I’m torn over whether Gary’s Economics, and Gary Stevenson himself, are a good thing for or a symptom of the problems society faces. There are many stages in this assessment, and I should begin by writing that it’s clear that he’s well-meaning and trying to do the right thing. His morality is not in question, unlike with many other social media personalities, celebrities or public figures in general.
Background
If this podcast, Mr Stevenson, his memoir and his Channel 4 documentary are all unknown to you, he’s an ex-trader who wrote a memoir, started a podcast/YouTube channel that grew well and has recently presented a more formal documentary about cost of living and a wealth tax. I don’t know all about him; I’m not an avid follower or personal friend. I know what he has publicly said in various places and a little of what has been written about him.
He worked very hard at a state school, got a place to the LSE and there had access to a gambling competition run by Citibank called The Trading Game, which he made the title of his memoir. He did not write himself a complex algorithm; I think I recall him saying that he didn’t devote the time to it, or found out about the competition late.
Instead, in this game that was a cross between Perudo and poker, he realised that bluffing and market manipulation were good strategies: what he calls ‘second-level thinking’: attacking not the mathematical problem, but the people who solved it. He won an internship at Citibank.
There he successfully converted the internship to a full-time job by ‘aggressively positioning himself next to the senior traders’. At 21 he joined as the global financial crisis occurred, and made money betting against recovery primarily in short-term interest rate swaps. He effectively committed to receiving ‘high’ fixed rates as other investors forecast recovery, and paying the floating rate, which stayed low; and also bought Sterling futures, which go up when interest rates stay low.
He earned millions in this job and has based his contrary trading outlook, betting against the wider consensus, on his understanding of wealth inequality and that the massive cash injections from central banks would not trickle down to normal people who would spend it, causing inflation and therefore interest rate rises. Instead it was trapped at banking and investment level.
He is presented as ‘the world’s no. 1 trader’ and his introduction to his podcast explains that he made millions as a trader. I have seen repeated mentions of his working class background and his high income, both from him and in reports about him, which I believe are influenced by how he presents himself.
His documentary was controversial, primarily because so many vested interests absolutely loathe the idea of a wealth tax, because it’s a good idea and they are enemies of anything that is right and good. After reaching the higher profile of a presenter on a national broadcaster (despite his 1.6m viewers on YouTube, who were probably either sympathetic or not following closely) he found himself subject to a right wing anger mob, full of rage and hate and idiocy and has just shut down his podcasting.
I had better come out and admit that I am jealous. I had the same insights at the same time and still need to work for a far more meagre living. In 2008 I was well aware that the concept of trickle down was foolish, and that banking and investment were somewhat divorced from everyday life.
The Trading Game
I remember a childhood visit to my cousins, with whom my family was close. It followed the normal pattern of gin for everyone else, sherry for me, a nice dinner with wine, and then conversation, with the younger generation playing games at the table. I had a reputation for winning all the board games, and I disliked the constant attention of this reputation and being picked on as the first target to take down. I resolved this day not to bother playing hard, to chat, possibly even play games but talk in the older generation’s conversation. We played Perudo, also known as liar dice, a game depicted in Pirates of the Caribbean.
I played a boring, steady game, making safe bets that treated others’ bids as indicative but not necessarily truthful. And as I lost round after round, the teasing became even worse. It annoyed me. I was not deliberately losing, but not working hard at the game either: I was trying to be less serious and light-hearted, and my sister in particular would mention every few sentences how she had won more rounds, or I was bottom, or it was amazing I was doing so badly, or reminding me that she was beating me.
So at the end of one round when she again made it about me, I flipped. I don’t remember if she won the round, or one of my three cousins had. I was trying to be happy for other people, congratulate them and not focus on winning or losing, but she in particular could not let it go.
I started making great leaps in bidding, changing the number, bluffing entirely, barely considering my dice or other bids. And my sister, to my left, bore the brunt of this new uncertainty. My cousin to my right had been doing a bit of this as a fun joke, but less rigorously dangerously. I was all-out, trying to upset the round before bidding returned to me.
It worked. I went from having won fewer rounds than anyone else to, by the time we stopped, having won the most. My joking cousin was all smiles and nodding appreciation. My sister less so. I do not recall if I gave her a taste of her own medicine or was entirely restrained; I probably indulged in a couple of barbs.
I had, as a child, solved the exact same problem as Gary Stevenson. In competition against good mathematical calculators the mathematical optimum was not actually optimal. You give away too much information and you can be manipulated: it’s a long-established result of game theory modelling. However, my reward was a nod from my cousin Alex and a worsening reputation for winning games all the time. Stevenson’s was a prestigious internship that is widely recognised as likely to lead to amazing jobs. Not knocking my cousin, but I do feel short-changed.
Every group of people has a board game champion; at least a few such champions are able to arrive at the same solution. Mr. Stevenson is not unique.
I never even saw the advert for a gambling competition; it did not reach my world. I did not even consider internships; I wanted to work over the summer for actual money, and my parents had no money spare to put me up in London, or for me to commute daily to London. Neither they nor I understood the weird world of privilege and networking in which an internship somehow matters so much. I wanted to do well at academic studies, imagining that proving myself there would serve as the only relevant signal of ability, as had been the case all through school, and as had served for my parents too.
Hustle
My parents were not hustlers and go-getters. They believed in merit and working to prove oneself, and assumed that someone would spot and snap up such talent. This suited me, an introvert, perfectly, and I trusted that being the best at the tasks so far given to me would be sufficient for advancement. I hate, and hated, the idea of being forward, of demanding for myself what was rightly the result of someone else’s judgement. It seems gauche, arrogant and presumptuous.
Yet this is what works in modern society. We read that Mr Stevenson parlayed his internship into a great trading job (rather than, say, a more junior role) by aggressively positioning himself near the senior traders. Without having been there it’s hard to know exactly how this worked, but it seems very much like hustling, brown-nosing even: tipping scales in one’s favour and away from fair competition. This is very much how many working environments work, and maybe such an attitude is essential in trading and banking, given the many scandals that we know about, the ease of insider trading and the nature of the work itself.
So either the best-paid people in the country are doing a job that requires determination to take whatever one can get, rules and fairness be damned, or else it is a reasonable, productive, powerful part of the economy that is most accessible to people with such an attitude. And Mr Stevenson, it seems, exemplifies this sad state.
Is being a trader respectable?
Extreme pay in competitive fields is often justified by the claim that being the absolute best matters. In sport, the top player is thought to deliver victory, so marginal differences in skill supposedly justify astronomical salaries, unlike in normal trade where most customers definitely want (or do not) the product no matter the quality of the sales pitch. Yet even this example is shaky. Major leagues are close to cartels, revenues are shared and ‘winner‑takes‑all’ dynamics are far less absolute than advertised. Furthermore, the quality of viewing is not that different.
Judging who is truly the best is also unreliable: elite players have inexplicable slumps, misjudged transfers, and buyer’s‑regret contracts. Clubs themselves rarely make money; they are prestige assets for wealthy owners rather than rational investments.
Trading rests on the same mythology as sport. Banks do not primarily lend to productive businesses or invest for long‑term value. Their trading desks exist to out‑perform other traders by tiny margins and extract money from them. It is competitive gambling (and gambling itself is not a good thing), detached from any underlying economic value. Economists talk about liquidity, but ordinary investors do not need microsecond liquidity; a timescale of days would do.
Traders such as Mr Stevenson are paid vast sums because their institutions believe they are the very best. Senior traders went through this selection process and are institutionalised to have the same belief. It becomes intrinsic to their egos and self‑worth.
But I have doubts. I can observe Mr. Stevenson; I have met traders and other ultra‑high‑earners, and none has been a genius worth multiples of others. Spend even a short time with them and the flaws, misjudgements and ordinary human limitations are obvious. The mystique evaporates. The whole profession is a self‑regarding culture built on exaggerated skill, questionable social value, and rewards wildly out of proportion to demonstrable ability.
Selection processes
On top of that, I wonder about the selection process. If so many millions are at stake, surely it would pay to invest millions in selection, recruitment and training; to develop a large, er, bank of people all able to do an excellent job, to pool their abilities? After all, football is limited to 11 players on the pitch, but there is no rule limiting how many employees a trading department can have. Can one great trader out-trade a great team of traders? I do not know enough about the job to be sure, but it seems vanishingly unlikely.
Even if it is currently the case, that is probably because no-one has devised the system by which a team could co-ordinate, share insights and then perform better.
There are millions of people in this country who would like to earn millions. The selection process for such a role should, with a budget of millions, have testing centres, carefully devised tests examining various attributes and ability to learn, centralised marking, hundreds of thousands of applicants, hundreds of recruits, training for all: it would be on a semi-industrial scale, rivalling a university itself. And this would be for Mr Stevenson’s job, since apparently in just one year he gained Citibank £35m from one sequence of trades and bagged himself £2,500,000 in bonus. If Citibank has many traders, the scheme should be even larger.
It is mind-boggling that such money should be handed out at the human scale of having a few employees meet the winners of a game and pick one they like based on his pre-existing responses to losing repeatedly: they rigged a few rounds to test him. I guarantee that all the other winners could have been taught how to behave in such situations even though I know nothing of them except that they did well in the game. In contrast, the fact that Mr Stevenson backed his strategy despite a losing streak that was genuinely the result of the game not being as he understood it could be an inability to learn: a stubborn dependence on one lucky strategy.
Citibank selected him anyway, a modern version of smoky backrooms and old boys’ club, in which people select the ‘right sort’ of candidate for great things based on whether they like them and they have the ‘right attitude’ rather than intrinsic ability. They fit in with the culture of the nouveau riche ‘old’ boys network that now exists, and which regards itself as the vigorous and meritocratic replacement for the older ‘old boys club’ of the past while perpetuating the same practices and flaws slightly better hidden in new clothes.
Individual brilliance?
For £2.5m I can gather a team of Oxford doctorates for a year. A big team, especially if we allow in some masters. Why is one person doing this job except out of history and habit? Does anyone seriously believe that my team would be incapable of learning: that city traders are such geniuses that not only can they outperform a group of people with the most prestigious qualification from the most respected university in the world, but that they can then also apply that genius to replacing themselves with the only other geniuses out there?
On such small margins hang millions of pounds of income. Would others have ‘earned’ that income and been as insightful? I believe it very likely, as we shall come onto. But more generally, is it a good economic system that has such massive cut-offs in it? Is it fair that someone who is believed to be 99.6% able is rejected and gets a decent job earning maybe 2% of someone who is believed to be 99.7% able?
There is no natural economy: an economy is something humans construct and control. Even if all my criticisms so far are wrong, there is still no good reason for us to allow traders to be paid that much. We can change the economy and the incentives so that such massive incomes and boundaries do not occur. Exactly how would be a long and different essay, but this is the last point buttressing my dislike of trading and massive bonuses.
Self-promotion
Let’s return to hustling. I like humility; I value tight-lipped people who demonstrate their worth through actions more than people who trumpet their own confidence. Society disagrees with me, and confidence is the primary measure most people use to judge others. Being loud and forceful is regarded as leadership; being introverted and thoughtful is not even noticed enough for anyone to give it a label. It is simply an absence of being good enough. The implicit assumption seems to be that if you’re great you will know it. This is despite every person who has ever been online knowing about the Dunning-Kruger Effect. As a young man I would have been too shy and quiet to have pushed myself forward for a competition and too risk-averse to have regarded the prize of working for free in another city as worth the investment of my time. Citibank’s distancing of rewards, which for them reduces risk, allowing them to judge whether someone is appropriate rather than directly promising high salaries, introduces massive risk for the applicants, and rational applicants without knowledge of how the system really works will see the ‘certain’ rewards and judge them not worth it.
Writing a memoir about trading is self-aggrandising. No doubt there is some level of presenting a view of that world that has not previously been presented, but trying to sell a history of one’s achievements is dangerously confident. There is a world in which a publisher persuaded him; in which the publisher chose the marketing focus on how much he earned and his rags-to-riches story; in which the publisher’s marketing strategy rang in his ears as he introduced himself as a working class boy who made millions in his twenties. But it seems at least as likely that Mr Stevenson himself had a high degree of confidence and self-belief. Where else would the idea have originated? I doubt publishers were canvassing all traders they could find asking one to write a memoir for them.
Our society selects attention-seeking loudmouths. This is most obvious in politics, as politicians are so public, but it’s not limited to politics. I regard such a character as a vice; a problem, the opposite of good leadership, self-awareness, thoughtfulness or even pleasantness. Mr Stevenson isn’t a loudmouth that I can tell, but the success of his hustling is the direct result of this unfair and ridiculous bias in society. He has behaved on that spectrum, and reaped rewards that should never have been contingent on such behaviour.
Nothing is a smoking gun: I was not in the rooms where this occurred. Bias, unfairness and networking never are very public. But the story is very consistent with such mechanisms.
The choice of what is worth mentioning in self-promotion
I never listened to the podcast on YouTube, even though YouTube seemed to promote it assiduously to me. I don’t remember whether it was the introduction, scrolling in captions before I clicked, or the bio, or a summary elsewhere, but the focus on a working class boy who became a trader and made millions young seemed too much like marketing spiel and not enough like any source of economics expertise that I would want in a podcast called ‘Gary’s Economics’.
On each point: his childhood background is an appeal to inverse snobbery. He is ‘like you’ and therefore… an expert? I want a country where people are judged on the content of their character and their relevant abilities, not whether they ever learned to pronounce the letter ‘t’. This applies in both directions. Kind, thoughtful, learned people are valuable no matter where they were raised. I have experienced far more disapproval and venom from people who hear my voice and hate me for speaking properly than I have experienced support and privilege from people who offer me jobs, promotions or even friendship and respect because of my speech, and so any support for or invocation of inverse snobbery makes me angry. I did not choose to grow up in Cambridge, where accents are close to ‘RP’. Yet many working class people will still judge me for it.
His work as a trader is also intended to create respect, partly linked to the financial reward. Traders are ‘bigshots’, but why? I have already been over my doubts about this: doubts that anyone whose focus is inequality and more traditionally left-wing policies (as Mr Stevenson’s is) should share.
Similarly, his wealth marks him out not as knowledgeable or insightful, but as wealthy. The whole problem with inequality is that the wealthy do not deserve such exalted status. Wealth is divorced from moral or intellectual worth. The hypocrisy in selling his talk show about inequality using implied respect based on his early fortune is frustrating. I had no interest in helping such an enterprise gain momentum by clicking, watching or interacting further with it.
Then there is that he made his fortune young. The vast majority of youthful success is particularly dependent on either luck or parental support. Many of us, the poorest and disadvantaged most of all, only get to start looking to new horizons at adulthood and have to work to escape our baggage. It can take years to reach a viable starting point for ‘great things’. Society’s focus on early success, as if anyone who can’t achieve greatness by 30 is a failure, directly discriminates against everyone who has such baggage. Mr. Stevenson’s parents were apparently working class, but that doesn’t mean that he has any of the other baggage that can haunt people into adulthood. They seem to have been loving and supportive.
Intellectual rigour
Finally, we get to the Channel 4 documentary, most of which I watched before giving up in disgust. The reviews and responses to the documentary show that I was not alone in being unimpressed. Obviously on the right there was outrage that anyone could dare to suggest a wealth tax. But those of us who are sympathetic to a wealth tax were appalled at his inability to justify the main idea of the programme.
The first part of the programme was filler material, introducing him and then briefly mentioning inequality and the increasing cost of living. I can’t blame him too much, because at this point there would have been external producers and television consultants demanding human interest and a gentle introduction for less politically aware viewers. It certainly wasn’t hard-hitting.
But then the interviews were equally limp. So pathetic, in fact, that he performed more like a right-wing nodding donkey journalist, letting ridiculous assertions and arguments against a wealth tax pass unchallenged. In an interview one might not want to interrupt a coherent speech, or stop someone revealing how foolish they are, or not want to annoy a touchy interviewee. But voiceovers or commentary afterwards would surely be appropriate, addressing the fallacies and foolishness.
The very popular podcast ‘The Rest is Politics’ followed up on the subject, inviting the expert Gabriel Zucman to discuss a wealth tax with the right-wing presenter Rory Stewart. Stewart was clearly doubtful of the idea, but the tables were turned. Zucman was erudite and knew the subject well enough to have answers for Stewart’s doubts and criticisms.
So how did Mr Stevenson not? It is clear that he had not done his homework. He was not thorough. He turned up with an intuition and self-belief and tried to bluster his way through, and the luck he had had all through his life did not hold. Without the serious engagement with a genuinely complex subject he was left foundering.
This is the final nail in the coffin for me. It suggests to me that this is how he approached his other endeavours in life, including the job that earned him millions, and it is consistent with his success at the Trading Game run by Citibank: he didn’t have a prediction model programmed beforehand, but relied on mental arithmetic and bluster. It worked for him, but separating brilliant insight from post-hoc rationalisation is hard even for the person involved, so for those of us reading stories we can only guess. There does not have to be one factor: he could have recognised that the game involved some bluffing, been too lazy, late or risk-taking to do as his peers did and try to solve the game mathematically, and taken the chance that bluffing and disruption would work without being sure of it. There is some insight, some guesswork and some luck. It is only after success that people focus ever more heavily on the role that insight played, even though it is often only partial at best.
Someone who had both mathematically solved the challenge and game-theoretically solved it by realising that bluffing and disruption would be valuable would surely have done better than Mr. Stevenson; and his aggressive disruption would have been disastrous against a whole table of people who recognised him for the troll he was.
I have sometimes wondered whether human character follows a rock-paper-scissors model of social approaches. Many people are trusting, gullible and willing to work together. This is a necessary foundation for society. Some people are more or less psychopathic: manipulative and selfish, and they take advantage of this gullible majority. And some of us are stubborn, forthright and suspicious, perfectly tailored to spot and resist such psychopathic behaviour, but also more awkward to deal with for the majority of wishy-washy, trusting people.
Mr. Stevenson was fortunate that he observed his peers all doing what he calls ‘first-order thinking’, and that his ‘second-order’ manipulations worked very well. But had he encountered a few suspicious types, his publicly-stated strategy would have failed. ‘Third-order’ adherents would have seen through him.
His inability to think on his feet seems to be demonstrated by his documentary interviews as well as the fact that he ‘backed his strategy’ when it failed in Citibank’s final test. This is not a genius with evidence and argument at his command, a great bank of knowledge analysed for novel insights.
Zucman is the perfect contrast. An academic who has studied the subject closely, he is familiar with all the detail, can answer people’s first grasping ripostes and respond quickly and directly to challenges. As an academic he will likely not have earned more than a million in his entire career.
I am aware that it might seem hypocritical to criticise Mr. Stevenson for his lack of thoroughness whilst admitting that I have not read his book or watched his videos. I think that the key difference is that this essay is almost entirely a personal diary, with a tiny audience: it is like chatting to friends in the pub. If Channel 4 were to ask me to make a television programme out of it, or I had an audience of millions, I would do the research that right now would be a waste of my leisure time.
Success begets success
Let us return to YouTube. Does Professor Zucman, or one of his colleagues, have a podcast with over a million subscribers? No, despite their intellectual rigour. How did Mr Stevenson amass such a following? I noted that YouTube was very keen for me to watch these productions ever since the very first one, and I wonder why. Did Mr Stevenson invest some of his wealth in advertising? Or buy in some help with algorithmic optimisation? Or buy views via bot networks or ‘mechanical Turk’ people for hire online by-the-hour? That would have been inequality perpetuating itself: a wealthy man buying his way into a new career while poorer hopefuls are crowded out. Even if he did not, the nature of the algorithm annoys me, promoting further those things that have bubbled, by chance, to a low level of popularity.
Why is popularity the measure of value? Why create such a massive contrast between something good that in the chance-based world of 10-100 viewers got 10 and something that happened to show up to more receptive people? Why judge only by how many have watched, rather than proportion of likes to dislikes or views or gave-up-half-way-through? It is rather similar to how shy, careful people struggle in society and aggressive confidence is rewarded. Popularity matters, not substance. If 10,000 people have watched a bad video the algorithms decide that it is better for me to watch it than a good video watched by only 100 people.
We must all conform to the crowd, be the same, think the same, want the same. Be average. Be satisficed (economics jargon for getting something only just good enough) rather than get real value out of life.
Views are what matter for serving advertisements to viewers, and therefore views are what the platforms chase. They know they produce addiction rather than interest; they know that ‘engagement’ is not always for positive reasons (e.g. anger rather than learning). They seem never to have tried to measure quality, but nonetheless in public they tout their pathetically simplistic systems as promoting what is ‘best’, helping people find what they will like most.
It’s an opaque selection system that makes far grander claims than it delivers, much like how we select employees for jobs. Managers look to satisfice the company, finding someone who is barely good enough. With that box ticked, they instead save time by not looking further, or by judging based on how they like the employee. They look out for their personal interests, not their employer’s. How do they judge whether someone is good enough? They check whether the person has done the job before. Not whether the person is capable, likely to perform well, or probably struggled in that job. Experience, not ability. Easy to see, saves manager time.
YouTube, and similar algorithms, is like the working world. One person might create a work of art; and another a tiresome half-attempt at the same thing, but the latter can, through luckily landing on an attention-grabbing thumbnail, or through direct good luck, get a faster run of early views. And once on that rollercoaster, they get whisked away to massive viewerships. Some even at this point fail, making follow-ups that don’t quite keep attention and dwindling away again. But many continue, using this early boost to experiment, improve and learn.
Every channel I have encountered has a backlog of videos of which the first (if still available) is far worse than the later ones. Established channels genuinely are slicker than anyone’s initial attempts. But is that expertise instrinsic to the worker, or is it learned? Obviously it is learned, or the early videos would be amazing already.
The same applies to work. Some people are lucky, catapulted into the stratosphere, where they learn far faster how to do well in that world than the people still struggling to make it there the slow way.
This is not a fair way to run an economy: a sort of career lottery, in which each human gets one ticket, maybe two, and hopes to get lucky. We have come to call this meritocracy because the people who benefit and therefore get a public voice like to regard themselves as deserving their high positions. But it’s like snake oil salesmen claiming that their fakery is backed by science: it is stealing a cloak of respect from a good idea to hide a bad one.
There is a backlash against meritocracy as a concept for exactly this reason, just as some people say “well, science can justify anything”. No, these are not bad ideas. It is like complaining that chairs are all a bad idea because someone told you a spike pit is a chair. It was a lie: there is nothing wrong with real chairs, real science or real meritocracy.
Conclusion
Mr Stevenson is promoting, at a surface level, a sensible outlook. No sensible person can deny that inequality is horrifying and unjustifiable, or that a wealth tax is a good idea. But everything about his story, his wealth, his existence as a public figure who gets to promote ideas, implicitly promotes, and is the result of, problems in society. He is trying to do a moral thing, far more than most people with his wealth. But the very existence of someone in his situation, with his story, is an indictment of society. He is not a rare exception to the unfairness of society, but yet another example of some of the myriad unfairnesses.
