okay welcome back to Gary's economics today we are going to introduce the first part of our online course video number one which is going to be what is wealth okay so I was at a conference the other day a conference about economics media and there was a guy basically spoke about how when people watch Jordan Peterson's videos they don't just watch his recent videos they go back to the beginning and they watch it through because what people want is an online course where they can follow the subject through so they understand it completely he called it a moo massive open online course and it got me thinking about this channel basically this channel in my eyes is an educational Channel which is to teach and educate Ordinary People about economics basically pushing a specific narrative which is that living standards are falling because wealth inequality is increasing if you want to stop the decrease in living standards we need to stop the increase in wealth inequality but obviously I'm out here every week making a video every week you see a different video every week and I kind of worry that if somebody actually comes in and they want to you know understand exactly what we're doing here they just see like a 100 different videos they don't know where to start and it becomes quite difficult for people to educate themselves and you know we often get people asking us questions which have been addressed in previous videos like for example people say what do you mean when you say government gave hundreds of billions of pounds to the rich during covid The Question we get asked tons recently is can you really tax the rich if you tax them won't they just leave we get asked questions about money questions about debt which are answered in previous videos and I suppose I could try and go back to historical videos and try and Link something together but what I wanted to do was start creating in amongst the other videos we make a of videos which are structured and designed to be watched in order such that anybody who comes to this channel in a year's time or in two years time can go and watch basically this online course that is really structured and explains everything in a step-by-step fashion about what I'm saying and about my ideas about wealth inequality and the economy so that you can understand things in a really structured way basically I wanted to add yeah basically a structured element to the channel so that we keep doing videos every Sunday but over time we start to build up certain videos which are designed to be watch in order and we put them together as an online course and today we are going to start that and we are going to do video number one in the course and video number one is going to be called what is wealth which is a very simple video which is introducing the concept of wealth to people because often economists don't talk much about wealth they talk about things like income they talk about things like jobs they talk about things like unemployment but they don't talk about things like wealth when I talk about inequality I'm always talking about wealth inequality rather than income inequality and in order to understand that you need to understand wealth so what is wealth first thing is wealth is different to income now I think for most Ordinary People their financial situation is basically about their income which is about what job they do when I was a kid I thought that if you wanted to be rich you got a job in a bank and you made you know £100,000 a year if you can make a £100,000 a year salary you're super rich and the difference between Financial positions of most Ordinary People is largely about what job do you do it's important to understand there are a group of people whose income does not come from their work their income comes from wealth what is wealth wealth is about ownership of things of Assets Now the most practical and and close to ordinary people's lives example of of wealth is housing so some people own own their own house they live in some people don't own their own house they live in and they rent their house some people own their house with a massive mortgage some people own their house with a very small or or no mortgage this is the most obvious example of how some people have wealth and some people don't if you own your house with no mortgage you don't need to pay interest you don't need to pay rent you simply can live in the house essentially for free if you don't own a house you will have to pay either interest on a very large mortgage or you'll have to pay rent so these houses exist the house that I live in exists outside there's lots of houses and blocks of flats everything exists everything is owned by somebody that's the first thing if you don't own your own house somebody else owns it either through lending you money for your mortgage or directly they own it and you pay them rent so the first form of wealth housing it exists it's everything it's it's everywhere everything is owned by somebody I think this is quite visible people know that housing is important people know that either they own their own home or they don't own their own home if they don't own their own home they have to pay rent I think what people often fail to realize is that there is much more wealth other than housing in our society so I'm looking out here through this window I can see White Chapel there's a massive Hospital right there that's Royal London Hospital that's worth an enormous amount of money it's owned by somebody that's a form of wealth if I look out here back to my right I can see Canary wolf there's a bunch of enormous skyscrapers these skyscrapers are worth an enormous amount of money they owned by somebody that is wealth there's a railway line out here that is owned by somebody that is wealth if I go just out here onto the Main Street that's Commercial Road there's lots of shops there's lots of restaurants if I go over there to Stratford Westfield there's an enormous Shopping Center in the center of London there are tons of skyscrapers there are theaters there are pubs bars restaurants shopping centers this is commercial wealth now what is interesting about commercial wealth is ordinary people don't normally own it right Ordinary People are often struggling to own their own home they don't consider when they go to work in an office or whether they go to shopping tesos or whether they go to a restaurant that these commercial buildings are also owned as well now this is a massive part of wealth and the fact that ordinary people often don't own their own homes but EXT but more but very often don't own a significant chunk of the commercial property tells us another real fact about wealth which is that property in many cases is owned by Ordinary People by the middle class but commercial property is overwhelmingly owned by the rich so what is wealth largely in this country it's property residential property but also commercial property res residential property is often known by Ordinary People commercial property is overwhelmingly owned by the rich one other big form of wealth which is important to recognize is debt now when you first hear that that might sound a little bit counterintuitive because you think okay debt is is not wealth debt is like a bad thing to have debt is like negative wealth one thing you need to understand is that debt always balances out if one person is in debt another person is in credit so if you owe £400,000 on your mortgage that ultimately is owed to somebody one form of debt which gets an enormous amount of press at the moment is government debt so the government has an enormous amount of debt it's equivalent to something like I haven't done the numbers recently but I think it's like 30 35,000 per person in the UK this normous amount of government debt is owned to somebody debt often confuses slightly the real ownership of wealth because the main form of wealth which Ordinary People own in in this country the UK it's the same in a lot of other countries is their home but very often often they own their home by using an enormous amount of debt so if for example you live in London and you own a home that costs 500,000 which is a pretty average cost for a home here in London you might have a mortgage of 400 maybe even £450,000 on that house if you own a a £500,000 house with a £400,000 mortgage basically you only own 20% of the wealth in your home and the other 80% is owned by essentially whoever owns your Mortgage Debt like commercial property unlike residential property is another form of wealth which is overwhelmingly owned by the rich now there are a lot of ways which there are a lot of misunderstandings about wealth firstly a comment we often get is um no actually Ordinary People own the commercial property they own the debt through their pensions and to a tiny degree this is true if you have a pension if you have some savings you will own some other people's debts if you own some stocks and shares you'll own some small share of the commercial property but really it's a little bit of a red herring because overwhelmingly the amount which Ordinary People own is Tiny compared to the amount that the rich own rich people have enormous funds stock and share portfolios enormous Pension funds through which they own these things Ordinary People do own a little sliver through their Pension funds But Ordinary People don't own a very small percentage so what is wealth wealth is not about income wealth is not about your job wealth is about who owns the physical things in your country the buildings the property the natural resources you know we didn't mention Farmland the kind of wealth that is relevant is is different in different countries you know if you're talking about a country like Saudi Arabia or like Qatar who owns the oil is an enormous part of the wealth you know in a very agricultural country who owns the land is a big part of the wealth in this country the UK and it's similar to a lot of developed countries it's largely about properties which is residential property commercial property in some countries you might have a lot of factories you know obviously China has a lot of factories Germany has more factories than we do but basically there is a lot of physical wealth in the country properties buildings natural resources land productive things like the energy production capacity you know the windmills the coal plants the oil plants the nuclear plants there is all this physical wealth in the country or people in most cases own only their own property and in many cases that's only through debt all of the rest of the wealth is owned by essentially very wealthy people and this leads to cash flows the people who don't own the wealth have to pay the people who do own the wealth in order to use the wealth the most obvious example of this is if you don't own your own home you will have to pay rent to the person who does own your home if you do own your home but using a massive mortgage you'll have to pay interest to the person who does own your mortgage and we spoke about the commercial property so this extends all through the commercial property so when you go shopping at Tesco part of the money that you pay will go to the owner of that physical building that your Tesco Superstore is based in some of it will go not just to the farmer who maybe produce the food you buy but also to the land owner who owns the land some of it will go to the people who own the energy resources that transported the food to the supermarket when you pay your taxes a big chunk of your tax goes as interest payments to the people who own the government debt so real wealth exists debt exists ordinary people have to pay the wealth owners every single time they basically spend any money your rent your mortgages your food your bills your taxes when you go to a restaurant when you go to a pub when you go on holiday when you go to the supermarket a little chunk of every single thing you spend is going to the wealth owners which means there is a big net flow of cash every day every week every month every year from ordinary people who don't own much wealth to very rich people who do own wealth these are basic concepts but it's important to understand because I think a lot of people who are not rich don't realize how much wealth there is and they don't realize they're paying to use it mainly they don't realize how wealthy weal people are and we're going to go in in our next video in the online course to how that affects you and how that affects the economy okay so that's video one of the online course what is wealth we're going to keep doing these videos alongside the other videos we're going to put them up on the uh YouTube in a separate um what do you call them those things yeah in a separate playlist we're going to put them up in a separate playlist on the YouTube so that over time we build up a course that people can watch from the ground up and start to understand everything in a really clear simple way what we're doing um we're not going to stop the other videos we're doing the more topical videos the more salacious videos which I know you all love um and the more yeah educational videos pushing for for changing the tax system but hopefully this will give newcomers over the years a place to to Really develop all of their understanding okay thank you