Why Inequality Feels Worse Than the Data Says It Is

SPEAKER_1 (0:01)

Evening.

Tom Bilyeu (0:02)

Buyers' Remorse.

SPEAKER_3 (0:03)

Buy a new car?

SPEAKER_1 (0:04)

I'll be moving in.

Tom Bilyeu (0:06)

Let's get started.

SPEAKER_1 (0:07)

Sorry, I think there's been a mistake.

SPEAKER_3 (0:09)

I bought it from Carvana. You what? Yeah, great price. I even have seven days to love it or return it. So there's no...

SPEAKER_1 (0:15)

No, no Buyers' Remorse. More like Buyers' Rejoice.

SPEAKER_3 (0:20)

I guess I'll let myself out.

Tom Bilyeu (0:22)

Congratulations.

SPEAKER_1 (0:23)

I mean it. Buyers' Rejoice. Buy your car today on Carvana. Limitations and exclusions may apply. See our seven day return policy at carvana.com.

Tom Bilyeu (0:30)

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I tell every founder the same thing, just make it official. Click the link in the show notes to check out Tailor Brands and get started on your business today. This is a paid advertisement. Everybody wants to believe that inequality is at an all time high, but the data does not agree, at least on some dimensions. If we are actually going to get out from under this problem and figure out how to make a culture that is tight-knit, optimistic, moving towards a shared vision of a positive future, we are going to have to come to grips with what the data actually says. And the data says a lot of very important things. We're going to take a look at it in this deep dive. So let's take a look. Here we go.

SPEAKER_1 (2:10)

There's an old joke that if you ask 10 economists for their opinion on anything, you're going to get at least 11 different answers, which is a bit rude, but also not untrue. And nowhere is this less untrue than on the topic of inequality. The world recently, albeit briefly, had its first trillionaire a few weeks ago, who alongside just 11 other people control more wealth than the entire bottom half of humanity combined. What's more is that seemingly no matter how hard they try, they can't seem to lose that money either. Of the 100 wealthiest people in the world today, only two are poorer than they were in 2019

Mackenzie Scott, who has been giving away her money as fast as possible, and Jack Ma, who is still dealing with pressure from the Chinese government. Even outside of these statistical outliers, average household incomes have remained effectively stagnant in most major developed economies, while the income of the top 1% has doubled or tripled over the last two decades alone, with some pretty obvious causes.

Tom Bilyeu (3:02)

Nobody is going to deny that we have a lot of people that are making an obscene amount of wealth.

The problem is everybody misunderstands what wealth is. That is going to be a huge part of this as we really try to parse out what is going on here. Do we have some sort of unprecedented scale at which people are getting extraordinarily wealthy and everybody else is getting left behind? We've got to come to grips with the difference between I have money in my bank account and I have fictional wealth that may one day come true but it's completely speculative.

And what's happening with the middle class? Because ultimately getting a thriving middle class is important and right now what we're actually seeing is you're getting a lot more people getting wealthy. That is lost in this discussion. We're getting more people going up stream than is typical, but we also have more people going downstream. But I actually think that we have more people going upstream. The problem is you're just not getting that centered bell curve of middle class people thriving and making more money over time. And so as we go through the data, that's really what we've got to pull apart is, okay, what are happening to people on the bottom side of the K? Why is it happening? How is that manifesting? And then what is it that actually matters about the accumulation of money? And how does it different? How is it different than the accumulation of wealth, which is essentially fictional?