Hi. Hello hello roory. Hi, how are you? Yeah, not too bad. Little good, little good, little good. How's how's your week? It was okay. I was sick for the whole week, so it wasn't particularly the best. Okay, okay, okay, okay. Are you better now or the better? I think so. Like a little bit, but a little bit better. Yeah. I only had really nose right now, which is good because I in the day before yesterday had fever and on Wednesday as well. So I had fever for two days, but today I'm feeling fine, so hopefully I'll get okay. Yeah, okay, good in a school. How's economics going at school? Economic, it's going pretty bad because it's actually our teacher doesn't do anything as I told you. So I don't really think that it's helpful for me at all. But at the same time, our teacher, you he's like very mad because we do not and we're not doing any work, but he's used to one, reading through the PowerPoint and not giving us any instructions and stuff. And Yeah, I don't really understand the content, but Yeah we would do guinea index and or Gina index and we were learning inequality and. And China where we're learning about is China still a developing country or developed country that we were debating about that because obviously there's an article about China abandoned China just abandoned its developing country title in the wto like two months ago. So we're debating as China still a developing country or developing country. So Yeah, that was what that's what we did. Interesting. Okay. So it's apparent. Okay. So it seems that China no longer officially is under the wto classification. It's no longer a developing country to reach some kind of threshold, right, or some kind of level, right? Yeah, okay, interesting. I didn't I wasn't aware. That's interesting. Okay. So do you remember well, the article said maybe which like these, like this. No, the article said that China given up the classification of the developing country in wto. The reason is due to that China doesn't. America has pressure has been presin China to give to give up the title for a long, long time because since that 20, 21 or 22, 2000, even 20. 17, eight, 16, when Trump was, when Trump was the president for the first time, he was saying, like China and should should have not been or China was not a developing countries since 2016 because as China as a whole had an enormous GDP like in total, so they were like saying, Oh, how come the country with that gigantic GDP still classified as a developed country, a developing country? But at the same time, the article stated that China a's GDP per capita in 20, 20, 25 was 13000 and the GDP per capita of America, which is like the you know class a developed country, was $85000 per capita. So it's like an 87 times Yeah seven times difference between America and China. So Yeah, we were just basically basically saying like, Oh, China as a whole given up as the title classification as developing country is normal because it's such a big, is such a big and such a it's I don't know, a comprehensive economy because you've got everything, got industries, you've got you've got service sactors and everything that is very mature economy. But at the same time, the gliper per caboter lagging behind the developed countries like Switzerland. It's like I 100000 or something like that Juliper per capita and America it's 85000 so it's like even Ireland Ireland is 96000 so it's like so far behind of these like you know developed countries. Okay so okay so that's interesting. So I it's interesting so but okay now let's I don't know if this was in the article but the question that from someone that I haven't read this article right I just checked online, whshe was speaking a little bit. But the first question that came to my mind, and I'll ask it to you again, why do you think America insisted on China officially on paper going from developing to developed? That's the first question that I kind of came to my mind. Really, why did Trump wise America insisting on this? Clearly there's some benefits or some disadvantages. China as a developing country in the wto, it could seek some of the advantages that the other developing countries get. I don't know the other developing countries they get actually, I don't know, they get a lot of advantages like a lower tariffs, for example, and aids from wto and stuff like that. So Oh Yeah. And also, I think I don't know, I forgot was the article about on this one, but you can seek a lot of advantages. Obviously, America as like the the enemy of China, they don't want China to exceed those advantages anymore. They they want like a fair competition, something like that. So I mean, I wasn't aware of this developing versus developed kind of letting threshold where things change at the margin. This is an interesting thing in Econ. Beyond this, we get a lot of, let's say, natural experiments, right? Like for example, there's a very famous book that talks about the Mexican American border. Okay? Yeah certain cities or towns along the border, you can imagine that on both sides of the border you have the same climate, same racially, probably similar types of people, culture, etcetera. Geography, climate, everything where soul il fertility. However, there's very different levels of development you can imagine on the American side. The American town is much richer than the Mexican town. So why is this would created this difference. When you cross a road and you're on the other side 50m away, it's three times, four times the GDP per capita. So you have a lot of these discontinuities in life that are interesting, right? Suddenly to like, I don't know, we've all heard these economic ic two twins have the same upbringing and then they separate at one point, right? And then from then on in, it's different, right? So here it begs the question, what does China get as a developing country, right? And clearly doesn't really matter. But it does matter for some things that classification, apparently right now it's just checonline, as you said, to certain benefits in terms of, let's say, trade. And apparently, according to this article, les reading online, and it does make sense, China and developing countries as a whole get more freedom in terms of being able to protect their infant industry, their domestic markets. So they basically impose tariffs and protectionism on foreign exporters into China, right? So they can protect China quite a lot, right, from foreign competition. That's pun one. Obviously China, if it maintains its developing status, it can choose whether Yeah I choose to protect my market right, from foreign exporters or outside turbing up, but I want the choice, right? Raring. That's what they want everyone will actually choice for as a developing country, they could choose right a parthen another thing is that as a developing country, do you think you have the same, let's say, pressures or obligations to contribute funds to these international organizations? Or, for example, in terms of climate change, do you have the same obligations. Oh, no, I didn't know, right? But okay, but isn't that I don't know the exact, let's say you've got obligation. Sorry, you've got obligation now. Right? Right. But but what I'm saying is imagine, for example, for climate change, right? Yeah, different countries we will have to kind of go on in the same direction and try to decrease our emissions and all that stuff, right? So we all know that, but I mean, I'm not aware of the exact ways that the different countries are efforts are enforced and how much they have to do, you know, each one or contribute or cuts, etcetera. It seemingly, and it does make sense that developing countries are exempt to some degrees and they don't have to contribute as much, right? They are basically this idea of Rory, that if a country try's poor or developing, we can't make them cut emissions too much, right? We have to there's a more impeding, let's say, priority, right, which is to increase employment because GDP make everyone have a higher living stand to bring people out of even out of absolute poverty or bring people out of bad situation. That's the most important priority rather than cutting emissions, right? So clearly, it's seemingly China would have loved to have continued within this developing country kind of status to contribute less in terms of pollution cuts, contribute less in terms of money out to cities, international organizations, right? And also have the optionality of imposing tariffs and protectionism on foreign companies wanting to access the Chinese market, right? So China, wow, do you think China is a big player internationally in terms of the international kind of international international relations? I mean, definitely is because its economy. But do you think it's interested in squabbling and having a big role internationally? What do you think China's priority is really? What do you think over the past 30 years? I don't know, developing the industry, sex, the secondary sector and getting more power in the in the global scale and spreading ideology to the other developing countries, standing on the same line with them to again, to fight against the so called western democracy powers. I agree with the first bit, industrialization, development of economy, I think this has been but the second bit as well, China wants to gain ined influence over the Third World countries. In the Third World countries, for example, like sure, eggot, Nigeria, Thailand, right? I agree that that's also priority, especially more now. And whatever helps development and development, it can also happen abroad, like in terms of aciring natural resources and influence. Okay, economically, yes. But what I'm trying to say is that China does not want to be the thoughts leader. Okay? China, okay. It wants to be everyone wants to be everything. There's been a lot of prioritization on the economy, and China has done very well with this, right? It can't be faulted for this, has it? Wanted to contribute tremendously and be the lead in terms of the fight against climate change or even international relations. It does its work very diligently, very focused. But I think number one priority is the economy, right? And it does not want to. And obviously, for example, climate change, it goes against its economy if assets are cutting it does it? It's at least it's not going to be proactive. Doesn't be pushed into agreements diplomatically with different countries. Yes, it doesn't want to be proactive, right? It's not in their best interest. I do not want to get sucked into into conflict. Okay. I mean a trade war or a conflict does not make much sense even with the Russia conflilicts in Ukraine and that's not not China's business. It's not gonna to get into that doesn't want be a thought. I mean that's at least my impression again doesn't want to be a thought leader. He wants it to develop its economy right? And obviously here with you know going from developing to develop it rather be classes developing it doesn't really care so long as it gets optionality it gets the ability to choose what it does with with its economy, right? So Yeah, I mean look it's classic Trump, right? Trying to by imagine Trump pushed for this, right? It's not like a beyond a certain threshold. It's not I don't believe it's gonna to be let's say I don't know whatever it is let's say 13005 499 usd per capita and then it lesay 13500 usd per capita you trigger let's say developing to developed I don't think it's going to be like it was it's like this it's very much a diplomatic kind of a political thing, right? At some point there's pressure from other people or maybe it's in your interest to change me maybe Yeah okay cool so okay this is interesting and you talked about inequality as a whole okay inequality as a whole dindex and stuff like that. Okay so what is the genie index? I'm sorry genie index I don't how to sponce it up Yeah the genie Yeah what is genie? What is represent what is a person's name? Thanks to this idea, I actually don't know if it's genian. I don't know if genie is a name or not. I don't I don't know. I don't think so. But okay. But but what does represent? But what does genie represent? Jeannie represenpresent. Like how was the equality? Like, wait, let me think it's like, okay, so jny index ts, it's from one to, it's on a scale from zero to one. The closer euro zero, the morequally, the wealth are more equally distributed. And the closer you are to one, the more unequal the wealth are distributed. It gets at this point. And when, when the when gene index is one, that means that one person in the whole country controls like the 100% of the wealth of the country, the other people would get zero. The other people they get zero. And the, on the other, another hand, jny, when when it comes to like jny indepof on a scale of zero, that means when everyone in that country has has the same wealth and money, every single person, it's not a single person who has one, even $1 more than the others, everyone's got the same same well, same, same like amount of money and very equally, ally divery very Yeah, that's interesting. Good, good. So you have a 90 hundred could get to one or zero because these these are basically impossible because there's no no countries right now are very equal, perfectly equal. And the wealth is there's there's not a single country that has perfectly distributor wealth and there's not a single country in the world that has the person that controls like all the money in the country, maybe North Korea, but in extent, because kjong, obviously, he gets most of the money in North Korea, but I'd say I'd let know, let me see what's North Korea genathat because I wouldn't trust it. I wouldn't trust that. Yeah, that's the issue. The thing is, the issue is that I love the money that receiby. It's not going to appear in any statistics, right? I think the p, the GDP of North Korea probably I have no idea but probably measures what is I think there's so many other things involved but roughly what really happens and not including what Kinson makes this guy, all the money he makes off like this is a love of rumors, the drugs trade or more like the arms trade. I think what that is is a separate completely right? And the billions I'm sure I mean, Yeah the GDP Yeah the GDP of North Korea is like 5 billion, which is not a lot at all, I mean, of the whole country. Just crazy man. Yeah, I know. But this is actually very, this is actually not because I'm Brudo Wikipedia. It says the genome depth in North Korea in 2020 was 16.6, and and the genome depth of China in 2022 was 36. That's so not because just North Korea, each the individual, each individual 's debasically, each individual basically gets no money, basically gets no rights and stuff. And the higher class people, those people who work for the governments, they've got so much money, and the corruption there, the corruption there is insane as well. So I can't, I don't trust the data at all. I think so you're saying 0.6, 0.6 in China. Is that kind of what at least what the Google says, right? Yeah, I mean, North Korea at least by 0.7, something like that. Okay, that's a thing like as in, I wouldn't be surprised. I got your point, right. I wouldn't be surprised it's actually 0.6 and I'll tell you why. I mean, and by the way, we're just talking about numbers that are fabricated basically, right? Not another reality, right? But I wouldn't be surprised really if you basically all the money that's basically made illicitly stolen, everything is not really counted, right? So the 5 billion is basically subsistence level. I'm North Korea's if you get GDP 5 billion, which is roughly 5 billion divided by population, we're talking a GDP per capita of $1000a year or less, which is subsaharan African levels below that. Okay. So I think 0.6 might be the case and it's actually something not applaud and I'm sure the North Koreans applaud this if anything or even if it's a lie because your country is so equal because everyone is super poor poor they can't eat enough that's that's the level of so we can even say Yeah it might be 0.6 mm maybe I mean basically excluding all the off the top right which is most of it which is stolen which is made illicright or the arms training they make I think believe they make weapons they have to fund it somehow, right? All that money basically we don't count now we have the scraps left over right and that's divided up over large populations a tiny amount so have lots of people with subsistence basically just enough to survive more or less so everyone's very equal at a very low level. So maybe I mean obviously it's we're talking we'll fabricate we don't either don't know and sure there's people I don't I believe the people that might have a bit of money that's maybe counted or not, but Yeah, I mean, this is nothing to be proud of to 0.6, right? And also there's a lot of black market in North Korea. I did some research in North Korea around North Korea recently. It just my personal bit of Google searching, right? Because I was I was in South Korea in September and they went to the bi. Don't know if you had a chance to go South Korea or I had a travspa. I didn't go to the border. Okay, so next time, go. But it's like, dangerous. No, no, no, no, no, no, no, no, no, no, no, no, no. Dangerous, no, no. It's a very standard trip for tourists. So like, you know, there's loads of companies that French American choose foreigners, whatever. And also, I guess, South Koreans, me, South Koreans, it's a bit of a sense sitive this issue. It's an issue, I imagine, also is a, there's them, a lot of like national sadness, let's say. So it's not something maybe they want to prtically go to the border because it is a bit of a traumatic thing for them, isn't there, in their past. But you basically go, and it's a very secure, really. I mean, it's manned by so many troops. It, there's also the un involved there, kind of intermediate a little bit. And there's A, A buffer there's a buffer zone, right, where nobody can trespass, right? Very much a buffer zone like no man's land, right? And obviously something could happen at some point, but I think it's to the point where it's basically the status quo is we don't like each other, but we kind of understand that if something happens, it can be the World War Three I, right? So and also, I think North Koreans are just overpowered, right? They're going to do random stuff. For example, they would send balloons like full of like like rubbish over to the South Korean side, which is just a bit of a like a child's play, right? Yeah something crazy like theybring like balloons and then just pthem onto to South Korean side kind of like as a child was. Does that make sense? Yeah. So that's make Yeah and also they're like playing some they're playing some audio about like how great North Korea is and trying to convince people from South Korea and move to North Korea and trying to like, no no one's gonna go there. It's more that, I mean, but it's more like a tourist attraction almost like a seem part. I mean, it would not basically a bit like, you know, and what was going to say, Yeah, I mean, the North Korean economy is terrible. I mean, there's it's not like an economy where there is some sort of private enterprise. Like you think if countries are you know, companies like Cuba now, can we? I'm sure there's a lot of government. Government dominates everything, but you can set up a na business, right? I mean, you can sell somebody on the street almost, right? And then the police officer goes down and it goes through and it wouldn't tell you. And it's basically, but there's some also foreign hotels, are there, or Spanish hotels? I mean, there's a private business. I mean, there's some kind of, you know, private activity in North Korea. The economy is what we spoke about before, the great economy, or informal economy, subsistence informal economy. I produce some extra stuff that the government does not know, some extra I'll put, you know, I know some potatoes and I selthem okay somehow, right? That's what the lifelight of the economy, because there is no business. There's nothing even public business. It's just, I look, everything's reshoby government and there's just no activity. Asseeming me right? There's no, I think the activity the most, sa is basically the arms tree. So you get paid a bad wage to make arms and armament and guns to sell off to whoever pays you the most and to be, I'm sure these arms go to really corrupt, terrible governments in Africa, criminal organizations. But Yeah, there's just nothing. There's nothing. So it's a shame. So I think a lot of the informal economies also not counted within GDP, right? Or not counted at all, right? But Yeah, I saw a documentary after my trip and was, it's just a terrible country, really bad. It was richer in South Korea before the Korean War. Actually 1950, 60S, I mean, marginally richer. South Korea was also very, but they were both very poor, right? Okay, Korea, the Caribbean institustill were very poor, very, very poor. Yeah. So it's not like it was something to be proud of. It was basically marginally richer. But but Yeah, I mean, it basically stayed the same. There's no growth. There's actually less rich, less prosperous than it used to be 60 years ago, which is something quite big you know a big statement, but it's okay. And then look at South Korea. Look at the South Korean development rule. Okay? And this is an interesting case study, right? Because South Korea developed massively under dictator as well. Okay? So South Korea was under dictatorship until the the 19 eighs, but a dictator that I'm not defending any dictator, right, but at least was a dictator that allowed a free market to prosper, right? And this is a big kind of case study, real life experiment, whereby you can have a dictator on both sides, but a dictator, not better or worth, but simply promotes the free market system. It is superior ring than some kind of government control, inefficient government control ring. So Yeah, south koa is obviously from a developed country now, basically the same junip capspain and very, very similar. That's a wall we were always taught, right? Let me check. So developed country that's growing. And Yeah let me check this. There was very poor, just not that longer. Like Singapore, the same ring. Singapore was extremely poor before even poor rer, extremely poor Singapore. Singapore Yeah one of the highest GDP per capita in the world right now. So Yeah, it's not like, for example, South Korea. I was just on basically basically pretty much to the point of Yeah exactly what the GDP per capita of Spain. I I'm not saying Spain is America or you know but it's basically like on the level bit below France, the the level of Italy. And if you think of, let's say, Singapore, very poor, and now it has a higher GDP per capita than America. And obviously it's an interesting case, a small country, right? It's almost like a City Country to one city state, right? Single state, single city state. I think it's cool and it's a bit like Hong Kong, right? I'm sure there's a lot of things going on in terms of its privileged position in terms of finance, international tralike intermediation, right? So can we can question how how valid this is? Does that make it before Rory, you were saying yoube referring certain countries that were very rich in terms of GDP per capita rate you a richer like than America. You'll quite right to say, look, America's not number one, not even number five, right? But I will question whether some of these city states or small countries that we can really, truly say they are more developed, if that makes sense, right? Why do you think? Why do you think? What do you think my point is here? What do you think I'm questioning? I'm not questioning that. The data is that. I'm not questioning that. But why do you think I question the achievement of a small country versus not of the matter? Hello. Because they have smaller populations, so each person gets more money. Yeah. And I understand the fact that, look, if it's small population, we also have a smaller GDP, but look, we have more left. It's a tough one. I mean, I do think that even if it's just a 1 million person state, but a strategic recapitalist half a million dollars, that's a great achievement rate and it's always per person. I mean, and I think that it's per person, you are richer. That's great. Whether look at country like the us with a lot of immigration so big, I think it's naturally going to be harder to have a very, very high GDP per capita right, to compete against a city, right, like Singapore that has is basically one Secor, two sectors, right, that dominates. They're also more prosperous. And also because it's small, they don't have to have I mean, it's a lot of things that and I don't have an opinion here, right? But we have agriculture in the country. If you have a bit of diversity, you're not going to be the top echelon of gp per capita va because you have a bit of everything. Also racially, immigration wise, it's kind of hard to have keeping an homogenous level of GDP counso high ring, but it's an achievement also obviously Hong Kong as well a ring. Singapore is around 5 million people according to just my Google search now a bit less Hong Kong is 15 or 20 million right? Yeah Hong Kong I don't know if you have an opinion on Hong Kong, right? In terms of it's achievement I mean it's got a great achievement it okay it's a bit less 7.5 less than ten actually okay but I think Hong Kong it benefits a lot from this special status of the moment between China and the west, right? Yeah. Is this artificial to some extent. Is this real economy? I mean, maybe maybe not before it was maybe an idea that look, if it's not an economy that's manufactured goods that has gone through some industrialization and which it did, it did okay before does account as a fully count. Can you be a service based economy, a tertiary sector economy and be fully developed? I mean, yes, there's this idea that people, countries are skipping this this manufacturing stage of development, which is what China went through, right? Mainland China. Okay. So why do you think I'm a bit skeptical of the uae of Luxembourg, these countries data? Why are they a bit skeptical to maybe, let's say, make this kind of idea that these countries are fully developed or these are, if they countries to look at, even though they special, even though they only specialize on one thing, they would create such a huge amount of money because they specialize on one sector and they've get a lot of money and they've got this very few population in that area as well, in that city, state or other. So that's how they developed. Okay, Yeah. And so I mean, I'm not questioning that they do very well. People live very well there. I'm just saying, for example, like Luxembourg or Samaria and euntenstein, these very small countries in Europe, they're basically towns. A lot of these end up being like money laundering centers or some kind of financial centers where there's like offshore, let's say, money to tax havens, right, where people deposit money, have developed financial system there, and they kind of benefit from that. I also think it's just so few people that benefit from, let's say, certain think maybe in Luxembourg they did have a big financial system. They benefit from that. Luxembourg's a lot of private equity funds and funds and investors, institutional investors in Europe have their money stored in Luxembourg. So legally, though, their companies and their funds are located in Luxembourg for tax reasons. And I also think that in the case of ua, it's a bit different. I think a lot of it is oil money again, and it's always basically a family that just has the land, has the expedihas, the ownership. And it also depends on how you count the population. There's a lot of immigrant population that are basically brereport and live terribly, treated terribly, right, like dogs almost again. So that's a you Middle East that's not of my opinion there small countries in Europe, I think they do very well, but they're just tiny popufrom tiny tiny tiny diluxembourg is tiny submarine and interesting. I mean tiny I don't know how representative it is. That's basically the word how representative that is of something to emulate. I don't think you can you can emulate that over a big territory like China, right? China had to develop stically holistically to bring 1.5 billion people. South Korea and Japan, they developed tonight, they have higher ggp capital, as in China, because they're smaller, with smaller plus, with smaller populations, are easier developed. And also Taiwan. Taiwan has way higher GDP per capa than China because China, Taiwan just a small island. So they can develop the island fully. They can get the island fully developed quite fairly easily, I would say, because obviously there's a small islands and you've got multiple pouses. So you've got so many every city is basically like close within like 100 km distance away from the seaside. So it's easier to transport to for transportation and stuff. That's how they fully developed. And we got higher gmaup because just of the trade and geographical location and everything. Yeah, I one issue I'm not too familiar with it to be Honi don't know enough about Taiwan, but I don't know if it developed. I think it developed more or less in line at the same time as China. Maybe I don't know if it had an advantage before as mainland, but I don't have an opinion there. But I think what Japan is, I it's a bit different. I agree with you. The population thing is an issue, big countries across small countries. But I do think Japan developed much sooner. So it started sooner and then that's still an advantage to carries through obviously everything we could compare the development stage of China versus Japan, okay? South Korea, it didn't develop much sooner, but it did develop 20, 30 years before. And I think that is massive. Okay? And there's something called compound interest, which is important to kind of have conceptual understanding of what compound interest is in terms of economics or finance. I don't know if you've heard of compound interest. Worse or simple interest, why done this and no. Got I had key reminme of this. For example, for example, let me explain. So imagine you grow five, let's say 3%, 4%, okay, your GDP grows at 4% or gdper capital with something grows at 4%, okay, over 20 years, okay. Well, that's take over 30 years, okay. How much bigger is that? Something for example, let me give you example. Let's say GDP per capita. It's ten k. Yeah. Okay. Gdb per capita near 30 is how much if we're growing at 4% annually. Mathematically, mathematically each gets wait, do me think. I know actually it's ten times one plus one plus 4% bracket and in power 30 to the power of 30, exactly. So you've you've done what is the right way, which is a compound interest rate there. And it's very interesting. This is what we call compound interest in the 4%. It's not 4% of ten all the time, right? We grow 4% from the current base, but the base is growing, right? The economy, the GDP is growing. So this is important. This what we call compound interest, right? So you're right, it's basically ten k times, right? One plus 0.04 or you can just go 1.04, right? So power of 30, right? Equal to can you do this in your calculator? How much is this? Wait, let me think. Do you do you have a calcator? I do. I need to, but it's not besides me. Can you do the calculation for me please? Thank you. How much do you think it's going to be? What's an estimate? Timate, random estimate, mental estimate? I don't know something like 25k, 2530k actually not not bad, not bad, not bad. Yeah more or less it's so 10000 times 1.04 to power of 30 is 32.4. Okay, what do you think? And here I'm talking about compound interest. What do you think I'm on about with compound interest? This is a bigger number. What do you think simple interest would have given. What simple interests have been rather than a number have been. Sorry, what was the question like? So this is this is compound interest again. Yeah. So the base goes up every time that's that's this idea, right? It's not it's 4% of the same, 10000 all the time or simple interest of being wards. 4% simple interest over 30 years would have yielded how much after the 30 years? Have you heard what isn't interest on? No, no, we heard of the term? Okay, well simple interest is just 4% of ten k rest it's just ten k plus Yeah right 0.04 right times ten k right times 30 right equals so it's literally just 10000 plus 0.04. Do you know what I'm doing here? Can you follow what I'm doing? Yeah Yeah. 10000 times 3020 2000. Yeah, so this is very easy. It's just 4% of ten, which is 400, right? 10000 to 400. Yep. Do you follow that 10%, 4% of 10000 is 400 rate Rory so enough. Four of 10000, it's not as much as the the first one. Well, Yeah, Yeah but 400. Yeah Yeah but it's just 400 times. 30 is 12000, right? Ten plus twelve is 22. That's it, right? Yeah. So compounding is a powerful thing. I don't know if you've heard of Warren Buffett, right? This is something he talks about a lot. Okay, warm rebuffet, right? Yeah, you've you've heard a Warren Buffett, right? Okay. Can you explain me to a bit that because you've you've heard of Warren, you've heard of Warren Buffett, the investor, right? Yeah, you've heard it does matter if not. But the point about compound interest and going back to the South Korea China point, compound interest means the growth rate is over a bigger number every time. So 4% growth over 100k is 4000GDP per capita, additional 4% of ten k is just $400, right? So clearly, compound interest masses a lot. And when it comes to growth, we think about compound interest. If you go to your bank and they give you compound interest, this is what this this has to be the case, right? Because if you, when you make more and more, you have more money in your bank account, you want the interest rate to represent to be off that bigger number, not off the original number. That makes cenright, right? So my point of following the compound interest is very powerful. That's what eptors represented it. That's the only thing I represented. Okay, let's do another experiment and I want to exaggerate the numbers. Okay, ten k times 1.05. Okay. To power and. Then me add a, say, longer time of horizon to power, 40 equal something, ten k, well, let me say, let me do. Okay, let's start with an even loan number. Birking China pro starwith a GDP capa in the eighties and nineties, maybe even two k to be honest, maybe even less. Okay? Two k and they've grown for the past 50 years an average rate of, let's say, it's 7%. Okay? Now it's less, right? But now let's assume, Rory, that they only grew at 6% average cumulative annual growth rate over the past 50 years. Okay, what do you think going to be the difference? Okay, me, let me calculate the first number and then you can tell me what you think the second number will be. Okay, let's do the other way around. 0.06 and 0.07. Ducan, you see this, right? This is what I'm trying to set out this bottom bit here, right? Yeah and you can see it, right? You know what? I'm trying to do it. Okay. Guess the first one, two k times 1.06 of power 50. What do you think that's going to be? It's a tough number Testament, I know. But what do you think. And this is a tough one. It's impossible menit's tough, but more or less an order of magnitude, something like a 25, 25, okay? Thatlooked be not bad. Yeah, 36.8. That's actually not bad. That's timate okay. It's bad. No, it's all bad. It's all bad. It's all bad because this is a big compound interest over a long time horizon, not 30 or 50 years, and a higher growth rate. So everything thingmagnified. Okay, what are the bottom the difference between the bottom and the top is just 1%, right? Over 50 years, right? Rory Yeah you can see that right? What do you think the bottom numbers are gonna to be? You know the top number is 36, right? 840 50Yeah okay, just 1% difference ring that's not about actually it's 58, 914 okay? So why why on earth am I? Why on earth have I spent the time to calculate these two numbers? What's my point, Rory? What do think my point is going to be? What am I trying. To show you you tried to show me that. What's my teaching point here? Think of like put yourself in my shoes. Yeah. Just this bit down here, right? What's this point? What's the point of this? What am I trying to show? What's what's is there anything that's impressive here or a bit surprising? The surprising thing probably like 1% will make such a difference, right? 1% Yeah difference in growth, annual growth rate over 50 years. Compounding makes a huge difference. There's a difference of 22000, which is more than 50%. So this country of 50 8K is a 50% richer, has a 50% higher living standard. That's massive. That's 0.1. Okay, that's is interesting. I think the next one, the next one is it more interesting? And this isn't the more going to the China's South Korea point, okay? This is more related. This is my, this is the most interesting point. Okay, let's do the following again. I'll just copy this style. Okay, let's do the following. What am I trying to show here in the bottom numbers? Bottom numbers are. What's teaching point down here? Oh, that means like the the 1% more growth is more powerful than 30 years, something like that. But I'm not trying to compare between both. I'm trying to me let me do the following. Let's see if this makes sense. And this is related to your earlier point about South Korea versus chain. Does this make sense? What I'm just trying to draw here? Yeah, Yeah. What am I trying to show here? China, the top line, south to korethe. Bottom line. China, South Korea has still developed longer than China since China still came. Okay, very good. So your point was, Rory, Oh, South Korea or Japan have a high GDP caphave, a low population? Oh, high GDP, let's say living standards. Maybe maybe it's easy to develop with a low population. And that's something that people talk about. Again, also in terms of fertility rates, it's not the issue of China because I don't think the offspring per family is very high at all actually. But in some African countries, obviously very different. The porate of masses love used population that are dependent, right? Even if this is the China where families just have one or two kids, really on average, the high evolation is an issue in terms of developing fast overtime rate. But what I'm trying to illustrhere, and we'll see, we'll tackle the numbers, Rory, is I believe the bigger issue here is that China has developed very fast, but it's not developed for that long yet. Okay? South Korea probably had a lower growth rates, not as meteoric and from a bit maybe with a higher base, but that's irrelevant. So we can question if it's 1.07, both cases or not, we can question that. But it's just been developing for longer. And compound interest is a powerful tool, okay? It's a powerful thing whereby. Starting sooner makes a massive difference down the line again. Yeokay, so for purposes of illustration worry, I've kept the two k start point. Okay, you can see the both started two k right? Yeah those starclaim wine develops longer wine develops and I've also we've also assumed already the growth rate is the same 1.077. Okay, so let me do it. Let me do the calculation. Okay? The top one is how much do you think the top one's going to be? What do you think. It's an estimate for China. Let me think. Maybe I should think about that, an estimate, like it's a tough Testament. Okay, I'm asking for that south curiosity. Out of curiosity, let me think, Yeah, I can't give you like a very opposite number. So I hathink careful any number, just more or less. What's it going to be? Well, okay, if I just give you, if I just give you a random number, I think it would be an educated guess, but it's a tough guess yet like a thought 3030 okay it's not 30 because there's there's no there's no logic there's no logic here just it's have curiosity not 30 not 30 1550Yeah okay. 15 224 okay, very good to the point. Okay, well it's actually more or less the China case. I mean I'm not that these not numbers I just invented more or less with a bit of understanding of the Chinese situation. I'm not saying they started a 2% the gb per capita, a two k gb per capita, but more or less somewhere wrong along those lines. And a growth rate, average growth rate over the past 30 years of more or less 7% is pretty standard. I would say it's more or less that, maybe a bit less. And this is roughly the GDP per capita. They actually have now 15 point 15k us dollars per capita, more or less. That's actually the average GDP per capita of China more or less, right? So Yeah, now I think of the South Korea, they're say same assumptions, which obviously we can argue, but let's say same but over sixth, would this think 36, 37. Okay. And this is this is the best one to illustrate this. The power of compounding is tremendous. It's not double. It's actually this number here. Oh, wow. You can see the power of compound ding Rory over long time periods, right? Yeah, I it's not it's not double because Oh, it's double the time period. It's Yeah 7% that gets compound over and over. And this is what Warren Buffett investors talk about in finance as well. The power of starting early. That's why. And I'm not saying this is like good you know, rocket science, but there's a lot of I'd an idea that if you start investing early, saving early, the compound over time and if you let it stay there sits and you don't sell your shares, for example, they just continue to grow, continue to grow, continue to compound ring. Okay. So this is basically my opinion. And obviously 115 per capita is not the South Korean case at the moment, right? That just illustrates what potentially could be the difference, right? Just by starting earlier, right? Everything else the same Centrus parais, okay, Yeah, Yeah. Okay, cool. Just because you're developing over 30 years and not just over 60 and not just 30, okay, cool. So this is interesting, but why do we care about inequality? Ruwhy? Do we even care? Okay, it's a bit of separate issue now, right? Specific about inequality. And you mentioned genie, right? Why do we care about inequality? Is this an issue at all? Quality is an issue, for sure. Why? Why? Because we all want to be equal, like the pool, especially like the the, like the lower class people want to be, want to be equal. What do you really want, Rory? Do you want it equal? Do you want to be rich or do you want to live better? Obviously, everyone, everyone wants to. Everyone wants to be richer. No. Okay. Do you want to be? Everyone wants, do you get a mad Rory, that your neighbor has more money than you? Or do you get a mad that you just are in a bad situation? You want more money, you want that be garsy, or you just want something else, maybe be more basic. You want a computer and you don't can't afford a computer. What do you think? And Hey, this is a philosophical. I'm not saying. I'm just asking some questions like what do you really want as a society or as an individual? What do I really want? Money, right? Is that money from someone else or just money yourself? Just myself. No, this is a philosophical question. Yeah. I mean, maybe and let me give you a little kind of analogy that gets talked about a lot. Okay, different viewpoints in life. Okay, in life or like politically also there's a pie, okay? Your slice of the pie is 5%, okay? Well, let's say, well, that's is 3%, okay? This is you know a small community, you own 3% of the wealth or you the GDP, right? Let me you let me let me pose two situations, okay? This is situation one again. Then we've got situation two again. Let the same size, okay? It's not the same size, more or less. I say something in the. Same 3% of the same pi again. Okay. In both scenarios, you start at 3% of the GDP of your small village or some kind of pot, okay? Yeah. Okay, scenario one, you keep the 3% share, but there's big growth. Okay? The pies grow, but you still have the same 3%. Obviously, it's more right, because 3% of the bigger quantities is a bigger number. Bering, scenario two, you start with 3% of the same number. Scenario one, but now there's been massive growth. Okay, the pie is really big, but you'll share the pie just 2.5% and this this pie, this slice. Yeah is big is bigger, okay? The bottom one is bigger in terms of the actual slice, okay? This this less is bigger than this one. What would you rather have? Would he be rather be in scenario one or scenario two? I'd rather be at scenario too. Anyway, it's bigger big the bigger it is in total like the more like even though same percentage but you still get a lot, you still get lies a lot of money. Your slice is bigger below, right? It's narrow too. Yeah, Yeah. Now I've been added numbers just to not overcompcated but if we thought thought about the surface area, the volume of this slice, it's bigger even if it's 2.5% of the total pie. So it's less than your initial share of 3%. Your slice is bigger. Bigger than before in scenario two, knows. So bigger than the top one in scenario one. Yeah. So philosophically, there's a lot of people, Rory, that concentrate on the share. Okay, in scenario two, inequality has gone up, right elileast, but me could just think about me versus the rest, right? I am poorer in relative terms. Rory ray, do you see that? Why am I poor orer relative terms because like the total share is not that much. So even like it's the 3% is not as big as the the 2.5 percent of the bigger the share 2.5 percent share in the bigger economy. Yeah even if 2.5% is a bigger number because the pie is really massive. I don't have 3% now. I have 2.5% the way gene coefficient works, and you explain it really well before, Rory, it's a how much do you have of the total wealth? How much does this percentage? How much does this percentihave of total wealth? Okay. So philosophically, I would say, I mean, I think most people would say scenario too, but some people that talk that, and obviously this is an extreme against more illustration purposes. But in politics, a lot of some schools of thought would think noabout keeping the share the same or even more. Okay, so the poor have that the share of wealth should not be going down, right? Have other people go, the share does not matter, it's how much they get. Like 9% are just put in hard cash. Okay. And I'll leave you with one phrase that I might have mentioned before. Okay. Yeah. A rising tide and lift tall boats. Have you heard of this phrase? Not really rising tidoes this does this illustrate? What is the what am I trying to say with this phrase? What does this mean, do you think, apply to the economy? So when the economy grows, all people gets more money. Basically, there's when there's a rise inside, all the boats rise as well, right? So it's this idea that don't care so much about your share or about how the rich are doing versus you, so long as everyone's doing better, that's the most important thing. Also that the rich do well, you do well, the working class well, right? So ineuality is bad. If it's extreme, it maybe signals people doing very badly. But if everyone does well, and inequality has gone up in China over the past 30, 40 years, and a lot of countries have developed fast, but so long as everyone's doing better, if there's no absolute poverty now, which doesn't all exist, I would say in China that did exist in the twentieth century for sure, nor famines, this is a great achievement in itself, right? So these are different ways of viewing inequality. Inequality, I would say it's not bad. Obviously, it's extreme. Why is it extreme? Just because it's extreme does not mean as spal. What I'm trying to say is that an economist, we should always kind of look at the data, okay, and look at the trends. It's not over high inequality number. The high gienene is bad. Maybe it's bad, but we have to look at the data a bit more, right? That's kind of my point is as an economist or three level economy, more pragmatically, you have to think a bit deeper. That case also for the evaluation rate. Okay, tomorrow quickly I want to go through the gene coefficient graphs. How to calculate it like you've given the intuition, okay? But if you can look at that before the lesson. Okay, so we'll look at the so have you done have you looked at the graphs, right? How you actually calculate it like numerically or like graphically, right? Okay, got this part of the a level course ses, well, like you've probably seen these crafts again. Cool. Okay. Do you have any questions? Worry? No, I don't have any questions left. I don't think. Okay, great. Well, thanks a lot and see tomorrow. Okay, thank thank you. See you tomorrow. Bye, bye. Bye roory. How good day. Bye.