Video summary
Rory Sutherland opens his critique of Gary Stevenson's economic messaging with a pointed observation about wealth redistribution, suggesting that if one truly wishes to help those in need, wealthy individuals should simply spend their own money rather than relying on political mechanisms. He highlights the stinginess inherent in Stevenson's philosophy by noting that despite earning millions annually and owning only a single pair of shoes while his school friends worked at JD Sports, he failed to enjoy life or support them materially. Sutherland argues that this behavior stems from a corporate mindset where spending personal funds feels disproportionately painful compared to using expense accounts for entertainment budgets. He contends that Stevenson is correct in identifying the unhealthy concentration of wealth but proposes Georgism as a superior framework, advocating for land value taxes inspired by Henry George's principles to address inequality without penalizing earned income or labor. The core of Sutherland's argument distinguishes sharply between income inequality and asset-based wealth inequality, asserting that while high earners like top-tier lawyers pay significant income tax, the disparity in accumulated assets is far more extreme and damaging. He illustrates this with a hypothetical scenario where Bill Gates entering a football stadium would instantly make every attendee a multi-millionaire due to property value appreciation alone, yet society aggressively redistributes earned wages while treating asset wealth as sacrosanct. Sutherland points out that speculation has led to an enormous transfer of wealth from the hardworking young generation to older landowners who do not deserve it, citing a specific case of a woman living in a house worth millions with no liquid cash, leaving her children unable to afford basic car repairs while she cannot spend money on lemons. To solve this issue, Sutherland champions Georgism, which he describes as an approach that is extremely free-market regarding the fruits of labor but highly socialistic concerning land and limited resources like oil or water. Under pure Georgist theory, individuals should keep everything they build or create with their capital and effort, while paying taxes only on unearned rent derived from owning scarce assets like land in major cities where supply cannot be increased. He notes that Texas serves as a practical example of this system, imposing heavy property taxes around 2.5% which effectively prevents using real estate purely as an extractive store of wealth; ironically, many Californians move there seeking cheap land only to discover the low price is due to these substantial ongoing tax bills. Sutherland further explains that mainstream economics often simplifies reality by treating capital and land as interchangeable, ignoring the critical distinction between limitless man-made capital and fixed natural resources like land which act as artificial bottlenecks for rent-seeking. He criticizes decades of media narratives framing rising property prices as good news, arguing this is a monstrous misrepresentation similar to celebrating an increase in petrol costs without acknowledging that cars do not become more valuable when fuel gets expensive. This bias exists because the primary consumers and writers of these stories are likely already homeowners who benefit from the status quo, creating a feedback loop where politicians across the spectrum—from Milton Friedman to Richard Nixon—have historically been invested in property markets or sympathetic to Georgist ideas despite their differing political labels. Ultimately, Sutherland concludes that while Gary Stevenson's ascendency represents a performance art of austerity for some observers, his fundamental insight into wealth concentration is valid but incomplete without addressing land ownership structures. He emphasizes that the current system sanctifies being mean with income taxes while ignoring the monumental inequalities created by asset values, urging a shift toward taxing unearned rent to ensure fairness between generations. By adopting Georgist principles where one pays for the privilege of imposing costs on future generations through property ownership rather than labor taxation, society could create a more equitable environment that respects both individual enterprise and collective responsibility regarding finite resources.
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What do you make of Gary Stevenson's
ascendancy and that sort of messaging
that's happening in the UK?
>> Well, first frivolous point which is uh
if you want to help with wealth
redistribution, Gary, go out and spend
some [ __ ] money, right? I mean, he
was earning like2 or3 million pounds a
year and only owning earning one pair of
shoes, okay? And his mates from school
were working in JD Sports. And I did
help I couldn't help thinking reading
the book, Gary, Gary, just go down to G
JD Sports and just buy a few pairs of
shoes. Help out your mates. Okay. Uh,
you know, get a hot tub, you know. You
know, but his fundamental insight
unbelievably stingy. Do you do you not
think you do that book?
>> I haven't read it. I've seen him talk on
>> Jeez, Gary, just go out and, you know,
enjoy it for crying out loud. Okay.
Think you get that weird thing actually
in banking which is so much of your
enjoyment stuff back then was covered by
an entertainment budget. Okay. that you
got really really resentful about
spending your own money. You see, you
see what I mean? Most of us, the money
comes in, 80% of it walks straight out
again because we piss it up the wall.
You know, you know, you know, I haven't
got an air fryer for the second bedroom,
you know. But there are people who kind
of, you know, if you're in that very
corporate world where more or less all
your fund is taken care of by some
expense account, you actually find you
spending your money disproportionately
painful. He's absolutely right in his
insight that um money is becoming
unhealthily concentrated
um in that two things I would say. He's
absolutely right that economics uses
these single representative agent models
which don't capture inequality.
Okay. Um I would argue personally Gary
that you need to read up a bit about
georgism which I think the great ideas
of Henry George and the land value tax
would actually take care of a lot of
that. uh in my view if you tax land
ownership because property ownership is
effectively
you are buying the right to impose taxes
on the on the younger generation. So
what you what you I mean when people
invested in gold okay it doesn't do
anybody else any harm because I I can
make do without any gold. Okay I'm not
massively into bling not hugely into
jewelry. Okay we can all get by without
gold. If there's a bloody um uh a Dutch
tulip boom, okay, I'll just switch to
gladioli.
Okay, but I can't substitute for
property at some level. If your employer
demands you work in a major city, okay,
and land and commutable land is scarce.
Other than the blimp, of course, where
you could just live tethered above
Barkley Square, 400 ft up. Okay, other
than your blimp solution, there's no
escaping the depradations of rentse
seeeking land owners. And what has
happened is that we've in a way we've
sanctified wealth and being pretty mean
on income.
>> Okay, so we've taxed away income
discrepancies pretty energetically,
but they aren't that big. Okay. I mean
what I mean by that is if you look at
income inequality even before tax never
mind corrected after tax.
You know the the number of people who
earn like you know 20 times median
income okay is they exist but there are
very few of them and they pay an
enormous amount of income tax. I mean
huge amounts of income tax. In other
words that's someone who's probably like
a high-end lawyer in a partnership in
you know a London magic circle law firm.
Now, there are a lot of people I'd
rather the money went to than people in
law firms, but nonetheless, those people
pay a lot of tax, whatever you think
about it. Okay? By contrast, wealth
inequality is monumental. I mean, there
are people who if they walked into a
football stadium, the every single
person on average in that stadium would
now be a multi-millionaire simply
because Bill Gates walked in. Okay?
There aren't inequalities like that of
that kind of extreme form in in actual
earned income. And yet we have this
incredibly aggressive system of
redistributing earned wealth. And yet we
treat wealth that's actually resident in
asset values and things as completely
sacros.
And the problem is until you actually
get to that point where you start
actually taxing. Now Texas does it
amusingly because you have quite heavy
land taxes. So, ironically, what's often
stereotyped, I think, unfairly as, you
know, the most conservative state in the
union, which in fact is not, okay, but,
you know, it's a highly conservative
state, you actually pay quite a lot of
tax on the value of the property you
own. So, the property taxes in Texas, I
think around 2.5% if you own it.
Now, the great effect that has is that
it makes property less expensive because
you have to pay tax on it. and it
prevents you using property as an
extractive store of wealth.
Okay.
And the extent to which I think you have
to argue that speculation in property
has been absolutely del has led to
enormous redistribution of wealth
effectively to the not necessarily very
deserving old at the expense of the
hardworking young is
I I I just find it impossible to
dispute. Okay, I'm 59 by the way. I did
okay. I surfed the wave. I didn't surf
it very well. I now own, you know, a
couple of flats. I don't own a house.
Nothing blingy. Okay. I now own a couple
of flats sort of outright. Um, but there
are people who bought a house in 1974
whose children, this is literally a case
I know of. Okay. So, there's a woman
living on her own in a five-
bedroomedroom house not far from where I
live, which is probably worth with the
garden 4.5 million. Okay. Or 3.2 or
something like that. She has no money to
spend. She has all this money tied up in
a totally ill liquid form of wealth.
>> So, you know, she's kind of going down
little and comparing the price of lemons
even though she owns a [ __ ] off, you
know, 3.5. Her children are kind of
worried about how they replace the shock
absorbers on their car. And then the
argument would be why should those
children go out and work really hard?
What I do to be absolutely honest is get
into debt, go off to Barbados, wait for
your mum to die,
right me. No, no, no, that's but but
nothing you do working, let's say, as a
school teacher. So, there's this great
book, you must get her on, called the
Inheritocracy,
>> okay,
>> by a woman called Eliza.
Oh god, I'll remember it in a second.
>> You're becoming increasingly leftwing
here, Rory.
>> No, no, no, no, no, no. I'm left I'm I'm
pretty right-wing in terms of people's
earnings because you have actually
earned them. So Henry George effectively
the way to understand Henry George is it
was an approach to life which actually
had a brief but extraordinary success uh
popular success in the United States.
The game of monopoly is based on it's
trying to interest people in George's
principles of extractive rent seeking.
Okay.
And the basic principle of Henry George
is that it's it's now I I'm going to
qualify this. It's extremely free market
and capitalistic with regard to the
fruits of your labor. Okay? Anything you
do, any anything you build on your land
is yours to keep. But it's effectively
highly socialistic in terms of land
ownership and arguably ownership of uh
of limited resources. So a georgist
would also tax uh oil for example.
um uh you know anything that's and the
argument is you didn't make those things
there would have been in the 19th
century they would have said this is
God's creation and you're only you know
you're actually you don't own it because
you didn't make it you don't have the
right to own this thing because you
didn't make it what you are is a
custodian of it and you pay commenurate
tax on the land you own okay whereas you
would in purest Georgia circles you have
no income tax at all okay that probably
a bit extreme um but it's
There there it's sometimes called geoism
and it's um there's there's also a
school of thought which is kind of
environmental georgism which is you tax
the consumption or
you tax anything where you rivally
consume something of which more can't be
made.
>> Right. Yep.
>> Okay. And what happens in Texas quite
interestingly is all these Californians
apparently move to Texas and they go,
"God, the land here is really cheap.
let's buy loads of it. And then six
months later, they get hit with a
massive tax bill for their land
ownership and they go, "What the hell's
going on here? We bought this land
because it's cheap." And the Texans
reply, "That's why it's cheap. You pay
2.5% tax on it."
>> Did you ever look at that issue with
fighter pilot seats that was designed
for average?
>> Yeah, that's a brilliant point. So,
that's similar that's analogous to Gary
Stevens. Have you had Gary on, by the
way?
>> I haven't. He was supposed to come on in
London a couple of months ago uh when we
had last had you on.
>> I hope he's out shoe shopping instead.
I mean advertising. Meet me halfway.
Gary
>> Well, there's an interesting
>> If you want to redistribute wealth, it
does help if rich people occasionally go
out and buy something.
>> Yeah. There's an interesting there's an
interesting debate going on about
whether or not Gary Stevenson is
basically thinly veiled performance art
that you've got this the get up the the
same pair of joggers that all the rest
of this stuff. It is. I don't know. I it
must be difficult to have
>> I I think I think he's um okay
apart from his consumption patterns. Um
I think he's fundament so there are a
few things where the problem with all
these models is is that the assumptions
of the model that are necessary to
simplify the model eventually come back
to bite you and looking at average
wealth as if it's somehow representative
of you know that that a successful mean
getting richer on average the fact that
for 30 [ __ ] years in the US and the
UK we presented rising property prices
as a good news story M
>> is monstrous. I mean, that was just the
most monstrous misrepresentation of
information. You don't say petrol's
gasoline's gone up, but good news, you
got a full tank of petrol, so your car's
not now more valuable, right?
>> Is it is it a case of kind of a luxury
belief that the sort of people who would
be writing and consuming those and
understanding those sorts of stories are
likely to already be people who own
property. So, their lesson is not going
to be, holy [ __ ] it's going to be hard
to get onto them.
>> You're absolutely true. Uh even worse,
of course, every single MP in London uh
throughout the 70s, well, 80s, 90s,
2000s was basically heavily invested in
the property market because they got a
massive perk. They got their mortgage
paid on a London home. So, there wasn't
a single person there with a possible
exception of someone, you know, was Ken
Livingston ever an MP? I'm not sure he
was, but apart from a few very, very
principled leftists or possibly a couple
of georgists in the Conservative party.
It's a weird, by the way, it's a weird
sort of philosophy because it it's it's
both leftwing and right-wing and so it
has it's at the same time
>> Milton Freriedman was a fan. So was um
uh god I always I always forget her name
married to Malcolm McLaren you the
fashion designer Vivian Westwood she was
also a geologist you get Richard Nixon
Winston Churchill
>> it has its adearance crosses the
spectrum
>> but what what happened in the model was
that Adam Smith thought there were three
sources of wealth creation which was
land capital and um labor and future
generations of economists thought it's
too complicated having three things
because it makes the maths difficult so
we'll pretend that capital and land are
the same thing and they're not because
capital is potentially limitless and you
can create more of it. Land is
effectively a bottle an artificial
bottleneck. It's it's a rentse seeeking
device.
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