Economics Explained

This is Bill Ackman, the billionaire hedge fund manager of Pershing square capital. Bill has been featured on this channel a few times before, most notably because of his trade made in early 2020 which netted him over 2.6 billion dollars in profit. Since then he has become a bit of an internet darling which is just great for him because a lot of his trading strategies require him winning over hearts and minds to change people’s opinions on a stock, bond, cryptocurrency or whatever else it is that he has some kind of vested interest in. Now this is nothing new, influential stock traders have been trying to create news stories that suit them ever since there were stock markets and newspapers.But this most recent announcement has been a little bit different. Ackman along with a selection of business leaders and economists have started advocating for a plan that would give everybody a few thousand dollars in cash on the day they are borns all in order to solve the retirement crisis. It sounds crazy, but there may be more merit to this whole plan than you think.Most advanced economies around the world today are dealing with aging populations and declining birth rates. A future where the dependent elderly far outweigh the productive young is fast approaching, current pension infrastructure may just not be able to cope. We may see a future where the quality of life for elderly citizens rapidly declines, or young people are taxed very heavily in order to support them, neither of which sounds particularly appealing to anyone, so perhaps radical solutions are what we need. And to understand this plan we are going to need to look at a few key areas.  How would handing out money to babies solve problems amongst the elderly? How would nations afford this? And is this actually a sound idea? Or just another scheme by a savvy businessman to profit off front-page news. Learn more about your ad choices. Visit megaphone.fm/adchoices

So apparently we are due for a fourth industrial revolution, which might come as a surprise to you because as far as most people can tell we have only had one industrial revolution, and some nations haven’t even got around to that one yet. All the same, this promise of a radical shift in the way we live our lives has got a lot of economists very excited and maybe a little bit anxious, both for very good reasons. The first industrial revolution, you know the one that we all think is the only industrial revolution was responsible for giving us production. This production went on to define our way of life in the modern world where people in advanced economies have access to practically unlimited food, robust housing, and bits and bobs to fulfill our every little desire. The world before this was very stagnant. The idea that we have economic growth at all, where society is always advancing and every generation is richer than the one that came before it is a surprisingly modern ideology. What’s more, is that it’s not something that we are guaranteed. We can only get so good at making stuff given our current set of technologies and resources, and in fact, we might already be starting to see this plateau. Arguably the rollout of smartphones that gave us unlimited access to information wherever we were, was the last great paradigm shift in how we lived our lives.13 years later this technology is improving but it doesn’t offer anything fundamentally different to the way that we live our lives, run our economies or advance our standard of living. But maybe we are getting ahead of ourselves.To really know what to expect from this supposedly incipient fourth revolution we must first understand a few key things. How do economists define an industrial revolution? What is a revolution and what is just some cool new technology? What were those other two industrial revolutions? What is going to be the fourth industrial revolution? And will this make our modern economies look like the land before steam engines? Learn more about your ad choices. Visit megaphone.fm/adchoices

What is The Great Reset actually proposing to do? Do these ideas have any merit? Who are the players involved in pushing this agenda? And is this actually a nefarious scheme or just the victim of terrible marketing? Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Carnival Imagination, a luxury cruise liner worth hundreds of millions of dollars, which just 10 short months ago was touring passengers in extreme comfort to exotic destinations all over the world. This ship is sailing dead ahead to its final port of call, where it has been sold for scrap alongside dozens of other ships that have become the latest victims of the global pandemic. The Chittagong ship breaking yard in Bangladesh is the largest of its kind in the world, and in the past few months even its abundant shores have become inundated with pleasure cruises and industrial cargo ships alike that all could have otherwise sailed the oceans for many more decades. These are all very troubling signs for the unsung heroes of our modern global economy, the merchant marine fleet. Every year trillions of dollars worth of cargo is transported on ships like these and losing this fleet could turn into a huge barrier to global trade.But what is really going on here?Why would profit-motivated companies destroy billions of dollars worth of productive assets? Sure times are tough, tourism and trade have declined massively but this hardly looks like a reasonable response right?I don’t burn down my house if a video gets less than 10,000 likes, so why would companies in such a competitive industry do something equally as self-destructive?Well as always it has to do with economics (go figure) and to understand this bizarre behavior we need to understand a few key areas. What are the economics behind the merchant marine fleet? How do these factors make it financially viable to destroy ships? what does this mean for the future of international trade? And what does this all have to do with Chinese bridge building? Learn more about your ad choices. Visit megaphone.fm/adchoices

The United States 2020 Presidential election has been called by pretty much every organization that covers the event in any capacity and while the final decision is not made until the special club that is the electoral college has presented its final decision, it’s apparent that Joe Biden will be the next president of the united states. This is the first time in almost 3 decades that an incumbent president has been voted out before serving a second term and it has come in the midst of national and global catastrophes galore. To add fuel to a fire that threatens to ignite the global economy, the outgoing president has been vehemently challenging the results which is casting doubt over the smoothness of the transition, the continuation of much-needed government support, and the foundation of the nation’s systems in their entirety. And this all begs the question, either unwittingly or maliciously, how much damage could a president do to the American economy, and by extension the global economy. There are checks and balances in place to control the influence of any one man in the united states around things that were relevant when those checks and balances were been written. But it must be remembered economies back then depended a lot more on successful harvests, and a lot less on tweets. Our modern economies are incredibly complex and incredibly fine-tuned, but complex fine-tuned things tend to be very easy to break, and the outcomes of throwing a proverbial spanner into the works could be just as devastating. Thousands of people die when unemployment rises, and many more could lose access to healthcare, housing and livelihoods during even a minor period of economic turbulence.All of this is to say that a president waging war on an economy could be just as dangerous as waging war on a nation.  What kind of influence does a president directly have over an economy? Do they deserve the credit for things going well? And what could a president do to tank the economy if they really wanted to? Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Netherlands, a picturesque nation filled with windmills, tulip fields, and uhh coffee shops. The nation is looked to by many as an extremely forward-thinking place that practices some pretty progressive policies. The nation has an incredibly strong social security system, with universal healthcare, robust retirement pensions, as well as allowances for maternity leave.And These kinds of policies are mirrored in other areas as well, the nation is home to relatively high tax rates, and the protections for employees are very strong almost to the point that people joke it is impossible to be fired in the Netherlands. So this kind of looks like a liberal paradise right? Well, it would if it were not hiding a dirty little secret. This postcard-perfect little nation is according to the world bank the most unequal place on earth, and the extent of the inequality is simply staggering. We have explored south Africa on the channel before, which normally gets this less than desirable title. And if you were to pose this question to google, it’s what you would walk away thinking. But this isn’t the whole story.In terms of wealth inequality in recent years, South Africa has been pretty tame. The Netherlands by contrast is the only country on earth that is more unequal than the world itself.So what is going on here?Similar policies to the ones that have been commonplace in the Netherlands for decades are being proposed by politicians in places like the United States as a way to curb the issue of wealth inequality. But if we look at the results it doesn’t look like they will do that at all. So to really understand this we are going to as always look at a few key issues. How did the Netherlands of all places become the land of inequality? What does this teach us about the nature of wealth in the modern world? And how can this help us create more robust economic policies that work to benefit everyone? Learn more about your ad choices. Visit megaphone.fm/adchoices

China has been home to the most extreme economic growth in human history. In four short decades, the nation has gone from a struggling backwater filled with poverty to this, a nation of glistening skyscrapers and more Gucci stores than you can poke a stick at.The driver of this growth has obviously been its embrace of the free market and opening itself up to international trade. The nation has always had huge potential, given that historically for 1,900 out of the last 2,000 years it has been the largest economy on earth, but now it is finally realizing that potential once again. Seeing this sustained growth people are obviously keen to jump on board, millions of dollars are been made by millions of people and any logical investor would be foolish to not have exposure to the largest growth market in the world right?I spend a fair amount of time chatting to channel viewers on discord, Patreon, and even in the comments section of the video’s and it’s probably one of the questions I see the most, Mr economics man how can I invest in Chinese companies stock? Now I don’t want to sound rude, and I promise I absolutely mean this in the nicest possible way, but if you have to ask someone on youtube how you can invest in Chinese equities, you absolutely should not at all be investing in Chinese equities. And in fact even for more seasoned investors, the market for Chinese companies is not exactly the promised land of double-digit annual returns you may think it is. This is because there are a few major problems that have yet to be overcome, the stock market in China is both too regulated and not regulated enough. Which sounds silly but let’s explore it by looking at this problem piece by piece.  How is the Chinese stock market over-regulated?  How is the Chinese stock market under-regulated? And why does this mean that most investors probably shouldn’t be investing in these markets?  Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Texas, the second-largest state in the USA by landmass, population, and GDP. But perhaps being runner up is not so bad in all of these categories. Texas has for many decades been a huge driving force of prosperity, not only for the people within the state but also for all of the USA.The state provides over 40% of the oil production in the country which is, in turn, the largest oil-producing nation in the world. To give you an idea of just how massive this operation is, Texas produces more oil than, brazil and china combined. Now for regular channel viewers, you might be thinking that well that’s great and all however, oil wealth doesn’t always guarantee prosperity, but fortunately for Texas, it has diversified itself into a host of other industries some of which are very far removed from what you might picture taking place in the land of cowboy boots and Ford F350’s.Texas today has the fastest growing population in all of the United States which is been driven by the state attracting a range of new businesses that will work with this young new professional demographic to continue to grow a strong economy. Or at least that is the theory, the rumblings of the world in 2020 have not been easy on the Texan miracle, and for the first time in almost three decades, the state might be starting to show signs of troubled waters. To see if this could be a hurdle the yeehaw state could not overcome we need to look at a few key areas. What have been the industries driving the growth of Texas? What is it about the state that makes it so attractive to these industries? And what could future growth look like after 2020? Learn more about your ad choices. Visit megaphone.fm/adchoices

In the fallout of one of the most volatile American elections ever financial markets did something very strange, they rose, and rose to new record levels, again.This would be unusual during even a normal election, where most investors tend to sit back and wait for the dust to settle but it is especially strange in 2020.Joe Biden, who everybody is at least 90% confident will be the next president has spoken very openly about plans to raise corporate tax rates and this is coming in conjunction with the tension around how a transition of power may or may not take place, not to mention that global pandemic. If investors are supposed to fear uncertainty surely they would be terrified of the current world that we live in. Logic would dictate that the best outcome for the major corporations that make up financial markets would have been a nice simple and decisive Republican victory. At the end of the day, they tend to be a slightly more pro-business party.Instead what they got was an extremely contentious Democratic victory with the potential to bring turbulence around key issues like covid relief packages in the coming month. So what is going on here? Why have markets rallied so hard in spite of this turbulence Will this market boom reverse if the proposed policies of the Biden's campaign are rolled out. And could it just be that investors no longer favored trump as president? Learn more about your ad choices. Visit megaphone.fm/adchoices

The war on drugs was declared in 1971 by president Richard Nixon in a press conference that went on to outline a plan to fight the trade of controlled substances across the world. Drugs were declared national enemy number 1. Since then over 1 trillion dollars have been spent on fighting this battle and by all metrics, it has been money poorly spent. It’s probably no surprise to anybody that drug-related deaths and crimes have done nothing but rise over the 50 years since Nixon made this declaration. With the benefit of hindsight, it was pretty easy to see why... you can’t fight the forces of supply and demand in unregulated markets with m16’s and government agents. Trying to do so would be like trying to fight a hurricane by dropping bombs on it. Not particularly effective and if anything it’s just going to cause even more collateral damage. But perhaps this is all starting to change, just last week during the election, the people of Oregon also voted on something else that will potentially have even more influence than who the next president is. The people of the state voted to decriminalize drugs, all drugs, even the hard stuff.This might look like waving the white flag in defeat and finally admitting that drugs have won the war on drugs. But it might also be what we should have been doing all along, fighting the war on drugs with economics. To understand what economists mean by this we will need to look at a few key areas. Why couldn’t the war on drugs disrupt this market? What is driving the growth in this market? And could legalization provide a better solution to dealing with this issue?  Learn more about your ad choices. Visit megaphone.fm/adchoices