Scott Galloway (@profgalloway) hosts The Prof G Pod and The Prof G Show, cohosts Pivot with Kara Swisher, publishes the No Mercy/No Malice newsletter, is a professor at NYU Stern School of Business, and is a bestselling author. His latest book is Adrift: America in 100 Charts.
What We Discuss with Scott Galloway:
- What the 70% of Americans who describe themselves as middle class should consider in the election cycles ahead.
- Do we want advanced technologies in the hands of elected officials, or under the exclusive control of private enterprise?
- What Scott means when he says, “In America, it’s never been easier to become a billionaire — but it’s never been harder to become a millionaire.”
- Why does the tax code seem to get increasingly complex in spite of the majority of Americans supporting its simplification?
- How can we address the inequities and inequalities of the current state of capitalism without seeking to dismantle it entirely?
- And much more…
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Please Scroll Down for Featured Resources and Transcript!
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Miss the first show we did with Pivot co-host and NYU Stern School of Business professor Scott Galloway? Catch up here with episode 204: Solving the Algebra of Happiness!
Thanks, Scott Galloway!
If you enjoyed this session with Scott Galloway, let him know by clicking on the link below and sending him a quick shout out at Twitter:
And if you want us to answer your questions on one of our upcoming weekly Feedback Friday episodes, drop us a line at email@example.com.
Resources from This Episode:
- Adrift: America in 100 Charts by Scott Galloway | Amazon
- The Prof G Pod with Scott Galloway
- Pivot with Kara Swisher and Scott Galloway
- Prof G Show
- No Mercy / No Malice
- Scott Galloway | Website
- Scott Galloway | Twitter
- Scott Galloway | Solving the Algebra of Happiness | Jordan Harbinger
- Scott Galloway | From Crisis to Opportunity Post Corona | Jordan Harbinger
734: Scott Galloway | Course Correcting an America Adrift
[00:00:00] Jordan Harbinger: Coming up next on The Jordan Harbinger Show.
[00:00:03] Scott Galloway: In the teen brain, just as it's coming online and understanding social status, but it doesn't have the ability to modulate, it doesn't have the ability to not take certain actions as seriously, as more seriously than they should, I said I'd rather give my 15-year-old kids a bottle of Jack and a bag of marijuana than an Instagram account. This has been a disaster, especially for girls.
[00:00:29] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger. On The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people. We have in-depth conversations with scientists and entrepreneurs, spies and psychologists, even the occasional journalist-turned-poker champion, mafia enforcer, drug trafficker, neuroscientist, or hostage negotiator. And each episode turns our guest's wisdom into practical advice that you can use to build a deeper understanding of how the world works and become a better thinker.
[00:00:57] If you're new to the show or you want to tell your friends about the show — and of course, I love, love, love hearing, when you do that. I suggest our episode starter packs as a place to begin. These are collections of our favorite episodes organized by topic. That'll help new listeners get a taste of everything that we do here on this show — topics like persuasion and influence, abnormal psychology, investing in financial crime, cults, and more. Just visit jordanharbinger.com/start or search for us in your Spotify app to get started.
[00:01:24] Today, my friend, Scott Galloway, back on the show, always a blast. We always have a lot of similar opinions when it comes to capitalism, business, education, thinking about the future. Very smart dude. For people who think I'm on the left, this episode will either confirm your suspicions or be very confusing. For those that know I may be right-leaning centrist in many ways, this will also confirm your suspicions or be equally confusing. Either way, if you're on the left or the right, you're going to agree with a lot of what we discussed here today. And of course, you're going to have a few kooks that send me one-star reviews because they can't stand to hear a dissenting opinion. And we all know that those people, well, they're the real snowflakes, always have been.
[00:02:01] Now here we go with Scott Galloway.
[00:02:06] So post-World War II, the US' greatest innovation was not a thing. It was social and economic construct, the middle class. This is what you wrote in your book, which I read and really enjoy it. It's a bunch of charts and normally I don't go for the charts. I feel like it's a little bit of a cheat, but you did good in my opinion.
[00:02:24] Scott Galloway: Thanks, Jordan.
[00:02:25] Jordan Harbinger: Yeah. Like you need my approval but all of that is in trouble now. Tell me what's going on there?
[00:02:30] Scott Galloway: First, it's great to be with you again.
[00:02:32] Jordan Harbinger: Yeah.
[00:02:32] Scott Galloway: And thanks for having me on. Peter Drucker said, "An economy exists to create a middle class," and I think a middle class is a way of essentially sharing prosperity across this construct called the nation. We have had traditionally the strongest middle class in the world. And as a result, a strength of a middle class, I think directly correlates to the prosperity of middle class, correlates to how successful that system is. So democracy and capitalism have produced the most robust, most prosperous middle classes, and they fight our wars, they pay our taxes. They kind of fund real forward-leaning innovation. Now, over the last 50 years, if you were to say what country has been most descendant, you would say it's been China, hands down.
[00:03:14] Jordan Harbinger: Mm-hmm.
[00:03:14] Scott Galloway: And it's no accident that China has brought half a billion people into their middle class, and we have actually shed people. So it's a decent proxy for the health of a nation. And I think one of the things we have failed to do is recognize that sometimes the middle class or the middle class is a bit of an accident. You didn't have middle classes in countries until kind of the last century. And also that it's a naturally occurring entity. I think unless you focus on it and you figure out policies that directly support the middle class, it begins to erode. And China with its long-term thinking with its laws against corruption, they can be quite blunt—
[00:03:56] Jordan Harbinger: Mm-hmm.
[00:03:56] Scott Galloway: —with its authoritarian rule that sometimes says we're going to put a tutoring industry out of business because it favors the rich with its 10X, as a percentage of GDP investment in infrastructure and investments in infrastructure, essentially an investment in the middle class. People who are rich can build their own infrastructure. They have their own hospitals, their own schools, their own transportation.
[00:04:18] So when you're a nation like the US and you're letting bridges and tunnels crumble, you've basically decided not to invest in middle class because they have to utilize that stuff to get to work. I believe that our middle class has been probably the most productive, prosperous, and noble entity in the history of mankind, and we haven't been investing in it as of late.
[00:04:39] Jordan Harbinger: And we can talk about China in a bit because I know some people are like, "But China's corrupt, and they have lots of things crumbling and burning as well," which is true and the tutoring thing can go either way. I mean, to be fair, the rich in China still do the tutoring thing. They just have the tutors come over to their house. So they actually took away—
[00:04:53] Scott Galloway: Yeah.
[00:04:53] Jordan Harbinger: —the upper-middle-class version of tutoring.
[00:04:55] Scott Galloway: That's interesting.
[00:04:56] Jordan Harbinger: The rich people still get what they want. I'm a big China watcher and people are like, "You lose your mind when it comes to China," because you know when you can read between the lines of a lot of their claims—
[00:05:05] Scott Galloway: Mm-hmm.
[00:05:05] Jordan Harbinger: —half are bullsh*t and half are not exact. I mean it's like any claim that a country that's authoritarian, that controls their media makes.
[00:05:12] Scott Galloway: Yep.
[00:05:12] Jordan Harbinger: Not always what's on the tin, so to speak. But let's talk about America because otherwise, I'm going to get in trouble with my audience here. Somewhere around 70 percent of Americans describe themselves as middle class. This seems normal to me, but Americans, do we ever describe ourselves as wealthy? Do we ever voluntarily say, "Actually, I'm rich?" It's so rare, I think. Maybe blue-collar folks might say, "Oh yeah, we're a blue collar, we're a working family," but Americans just don't say that they're wealthy even if their dad has a jet. They don't say that. They don't admit that.
[00:05:45] Scott Galloway: It's really interesting. Our relationship and our identity as it relates to money is really unusual because while no one comes on a podcast and says, "Oh yeah," unless they're obvious unless they're Warren Buffett and they're obviously wealthy.
[00:05:56] Jordan Harbinger: Mm-hmm.
[00:05:57] Scott Galloway: You sort of play down your wealth. because the American story is that I've overcome hardship and now I'm economically secure. But there's a certain, especially on the left, resentment of the wealthy.
[00:06:10] Jordan Harbinger: Mm-hmm.
[00:06:10] Scott Galloway: In my view, this incorrect correlation between wealth and character. And that as we've made a cartoon of rich people, that they're Monty Burns and they run the power plant and they must have — you know, when you have Elizabeth Warren saying things like, most billionaires have had to climb over people. And I would argue, I know a lot of very wealthy people, I would argue that on average, and I get a lot of pushback here, they're high character. People are concerned about the Commonwealth and patriots and good people because what I have found is in order to attain that level of wealth and success, you have to create allies along the way.
[00:06:43] And that this cartoon of, and there's some people out there that are assholes and they're famous and they got really wealthy, but people hide their wealth because, one, I think they worry that they're about to become targets. It's been considered sort of unco, if you will, to talk about money, which I think is a little bit, and I'm parroting the Godfather here, a means for rich people to stay wealthy. It's such that people don't realize exactly how much wealth they have.
[00:07:08] Jordan Harbinger: Mm-hmm.
[00:07:08] Scott Galloway: But at the same time, with this thin veneer or layer of somewhat anonymity, I find young people, I find Instagram is basically wealth porn. And that is, "Let me take a picture of me at the Emirates first class lounge or me hanging out at the almond in Utah," which is basically saying, not like, "Look how beautiful the sunset is," but, "Look, how rich I am."
[00:07:32] Jordan Harbinger: Mm-hmm.
[00:07:33] Scott Galloway: I find Instagram is basically just trying to convince people, "I have amazing abs," or, "I'm rich," I think that describes about half of the posts.
[00:07:41] Jordan Harbinger: Well, ideally both, right? Yeah, ideally both.
[00:07:43] Scott Galloway: I got rich off my abs. But in terms of an honest, open discourse between people in an environment like this, you don't say, "I have a private plane." You don't say, "I don't need to work any longer." It's just people are self-conscious about it, and again, people, I think have incorrectly conflated wealth with a lack of character. I think you might say, okay, it doesn't mean you're a good person. We have an idolatry of money in our society, but you're not allowed to pretend you care about it. One of the other myths and I apologize for the word salad here, is that rich people are fond of getting in front of an audience and saying, "Oh, I never think about money."
[00:08:17] Jordan Harbinger: Mm-hmm.
[00:08:17] Scott Galloway: Which is a lie.
[00:08:18] Jordan Harbinger: It's a huge lie. Yeah.
[00:08:20] Scott Galloway: So rich people are good at money now. Some accidentally got wealthy. Kanye is so talented that he was going to be a millionaire, even without trying, or a billionaire even.
[00:08:29] Jordan Harbinger: Mm-hmm.
[00:08:30] Scott Galloway: 99 percent of people are rich, or 99 percent of people are good at baseball, 90 percent of people are good at anything, including good at money. Think about it day and night. That's how they get good at it. And the notion that they just get up there and tell young people, "Just follow your passion and don't think about money." You should know how much money you have. You should know how much money you can spend. You should have a reasonable idea in your mind, how much money you need to save and invest and understand what the investment rates should be. You know, my kid can do calculus, but he doesn't understand the interest rate on his credit card.
[00:08:59] Jordan Harbinger: Mmm.
[00:09:00] Scott Galloway: I think that there is this myth that wealthy people are, "You shouldn't think about money." I think people should be thinking about it all the time. I'm not obsessed with it, but it's something I think about every day. I'm still financially insecure, even though I am financially secure by almost every metric. I find the relationship you're talking about between people and money and this weird anonymity they feel they need to have, but when they're younger and not wealthy, they feel like they need to inflate their wealth. It's very odd.
[00:09:26] Jordan Harbinger: Well, it's a status symbol game, of course, with Instagram. I mean, I don't know about you. When I was a kid, I went to school with a bunch of rich kids. It was a public school, but I mean, the parking lot of this high school looked like a BMW, Mercedes dealership. We had kids that had Range Rovers that you couldn't buy in the United States. They were import-only. The driver's side was on the, quote-unquote, "wrong side" of the car because it was from Australia. I mean, there was a lot of real money at that school. Nobody talked about it because the kids didn't understand it. Nobody went, "Ah, Jordan, look at your Ford Topaz that you bought from your mom or your aunt, or whatever for 500 bucks." That's rusting. Nobody cared about that. Maybe because there was already so much that we were in that environment.
[00:10:11] But I'm guessing, and I know you grew up with a single mom and you were less sort of secure with money back then, financially insecure back then, did you think about it? I mean, you knew you didn't have a bunch. I remember your jacket story, when you lost your jacket, but did you think about it all the time? Is that a kid thing or is that because I grew up around a bunch of people with dad's credit card? I don't know.
[00:10:35] Scott Galloway: I think kids think about it less. I think if kids have somebody who's irrationally passionate about their well-being and they have other kids, they kind of make their own fun. Now, kids from lower-income households have actually higher standing blood pressure or elevated blood pressure.
[00:10:49] Jordan Harbinger: Really?
[00:10:49] Scott Galloway: So poverty literally is a sickness. But I think if you get into sort of I describe my upbringing, I was upper-lower-middle class. My mom never made more than $40,000. But here's the thing, Jordan, we were happy. It wasn't a sob story. We could have a decent place to live. We could take vacations. I went to a decent public school that had rich kids, middle-class and lower-income kids. And I think that churn of that diversity was good because I had friends who were rich and it was aspirational for me. I wanted the sh*t that they and their parents had.
[00:11:17] Jordan Harbinger: Mm-hmm.
[00:11:17] Scott Galloway: And I had a friend, Ronnie Drap, a black kid who wasn't going to college unless I got a football scholarship, full stop. So when he injured his neck mid-season, it was devastating for him because that was it. He wasn't going to get to go to college. And that created, I think, a little bit more empathy.
[00:11:31] And what's tragic now about our schools is they basically segment into sort of a caste system. I went back to my high school a few months ago, University High Charter, and its middle and lower-income kids mostly. And I think that's bad, that this kind of casting, if you will, I think kids need to mix. And I think we need more institutions that mix this. Like if we don't go to the movie theater any longer, If we don't go to the mall, if we don't go to work, like where do we meet people with different backgrounds and different income levels and different beliefs? Where do we run into a Republican and realize, "You know what? Oh, he's a good guy." Or you run into someone an immigrant and you realize they love their kids the way we love our kids and are really thankful to be here.
[00:12:12] But I didn't think a lot about money where I grew up, where I thought about money was, and it's kind of, I don't want to say it's when I became a man because that feels cliche, but where I sort of grew up when I was in, you know, I was a f*ck up in high school and underachiever, really unremarkable in college, got a 2.27 GPA from UCLA and then the crazy thing is, Berkeley let me in for grad school because it was a time when education was meant to say, "Okay, maybe we could help you." That's how they evaluated people as opposed to who's freakishly remarkable or who knows somebody on our board. And it was totally different back then. But the moment like my life changed was in graduate school when my mom got cancer and it was just my mom was a secretary. We were underinsured. And these very strong, I don't know if they're like, you know, it was just me. So it's the man of the house and I don't know if it's these masculine feelings or just, maybe it's just concern or a love a kid has to your mom. When it's just you and her, it was just like, "I got to get my sh*t together."
[00:13:07] Jordan Harbinger: Mm-hmm.
[00:13:07] Scott Galloway: I got to take care of my mom. And I looked around and I realized, like I remember some very ugly weekends when my mom was home. She was discharged early from the hospital. I remember just sinking all the time.
[00:13:16] Jordan Harbinger: Mm-hmm.
[00:13:16] Scott Galloway: F*ck, I wish I had more money. And the fact that I'm the 26-year-old male son and I don't have money means I have failed on a cosmic level. I can't take care of my mom. That was when I got my sh*t together. There were two moments where I got really hungry and focused for money. It was that. And then I started making money. And then when my first kid came marching out of my girlfriend, I thought, "Oh f*ck, I got to make more money."
[00:13:41] Jordan Harbinger: Mm-hmm.
[00:13:42] Scott Galloway: But I always say to kids, you know, young people in a capitalist society, the reality is for better, for worse. America becomes more like itself every day. And that is, it is a loving, generous place for people with money. And it is a rapacious, violent place for people without money. And so I'm not saying it's the right way. I'm saying it's our way.
[00:14:02] So when you're younger, I say burn a lot of fuel and work really hard, try and find something you're good at, become great at it, and then you know, economic power will come to you. I'm not saying you need to be totally obsessed with money. I'm not saying you need to be in New York and be an investment banker, but economic security in a capitalist society is paramount. And you should be thinking about money. You should be focused on it from an early age. You should be trying to save money and developing, more importantly, really developing a skill that people will pay you for. And it sounds very boomer but I stand by it.
[00:14:33] I think in a capitalist society your wealth is directly correlated to your kids' opportunity, how many people will laugh at your jokes, and your ability to take advantage of just some amazing things in a capitalist society, which keeps coming up with new cool things for people if you have the money.
[00:14:50] Jordan Harbinger: So if you want people to laugh at your jokes, sign a deal with Vox Media and get that—
[00:14:54] Scott Galloway: A hundred percent.
[00:14:55] Jordan Harbinger: That's where it is.
[00:14:57] Scott Galloway: A hundred percent.
[00:14:58] Jordan Harbinger: That makes sense. There's a lot there, and I love this because we do sort of debunk the "follow your passion" myth. I encourage people to get into trades because those jobs tend to actually exist.
[00:15:08] Scott Galloway: A hundred percent.
[00:15:08] Jordan Harbinger: I would say, tell me if you agree, it's a hell of a lot easier to make a hundred thousand dollars a year or whatever as a plumber or an electrician, that it is probably most attorneys, because you really have to be in the top single percent or double percent of attorneys, at least in the beginning of your career to make that kind of money. And I think for trades, if you get into those apprenticeship programs, I mean, you can kind of pop out the other end and you've got a lot of benefits. Now, the numbers may decouple a little bit early on, but man, I have you tried to hire a roofer or a plumber or an electrician? I mean, you, you are paying out the nose and that's if they can even get to you in under two or three weeks, here in California anyway.
[00:15:48] Scott Galloway: I mean a hundred percent. And we have this obsession in the United States. Basically, we tell all parents, you've failed. If your kid doesn't end up at MIT and then at Google, you've kind of failed. If they don't go to Stanford and then to KKR, you know, you've done okay as a parent if you haven't achieved those. And if your kid doesn't graduate from a four-year college, something's gone wrong. It's like, oh, you know, you're talking to the parent. "Oh really? That's too bad. I'm sorry."
[00:16:11] Jordan Harbinger: Mm-hmm.
[00:16:11] Scott Galloway: We need to stop fetishizing these elite four-year degrees. We need to revoke the tax status of universities. If they don't grow their freshman enrollments faster, then population growth. And also public universities need to get funding to massively expand one and two-year non-traditional certification programs. If Berkeley and UCLA, and I'm actually working with both those universities on this, offer one or two-year degrees or certification in cyber security—
[00:16:38] Jordan Harbinger: Mm-hmm.
[00:16:39] Scott Galloway: —health technology, specialty construction. Think about all the nuclear power plants and windmills and solar farms are going to need to build installation of solar panels. You're talking about 80 to 120K after 12 or 24 months of training. They can take on debt. When you're going to go to school for a year or two years and get that certification, you're going to take on.
[00:16:58] And we also got to realize that two-thirds of our kids are not going to end up with a college degree. College isn't for everyone, at least a traditional means. So 50 percent of Germans have some sort of vocational certification. It's less than five percent in the US because we have this fetish around a specific path but a hundred percent — I just built a house and you can't even get, like for people outside, you can't find people born in America to do any job outside now. I mean there's a whole lot of societal things around that.
[00:17:28] Jordan Harbinger: Mm-hmm.
[00:17:28] Scott Galloway: But plumbers — I was talking to the guy, I have dogs. So dogs and carpets are not one with each other.
[00:17:35] Jordan Harbinger: Right. Not a great mix usually. Yeah.
[00:17:36] Scott Galloway: Not a great mix. Especially when you have a Great Dane puppy. I won't get into specifics, but the carpet cleaner, he is a guy and he got a franchise and he is like a 63-year-old guy. He used to be a pilot. And I went through the economics, I think he makes about 180 grand a year. And he's training his son now, and this guy's like the carpet whisperer. He can get any substance out of any carpet and so he is at my house about two or three times a month. I'm paying this guy a thousand bucks a month probably just to go to my house.
[00:18:04] Jordan Harbinger: Have you considered just not having carpets?
[00:18:06] Scott Galloway: Not having carpets?
[00:18:07] Jordan Harbinger: Yeah. Don't get rid of the dog but get rid of the carpet.
[00:18:09] Scott Galloway: Yeah. And one of them got to go. But the main street economy and also colleges that foot to the mainstream economy and also perhaps are on the hook for — if they loan a kid 200 grand to get a history degree at NYU, my institution had more student debt issued, not issued more student debt, but more kids borrowed more money, three and a half billion dollars to go to NYU than any university in the world.
[00:18:32] Jordan Harbinger: Wow.
[00:18:32] Scott Galloway: If we were on the hook for 10 or 20 percent of those defaults, I think we would do the math and go, "We're not comfortable loaning you 200," or, "We're not comfortable putting in front of you paperwork such as you borrow $200,000 to get a history degree when we know deep down about a third of you're going to have a tough time paying it back."
[00:18:48] Jordan Harbinger: Mm-hmm.
[00:18:49] Scott Galloway: But a one or two-year degree in health tech, or I mean a hundred percent, so we need a lot more vocational investment.
[00:18:56] Jordan Harbinger: You said in the book, this is especially relevant in the wake of the student loan forgiveness, you said, "The greatest assault on middle-class America's prosperity may be the relentless four-decade-long inflation and higher education. Between 1980," which is when I was born, "and 2019, college costs increased 169 percent while earnings for young workers rose just 19 percent." So I take it you don't think young workers or young people should skip college, but — well, actually first we talked a little bit about the trades.
[00:19:27] Tell me what you think of the loan forgiveness because I think it kind of helped some of the wrong people. Not that if you got this, you're not worthy of help before you get that email going to me. I'm just saying student loans are, they're rough, but I think a lot of the people who need a financial break who aren't as well suited to maybe deal with that kind of debt and bear the cost. I think people who graduate with a four-year degree generally are in a decent place to bear those costs. And also there's nothing in this loan forgiveness that stops the inflationary education costs, right? We just sort of like threw these people a bone but we still have the same issue, which is that college is too freaking expensive. It's ridiculous.
[00:20:05] Scott Galloway: Yeah. So student debt is a tumor, it's a cancer. And that as we've transferred to a trillion and a half dollars from middle-class homes to the endowments in faculty such that my colleagues can answer the question we ask ourselves every day. And that is how do we increase our compensation while decreasing our accountability? And cheap credit has enabled us to raise prices fast as than inflation with absolutely no recourse in the sense is that once somebody defaults on their student debt, which by the way, they cannot discharge in bankruptcy, so it haunts them for the rest of their lives.
[00:20:35] Jordan Harbinger: Mm-hmm.
[00:20:35] Scott Galloway: But the university got their money and they're not on the hook on it whatsoever, unless I think defaults go above 25 percent and they're no longer eligible to get student debt or get accreditation. This legislation, in my view, is bad legislation. Now, should we have targeted relief for people who work in low-income areas, take jobs where they can't find people, go into government armed services? Yeah, we should absolutely have targeted student-debt relief. But while we have shrunk the tumor 20 or 30 percent at a cost of 600 billion to a trillion dollars, the tumor begins growing again, as you referenced tomorrow. And that is we're not going after the cancer, which is a massive increase in college costs.
[00:21:14] And what has happened is that we have started all sorts of administrative, we have increased administrative bloat dramatically. We have created a luxury position rather than being public servants, we've said, "I know. Let's maintain our freshman class at 1,500 students," despite the fact we have an endowment the size of the GDP of Costa Rica, Harvard because it creates the ultimate luxury item and the key to a luxury item is scarcity.
[00:21:38] I can't get a Panerai watch. Every Ferrari is sold out before it's even announced.
[00:21:43] Jordan Harbinger: Mm-hmm.
[00:21:44] Scott Galloway: And I can charge $450,000 for a car that charges, it costs $200,000. What has happened with a cartel that is more corrupt than OPEC with pricing power that is more outrageous in pharmaceuticals is you end up in a situation of the following.
[00:21:59] If somebody gets an NYU business school, which is difficult to get into, they take a class called Brand Strategy over Zoom because of a pandemic and 300 kids listen to me do this for two hours and 40 minutes for 12 nights. In exchange for that, they pay NYU $7,000 each. That's 300 kids times 7,000, that's 2.1 million for me to do this, 12 nights. I think the gross margin on that is about 98 points. I've returned all my compensation last 10 years, so I can bite the hand that doesn't feed me. And I know I'm virtue signaling and I'm going to place the privilege that I can do that, but I do it.
[00:22:32] Jordan Harbinger: Wait, you don't, you don't take compensation for teaching?
[00:22:34] Scott Galloway: No. I've returned all my compensation.
[00:22:36] Jordan Harbinger: Wow.
[00:22:36] Scott Galloway: I used to. I've returned it. I got very lucky. I'll say it out loud, I'm now financially secure. But one of the first things I did, such that I could say that Andy Hamilton makes five million dollars a year, which is f*cking outrageous, the president of our university, and anyone who would demand five million dollars, not a million to lead a university, shouldn't lead a university. Anyways, I can say sh*t like that because I don't take compensation or I'm less of a hypocrite.
[00:23:00] Jordan Harbinger: Uh-huh.
[00:23:00] Scott Galloway: I'm still a hypocrite because I benefit from the platform but I can rail on it. And to their credit, they protect me whenever any of my colleagues get upset at me. The leadership at NYU says that's part of academia and that is freedom of thought and to be provocative.
[00:23:13] Anyways, what you have is a business model that creates rejectionism and a caste-system-like mentality, the fewer people we let in, the more we go up. In US News and World Report, the rankings have been terrible for America. And then we can charge these outrageous rates where we can charge 2.1 million to kids, 300 kids to take Brand Strategy over Zoom. Basically, the most expensive Netflix program in the history of mankind.
[00:23:38] Jordan Harbinger: Yeah.
[00:23:38] Scott Galloway: At 98 points of gross margin — I'm trying to think what other product has arguably gross margins of 98 points and costs over two million dollars, and I found one product, it's called Zolgensma, I think. And it's an amazing biotech product of the biotech industry and it addresses an otherwise incurable disease. It creates muscular degenerative so it's a degenerative muscular disease, imminent death, two doses of this, cured.
[00:24:05] Jordan Harbinger: Wow.
[00:24:06] Scott Galloway: And it's $2.1 million. So save your life from a horrible death or Brand Strategy from Scott Galloway at NYU. Both of those things in their own way are corrupt but what has happened at higher ed is we have lost the script. We have decided that we're not public servants, that we're Chanel bags, and we absolutely need to move in and we need to demand the universities — what could you have done with that 600 billion in student loan debt forgiveness? You could have gone to our great public universities, which educate two-thirds of our kids in America and said, "Okay, we have this grand bargain deal for you. We want you to make a massive investment in technology such that every year you can increase your enrollments by six percent and decrease your cost by two percent. Because the dirty secret is about a third to two-thirds of our classes could be taken online with no decrease—
[00:24:53] Jordan Harbinger: Mm-hmm.
[00:24:54] Scott Galloway: —in quality. We're going to give you the money for the infrastructure, for the tech investments, but we are not going to pay for more administrative bloat. You've got to offer more vocational certification. And where does that get us? In 10 years, we're going to have double the number of freshman enrollments at half the price. We're going to go back to where it was when I applied when the admissions rate of UCLA with 76 percent and tuition was $1,200 a year.
[00:25:16] Because here's the thing, higher ed is still a great plan B. Yeah, college isn't there for everybody, but the opportunity to go to college is for most people, and that is if we were in the environment now, I wouldn't have gotten through UCLA. I wouldn't have had the confidence to pay for it. My mom would've said, "If we're going to pay $50,000-$72,000 a year," which I think is tuition at NYU this year, "and you're getting C's and D's, we're just not going to do it." I wouldn't have started an analytics company. I wouldn't have gone to business school. I wouldn't have started a consulting firm. There are very few college dropouts that start consulting firms. I wouldn't have started a business intelligence firm. I would've hired and fired 1400 people and I wouldn't have paid about 15 million in taxes over the last decade. So guess what?
[00:25:56] Jordan Harbinger: Mm-hmm.
[00:25:56] Scott Galloway: This is not only the right thing to do, to move back to where it was. It's good for America. It's good for our tax base because Jordan, no institution, no administration department, can predict greatness at 18. No one has any f*cking idea.
[00:26:10] Jordan Harbinger: Mm-hmm.
[00:26:10] Scott Galloway: I mean, there's some indicators. There's some kids that are just such stars in senior year in high school, you know, they're going to go on to do great things. And then there's other kids that have such problems, they're probably not. But for the 90 percent of us in the middle, no admissions department can decide who's going to be the most beneficial, who's going to be a great military leader, who's going to start a great nonprofit and feed people, who's going to start an incredible company that creates tremendous economic value. It is impossible to predict that at 18. And every psychologist that's tried, it just doesn't work. And I don't care if it's the marshmallow test, which gets debunked. It is very hard to predict that. So what we need to do is offer as much opportunity, spread as much opportunity across as many Americans as possible.
[00:26:51] So I don't like the student debt forgiveness program. I thought it was, you've shrunk the tumor, but you haven't addressed the underlying cancer, and that is colleges not only too damn expensive, but it's not accessible.
[00:27:02] Jordan Harbinger: Mm-hmm.
[00:27:02] Scott Galloway: It doesn't matter how expensive a school is if you don't get in. And what happens is all these kids get arbitrage down to a tier-two school, so they end up paying a Mercedes price for a Hyundai. So I think higher ed has become absolutely more from the greatest upper lubricant in the history of mankind to an enforcer of the caste system in America. Absolutely, we need fundamental structural reform.
[00:27:27] Jordan Harbinger: You're listening to The Jordan Harbinger Show with our guest Scott Galloway. We'll be right back.
[00:27:32] This episode is sponsored in part by KiwiCo. Righty tighty, lefty loosely. I before E, except after C. So many things I learned as a kid that's still just branded on my brain, even in my geriatric age of 42. All that to say, it's great to start kids early to have a lifelong love of learning. Yeah, I could have used a little bit of that. KiwiCo makes learning fun with hands-on projects for kids and kids at heart delivered to your home. KiwiCo has projects suitable for my baby to my 81-year-old mother and Jen, who loves to DIY, digs KiwiCo's Maker Crates. KiwiCo also has Doodle Crates that teach crafting. Yummy Crates that help kids gain confidence in the kitchen. Eureka Crates teaches science and engineering and many other options, literally, good for ages zero to a hundred. I had a lot of fun. All the stuff that arrives is really cute and fun. The most recent KiwiCo we got was so perfect for Jayden. It was an armadillo bowling set, not a real armadillo. Calm down. He always was so curious. He asked us, "Why, Why, why?" And the KiwiCo box includes a beautiful explanation about what armadillos are, shows other types of armored animals, which actually was cool. I learned a lot myself. It also taught him counting and fine motor skills all in a really fun and unique way. Get your kids hands-on science, art, and geography projects delivered to your door every month. They'll be so excited to see these arrive in the mail. I mean, I know my kids, they love packages. It's just like a timeless, fun thing. You'll be surprised at how high quality the materials are too. These are real engineering, science, and art projects for kids.
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[00:30:52] Now back to Scott Galloway.
[00:30:56] I want to switch gears a little bit and talk about investment in R & D. Because we see the CHIPS Act, we see the Climate Bill, some of this stuff, at least on its face, seems really promising. I know people are going to be like, the Climate Bill has all these faults. The CHIPS Act has all these faults, but at least we seem to be going in the right direction, especially when we look at what countries like China are doing.
[00:31:17] In the book, you say, "Federal funding for R & D as a share of GDP has declined steadily since the golden era from a peak of," and there's some percentages in here, "but basically, private investment has filled the breach. Total R & D spend as a percentage of GDP is slightly higher today than it was in the 1960s. But leaving the future up to private interests is shortsighted," because of course, private investments, they have short-term market pressure. People want to raise the stock price instead of spending something that's going to take 10 or 20 years to return in most cases. And also because private investment means private ownership. So the fruits of research won't necessarily be fully exploited by everyone. They might just be owned by Elon and Zuck and that makes it hard to compete with a country like China, even if you're Meta or Microsoft.
[00:32:03] Tell me what you think about this, because it seems like we are, if you ask anyone CHIPS act aside, we're falling behind in long-term R & D and investment. Okay, when you look at the vaccines and medical stuff, maybe that's the difference but Big Pharma is not exactly beloved either.
[00:32:17] Scott Galloway: Yeah. Well, look, we're brothers from another mother on this stuff. I agree with everything you said. And if you look at, I don't care if it's Moderna, Apple, Google, Tesla, you can reverse engineer their success — so let me back up. How do you build a trillion-dollar company? You find amazing technology that's been funded by middle-class Americans over the last five decades, and you build a layer of innovation on top. To a certain extent, Airbnb is just leveraging follow assets made by other people. They buy cars and then they, Airbnb doesn't buy the car. It creates a layer of innovation on top of apartments. Uber's the one that creates a layer of innovation on top of cars. Moderna built a layer of innovation and additional research on top of government investments and R & D. It places from Vanderbilt to the NIH.
[00:33:00] Jordan Harbinger: Mm-hmm.
[00:33:01] Scott Galloway: GPS, DARPA, the Internet, the $6,500 EV tax credit, the fact we're building out charging stations, all of these are subsidies such that Tesla can build a trillion dollar or $600 or $700-billion company. So if we want to have more Googles, we want to have more Apples, we need to make these forward-leaning investments and technologies that don't pay off for a long time.
[00:33:24] The semiconductor or CHIPS Act is one of national security, and that is whether it's your toaster oven or an M1 Bradley tank, they're run on chips. And if our supply chain and the thing about it, you know, just as nine women can have a baby in a month, these things cost four and a half, $5 billion, these chip plans to make. And we have to have a steady domestic supply of chips. You know something like a third of all chips are now coming out of Taiwan or two-thirds of a certain type of chip in South Korea, and no one's going to make those forward-leaning speculative investments unless it's the government.
[00:34:00] So I'm a big fan of it. You can't let perfect be the enemy of the good. I like the Climate Act. At the end of the day, we're going to reduce emissions by 40 percent by 2030, which I think is an enormous victory. You know, I like the Infrastructure Bill. I like when government actually does things. So I'm a fan of this stuff.
[00:34:16] Jordan Harbinger: Mm-hmm.
[00:34:17] Scott Galloway: We absolutely — you know, if you think about inflation, inflation is demand and supply driven, too many dollars, facing too few products. And the way you address the demand side is you raise interest rates and the stock market goes down and people feel poor. That's an ugly way to tame inflation. And you have to do it. But the way you address the supply side is you make forward-leaning investments in investment in infrastructure.
[00:34:39] And one of the things we're doing, which I think is really smart, is we're going to start taxing stock buybacks. Because instead of inflating share—
[00:34:45] Jordan Harbinger: Mmm, thank goodness.
[00:34:46] Scott Galloway: Instead of inflating share prices, we're saying to companies, "No, we want you to make forward-leaning investments in innovation in people, property plants, and equipment." So we have to, there's just certain things. The National Shoe Association, that lobbies on behalf of shoe manufacturers, has figured out a way to tax shoes coming in from China such that we can support our domestic shoemaking capability. And their reasoning has always been, "If we go to war, we have to have boots on our young men and women in uniform." All right, that's probably bullsh*t. Fine. They got it through. You have to have chips. You have to have chips.
[00:35:16] Jordan Harbinger: Mm-hmm.
[00:35:17] Scott Galloway: I'm a fan of the act and kind of these forward-leaning investments and just my last round on this, you know, we're talking about these huge investments. What I find really obnoxious is if the most patriotic Americans are veterans and it ends up and it makes sense, that the people invest the most in America are the most loyal. And anyone who has kids, you just irrationally love this thing, even if they're not that nice because you made such an enormous investment in it. And so veterans are the most patriotic. I find some of the least patriotic people are the people who've benefited the most from America.
[00:35:47] Jordan Harbinger: Mm-hmm.
[00:35:47] Scott Galloway: And that is our tech billionaires. I find the general narrative is they sh*tpost America, "Government should just stay out of the way. Government doesn't get anything done." Really aggressive, mean, profane tweets against our elected leaders. "The FTC is corrupt," and it's like, Boss start an EV company in South Africa.
[00:36:05] Jordan Harbinger: Mm-hmm.
[00:36:06] Scott Galloway: Why are you launching rockets out of Montreal where you went to school? If you look at the Pacific Coast, it's riddled with organizations, companies that have hundreds of billions of trillions in wealth. And then what happens just above Seattle, it stops. There's Lululemon north of the Canadian border and that's about it. And then when you hit to Qualcomm in La Jolla in America in San Diego, it stops until you get down to MercadoLibre down in Buenos Aires. And yet these tech billionaires who have benefited more than I think almost any cohort in America are the first ones to sh*tpost America.
[00:36:44] Jordan Harbinger: Mm-hmm.
[00:36:44] Scott Galloway: I just think it's obnoxious.
[00:36:45] Jordan Harbinger: I agree with you. And look, I come into this conversation with a license plate that says Elon fan because I got it a long time ago, I'll put it at that. And it was my wife's idea, but it really—
[00:36:57] Scott Galloway: That's your license plate, Elon fan?
[00:36:59] Jordan Harbinger: Yeah. Yeah, it is. And people take—
[00:37:00] Scott Galloway: Literally?
[00:37:01] Jordan Harbinger: —photos of it all the time.
[00:37:01] Scott Galloway: Elon fan.
[00:37:03] Jordan Harbinger: Yeah. I'll send you a picture of it. It's ridiculous.
[00:37:06] Scott Galloway: That's hilarious.
[00:37:06] Jordan Harbinger: Objectively ridiculous. But it really pissed me off when he goes, "Oh man, the taxes in this place where I built this company and did all these things and took advantage of all the infrastructure of California. I'm going to start talking about how everyone here is a libtard because I can't make them work in the parking lot in a tent for 20 hours a day. I'm going to move because that built the infrastructure that allowed me to build this company in the first place." And I get the argument. I just think it's bullsh*t. I just think it's bullsh*t.
[00:37:37] Scott Galloway: Well, I mean, yeah, we're reading each other's material on this and then, so let's be honest, Elon is a genius and he deserves to be worth a hundred billion dollars.
[00:37:46] Jordan Harbinger: I agree.
[00:37:46] Scott Galloway: The question is—
[00:37:47] Jordan Harbinger: Yeah.
[00:37:47] Scott Galloway: —should he be able to take that a hundred billion dollars and piece out to Texas and pay a lower tax rate on it? How does California continue to produce graduates to the University of California and that culture of innovation and the roads and the hospitals if the people who benefit most are allowed to take their capital gain somewhere else and pay a much lower rate?
[00:38:07] Jordan Harbinger: Mm-hmm.
[00:38:07] Scott Galloway: There's a VC who moved from the Bay Area to Miami — and the first thing they do when they leave is they start really, they're criticizing the local government. And I just wish they were more honest. I would just say, said, "Look, I would rather move to a low-tax domain because I'm about to register an enormous capital gain." And you're allowed to do that in America. If you move, you're allowed to take advantage of low-tax domains. But all of a sudden, it's just about the time someone has an enormous capital gain they're about to recognize, they start getting really upset about local government.
[00:38:39] Jordan Harbinger: Yeah.
[00:38:39] Scott Galloway: I find it's like, "Do you really think you're fooling us? It didn't seem to bother you for 20 years when you were building this company."
[00:38:45] Jordan Harbinger: Yeah, I agree. Look, I understand the domain shopping. I understand the impulse to not want to pay high taxes. I completely understand that and I agree that it is okay or allowed in America to do this. But you're right, it's the disingenuous part of going, "You know, I just can't believe—" fill it in, whether it's a legitimate gripe with the homeless situation in San Francisco to the taxation to whatever it is in the area to whatever, your gun rights. I mean, those are valid criticisms for many people but the timing is a little interesting that you suddenly wanted to have different kinds of conversations around guns in America right when your stock vested. What a coincidence that you started thinking—
[00:39:26] Scott Galloway: Yeah.
[00:39:26] Jordan Harbinger: —about all that, the month and a half or three or the year that all of your shares in Uber started to vest. What a remarkable coincidence that is. That's what really grinds my gears, I suppose.
[00:39:38] You said, it's never easy — and I take, I always drop this quote. People think I'm really smart when I do, but when I do it online, I got to credit you, "In America, it's never been easier to become a billionaire, but it's never been harder to become a millionaire." Talk to me about this. It's a bit counterintuitive and I must be doing great because I'm nowhere near a billionaire, so I'm doing it right so far.
[00:39:57] Scott Galloway: We've shed people from the middle class, but we continue to produce billionaires and everything we do is, or most of our policies do a couple of things. One, we have decided that we want to transfer wealth from young people to old people.
[00:40:10] Jordan Harbinger: Mmm.
[00:40:10] Scott Galloway: Over the last 40 years, the percentage of wealth that people under the age of 40 command has gone from 19 percent of GDP to nine percent, and there's these accepted things that are part of American culture that are just transfers of wealth from young to old people. The two largest tax deductions are mortgage interest rates and capital gains. Who owns homes?
[00:40:30] Jordan Harbinger: Old people.
[00:40:31] Scott Galloway: Old people. Who rents?
[00:40:32] Jordan Harbinger: Mm-hmm.
[00:40:32] Scott Galloway: Young people. Who makes money off of stocks and dividends and selling assets? Old people. Who makes their money from current income? Young people. So we've decided that young people who are making their money with sweat and renting should pay higher taxes than older people. Seniors are about to get their largest increase in compensation in history because they have a cost of living adjustment in social security. There's no such adjustment taking place for young people. The wealthiest generation in the history of the planet is also the one that gets the greatest reallocation of capital called Social Security, which is a trillion and a half dollars a year.
[00:41:08] So we have decided that young people should transfer money to old people. And it's not a surprise. 50 percent of America is under the age of 38, five percent of our elected officials are under the age of 38. Our elected officials get older and older every year. A quarter of them are over the age of 70, and the first two states we go to, to elect the president are very old and very white. So we end up with policies that favor the old and sometimes aren't as empathetic to people of color. We are becoming slowly but surely a nation that caters to this one group of people. And Social Security was a very successful program, but I would argue we have gone too far, even when we're bailing out people under the auspices of COVID.
[00:41:49] Jordan Harbinger: Mm-hmm.
[00:41:49] Scott Galloway: The PPP program, we create a cartoon of a cupcake bakery owner. The reality is the millionaire next door owns a car wash for several car washes. The wealthiest cohort in America are small business owners, and we decided to put 600, 700 million in their pocket. I have an edtech company raised $37 million. We could have gotten $270,000 from the PPP program.
[00:42:11] Jordan Harbinger: Mm-hmm.
[00:42:12] Scott Galloway: CFO came in, signed here, here, and here, and my board to their credit said, "We're not going to do this. We don't need the money. Everybody on this board is rich. You've raised a sh*t ton of money, we're just not going to do it." So everything we do is kind of this transfer from old to young. And the scary thing about it is we act like it's just a natural state of being. Now, these are conscious decisions we have made. In addition, we just haven't invested reinvest in the middle class. We have seen it shrink. And what we do is once you hit 99 percentile, once you get to kind of $300,000, $400,000, $500,000, what we decide is we're going to start taking your taxes down.
[00:42:49] There's a bit of a myth if you look at the data or the conventional wisdom isn't as accurate as you might believe, and that is if you look at taxation policy, lower-income people and middle-income people haven't seen their taxes go up, but they haven't seen them go down either. They're sort of where they are. Now, if you layer in things like consumption taxes and sales tax, you could argue their taxes have gone up and things like education and housing and energy, depending on the era go up or down or food prices. And especially, lately, they've been going up, which has hit lower-income people, especially hard.
[00:43:18] The people who really get screwed are people no one feels sorry for that, and it's what I term is the workhorses. And that is you make 300,000 to a million dollars a year.
[00:43:27] Jordan Harbinger: Mm-hmm.
[00:43:28] Scott Galloway: Your wife is a lawyer, you're a chiropractor, you got great certification, you're played by the rules, you're really good at what you do, you're killing it, or you think you're killing it and you're making $800,000 a year between the two of you, right? Rounding third base. In order to make that kind of money, you got to live typically in a big city and what is typically a blue state. You are probably being taxed 48 to 52 percent.
[00:43:52] Now, no one feels sorry for those people because they have a lot of money and they live good lives, but they don't have enough money to, quote-unquote, "get into" because they have to live in San Francisco or New York. They typically don't have the kind of capital or enough money to save such that they can start making forward-leaning investments in alternative investments or stocks and bonds which get taxed at a lower rate. The people, once you hit 99 percent and you start going to 99.9, your tax rate actually goes down. So, relatively speaking, over the last 50 years, the group that's got hit the hardest are actually the workhorses. The people who make really good livings, they make enough to get into the top current income tax brackets, but they don't make enough to go to sort of the, your taxes plummet.
[00:44:34] I'm an entrepreneur. When I sold my business L2 in 2017, the first 10 million of proceeds were tax-free.
[00:44:41] Jordan Harbinger: Wow.
[00:44:42] Scott Galloway: That makes no f*cking sense.
[00:44:43] Jordan Harbinger: No.
[00:44:44] Scott Galloway: That makes no sense. And since then I have been able to get the majority of my income from recognition or capital gains on investments. So my tax rate is lower than the people who are working for me and my firms because I get most of my income from capital gains. These are concerted decisions we have made and that is, we've said, okay, once you get to call it, what I'd say, like for me getting to a million dollars was tough, but I think if you work hard, you can get to a certain level of income, but getting to one million or getting to be a millionaire was pretty hard. It was a grind. Once you got to a certain level, it just became a rocket ship.
[00:45:26] And so it feels to me we should invert it. We got to make it much easier for people to get to a hundred thousand, 500,000, or a million. I don't see why we have taxes for anyone paying under, you know, $60,000 or $70,000. We've got to get people education. The people who are real. I don't think anyone has a birthright to be in college but get them a low cost, you know, a reasonable cost of education, help people get to financial or economic security.
[00:45:52] And then, I'm for going back to where we were in the '60s and '70s. I just don't think there's any reason why we need people worth 200 billion. I don't see what that does for society. I'm not saying you Robin Hood it and you show up and just take their money away. But the fact that they're paying lower taxes than even the workhorses at 700,000 or 800,000 a year. That just makes no sense. I don't see what value it's adding to society. And I can also tell you, as an entrepreneur, I have never known what my tax rate is.
[00:46:17] Jordan Harbinger: Mm-hmm.
[00:46:17] Scott Galloway: So the notion that people would leave the country or would get lazy and not start companies, I couldn't tell you what my tax — I've started nine businesses. I have absolutely no idea what the tax rate was when I started. So I think with our tax system, with our economic policies, we have decided, "Let's have it be the Hunger Games until you get to the 99th percent. But once you get on the gold medal stand, we're going to give you the bronze and silver medal."
[00:46:44] Jordan Harbinger: Yeah, it's interesting. That argument I hear all the time people are going to leave. People are going to move. You guys just talked about people moving from California to Texas. What are you talking about? You're arguing against yourselves. It's not necessarily that, right? People are still going to build businesses in the places that have the infrastructure to build that business. I am not going to work less or do less because of my tax rate. Same as you, I don't even know what my tax rate is. They usually tell me after the fact because it's so damn complicated. When you have a business and you're doing what you can. Which by the way, the tax code, that's a whole thing. I don't really want to get into it. That in itself is kind of a tax on the poor because I have a whole team of people—
[00:47:22] Scott Galloway: A hundred percent.
[00:47:23] Jordan Harbinger: —that create, I have a whole team. I probably shouldn't admit this, but we're talking about it. And it's not my style to hide anything. There's a whole team of people that go, "So you start this entity and that is a different financial tax than this one. And you move this over here, and this is called a management company. And it moves this. And then when you do that and you make this charitable deduction over here, and you can write this thing off." And I'm thinking, I bet my dad, who's a decent investor, but worked at Ford his whole career, has no idea how this works. He has never hired anybody to do anything like this because he just pays taxes on what he got from Ford. And the rest of it went into the market, slash, into my mouth, and into my college tuition fund. And that's it. And if you don't have that team of people, you pay more and I pay less. And it doesn't make any f*cking sense. You're right at none.
[00:48:08] Scott Galloway: Complexity is a tax on the poor. Our tax code's gone from 400 pages to 4,000.
[00:48:13] Jordan Harbinger: Wow.
[00:48:13] Scott Galloway: The government over time, regardless of calls for inefficiency or efficiency. Government is about 23 percent of GDP. So logically, our taxes should be on average around 23 percent. And we fund a lot of it with our deficits. So technically, it should be about 20 or 21 percent. So if you charge people who made over a million dollars a year, call it 30 percent, you'd be able to probably have a flat tax across everybody else of around 15 percent. But here's the thing, when you can navigate by starlight, you want to run your races at night.
[00:48:44] Jordan Harbinger: Mm-hmm.
[00:48:45] Scott Galloway: And so what the rich do and what corporations do is they make massive investments in lobbyists such that they can create complexity around the tax code that only they can navigate. What you said resonates with me. The brightest woman I deal with is a woman named Lucy Lee, who works for a big law firm and charges me $1,900 an hour to basically figure out the most tax-efficient strategies. And they're really complicated and people who are lower income or middle income, or even the workhorses don't have those sorts of resources.
[00:49:15] And what's happened, there's been automation at the IRS, but the only tax returns they can automate are lower and middle-income tax returns, which aren't that complicated. So guess what? Lower and middle-income people are being audited, but really wealthy people who require very complex are a lot of resources don't get audited because the IRS doesn't have the funding.
[00:49:36] So we've just sort of engaged in this. We want to tilt as much money to the already rich as possible. And when you have a middle class that's shrinking, you're not going to have a prosperous society. And when you have this sort of income inequality, it always fixes itself. It always self-corrects, which is the good news. The bad news is that the mechanisms for correction arrows of one of three things — war, famine, or revolution. And I would argue we have some form of all three of those things right now.
[00:50:05] Jordan Harbinger: Mm-hmm. I think, look, the American dream used to be, "Work hard and do better than your parents." But today, and maybe you know this off the top of your head, I want to say that a 30-year-old or someone around that age is not doing as well as their parents were at 30. And so now the New American dream is either to be, I don't know, to be an Instagram influencer, YouTuber/born rich in the first place and not have to worry about it. I don't even know, but I do know that it's sort of broken, right? My parents wanted my life to be better than theirs, and it has been, but that's just not the case for a lot of people that I grew up with.
[00:50:37] Scott Galloway: Yeah. Your data's exactly right and it's a chart in the book. And by the way, the fact that young men and women at 30 aren't doing as well as their parents were at 30. That has never happened until now.
[00:50:47] Jordan Harbinger: Mm-hmm.
[00:50:47] Scott Galloway: That's the first time in the history of the US and when you think about the compact people have with a system or a government, that's kind of the basic compact, is my kids will do better than me.
[00:50:56] Jordan Harbinger: Mm-hmm.
[00:50:57] Scott Galloway: So what does that mean? That means more than 50 percent of young men under the age of 30 are living with a non-romantic partner. They're living with their parents usually.
[00:51:04] Jordan Harbinger: Mmm.
[00:51:05] Scott Galloway: In addition, if you really want a zero in on the cohort, that's not doing well, it's young men. Young women are actually holding their own and single-parent households, their outcomes aren't any different. Men, it's different. And single-parent households, they don't do as well. And there's really scary stats, Jordan, are that for every one male graduate of college over the next five years, there's going to be two females. I think, well, that's not — I mean, okay, fine. If women are getting into college, seven out of 10 high school valedictorians are girls, then fine.
[00:51:32] Men have had a 400-year head start. It's time. We freaked out, understandably, and created affirmative action for women when it was 40/60 women to men in college. It's now going to be 66/33 in terms of college grads, women to men. But no one feels sorry or feels as if there's a need to help young men because they have had incredible advantages over time. But it creates all these knock-on effects.
[00:51:55] Jordan Harbinger: Mm-hmm.
[00:51:55] Scott Galloway: For example, marriage rates are plummeting. And one of the reasons is marriages become sort of a luxury item. It's expensive. Low-income men have no mating opportunities. And essentially women, and we don't like to say this on the left, but women mate socioeconomically, horizontally and up, men horizontally and down. And when there's no economically or emotionally viable men available, women aren't interested in mating with them. A female college graduate does not want to mate with a guy who's not a college graduate. And so there's this massive imbalance in mating and it's really goes parabolic in online dating, where now more than half of people meet because people aren't meeting at work. And the problem is, if you looked at mating with a Gini coefficient, which measures variance, mating inequality on Tinder is more unequal than income inequality in Venezuela. What do I mean by that?
[00:52:46] Jordan Harbinger: Oh, no. Really?
[00:52:48] Scott Galloway: If there's 50 men on Tinder and 50 women on Tinder, 46 of the women will show all of their attention to just four men. Usually based on his ability to signal, not only current resources, but his ability to garner resources in the future.
[00:53:02] Jordan Harbinger: Mm-hmm.
[00:53:02] Scott Galloway: So if you live in New York, you went to MIT and you're working at KKR and your Rolex accidentally shows up in your profile picture, you're going to get just a massive amount of inbound interest that leaves 46 men vying for the attention of four women.
[00:53:18] And the thing about meeting in person is there's vibe, there's pheromones, there's humor, there's all sorts of kind of the magic and mystery of why we are attracted to people. When it gets two-dimensional just comes down to resources.
[00:53:30] Jordan Harbinger: Mm-hmm.
[00:53:31] Scott Galloway: You end up with what I call Porsche Polygamy, and that is 10 percent of the men get 90 percent of the mating opportunities, which by the way doesn't catalyze or encourage long-term relationships and also encourages a lot of bad behavior. The bottom half of men are totally shut out of the market. They have absolutely no mating opportunities. Well, okay, women don't have a responsibility to service anybody.
[00:53:53] Jordan Harbinger: Mm-hmm.
[00:53:53] Scott Galloway: I agree. Most of my friends in college are having sex with other men. I'm not suggesting they have an obligation to enter into relationships with people they don't want. But what you end up with is the most dangerous person in the world, and that is a broke and lonely young man who's not attaching to work, not attaching to school, not attaching to a relationship. The most violent, unstable societies in the world all have the same thing, a disproportionate amount of young men—
[00:54:19] Jordan Harbinger: Oof.
[00:54:20] Scott Galloway: —who are lonely and broke. And we are producing way too many of them. We're also producing men who are not emotionally viable. They're alone. They have no guardrails. They're living at home. We have this unbelievably terrible experiment, unsupervised experiment in porn that creates unreasonable expectations around a relationship with a woman, and also decreases their mojo to go out and actually make their own bad porn.
[00:54:43] Jordan Harbinger: Mm-hmm.
[00:54:43] Scott Galloway: Online dating is just a little sh*tier for all women because I think a lot of young men who don't have prospects are more prone to misogynistic content and hold women responsible for their failure socially. They're less likely to believe in climate change. They're much more likely to believe in conspiracy theory. They're much more likely to engage in all this nationalist bullsh*t and also because of sexist tendencies, women have been graduating from college in greater numbers for the last 40 years, but only 28 percent of our elected representatives are women because I think as a species, we incorrectly conflate height in voice tenor with leadership capability. So you have this disproportionate number of our leaders who will want to get reelected by catering to this disaffected, angry group of young, uneducated men. And it leads to Trump rallies where people are making Q-Anon gestures.
[00:55:33] Jordan Harbinger: QAnon, yeah.
[00:55:34] Scott Galloway: QAnon, excuse me.
[00:55:34] Jordan Harbinger: Q-Anon, oh man, got to clean up that soundbite.
[00:55:37] Scott Galloway: You're the right one. I did wrong. It's QAnon. I'm the boomer who doesn't know how to do this stuff. But what you end up with is presidents who make incredibly misogynistic comments and the crowd goes crazy—
[00:55:50] Jordan Harbinger: Mm-hmm.
[00:55:50] Scott Galloway: —because there's too many young men who hold women responsible for their shortcomings or society has failed them. So the under 30 failing thing is a narrative, and we need to level up people under the age of 40 with programs that start to restore their opportunities and economic viability. But the group that is fallen farthest fastest, hands down in our society, is young men.
[00:56:15] Jordan Harbinger: This is The Jordan Harbinger Show with our guest Scott Galloway. We'll be right back.
[00:56:19] This episode is sponsored in part by Squarespace. Have you ever thought, "I'm just an ordinary dude or dudette, do I really need a website?" The answer is a resounding yes, especially if you run a business, you do freelance work, or even work as an employee. A website is indispensable. Having a website will make you easier to find and it'll make you more hireable because it builds your credibility as well as your personal brand. And whether you think those are annoying or cringe or not, they exist. You'll definitely stand out in the sea of resumes if you have your own website. It's never been easier or more affordable to create a website with Squarespace. You don't need to know how to code. With Squarespace, just pick a template, a design theme, then customize it. Squarespace has all the tools you need to get your personal site or online business off the ground. You can even generate revenue through gated members-only content, manage members, send email communications, leverage audience insights, all in one easy-to-use platform. I'm not even scratching the surface of what you can do on Squarespace. Give it a try for free at squarespace.com/jordan. That's squarespace.com/jordan. Use the code JORDAN to save 10 percent off your first purchase of a website or domain.
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[00:58:40] Now, for the rest of my conversation with Scott Galloway.
[00:58:46] That scares me because I assume most mass shooters fit this kind of profile. I'm not saying every shooter or school shooter is this, but it seems like there's, I would imagine there's overlap, big time between guys who have violent attacks and go on to kill a bunch of strangers in these types of, not only that incel culture but just the difficulty mating, bored, lonely, less educated. Am I onto something here? Do you have any data on that?
[00:59:12] Scott Galloway: So there's some nuance here and that is when you hear about a mass shooter, you know who it is before you know who it is.
[00:59:18] Jordan Harbinger: Yeah.
[00:59:19] Scott Galloway: You know, it's a young man who was not connecting to school, not connecting to, and unfortunately, the talking point is, well, it's not about guns, it's about mental illness.
[00:59:28] Jordan Harbinger: Mm-hmm.
[00:59:28] Scott Galloway: Or it's not about men with a lack of opportunity, it's about mental illness. And the reality is that only about four percent of violent crimes would the individual be classified as mentally ill a day before. And the majority of mass shooters would not be classified as mentally ill the day before the action. Mentally ill people are more likely to be subjects of violence than the perpetrators.
[00:59:47] Now, in terms of incels, what we have is young men. Their brain, their prefrontal cortex, doesn't grow as fast or doesn't develop. They're much more risk aggressive. They think they can get social status by doing these acts. They're much more comfortable with gunplay, so they're much more dangerous.
[01:00:04] We have to be careful of this profiling, and that is just because a young man's an introvert, just because he's not socially skilled, just because he is not dating doesn't mean he is going to pick up a gun and head into a university or head to a school. So there's some danger around talking too much around their tendency towards violence.
[01:00:23] Jordan Harbinger: Mm-hmm.
[01:00:24] Scott Galloway: But at the same time, the attack on Salman Rushdie, it wasn't about the fatwa, it was about a young man living in his mother's basement. And until you have more opportunity for young — the questions, well, what do we do about it? And I'm not sure you want to affirmative action for men because it would become too politicized and too much of a political hot potato, but if you massively increased opportunities for vocational certification, if you massively increased freshman enrollment opportunities at our great public universities, leveling up young people, to begin with, lowering their taxes, increasing investments in them would disproportionately help young men who on the margin have fallen off the map.
[01:01:02] And you know, at certain schools in the Northeast there's petitions from the women saying, "We showed up at 7228, women to men here. We didn't apply to an all-girls college." And so we need more emotionally and economically viable men. But there's no doubt about it, young men who have nothing to lose, get violent and they create volatility. And so people say, "Well, you know, there's some truth to this to say that young men need more help and we need to do more young men, or they'll be violent, is a form of repackaged violence." And I think there's some merit to that argument.
[01:01:32] What I'm suggesting is we need a massive investment in young people, and we need to stop the illusion that we're doing nothing but transferring money to such that Nana and Pop-Pop can upgrade from carnival to crystal cruises. Enough already. My generation has soaked so much money from the young and it's creating all sorts of terrible outcomes, both in terms of ability to form relationships and specifically, we need to produce more economically and emotionally viable men.
[01:02:00] Jordan Harbinger: There's so much of this, and it seems sort of daunting. I think the simplistic argument is, hey, women don't do this because when they feel shame, rage, whatever it is, they don't turn to semi-automatic weapons to gain that status.
[01:02:12] Scott Galloway: It does. Yeah.
[01:02:12] Jordan Harbinger: So come on, ladies, arm yourselves. Oh, was that not your point? Nevermind. Scratch that.
[01:02:17] Scott Galloway: But just to give equal opportunity to how tough it is for women. When social went on mobile in 2013, you immediately saw skyrocketing rates in self-harm and depression and suicide attempts among—
[01:02:31] Jordan Harbinger: Mm-hmm.
[01:02:31] Scott Galloway: —girls. The number of hospital admissions, and this isn't self-reported, this is actual hospital admissions for self-cutting, has gone up anywhere between 60 and 120 percent among girls. And what we have with social media is you have basically, you're presented with your full self, 24 by seven, and the teen brain, just as it's coming online and understanding social status, but it doesn't have the ability to modulate, it doesn't have the ability to not take certain actions as seriously, as more seriously than they should. So you have all of the downsides, you have all of the emotional receptivity and insecurity, but the inability to modulate it. And boys bully physically and verbally. Girls bully relationally. And we've put these nuclear weapons in their hands with phones with social media.
[01:03:15] And I said it on CNN and it got played on Jimmy Fallon at late night. I said I'd rather give my 15-year-old kids a bottle of Jack and a bag of marijuana than an Instagram account."
[01:03:26] Jordan Harbinger: Mm-hmm.
[01:03:27] Scott Galloway: This has been a disaster, especially for girls. And you see data like between eight and 12 percent of British girls report specifically Instagram being a cause of their depression. It's not the only cause, but it's definitely one of the roots. And amateur statisticians will say, well, correlation doesn't equal causation. Well, actually, if you go through, as my colleague Jonathan Haidt has done and eliminate every other cause, correlation is causation. So we have found, or there's been peer-reviewed research now that shows when social went on mobile, there was an enormous uptick in teen depression.
[01:04:03] Jordan Harbinger: As a parent of two little kids, I also worry about this. You know, I've largely sort of weaned, I don't check Instagram other than my DM inbox for show fans. I don't mess with most of that stuff. I don't even have a TikTok account. So it scares me having a nine-month-old daughter. I just hope we get a handle on it by the time they're old enough to even use this stuff because it is terrifying. I do see the effects on even emotionally healthy women and men for that matter, who use this stuff. I haven't seen it be good for anyone other than people who've used it to make a living, for example, and even for them, sanity-wise, not great, only in economic boon.
[01:04:39] Scott Galloway: I'm curious if you feel this way because you have a big profile on social. It's been hugely economically beneficial for me. It's a channel for me to put my thought leadership out there, get attention to my books and my content. So I would argue, and I've argued for this, that Twitter should charge people, like me and you with a certain following, a subscription fee. In that way, they wouldn't be as reliant on advertising. They wouldn't feel the incentive to lie about the number of people on the platform. They wouldn't allow fake accounts, their algorithms wouldn't incentivize heinous file comments to create a lot of engagement. But I've economically benefited. I would argue that when I've had sort of 10 mental health scares, when I say scares, I've just been really down for whatever reason.
[01:05:23] Jordan Harbinger: Mm-hmm.
[01:05:23] Scott Galloway: I would say somewhere between a third and a half of them have been probably motivated by Twitter. And that as somebody comes after me, says something that I find really offensive or incorrect or not accurate, and then a bunch of other people weigh-in and I respond in a childish manner and there's this back and forth and it just takes an enormous f*cking toll on me.
[01:05:41] Jordan Harbinger: Mm-hmm.
[01:05:42] Scott Galloway: And I should be adult enough. And then when I get really upset, it's like, I mean, Jesus Christ, I'm a 57-year-old man that can't modulate this sh*t. What's going to happen to my 15-year-old boy?
[01:05:51] Jordan Harbinger: Mm-hmm.
[01:05:52] Scott Galloway: But I think like if I can't manage to the extent I like the ability of my mental health on these platforms, what the hell is happening to kids?
[01:06:01] Jordan Harbinger: I'm with you on this. I don't check my YouTube comments because 90-plus percent of them are either just brain-dead nonsense conspiracy stuff, or just horrifically mean for absolutely no reason. Like it could be the shirt I'm wearing in the video, the lighting that makes my forehead look larger, whatever. And some of it's funny, right? Like if you're going to say, "Jordan has a five head," that's funnier than saying, "Jordan has a big forehead." I get that. That's objectively funny. But a lot of it is just like really kind of almost like sick aggression and it doesn't make any sense. So I stopped reading all that stuff.
[01:06:35] Twitter people try and come after me. I'm quick to block because I know I get sucked into it. There was a time—
[01:06:41] Scott Galloway: Me too.
[01:06:41] Jordan Harbinger: This is a few months, several months ago, actually a couple of years ago now, I was sitting with my baby son and he was looking at something and I was feeding him and I found myself checking my phone to see if that a-hole who had sent me that mean thing had replied to my retort. And I thought, if I had to pick something that is the biggest waste of my time in my life during a precious time, this is it.
[01:07:03] Scott Galloway: A hundred percent.
[01:07:04] Jordan Harbinger: And I immediately cut that crap out. But it's very difficult. And again, yeah, I'm 42. I'm not into the social media thing. You use Twitter a lot more than me and you have more insightful stuff on there. I decided these are inboxes now. These are inboxes for DMs from fans. That's it. I'm not going to check the rest of it because I can't help myself. And yeah, so what is a 15-year-old boy or girl going to do when they don't have the presence of mind to say, "You know what? Life is bigger than this." Because it's not for them. It's not for them bigger than this. Their whole class is on there. All their friends are on there. So what happens when someone posts, oh, you're, you know, so-and-so did this bad thing, or it is embarrassing status degrading thing with this other person that is their life and they can't just turn it off because nothing else matters to as much to them. I have other things that do matter more, and that was the only reason I could tear myself away from it. So, yeah, it's freaking terrifying. And you can't just ban them from it. That's not going to work either. They're just going to hide it from you.
[01:08:00] Scott Galloway: Yeah. I didn't even know my son had a Snap account until after a year he had it. But I don't understand. We age-gate marijuana, pornography, R-rated movies—
[01:08:09] Jordan Harbinger: Mm-hmm.
[01:08:09] Scott Galloway: —the military, but we don't age-gate social media. I just don't see why any 14-year-old needs an Instagram account. Again, the illusion of complexity, these are difficult problems, we couldn't stop a 14-year-old if we wanted. These fake bots, we can't stop it. It's like, okay.
[01:08:24] Amazon gets critic bombed on Lord of the Rings and also She-Hulk, She-Hulk: Attorney at Law, great new TV show. A bunch of people, bad actors, fake accounts, weigh in and start bombing the Lord of the Rings and create, take their rotten tomatoes so their ratings down to 30 percent. They have an economic incentive to not have fake reviews. They take down the review page, they use AI, some sort of identity verification, and 48 hours later they turn it back on and now it's real reviews. They figured it out in 48 hours.
[01:08:57] Jordan Harbinger: Mm-hmm.
[01:08:57] Scott Galloway: Because they're economically incentive to figure it out, whereas Facebook and Twitter like can't figure it out. Election misinformation, these are big problems, Jordan. We can't figure them out. They kick one account off the real Donald Trump and somewhere between 30 and 60 percent of election misinformation goes away overnight.
[01:09:14] So these problems are absolutely solvable and that's kind of the major theme of the book. We have enormous problems. That's the bad news — teen depression, income inequality, failing young men, a lack of respect for our institutions, a lack of appreciation for how wonderful it is to be American. And the good news is they are all fixable. And we have been told they're more complex than they are. So big companies can continue to delay and obfuscate because we're not talking about the realm of the possible, we're talking about the realm of the profitable. So they want to make it the realm of the perplexing. We can fix all of these problems.
[01:09:51] And the notion that we can't, this bereft feeling of resignation in our society is really the most dangerous thing. We can absolutely fix social media. We can turn back teen depression. We can make income more equal without hurting the economy. We can give young men more opportunity. We can create more economically and emotionally viable young men. We can recognize how wonderful it is to be American. These are all things we can turn around. And just so I come with a total prostitute, I didn't call it lost in America, I call it adrift. We can see land. We've been there. We know how to get there. We just have to have the will. We just got to start rowing in unison, in the same direction here. These problems are all solvable.
[01:10:32] Jordan Harbinger: In the time, the short amount of time we have left, I want to deliver some, ideally, good news. I always like to end with that because otherwise, it's a little daunting. I worry we're headed for a recession. I know that's very insightful and prescient, depending on when we release this, it's either going to be really obvious or we'll still be pretending the sky isn't falling. But recessions are usually necessary shocks to the economy. They have other advantages. I came into my legal career in 2007 just before everything imploded in 2008. It was one of the best things that ever happened to me because one, I stopped being a lawyer and I didn't even try to look, well, I shouldn't say I didn't try. I barely tried to look for another job that I didn't want. I went all-in on radio, went all-in on podcasting. Look, disclaimer, sample size of one and all that, but I think there is something to joining a workforce in a recession or starting a business in a recession. There's something to that. What do you think?
[01:11:27] Scott Galloway: There are plants, I think they're called pyrophytic that don't germinate unless there's a fire. The reason I'm economically secure is, one, I've built and sold and businesses, but the primary reason is I took most of my money in 2009 as I was coming into my prime income earning years, and I put it into these two stocks, Apple and Amazon. One's up 1,100 percent. One's up like 2,200 percent. And the reason why they're up 900, 2,200 percent was when we hit the great financial crisis of 2008. We didn't pump the economy full of ice cream and steroids like f*cking Elvis at 42. We said, "No, we're going to let stocks fall."
[01:12:04] Recessions as described by Jamie Dimon are something that happens every seven years. When you bail out every small business owner during the pandemic, all you're doing again is robbing opportunity from a young person because that 45-year-old or 55-year-old, that might lose their restaurant. And I'm not saying it's not tragic, but you have to let the Gale-force winds of disruption howl. When that business goes out of business, the 28-year-old with a better business comes in and gets that business for pennies on the dollar.
[01:12:31] All we're doing when we prop up with steroids and ice cream businesses in an economy — our economy I would describe is the Elvis economy right now. Let's use drugs to wake it up. Let's use drugs to put it to sleep. It's all about financial engineering. You know what? Let businesses go out of business. Why the f*ck are we saving Delta Airlines?
[01:12:50] Jordan Harbinger: Amen. Yeah.
[01:12:51] Scott Galloway: Airlines have gone bankrupt 63 times. It's not like the planes crash. Someone else comes in and says, "All right, we need to rethink how we approach airlines." They buy it for pennies on the dollar and a new generation of entrepreneurs make a lot of money. Young people should have the opportunity to buy Brooklyn Real Estate for a thousand bucks a foot instead of 2,000. They should be able to buy Apple. They should be able to buy Salesforce at good prices. But instead, it's like, no, no, no, no. We've decided the Nasdaq getting cut and we've decided a million people dying. That's tragic. But what would be really horrific is if we let the Nasdaq go down, everything we do is how do we keep the current rich, rich. You need churn. You need to give young people opportunity. And some of that opportunity, quite frankly, is disruption. We should have given money to consumers, not to businesses, and let them decide what businesses survive. I think our economy is probably going to recession. And guess what? That's not the worst thing in the world.
[01:13:50] Jordan Harbinger: I remember learning at my libtard school of the University of Michigan back in the day in a healthy capitalist economy, the capital is at risk. That's the point, right? The competition spurs the innovation. The disruption creates the winners and the losers. But it's like in America, those who have benefited from, they got lucky early on. Now, we're stifling creativity and competition, whether we mean to or not. What we don't want to do is lose, but what we're doing is we're stifling, we're protecting and rewarding existing shareholders while diminishing opportunities for future in innovators. And that's the opposite of capitalism.
[01:14:25] Scott Galloway: America used to be the best place to get rich. It's become the best place to stay rich.
[01:14:30] Jordan Harbinger: I had some pithy thing, but I don't.
[01:14:35] Scott Galloway: Noted. Noted.
[01:14:37] Jordan Harbinger: I like that. That was good. That was better than my pithy thing, and I just decided not to put a cap on it. I think that's what happened there, anyway.
[01:14:42] Scott Galloway: There you go.
[01:14:42] Jordan Harbinger: But yeah, bailouts — what did Delta get? It was like billions of dollars, 50 billion all around, I think. But Delta Airlines, look, I'm a shareholder, so I know I'm arguing against my own interest, but that CEO, he's doing okay. That guy did pretty good every year during the pandemic, we basically chose to bail that guy, we chose to buy that guy another house in Martha's Vineyard instead of getting healthcare for veterans or paying for vocational schooling for disadvantaged kids.
[01:15:13] Scott Galloway: Yeah, it's so obnoxious on the way up, they're all rugged individualists who say, "We should have lower taxes. We need to reward the entrepreneurs, the innovators to pull themselves up by their bootstraps." And then sh*t gets real in a pandemic. And by the way, over the last 10 years, pre-pandemic, they'd spent 97 percent of their free cash flow on stock buybacks, which artificially inflate the stock price. Why? Because the majority of their compensation comes from options on stock that three COs the largest airlines had paid themselves about 150 million, about 130 of it in stock compensation. And then sh*t gets real from a pandemic and they're out of money. They didn't save any of that money. And it's like, "We're in this together, we're in this together."
[01:15:53] So when you have capitalism on the way up and you have socialism on the way down, you don't have either of those things. You have cronyism. And the fact that we were bailing out, and by the way, it wasn't 50, it was 700 billion on PPP.
[01:16:05] Jordan Harbinger: Oh God, I didn't realize it, the bailouts, I thought the bailouts were on 50 billion for bigger comp — I don't know where I got that data.
[01:16:11] Scott Galloway: 700 billion for PPP program. Okay. Those numbers are so big, they're hard to imagine. What if you take in their 120 million households in America? What if you take in the poorest 60 million, the bottom half? And said, "All right, 700 billion, here's $115,000 given to every household below the median. If you're in the top half, you've done, okay, figure it out. Bottom half, here's $115,000."
[01:16:37] Jordan Harbinger: Mm-hmm.
[01:16:37] Scott Galloway: What would have that done to the economy? What would that have done to child poverty? What would that have done to veterans? What would that have done to the homeless problem? What would that have done to diabetes in lower-income homes that disproportionately or suffer from obesity? Can you imagine what would've happened to the health of our nation if we had taken that money instead of bailing out Shake Shack or f*cking Spirit Airlines? We had just given 115,000 for the same amount of money — and by the way, I'm not even sure that's a good. But what if we had given $115,000 to the poorest half of US households for the same cost? Would we be in a better place right now?
[01:17:14] Jordan Harbinger: It's so hard to say. I mean, I'm usually not one to just say like, cut that a check and see what happens. But that's what we did with businesses. So maybe, maybe it's just not a good idea to give that kind of thing away without a little more scrutiny and oversight. It's hard, I'm just not an expert in this area.
[01:17:30] You know Scott, I love these conversations. I realize you have to go. I do want to be you when I grow up, except—
[01:17:36] Scott Galloway: You are me.
[01:17:36] Jordan Harbinger: —with more hair.
[01:17:37] Scott Galloway: You just have better hair.
[01:17:39] Jordan Harbinger: You got me on the punchline. Thank you so much for coming on the show. I really appreciate it. The book is Adrift. We'll link to it in the show notes. It's a lot of pictures so people like me can read it really fast. And if you're not a reader, this is the book for you. It's all charts.
[01:17:51] Scott Galloway: There you go, man. And hey, congrats on your success. I love the fact that you're killing it and you have kids. You're exactly the kind of person that should be having kids and I really enjoy watching her success.
[01:18:01] Jordan Harbinger: Yeah. It's kind of you to say, man. I'm looking forward to meeting you in person at some point. Whenever we try and do these in person, we're on opposite continents.
[01:18:07] Scott Galloway: That's right.
[01:18:08] Jordan Harbinger: We'll make it happen at some point.
[01:18:09] Scott Galloway: That'll happen. I look forward to it.
[01:18:12] Jordan Harbinger: Here's a trailer for another episode of The Jordan Harbinger Show that you can sink your teeth
[01:18:16] Scott Galloway: Most of the people, young people, I deal with, envision themselves in kind of the top economic class, or at least aspire to it.
[01:18:23] Jordan Harbinger: Mm-hmm.
[01:18:23] Scott Galloway: Two basic rules, get certified and get to a city.
[01:18:26] Jordan Harbinger: I know, of course, most people want to be in the one percent, you know what? Actually, I take it back, I think now, most people want to be in the 0.1 percent. They just think that's what the one percent is.
[01:18:37] Scott Galloway: A hundred percent. A hundred percent. The myth of balance is a myth. And the other big myth is this notion that you should follow your passion and the notion that you should follow your passion is dangerous because most passion sectors are overinvested. If you want to open a nightclub, go to work for Vogue or play professional sports or music, just recognize, you better get a great deal of psychic income from those things because the monetary income relative to your effort will be dramatically lower than other asset classes.
[01:19:07] Your job as a young person is not to follow your passion. It's to find out what you're good at and then invest the time, the grit, and the energy to become great at. And the accouterments that follow being great at something, status, respect from your colleagues, money, access to better healthcare, the ability to take care of your parents and your kids. You will become passionate about whatever it is that lets you do those things. Happiness is love, full stop. So the depth and number of relationships across work, family, and friends is the best practice around happiness.
[01:19:44] Jordan Harbinger: Again, this is one of our most popular episodes. Scott has a bunch of great advice, whether you're young or old, and you want to live a rich and happy life, whether that means economics or not. And that's episode 204 with Scott Galloway, Solving the Algebra of Happiness here on The Jordan Harbinger Show. Check it out.
[01:20:04] I always love conversations like these. Scott is a really amazing thinker, really, really great writer. Always glad to have him on the show. I mean, the writer, okay, fine, this book is a lot of charts, like I said earlier in the conversation, kind of a cheat. Not sure how he took that one. He did laugh, but was it a chortle, was it a real laugh?
[01:20:20] Anyway, a few notes, and I'm cribbing a lot of this from Scott's new book. He did say it at best. "Productivity is an economic measure of efficiency," the ratio of output to input, so US productivity, that has increased at a remarkably steady rate since the 1950s. Meaning we keep getting better at getting more value out of our labor, out of our equipment, out of our raw materials. From 1950 to the mid-1970s, so our parents' generation, depending on who you are and when you're listening, average compensation for workers kept pace with productivity. Meaning the benefits of productivity gains went to the people actually doing the work.
[01:20:56] Since then, productivity and wages have decoupled. What the heck does that mean? That means that while the value of our output has kept climbing, so we're getting more out of less, the compensation of our workers has stopped reflecting that. So between 1973 and 2014, net productivity, again, remember, that's the measure of efficiency that grew by 72 percent, but hourly worker compensation grew by nine percent. Now, this left worker compensation at less than half of what it would've been if these two things had stayed in line. In other words, our nation kept winning, but our workers only got to cash in half their chips. The money started going somewhere else. Now, this is not only unfair, it can be dangerous and destabilizing to the country.
[01:21:41] Again, this is where people who are like on the left are like, "Wait, I think I agree with you," and people who are like on the crazy right wing are going to be like, "You're a communist." This is a problem because while the elites ran, and I'm fully aware of the irony that it's me saying this, the rest of the nation crawled. The bottom 99 percent of Americans experienced wage growth that was nearly eight times slower than the top one percent. That makes it really hard to build wealth. It makes it impossible to enjoy the upward mobility that our parents had.
[01:22:12] And look, I'm all for, "to the victor go the spoils" and capitalism and working hard and getting the rewards of that. The problem is now we can work hard and not get the actual rewards. Capitalism itself is rife with failure. I don't mean the system is a failure. I mean that capitalism when it functions best has a ton of failure. That is actually one of its best features. When a restaurant goes out of business, the pain of that loss has to be balanced against the opening that it gives a new chef who can finally afford to get a freaking lease to bring something better to the neighborhood that's a better fit. A decline in apartment rents means that young people can actually move to a city and they can bring their energy and their ideas and their culture to a larger market.
[01:22:55] Change always involves and entails risk because, in a dynamic economy, accumulated capital can be lost. So it's natural for winners to want to arrest the pace of change, to shift from offense to defense once the score is in their favor. I get it, you're older, you made a bunch of money. "Wait a minute, I don't want to pay all these taxes. Let young people do that. Well, I don't want to give up my competitive advantage," but doing this is shortsighted. It's actually detrimental to the long-term health of society. You got to let the gale of creative destruction blow. And this is true whether you're on the left wing or the right wing, you're going to disagree with some of this for different reasons, but it's problematic either way. And if I were you, I would strongly consider taking a hard look in the mirror if you disagree with that statement. And I think the problem is a lot of younger people are going to agree with it, and a lot of older people who are entrenched are probably going to disagree with it, and that is problematic for society.
[01:23:50] Now, shifting gears a little bit. We mentioned earlier in the show, I think it was a throwaway comment. Marriage rates are way down. So why does this matter? Who cares, right? Marriage is actually a powerful institution. It gives us a partner, economically, emotionally, logistically, two people simply form a more efficient household and build a stronger foundation that consistently proves to produce better outcomes for children. Now, look, if you don't want to get married, you don't want to have kids, all that stuff, fine. A household of unmarried parents makes just two-thirds of the income a married couple makes. Now this is not a moral judgment, okay? This is simply an economic statistic.
[01:24:27] Married people also have better health insurance as do their kids. That's something we can also fix by law, of course, and greater access to social networks via their spouse. You arguably get that. Just shacking up with somebody, fair enough. So not surprisingly, married people also tend to live longer. They experience fewer strokes and heart attacks. They have a lower incidence of depression. So this is something to look at. And again, not a moral judgment, simply statistics, we can probably navigate around what we mean by marriage and define certain terms, things like that if we need to. But we need to build a society that either rewards that less or we need to figure out how to make that happen more. I am not here to suggest which one of those is correct.
[01:25:07] Where we are headed doesn't depend on the conductivity of silicon or the depth of the Arctic sea ice, it depends on us, and it depends on what we do tomorrow and what we do the next day. What's singular about this moment is the scope of possibility. America is more populous, more powerful, and more connected than ever. The range of potential consequences of our actions is as open-ended today as it has been since at least 1980 or possibly 1945.
[01:25:33] And for the first time in memory, this is both Scott's memory and mine, we might have the political raw material necessary to mend our fraying social safety net. Done effectively — investments in early education, protections against job loss, and care for the sick, disabled, the elderly — these can actually be economic supercharges. Risk, again at the heart of capitalist achievement, and we are understandably more risk averse when a failed enterprise would mean losing our home, our healthcare for our family so we can make changes. That can remedy that situation while also including all of the necessary risks. We can actually de-risk in certain places and increase risk in others, and we will be better off for that. That is what capitalism actually is kind of supposed to be.
[01:26:19] Now, President Clinton, love him or hate him, famously said, "There is nothing wrong with America that cannot be cured by what is right with America." Although it's out of fashion, I remain an American exceptionalist, not that it's perfect, nobody listening to the show would assume that I think is much, by the way, the best engine for upward mobility in the history of the world is still capitalism for all its quirks. And look, folks, we're allowed to fine-tune it.
[01:26:46] Big thank you to Scott Galloway. The book will be in the show notes along with all of Scott Galloway's clickables. That'll be over at jordanharbinger.com. Transcripts are in the show notes, videos up on YouTube. Advertisers, deals, and discount codes, all at jordanharbinger.com/deals. I've said it once, I'll say it again. Please consider supporting those who support this show. I'm at @JordanHarbinger on both Twitter and Instagram. You can also connect with me right there on LinkedIn.
[01:27:11] And don't forget, I'm teaching you how to connect with great people and manage relationships using the same system, software, and tiny habits that I use every single day. That's our Six-Minute Networking course, and that course is free over at jordanharbinger.com/course. Dig that well before you get thirsty, folks. Build those relationships before you need them. Many of the guests on the show actually subscribe to the course. Come join us, you'll be in smart company where you belong.
[01:27:35] This show is created in association with PodcastOne. My team is Jen Harbinger, Jase Sanderson, Robert Fogarty, Millie Ocampo, Ian Baird, Josh Ballard, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for this show is that you share it with friends when you find something useful or interesting. If you know somebody who loves conversations just like this, please do share this episode with them. The greatest compliment you can give us is to share the show with those you care about. In the meantime, do your best to apply what you hear on the show, so you can live what you listen, and we'll see you next time.
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