Economics Explained

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How The Dutch Economy Shows We Can't Reduce Wealth Inequality With Taxes Nov 26, 2020

Show notes

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?

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How to Invest In Chinese Stock Markets - And Why You Absolutely Should Not! Nov 22, 2020

Show notes

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?

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Can Texas Escape Oil Dependance? Nov 19, 2020

Show notes

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?

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Why the Stock Market is at an All Time High... Again?! Nov 15, 2020

Show notes

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?

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Can America Win the War On Drugs... With Economics? Nov 12, 2020

Show notes

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?

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Does Tesla Deserve to be The World's Most Valuable Automaker? Nov 08, 2020

Show notes

Tesla is today the most valuable automaker in the world by market capitalization beating out industry giants like General Motors, Ford, Volkswagen group, and even Toyota.

It has achieved this impressive feet despite a short operating history, a limited product lineup, and even relatively modest sales figures compared to these much more established entities.

In spite of all of these indicators, investors are willing to pay more than five times as much for the same stake in Tesla as compared to the more traditional automakers.

So what is going on here?
What do investors see in Tesla that a rational person may not?
What is the companies vision to truly justify being valued this highly?
and could this all be a charismatic CEO taking a pool of naive investors for a ride?

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The "Evolving" Economy of Kazakhstan Nov 05, 2020

Show notes

This is Kazakhstan, and yes I know what you are all thinking, and yes in the interest of full disclosure we are definitely cashing in on the hype surrounding the second Borat, but in fairness so is the nation itself.

Even still this country is so much more than that with one of the most, hmm let's call it exciting economies in the world.

What was once a mistreated soviet state has now gone onto be the largest and wealthiest economy in central Asia, one that is welcoming foreign trade, international investment, and advanced development of technologies to continue this growth into the future.

In this episode of Economics Explained, we'll explore the following questions:

What went on under Soviet rule?
What has the country been up to since the collapse?
what is their plan for the future?

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The Economic Policies of the 2020 Election - Trump vs Biden Nov 01, 2020

Show notes

The US presidential election will be held in 2 days from when this video is published.

The process of electing who will go on to be the most powerful man in the world always makes for big news but perhaps never more so than in 2020.

The United States is currently in the grips of a major health crisis that has caused untold suffering to people directly affected, and indirectly to people impacted by the economic consequences that came with it.

This is all coming in combination with a mountain of other issues, wealth inequality, trade tensions, nationwide protests, a wildly unstable financial market, record-high levels of debts, and a host of other issues that are certainly getting less airtime in 2020 but are of no less importance.

This election is a chance, at least in theory, for the citizens of America to have their say about how they would like these issues dealt with... and while there are more issues than ever the right solutions are desperately needed.

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The Pokémon Card Price Boom Oct 29, 2020

Show notes

In this episode of Economics Explained, we will explore the following questions:

What has been behind the boom in the value of Pokemon cards?
Could this be a genuine investment vehicle?
Or is this all heading towards being the next beanie baby bubble?

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The 2020 Nobel Prize in Economics Oct 25, 2020

Show notes

In and amongst all of the happenings in the world this year these awards have kind of flown under the radar which is unfortunate because they all recognized some very remarkable works.

And in the field of economics, it all had to do with auctions.

Auctions and Auction Theory are one of the most important systems to understand in economics because they act as an efficient way to build markets and correctly determine how we value items.

In this episode of Economics Explained, we will explore the following questions:

What should the average person or aspiring economist know about Auction Theory?
What did the winners of this year's Nobel prize contribute to this theory?
And how can this be utilized to build better and more efficient economies?

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