based on Thomas Piketty taking the Gordon growth formula that r > g and assuming that it is always thus. 'r' is greater than 'g' both on the upside (capital accumulation) and downside (capital destruction). Hence why today there is a lot of value destruction in equity markets because Trump's tariffs will slightly shave off GDP growth rates.
The pathetic fanboy behaviour many people have to Gary is because they do not desplay a hint of scepticism against his claims. Even if they are falsifiable. They are just marks who are subscribing to his Youtube page to be fed a stream of BS that confirms to their existing bias.
This is an admirably rigorous academic exercise but if it's not too much to ask, we need you to stick the landing. What does this mean? The 1M followers aren't going through his equations with red pen. You have, and now imply that the premise on which his philosophy lies is flawed.
So again we ask, what does this mean? You have taken a stand and now you have the mic. What is your philosophy, based on your sound economics, and how does it address the concerns that Gary's trying to take on?
I'm not interested in trying to convert Gary fans. I purposefully left out any discussions about the real world effects of wealth inequality.
I want to write more academic economic articles, so I'm not trying to appeal to people who fall for Gary. I want to write about market design, econometrics, labor markets, etc. I don't want to waste my time debunking online gurus.
I respect your decision. If you decide to change your mind, there are people willing to listen to well thought out arguments and a coherent philosophy that can shape the economy of the future.
This reminds me of social media scientists during the pandemic trying to discredit the vaccines or being COVID deniers, by supposingly presenting some irrefutable facts as to why what the WHO said was wrong and why they knew the "truth" but no one else out there did... Unless of course they did their own "research".
Of course Gary's thesis is not exactly at the same level of thoroughness that COVID research went to, (peer reviewed research, trials, academic articles and meta analysis, on the efficacy of the vaccines or the dangers of COVID 19), but still his thesis was done at one of the best universities in the world, supervised by some people that are leading experts in the field. Now, I am not an expert but why would your review be more credible than the review of his supervisors? Would they not have picked up on such obvious errors if they were present and in any way significant?
I expect your claim to be an expert also comes from having studied economics at a university in the same way Gary did? So what makes you more of an expert than Gary? You see where the problem comes from, right?
Especially when Gary's model actually matches up with the lived experience of millions of people? Something that in the comments you don't actually deny, but just stick to some 'bad economics ' argument. So maybe the model could be better but the rise of inequality and the impact on the poor are lived in realities. As to what happens to new builds, just take a walk at East London to see all the mothballed, foreign owned apartments...
Is it true economists don't factor inequality into their economic models and they assume that people (the agent?) are always rational, always act in their own interests and are free to choose?
Rationality in economics means that people will choose what they like best, not that they always make educated choices. It's not at all like what rationality usually means. Behavioral economics studies when they aren't rational, and Information economics studies what happens without perfect information on both sides.
Economists assume people act in their self interest when it is useful. It depends on if the assumptions leads to accurate predictions of the real world or not. In simple models, in econ 101, yes. But it's not hard to relax that assumption in most models.
Free to choose? I'm not sure exactly what you mean, but economics is about choices, so the focus is on where people make choices. I mention this in the text, because this comes up, but if you have an income and only one good you can buy, there is no interesting analysis. You just spend all your income on that good since you can't buy anything else.
Recommend you guys take a look at our podcast episode on “What Gary’s Economics Get’s Wrong” (https://youtu.be/34r99h8z88g?si=RaX7javw43v3gmFU) if you’re keen on continuing the conversation. Would love to hear your thoughts also!
I like Gary, but I would also like him to be wrong, because his predictions are pretty bleak.
I don't have time to understand the work above. Or let's say I choose not to devote the resources - I'll take your word for it.
Is there anything else you can share with us that could indicate where he is wrong in terms of his overall damning of the status quo. After all, the huge drop in living standards and the housing crisis are all agreed. Structurally, I can't see how things will change, how my kids will ever afford to buy a house unleas they become top earners.
I ask this in good faith - where is the hope to come from?
Thanks Ivan for the comment. I know this post isn't very interesting or compelling for most people.
The claim of dropping living standards (since covid) is true for some countries, but not for others. The median person in the US for example, is richer now than they were in 2019.
However, house prices are very high. Gary claims this is because of inequality. The simple truth is just that western nations, especially English speaking ones, have not built enough housing in the last few decades.
Prohibited zoning laws, parking minimums, NIMBYism are all massive drains on the economy. In places like San francisco and London, it has become almost impossible to build. These regulations only help one group: Wealthy Landowners.
This actually makes sense in Gary's model aswell! Gary's model assumes wealth is fixed, which is the reason asset prices increase. However, if you build more housing, Gary's model correctly predict that this doesn't raise prices.
So if you want housing to get cheaper, you should support whatever local party is against arbitrary zoning restrictions (Some zoning is still necessary, we don't want factories getting built in residential areas). Alot of zoning is local, so you don't need to convince the entire country. I recommend reading "Politics is for power" if your goal is to achieve change.
If you want to advocate for wealth taxes, I don't have a problem with that. It just won't make housing any cheaper. I support taxing wealthy individuals, I just think a progressive consumption tax would be more effective.
Thanks that's useful. Btw your post IS very interesting, having read a fair bit of popular economics, Friedman, Chang, Harford etc, I would love to have the resources to get to grips with your formulae, but the working day is ticking away... But please don't dumb anything down, it's good stuff.
As an architect, I deal with planning policy, in the UK, a fair bit. In my view a far more damaging factor is land banking and similar vested interests that surmount planning policy. For example we had a huge amount of land around railways that went to private ownership 10-15 years ago, which could have taken I guess a million homes (?). That went off to a pension fund somewhere, presumably to be sold peicemeal over decades to optimise return, I suppose. That's what I would do with it if I were a fund manager. But we need all of it..now.
So, if it is really a good ol' supply and demand, I suggest we need command-economy style control of land, compulsory purchase and assignment..which I can't see any British Government taking on.
And of they did, could they describe a raid on a pension fund as a wealth tax. Oof. Good luck.
This is such a relief to hear, his masters thesis model has errors so rapidly accelerating wealth inequality isn’t a problem and the average worker will be able to afford a house any day now
This article argues that Gary is a horrible economist. If Gary wasn't claiming to be one of the best economists in the world, I wouldn't have written this.
I'm not arguing that house prices haven't risen.
But if you actually care about house prices, then you should advocate for building more housing. If there is less housing in London than people who like to live in London, then prices will rise, no matter how high you set a wealth tax.
I doubt you really care about the quality of his economics. All of that stuff is bye the bye vis-à-vis his overall message. He's near enough the only public figure with a big following in this country who is really banging the wealth inequality drum. If you're publicly trashing him, it’s likely not the finer details of his persona that irks you, but more that he's going after the rich and you don't like that. I'd have more respect for you if you just admitted that.
I didn't write this to convince his fans, this was a fun academic exercise for me. I didn't even write about whether the things Gary says in his videos are accurate. Nevertheless, you are allowed to believe that every single person who disagrees with you is secretly selfish or lying or paid.
I didn't say anything about selfish or lying or paid - or even imply it for that matter. I said I believe you don't like the fact he's going after the rich. That could be for a million reasons, granted selfishness could be one of those.
"I'd have more respect for you if you just admitted that." You are saying I'm not being honest. I agree you didn't imply it, because you said it directly.
Do you think it's possible that I genuinely believe that Gary is not a good economist and wrote this because I thought his master's thesis was not very good.
Secondly, can you point out where in my post I wrote that I don't support a wealth tax? I didn't even write about wealth inequality in the real world, solely within his model. This isn't a political post, it is an academic exercise.
You open with "Feeling that making millions from trading was immoral, he went back to get a master’s in Economics and started making millions from selling books about trading instead. Gary also owns a YouTube channel with 1 million subscribers."
You got to admit that, at the very least, if you started like this, it's 100% natural that somebody reaches the conclusion that you're proving that he is a bad economist to discredit everything that he is saying
It might just be “a fun academic exercise” for you, which speaks volumes, I should think.
I'm sure Gary was tearing up when he wrote the original paper. I mean it all means so much, I wouldn't be able to contain myself.
Agree, whilst the criticism is afoot, as to be expected, Gary is the only one banging the drum on wealth inequality and therefore, very much needed.
Yes obviously. And if you are pro vaccine you are pro pharma because no one is standing up to forced injections. If you are pro global warming then you are pro big cooperation's making money from going green. You people are ridiculous. If you don't want to look at evidence and past data then don't pretend that other people who are doing so are in a cult doing it because they are somehow genetically wired to defend some billionaire that they don't know. If anyone stand up for something that is popular then we can't criticise that some of his claims is inaccurate.
This last paragraph is incorrect as the surplus between households and dwellings in London has risen 56% between 2001 and 2019 while the average price has increased 181%. That does not happen if the solution to house prices is ***simply*** build more housing. It is a simple solution quite simply because it is not a solution at all.
It's unconvincing to write this article then in the comments make a blatant ideological statement unsupported by the facts.
Can you provide a source?
Edit: I found what you're referencing. But that 56% number refers to the number ( and not the growth of the number) of underoccupied homes, not empty ones.
https://www.gov.uk/government/statistics/chapters-for-english-housing-survey-2023-to-2024-headline-findings-on-housing-quality-and-energy-efficiency/chapter-1-housing-quality#overcrowding-and-under-occupation
Yeah sorry been away from the computer, Leslie Kern’s Gentrification is inevitable and other lies p. 52 which itself is referencing government data on dwellings, households and price per dwelling charted against each other between 2001 and 2019. I don't think the discrepancy between underoccupied or empty homes really matters here and is just splitting hairs. The initial argument is the building of more homes will result in a trickle down effect that will lower prices but as we've seen that hasn't happened
There's actually a lot of research showing that increased housing supply reduces prices:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4629628
https://research.upjohn.org/up_workingpapers/307/
Supply and demand isn't some Thatcherite "trickle-down economics" idea.
Look, regardless of some flaws with his masters thesis he’s now a long history of making accurate predictions about the economy and making money off it, when he starts giving false predictions then it’s fair to say he’s a horrible economist, you could ask 5 of the worlds top economists to make predictions about what’s going to happen with the global economy over the next couple of years and get 5 contradicting answers, why because to build these mathematical models in the first place you have to make a series assumptions which render them close to useless when making actual predictions about the real world economy
Nowhere has Gary said we shouldn’t build more houses, but you don’t need to be genius to realise it’s not a coincidence that’s there’s a housing crisis happening in the majority of countries across the western world and it’s probably related to the ease of global capital to acquire residential housing portfolios, so if we waved a magic wand and added 500 thousand properties to the London market tomorrow it’s not obvious it would crash the housing market there because these properties would be bought up by global investment funds
Does Gary have a long history of correct predictions? Not a single one of his old coworkers said that his claims about his time at citibank were truthful.
Secondly, in the predictions he made in his videos, did he ever show evidence that he was correct? (He never shows wealth inequality statistics, he just says "it's obvious").
You also misunderstand what economists do. Economists don't try to predict the economy, no one can do that reliably. Economists can tell you what the effect of an income tax increase would be on labor supply and tax receipts. But the unemployment rate in 10 years? Impossible for anyone to predict. (You'd have to predict everything, including covid, natural disasters, new technology. Thats simply not possible.)
As a last thing: The share of homes owned by corporations or other institutions is very small, around 1-4%. If you find contradictory evidence, feel free to share.
I think you’re getting a bit too carried away with that FT article, his bravado aside it’s easily verifiable that he worked for Citibank as a very successful trader and his success was based on predicting interest rates which was informed by making predictions about increasing wealth inequality, it’s irrelevant to me if he was objectively the best
Secondly it’s pretty easy to check the specific predictions he’s a been making on YouTube since 2020 regarding inflation interest rates asset prices and living standards and whether they’ve panned out, spoiler alert they have
No need for the condescension, I think it’s fair to say economists do actually try to make predictions about the economy, both from limited interventions and in a general sense. I didn’t say anything about predicting everything about an economy
And the last thing…yeah so that is current ownership, is it only 1-4 percent of new builds or sales of existing properties that are being bought by corporations and institutions? And it’s not just institutional investors it’s also very wealthy private individuals .
1. There are multiple occasions where his coworkers have contradicted Gary. There is not a single one, not one piece of evidence that support any of Gary's claims (other than the fact that he worked there)
2. Have they? He said covid would make people poorer. You dont get credit for that prediction, everyone knew that the pandemic was going to hurt people. He didn't make any predictions other than that.
3. No, economists don't try to predict how the economy will look like in 5 years. The closest thing you'll get to that type of foreecasting is what the fed does.
4. Do you have any evidence of widespread collusion being the cause of high housing costs?
1. His claims bascially amount to him having worked at cititbank and being sucessful, I can assure you that citibank would not have kept him around for 7 years if he wasn't. This is on the record, or maybe just trust the New Statesman or the Guardian to do some basic vetting. Was he the most successful? Really who cares? it is unimportant
2. Now with this point it looks like you went trawling through his masters thesis but couldn't be bothered to actually to read the article he wrote in the Guardian in 2020 or even watch the very first video posted. He doesn't just predict "covid would make people poorer" he predicts that covid would cause a massive increase in wealth inequality which would drive asset price inflation, and specifically refers to house price inflation, this was at a time when house prices were generally predicted to fall
3. Great you contradicted yourself in this point so I dont have to, many other institutions and economists who speak publically also make forecasts
4. Not sure where this is coming from, who mentioned widespread collusion being the cause?
“But if you actually care about house prices, then you should advocate for building more housing” that alone should be clear that you have no clue. Nice try though it’s always fun to see an average economist drowns in its own logic.
I mean yes most economics agree on that because that is what past evidence show. But it's always fun to see uneducated people use their "logic" instead of past data to solve complex issues. Don't look at why other countries don't have an housing crisis with hundreds of millions more people. Instead look at what makes you feel the best
“If Gary wasn’t claiming to be one of the best economists in the world” any credible source(s) where he proclaim this or are you just pulling it out of your derrière?
I did see a video of him doing so but cannot provide you the source unfortunately.
I think the idea of the wealth tax is because the gov is going broke and they need money to build homes amongst other things ?
wow, this is such an impressively, unbelievably bad faith argument. kind of incredible
Interesting read, but this feels like a performative refutation rather than a substantive one.
The critique focuses more on vibes (“bad economics,” “copy trading,” fuzzy equations) than actually engaging with Gary’s core thesis—namely, that UST supply/demand dynamics, liquidity flows, and Fed/RRP mechanics are now more explanatory than the traditional macro models this post gestures at.
Dismissing liquidity-based analysis because it doesn’t wear the uniform of DSGE models or invoke “state variables” misses the point: those models haven’t worked for years in predicting bond markets.
Calling it “bad economics” while defending frameworks that missed 2020–2023 macro entirely is bold.
What Macroeconomics model predicted Covid?
Thank you! Half of his content is him talking about being the best trader in the world and being so smart he went to LSE and Oxford… His debating style is so irritating, asking dubious questions and attacking his opponents as the super rich… One of his marvellous past predictions he keeps repeating: “Covid will be bad for the poor and increase inequality so tax capital” …Thank you for such amazing insights…
Re: footnote 15 - you're not using it against him. You can disagree, critique, even rubbish someone, and that doesn't imply enmity or even opposition. Critical enquiry is a shared enterprise that is good for all.
Thank you for writing this. Gary is a snakeoil salesman. The obvious lies (being the best trader in the world, for example) and the half-truths which are not challenged by obsequious interviewers is irksome.
His argument that wealth begets more wealth is functionally wrong and is based on Thomas Piketty taking the Gordon growth formula that r > g and assuming that it is always thus. 'r' is greater than 'g' both on the upside (capital accumulation) and downside (capital destruction). Hence why today there is a lot of value destruction in equity markets because Trump's tariffs will slightly shave off GDP growth rates.
The pathetic fanboy behaviour many people have to Gary is because they do not desplay a hint of scepticism against his claims. Even if they are falsifiable. They are just marks who are subscribing to his Youtube page to be fed a stream of BS that confirms to their existing bias.
My favourite from Gary is his confusion with correlation and causation and his anecdotal evidence, i.e.
In the 70s we have taxed the rich more, and my parents were able to afford to buy a house. That’s what we need wealth tax
substantive rebuttal, tom. thank you
This is an admirably rigorous academic exercise but if it's not too much to ask, we need you to stick the landing. What does this mean? The 1M followers aren't going through his equations with red pen. You have, and now imply that the premise on which his philosophy lies is flawed.
So again we ask, what does this mean? You have taken a stand and now you have the mic. What is your philosophy, based on your sound economics, and how does it address the concerns that Gary's trying to take on?
I'm not interested in trying to convert Gary fans. I purposefully left out any discussions about the real world effects of wealth inequality.
I want to write more academic economic articles, so I'm not trying to appeal to people who fall for Gary. I want to write about market design, econometrics, labor markets, etc. I don't want to waste my time debunking online gurus.
If that's not for you, I totally understand.
I respect your decision. If you decide to change your mind, there are people willing to listen to well thought out arguments and a coherent philosophy that can shape the economy of the future.
This reminds me of social media scientists during the pandemic trying to discredit the vaccines or being COVID deniers, by supposingly presenting some irrefutable facts as to why what the WHO said was wrong and why they knew the "truth" but no one else out there did... Unless of course they did their own "research".
Of course Gary's thesis is not exactly at the same level of thoroughness that COVID research went to, (peer reviewed research, trials, academic articles and meta analysis, on the efficacy of the vaccines or the dangers of COVID 19), but still his thesis was done at one of the best universities in the world, supervised by some people that are leading experts in the field. Now, I am not an expert but why would your review be more credible than the review of his supervisors? Would they not have picked up on such obvious errors if they were present and in any way significant?
I expect your claim to be an expert also comes from having studied economics at a university in the same way Gary did? So what makes you more of an expert than Gary? You see where the problem comes from, right?
Especially when Gary's model actually matches up with the lived experience of millions of people? Something that in the comments you don't actually deny, but just stick to some 'bad economics ' argument. So maybe the model could be better but the rise of inequality and the impact on the poor are lived in realities. As to what happens to new builds, just take a walk at East London to see all the mothballed, foreign owned apartments...
Is it true economists don't factor inequality into their economic models and they assume that people (the agent?) are always rational, always act in their own interests and are free to choose?
Rationality in economics means that people will choose what they like best, not that they always make educated choices. It's not at all like what rationality usually means. Behavioral economics studies when they aren't rational, and Information economics studies what happens without perfect information on both sides.
Economists assume people act in their self interest when it is useful. It depends on if the assumptions leads to accurate predictions of the real world or not. In simple models, in econ 101, yes. But it's not hard to relax that assumption in most models.
Free to choose? I'm not sure exactly what you mean, but economics is about choices, so the focus is on where people make choices. I mention this in the text, because this comes up, but if you have an income and only one good you can buy, there is no interesting analysis. You just spend all your income on that good since you can't buy anything else.
Very insightful thanks for sharing.
Recommend you guys take a look at our podcast episode on “What Gary’s Economics Get’s Wrong” (https://youtu.be/34r99h8z88g?si=RaX7javw43v3gmFU) if you’re keen on continuing the conversation. Would love to hear your thoughts also!
I like Gary, but I would also like him to be wrong, because his predictions are pretty bleak.
I don't have time to understand the work above. Or let's say I choose not to devote the resources - I'll take your word for it.
Is there anything else you can share with us that could indicate where he is wrong in terms of his overall damning of the status quo. After all, the huge drop in living standards and the housing crisis are all agreed. Structurally, I can't see how things will change, how my kids will ever afford to buy a house unleas they become top earners.
I ask this in good faith - where is the hope to come from?
Thanks Ivan for the comment. I know this post isn't very interesting or compelling for most people.
The claim of dropping living standards (since covid) is true for some countries, but not for others. The median person in the US for example, is richer now than they were in 2019.
However, house prices are very high. Gary claims this is because of inequality. The simple truth is just that western nations, especially English speaking ones, have not built enough housing in the last few decades.
Prohibited zoning laws, parking minimums, NIMBYism are all massive drains on the economy. In places like San francisco and London, it has become almost impossible to build. These regulations only help one group: Wealthy Landowners.
This actually makes sense in Gary's model aswell! Gary's model assumes wealth is fixed, which is the reason asset prices increase. However, if you build more housing, Gary's model correctly predict that this doesn't raise prices.
So if you want housing to get cheaper, you should support whatever local party is against arbitrary zoning restrictions (Some zoning is still necessary, we don't want factories getting built in residential areas). Alot of zoning is local, so you don't need to convince the entire country. I recommend reading "Politics is for power" if your goal is to achieve change.
If you want to advocate for wealth taxes, I don't have a problem with that. It just won't make housing any cheaper. I support taxing wealthy individuals, I just think a progressive consumption tax would be more effective.
Thanks that's useful. Btw your post IS very interesting, having read a fair bit of popular economics, Friedman, Chang, Harford etc, I would love to have the resources to get to grips with your formulae, but the working day is ticking away... But please don't dumb anything down, it's good stuff.
As an architect, I deal with planning policy, in the UK, a fair bit. In my view a far more damaging factor is land banking and similar vested interests that surmount planning policy. For example we had a huge amount of land around railways that went to private ownership 10-15 years ago, which could have taken I guess a million homes (?). That went off to a pension fund somewhere, presumably to be sold peicemeal over decades to optimise return, I suppose. That's what I would do with it if I were a fund manager. But we need all of it..now.
So, if it is really a good ol' supply and demand, I suggest we need command-economy style control of land, compulsory purchase and assignment..which I can't see any British Government taking on.
And of they did, could they describe a raid on a pension fund as a wealth tax. Oof. Good luck.