Big Technology Podcast - Professor Scott Galloway On Whether Our Economy Is Rigged (And What To Do About It)

Episode Date: May 19, 2021

Professor Scott Galloway swings by to discuss how our economy can at once feel rigged yet loaded with opportunity. Galloway describes a “tilted” system that makes life difficult for young people and wage workers while lifting up assets like stock and equity and helping older generations. We talk not only about the problems, but the solutions for the system and the individuals within it. As usual, Galloway is a tour de force who comes loaded with insights and keen observations. Check out our sponsor, Flatfile: https://flatfile.io Scott's New York Magazine Q&A: https://nymag.com/intelligencer/2021/04/unified-monetary-theory-beeple-biden.html

Hello and welcome to the big technology podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. Joining us today is one of my favorite voices in tech and business. He is the professor of marketing at New York University's Stern School of Business and the author of The Four, The Algebra of Happiness and Post-Corona, New York Times bestsellers. He's also the host of the Prof. G. Show and co-host of Pivot alongside Kara Swisher. I think we got it all. Professor Scott Galloway, welcome to the show. Thanks for having me, Alex. It's great to have you here. So I wrote to you, hoping to get you on after I read this great

New York Magazine Q&A that you did about the state of the market in our society as well. And the subtitle of that piece was, in a system rigged by the rich, outsiders have to make their own volatility. So I guess I wanted to start with like this theme of whether the system is rigged and whether this volatility is needed. Because the system does feel rigged, especially when you look at stuff like education spending and how fulfillment work has replaced factory work, which we've talked about on the show, and the tax system. Yet there seems to be a ton of opportunity now, maybe more than ever before to make it and make it really big. So I'm curious what you think can can we have those two things existing side by side sort of a rigged system but also

great opportunity to make it so i would describe the system as and that's a big word system uh i would describe it as not rigged but tilted if you look at uh the percentage of total wealth that is controlled by people under the age of 40 in the last 30 years it's dropped from 19 percent to nine percent. And everything from housing to education, to health care, things that young people have to purchase has exploded in costs. Meanwhile, wages have remained flat. And tax policy and monetary policy has really benefited asset owners. So the tax rate on your sweat is much higher than the tax rate on what money makes. And the people who own assets are generally older people and the people who make the majority of their income with their sweat are younger people.

So whether it's minimum wage, which impacts young people much more than older people, exploding from $7.25 to $7.25 over the last 30 years, it does seem as if the game is tilted towards the existing rich. Now, a lot of people would say it's more insidious than that, that it's this white heteronormative cohort that has basically said, we're going to transfer wealth from a younger, more gender balance, more multi-ethnic cohort to kind of the existing patriarchy. I would argue it's just kind of selfish behavior where basically my generation and boomers have figured out a way to weaponize government and figure out a way to have tax policy with the top 1% pay lower taxes in the bottom 50% to respond to crises by flooding the market

with stimulus, much of which ends up in the market, which accelerates residential and capital markets, 90% by dollar volume of those assets are owned by the top 1%. So I would argue that the market is tilted such that young people, for the first time in our nation's history, someone at the age of 30 is not doing as well as his or her parents of the age of 30. And that is the kind of the core compact you enter into with a society. And when society breaks that compact, and by the way, more than 50% of people under the age of 30 are now living at home, which means you have these reminders is called mom and dad reminding you every day that you're not doing as well as they were at the age of 30. It just creates immense levels of shame and rage across tens of millions of households.

And the most dangerous person in the world is a young, broke, and a lone male. And we're producing too many of them. And that's not to say that economic opportunity or shame for young women isn't as serious, but women have a tendency not to pick up AR-15s or start smashing windows during a protest. And I think if you feel like, okay, I can't get my entry point into the markets, the game is tilted, you're going to create your own volatility. You're going to find different asset classes that are more volatile. You're going to find reasons to turn righteous movements, whether it's Black Lives Matter or Me Too or the meme stock movement. And the underlying incendiary is that, you know, if you're not attaching to school, if you're not attaching to

partner, if you're not attaching to work, because you just don't have the same opportunities, you're going to get angry. And I think that's where we are. So I think the kind of the incendiary, it's turning a lot of worthwhile movements into something more dangerous, whether it's nationalism, is for, you know, for lack of a better term, not only income inequality, but kind of intergenerational equality. It's really sort of young versus old here. Right. And I definitely want to get into the wages versus asset stuff in a bit. But, you know, this conversation makes me think a little bit about, we talk often about how the system has to change. But I wonder about what the best way for an individual to act within the system. You teach, you know, business school students. So

should we be telling people that you should go out and continue to work for wages or maybe the fact that, you know, we now have the lowest amount of time it takes to bring a company to market at the lowest cost, people should be starting companies more often. How does the individual change their behavior to sort of buck this trend that you talk about with a tilted system? And so I just recognize I didn't fully answer your question because you said, you know, how do you circle the square of there is tremendous opportunity? There's more and more opportunity that's crowded towards fewer and fewer people. And that is there are the 1%, it's never been easier to be a billionaire. It's never been harder to be a millionaire. It's never been harder to be a

millionaire. And in my class, when I graduated from business school, we all made kind of between 70 and 100 grand. I would say the majority of us are doing well to really well. In my class of 280 kids, there's a billionaire in there. Somebody through alternative investments or a tech startup is going to be a billionaire. I also think quite a few of them will probably end up living at home or kind of wardens of the state or under government assistance. Because slowly but surely, when technology comes into an economy, it creates a crowding or sort of a winner-take-most environment. And we'd like to think that, yeah, there's a lot of opportunity if you're right skills, the right pedigree, access, right resources, even the right zip code. I don't think

there's been a company started that gets to more than $10 billion in value, or 90% of them are sort of been a bike ride from a world-class engineering university. So there's tremendous opportunity for the kind of what I'll call the remarkable, or the top 1%. I would say the two cohorts that are killing it are what I call the freakishly remarkable that understand technology and children of rich kids that are given tutors, access to elite universities, and kind of are shot into the career into the workforce at an incredible trajectory. Who aren't thriving are the unremarkables, and that is America's, I think, collective goal used to be, how do we take the bottom 90% and give them a real shot of being in the top 10%. great schools that just someone good can get into tax policy that is progressive, not regressive. But now we're under the illusion that this is this great innovation era. It's not. There were more new businesses. There were twice as many businesses being formed every day during the Carter administration than now.

It used to be 15% of companies were less than one year old. Now it's 7%. And I think there's a lot of factors around that, but mostly I think it's that the highest growth sectors in our economy, technology, search, social, computer hardware, digital marketing are controlled by monopolies or duoplies. And so new business formation and some of the highest growth sectors in our economy is really low. Whereas if you look at the sectors that aren't dominated by monopoly or duopoly, fintech, biotech, they're creating new businesses as a much greater clip. So I think we have let, we've been overrun by monopolies. I think we have decided that, we live in a meritocracy, and because we no longer integrate with other people at the mall,

at the movie theater, or in schools, slowly but surely the wealth, kind of the shareholder class is segregated, we don't have as much empathy, and we've bought into the ugly notion of meritocracy, and that is we constantly see on Instagram or on CNBC that anyone can become a billionaire. And so if you don't, or if you don't make it, the other side of meritocracy is that if you're poor and struggling, it's your fault. And whether it's, I mean, we just see evidence of this everywhere, whether it's minimum wage, whether it's college being out of reach for people, whether it's acceptance rates, declining dramatically because we're drunk on luxury. We have fallen in love with the remarkable. We've said, if you're in the top 1%, we're going to optimize the economy for you. I would argue

that's not what America is about, that America needs to fall back in love with the unremarkables and give, you know, sort of average to good kids remarkable opportunities. And I think that's what America used to be about. I think that's what higher ed used to be about. But it seems like our collective goal is how do we create people who might be worth a hundred billion? And I don't think that's, I think that makes for fantastic headlines and interesting CNBC stories, but I don't think that's a healthy society. It definitely feels like we've gone to sort of a hunger games approach to our economy. Yeah, no doubt. One of the things that I, that just kind of keyed in my brain And when you talked about how wealth has been insulated or sort of removed from the rest of society is, you know, I'm living in San Francisco so close to Silicon Valley.

I have friends that are, you know, in those circles and close to those circles. And one of the things that I've learned is that there's wealth and then there's wealth. And, you know, you can get close to it, but you can't really touch it. There's just this kind of wild upper stratosphere where money means nothing and, you know, it exists. But there's really, you know, I mean, whether you want to get into it. it or not. It just doesn't seem like there's possible roads into it. And yet everybody else has mortgages. And, you know, even if they're making $200,000, $300,000 a year, thinks about, you know, I guess they're still extremely distant from, you know, the people who actually are, you know,

in those money bathtubs in Silicon Valley. I'm curious what you think about that. It is interesting. Just looking at tax policy, we tend to think, okay, the wealthy are screwing the poor. And if you look at a tax burden on the poor in the middle class has kind of stayed flat. The tax burden on the super rich has gone down, right? The 1% now of a lower tax rate than anyone else. And we have optimized an economy for our quote innovators where a guy like Elon Musk can add the GDP of Hungary to his net worth since the pandemic. And then he can piece out and move from California to Texas such that he can save 15% on that $120 billion in unrealized gains he has. This is all from the capital gains tax, 20%.

Yeah, basically, Texas has no income tax. So when he begins to monetize his holdings, his gains in Tesla, despite the fact that he created most of those gains, while as a resident of California benefited from the roads, the culture, the university is there, about the time he's ready to sell stock, he moves to Austin and avoids all of that tax. So should the two wealthiest men in America, Bezos and Musk, control the wealth of the bottom 40% of America, and should they be able to avoid taxes, should Amazon, who's registered 20 billion in profits over the last 10 years, paying effective tax rate of 4.5%. So I think you can look at a lot of stuff and say, wow, it really is tilted against us. 90 of the Fortune 500 paid no income tax last year, including Federal Express and Nike, who are incredibly successful companies. But what people miss, where the nuance is, is that the people

who have gotten also pretty screwed here are what I call the workhorses. And that is, say you're a partner in a law firm, say your wife is a chiropractor, and you have a combined income of $600,000. You're kind of killing it, or $800,000. You're doing really well. But you have to live in San Francisco or New York. You have to live in an urban center because of proximity to those types of jobs, you're, but if you're living in New York of Manhattan or San Francisco and you're making $6,800,000, and you're making all of your money from current income, you're probably paying a 50% tax rate. And when you take home $400,000 living in San Francisco or New York, and no one feels sorry for this people, I get it. But that's not,

you feel pretty middle class. I mean, you're not, you are worried about money. Money is a stressful part of your life. And we live in an Instagram age where basically every piece of media you see is telling you how much better everyone else is doing. So the people who've gotten really screwed with our tax code, I mean really screwed are what I call the workhorses, and that is people who make a lot of money, but it's all through current income. Those tax rates have exploded to 50% plus. Entrepreneurs such as myself or people who make the majority of their income through appreciation on assets or through equity and companies they start, their tax rate is probably below 20% because of 1202. So we fetishize innovators. We have fetishize the really wealthy.

You know, the top 1% used to pay 60% in taxes in the 50s. Then it went down to 40 or 50% in the 80s, and now it's, you know, it's kind of 20, 23%. So we have made a conscious decision. People will say that the world is what it is. It's about a network economy. And there's some truth to that. the internet kind of provides or digitizations everyone has access to the best so the best garner a disproportionate amount of the resources we've also made a conscious decision that when someone gets on the gold medal podium we're going to give two or three gold medals we're going to decrease their taxes we're going to give them a tax code that is so complex that people with the most money have the ability to navigate it i think complexity is a transfer of wealth from the poor to the

rich because if you can if you can navigate by star star light you want to race your boat at night and we've created an economy where the people we're racing boats at night the tax code is so complex that people who are wealthy can hire these incredible navigators to really figure out how to work the tax code it's a tax rates are almost i think a little bit are we overestimate or inflate the importance of tax rates what we underestimate is the tax code i mean really doesn't matter what amazon's tax rate is their effective tax the the the corporate tax rate. Their effective tax rate is 4.5% because they know how to exploit. There are more full-time lobbyists in D.C. right now working for Amazon than there are sitting U.S. senators.

And what do you know? Our tax policy ends up with a bunch of goodies that play really well to a firm like Amazon. So we have consciously made a decision that we want to reward our innovators, that we want to see these people. And we've created an economy where if you're remarkable, it's the best place in the world. My dad, who is an immigrant from Scotland, I used to say America is a terrible place to be stupid. And capitalism, and I'm not saying this a bad thing, capitalism purposely says, and this is harsh, we can't reward the winners without punishing the losers. It is worse in America to be bad at what you do and not to be smart around money than it is in Europe. At the same time, it's gotten to a point where it's become dangerous not to be good at what you do. Your life

expectancy goes way down, your likelihood of stroke, your diabetes, your absolutely, your mortality rate from the novel coronavirus. And the question is, is that the world we want to live in? Meanwhile, we have individuals who are worth the GDP of nations. So I would argue that capitalism is a conscious decision to have winners and losers. And I think people accept that. And I think they're comfortable with that. But it feels as if it's gotten just out of control. So we talked a lot about systems so far. And I want to go back to the individual. So let's say you're just someone listening to the show or you might, you're, you understand that this is the system you're faced with and you're not Elon Musk. Yeah. How do you thrive in this system? Can you take anything into your own hands? What decisions do you make? Or do you just sort of throw up your hands and say, well, I'm unremarkable and so be it. Oh, well, yeah. I mean, absolutely you don't give up. But I think the first thing as citizens is that we have to acknowledge the problem and elect leaders that have the backbone to break up big companies, have the vision to decide it is unacceptable in the wealthiest nation in the world, to have one in five households of children be food insecure, to figure out to recognize that young people have gotten kick in the gut as a generation for the last 30 years and to invest in things like vocational program. I'm a college

professor. And I believe the most important thing or one of the most important things we need to do is to build on ramps into our economy for people who don't go to college. Two-thirds of young people will not get a Bachelor's of Arts degree. And so if corporations don't stop fetishizing the elite college degree, basically when you say, and the majority of Fortune 500 companies say this, the only path to a career here is with a college degree. that is saying we're not going to hire a lot of black people. We're not going to hire a lot of Latino people. We're not going to hire if by the age of 22 or 23, you're part of the 50, 60%,

plus that have not figured out a way to get a college degree, you know what? Sorry, boss, you're fucked. So we need vocational programs. We need to stop fetishizing college degrees. I'm working with some fairly high-profile hedge funds and media companies. to say, how can you take 10, 20, 30, 40 percent of your new hires and figure out alternative means of evaluating their skill set as opposed to just to their certification? Can we find a way to provide the American dream or access to what has been the greatest wealth generator in the history

of mankind, that is the U.S. corporation, recognizing that some people just have a much more streamlined path to a college degree than a lot of America and figure out a way to give some of them opportunities or a shot to the corporate ecosystem other than just the mailroom. And then also recognizing that we just need more vocational training. Down here in Florida, the governor here, who I'm quite frankly frank, I'm not a big fan of, but I appreciate that he's done some good stuff, is allocating money towards vocational programming, vocational training, you know, a one-year hardcore training in cybersecurity. You know, that person's going to get an $80,000 a year job right now.

So Google certificates, Tesla deciding that they are going to start hiring people without college degrees. You know, this stuff is really important. I think there's some real progress and signs of hope here. But just falling back into this kind of hunger games, you know, the world is what it is. It's a network economy, believing that our prosperity has translated to progress. It hasn't. The economy here has boom, the last 30 years. The markets are up.

corporate profits are at all time highs. Wages have been flat. So I think that I hate this cold comfort of like the world is what it is. It isn't. The world is what we make of it. Right. Anyways, you asked me what to do. I think it's situational. If you have access to an elite platform, be it a great college or a great company, you do that. You take advantage of that. A lot of kids come to my office hours and I'm something. I got an offer to Amazon and, but I want to start my own company. And I'm like, don't be a fucking idiot. Go to Amazon. The infant mortality rate on businesses is 70 to 80 percent. Amazon is a great way to get rich slowly. If you want to start a business, start it in five years and you'll have an easier time raising money after you have

five years in Amazon. So if you don't have access to those, I think you have to be very thoughtful about how do you get some sort of certification. We live in a certification economy. Is it a welder's license? Is it a class three driver's license? It's scuba certification, scuba instruction, whatever it is. You've got to get some form of certification. I think there's a myth among young people that they should pursue balance. I think that's bullshit. If you want to move to a low-cost region, have balance in your life, more power to you. If you expect to be in the top 10% economically, which I think is something like 80% of young people claim they want, I would say you have to acknowledge that balance is a myth and that you should just plan on working your ass off because

there's some kid in India or Brazil that through access to the internet is willing to work their ass off. So I think it's a sober conversation around not balance, but tradeoffs. How do I get some sort of certification, even if it's not going to be a Bachelor of Arts? And how do I also acknowledge that we live in an economy where, you know, the world isn't yours for the asking. The world is yours for the trying. Try really hard. So I'm not what I'd call here with a message of hope, telling them to follow their passion, which I think is terrible advice. It's certification. It's a sober conversation around what economic weight class you expect to be in and what are the requisite tradeoffs. Yeah. And now if I get that certification, let's say, become a welder.

Yeah. And I'm able to save a little bit. You know, now the question becomes, you know, I'm looking at, or I'm listening to what you said about how the society rewards asset holders and, you know, does a person who gets that certification is able to save, just, you know, plow their money into the market, especially now. It seems like it's a little volatile. Maybe people will say, okay, you know, I'll make 80, 90,000 a year, and I'll put the rest in speculative cryptocurrencies or in GameStop and, you know, try to get in on this party that everybody else seems to be having. What do you think about that? So if you think about, okay, so I think there's an algebra of wealth. I think a lot about this. And the algebra loosely speaking goes something like this.

Find something focus. Find something you're good at. at that people will pay you for. And generally speaking, try, you know, try to find a sector or try to find something you're good at in an industry that doesn't have a 90 plus percent unemployment rate. Sports, acting the arts, you know, kind of what I'll call the passion fields, generally have kind of a 90 plus percent unemployment rate. So find something you're good at and something people will pay you for and then double down on it and commit to becoming great at it. because if you're great at it, you can make good money at it. That's the first thing. Focus. The second thing is stoicism, and that is our economy, our consumer economy, is designed to figure out a way to link the upgrade from economy to economy to economy, comfort, to economy plus, to business class, to first class, to fractional jet ownership, to convince you that that's an investment in yourself and you're a loser if you don't have those things.

There are so many incredible opportunities and seductive ways to spend money in our economy. me. And I would say, try and live like a stoic, not only economically, but in terms of your time. Try to resist the institutionalization of trans fats, of porn, of dopah hits, and be really good at focusing as much time as you can on your professional and physical progress in your 20s. And from day one, try to save 10% plus of your money. Your wealth is a function not of how much money you make, but how much you save. And try to live like a stoic early on. I had a 300 square foot apartment. I lived on bananas and top ramen when I was in Morgan Stanley so I could save money for business school. And then I moved back in with my mom because I wanted to have the money to go to

business school. And then start investing. I would say low-cost ETFs. If you want to invest in some companies because it's fun and you want to learn, I get that. But the two things there are diversification. you don't need to be a hero. I've made some really stupid investment decisions. I bought Netflix at 10. It's at 500 now. That's the good news. I sold it at 8. I bought a company called the SENA, and within six months of me buying it, it was down 80%. But I've never put more than 10% of my assets in any one thing. And I let time take over. The most powerful force in the universe is compound interest. people say wealth is, you know, kind of 40% investment strategy, and then 60% patience and willingness to let time take over, and then diversification such that if you get shot in the chest, if you're wearing Kevlar, it hurts, but it's not fatal. So in sum, focus on your talent, focus on something you're good at so you can make more money than you spend, be a stoic, save, focus on your physical and professional well-being when you're young because it gets harder when you get older and you start collecting things like dogs. and kids, and then invest early and often and focus on diversification and let time take over.

I do think, in other words, the good news is I think I know how to get anyone rich. The bad news is that it's slowly and try to resist, you know, if you want to rebel, if you're a young person, I coach a lot of young men, if you want a rebellion, if you want to cause, recognize that the institutional food complex wants you to be fat. Recognize the media wants you to be divided and polarized. You recognize that Robin Hood wants you to day trade. You know, recognize that Twitter wants you to, and Instagram want you to feel bad about yourself. If you want to cause, rebel against all of those things, refuse to not be in great shape.

refuse to not have empathy for people just because they have different political views than you. You know, refuse to spend money on frivolous things. Refuse not to have empathy for fellow Americans. That's the rebellion. You know, that's how you should be rebelling as a young person because there are a lot of forces conspiring against you. Yeah. Speaking of Stoicism, you had a great conversation with Ryan Holiday, who's a fellow portfolio author on your podcast that I highly recommend. that was really interesting to hear in terms of stoicism.

Let's just one more question about this. Would you put money in index funds in the markets right now? It does seem like the market is volatile. We've talked about it in the past, about how valuations are really out of sync with reality. Would you trust it or would you wait a little bit? I think it's very hard to time the markets. I think low-cost ETFs if you think this market is expensive, there's ETFs for Chinese Internet companies. There's ETFs for European companies. There's ETFs, you know, for stocks in Africa.

So I would say they're just in generally low-cost ETFs and just start. But I think you always want to be in the market. In 1997, the economist called the dot bomb crash perfectly. They said this is how it will happen. But they called it two years too early and stocks went up like another 40 or 60%. It's just very hard to time the markets. And when you're young, you have the luxury of waiting out those cycles. So even if the stocks go down in the short run, if you buy any, if you bought any five companies in the S&P 500, if you waited 20 years, zero out of 100 people lost money. So it's really time. And if you want to say, okay, tech stocks are overvalued in the U.S., you know, sure, maybe.

So maybe go to industrials or go to an Asian ETF, you know, spread it around. And if you're a young person, you can afford to take some hits, maybe pick some great companies that you think are undervalued, but you don't have to be a hero. Don't put it all into one thing. Don't even put 40% into one thing. Spread it around and make sure that you don't trade it. Trading, I think, is a real menace. 80 to 95% of day traders lose money.

If you just invested in the 10 most popular stocks on Robin Hood, you would. would have lost money. And not only that, the costs are extraordinary from a time standpoint. One of the first things I do when I meet with a young man is I say, give me your phone and I look at their usage. I'm like, let me get this. You're spending 90 minutes a day on Coinbase? And I'm like, what's going on here? And they're like, well, I'm learning about crypto and I trade and I do these pulled put options. And like, Jesus Christ, stop that. Take that 90 minutes, work out for 60, right? And spend another 30 minutes at your real job. You know, the biggest cost of day trading is not only the fact you're going to lose money, but you're literally

pissing your life away. And people say, well, I'm learning. Are you really learning? What are you learning here? So if you want to be in finance, if you want to be in the financial market, if you want to be an investor, then sure, learn about it, get certified. try and go to school around it, try and get a degree about, try and get a job in it. But for the 97% of young people that aren't going to end up in finance, you know, what you're really doing is you're pursuing a dopa hit and you're bored. That's what I find most people who are day trading and on Robin Hood and it entered into consensual hallucination that they are advancing themselves or they are learning.

Recognize that it's gambling. And by the way, I think gambling's great. I love to go to Vegas. I love to put on a kilt. take some money, go down to the casino, get fucked up. I have a great time, and I generally lose it all. And the next morning I wake up with a headache and I'm fine with what happened. That's what you are doing when you day trade. That's what you are doing. So recognize if you love it and it's fun, fine. If you're learning a little bit, fine. If you want to be in finance, fine. But if you think

you're building economic security there, no. In my view, you're not only taking a huge economic hit likely, but more importantly, you're wasting a lot of your human capital. Don't spend time on this bullshit. Don't, you know, social media, trading apps, it's all a giant suck where they addict you with purposely engineered psychological triggers, and then they sell your activity to other people. You are not the product. They are not in the business of making you happier or more economically secure. So I think there's, I think there's something around. I think there's a real nihilism here, especially among young men around trading apps and social media. I think they're really damaging for young people. Yeah, it's fascinating. And most of the conversation is around

these meme stocks and coin base and all that stuff. But as you mentioned, time in the market, being in low-cost index funds, probably the best way to go. I think so. And you know, you're going to see on Instagram or Twitter, someone who took a shot of their screen account that shows that Doja coin is up. Right. They're gain porn. Yeah. And look, I want to be clear. I'm guilty of this. I'm now taking money out of the public markets and putting into the private markets. One, because I get access to opportunities other people don't. That's my white privilege or whatever you want to call it or I've earned that privilege. It's probably, you know, it's probably both. And two, I check my stocks too much during the day. And if I can take, I probably spent 30 to 60 minutes just looking at stocks and calling my broker. And asking questions. I'm like, what am I doing? I need to find stocks, and I'm usually pretty good at this. I've owned Amazon and Apple for 12 years. I buy them. I check them out every once in a while, but I just leave them the hell alone. Or I give money to someone who manages my money full-time,

and maybe they call me once every three months and tell me how it's doing. A young person's most valuable capital is their focus in their time, devote as much time as you can, to your physical and mental well-being and getting great at something professionally. And let someone else watch and get indigestion over Dogecoin or what's happening to what's happening to Amazon or DoorDash today. That is not stress you want to endure. Right. Okay.

We've talked a little bit about, or a lot about the difference between making money on assets and wage work. After the break, I want to talk a little bit more about wage work and what's going on. inside companies today because there has been a lot of interesting developments, look at Coinbase, look at Basecamp, look even at Shopify. And of course, the big tech companies, Apple this week, had a bit of rebellion from employees against management. So let's talk about that after the break. Hang with us. We'll be back right after this. Hey, everyone. Let me tell you about the Hustle Daily show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's

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with Scott Galloway, Professor at NYU, also the author of many great books and the host of a couple of podcasts, which you should definitely check out. Although you're probably subscribed already. Scott, I wanted to talk to you about this interesting thing happening inside companies. Maybe it's a symptom of what we've discussed so far, where there's this whole family, you know, the business is a family or the company is a family. That trope seems to be falling apart.

Companies are telling their employees not to talk. Politics there, businesses that seem to mission-oriented are now, you know, getting some heat from their employees, that they're not really mission-oriented. last week there was a long post that came out from the CEO of Shopify telling employees, you know, we are not a family, a family can't unfamily you stop thinking about it in this way. So I'm kind of curious, do you think that there's this moment is something where workers and companies are starting to reevaluate the contract between them? And maybe, you know, this is also a symptom of something that we talked about earlier

where, you know, workers are seeing the difference between themselves and the executives of these companies, if we have an economy that rewards innovators and they're not getting the rewards that their CEOs are getting them. Maybe they're starting to rebel a little bit. I'm curious what, you know, what you think about when you see stuff like this go down. So it is really interesting. One, you do have a younger generation that seems more politically conscious or more conscious of some of the externalities of, that quite frankly my generation is created. And they want a company that is the purpose of the company or the purpose driven nature of a company plays a greater role than it did in my generation. So that's some of it. However, however, I do think most

companies still take sort of an apolitical viewpoint and say, look, this is a fantastic platform, hopefully for you to develop economic security for us to rent your human capital and for you to figure out a way to have health insurance and put food on the table and establish economic security for you and your family. But you're going to leave your politics at home. The majority of companies are still that way. What the kind of the mistake, if you will, is that a lot of companies kind of entered into the political fray. And then they want to put the genie back in the bottle when their employees actually believe that this was a forum for political viewpoints. And, and then when the senior management didn't like what they were saying or found

it uncomfortable, they tried to shut it down. So they kind of invited it. And then when they didn't like it, they wanted to shut it down. I think a lot of it is narcissism. I think a lot of the companies are run by tech innovators that want a virtue signal in all hands meetings and talk about how woke they are. And by the way, the strange thing here is almost all of these values that come out in a company are generally woke. If, I mean, there's a couple companies, Hobby Lobby or Chick-fil-A that are famous for their conservative values. And Dural, some of the Teal-funded companies also. Yeah. But generally speaking, if you, you hear a company expressing political views in an all-hands meeting, it's generally very woke

values. If you showed up to work and said, I want to have in all hands, and you stood up as a CEO and said, I really want to talk about our progress in protecting the rights of the unborn or ensuring that our Second Amendment rights are protected, that shit doesn't roll in corporate America. It's generally seen as, and as a progressive, I say this, and I've just noticed that there is definitely a woken nature to what I'll call the overt all-hands, the politicization of the all-hands. I do think that a lot of people are snapping back and saying, look, there are certain companies you're going to expect it for it. If you go to work for Ben and Jerry's or Patagonia, you know that there's a political complexion of the founders there and that they get psychic income and they also offer that reward to people who have congruent values. by working there. I think 99% of corporate America is likely going to say, okay, this is so complicated

and so dangerous that we'd rather keep this an apolitical platform. And that is, we want to help you develop economic security. And then you should be free to exercise your political views on evenings and weekends, but you should probably check it at the door. I think a lot of these CEOs invited this. And then when they didn't like it, they tried to put the genie back in the bottle. I think generally accepted values around the important conversation around gender balance, around giving communities that have been discriminated against more opportunity. I wouldn't even argue those are woke values anymore. That's just kind of generally accepted behavior, I would hope, at this point.

So I, you know, I would argue that it's important for leadership to take strong stands on that. But what's happening is that the music has to match the words. Nike can't just put out a black square saying that Black Lives Matter on Instagram and then you find out that the percentage of their VP-level officers does not match the percentage of people of color in our nation or their customer base. So, look, I think there is, I think we have probably, I think the Shopify memo was outstanding. I think when the base camp guys decided to try and put the genie back in the bottle, they, you know, they had invited it.

Yeah, there was definitely a difference between those two. Right. But it's easy to, you know, try and cast yourself in a positive light. But I remember I went on the board a gateway computer, which is, I want to acknowledge as like the weakest flex in the world about 15 years ago. And I remember. They were popular. Yeah. Actually, when I was there, we sold three times as many computers as Apple.

But anyway, at the time, with no margins. But I remember saying, you know, someone in a, in a, all hat said, we're a family. And then they asked for feedback. And I said, dude, don't tell them we're a family. We're not a family. We might fire a third of these people in six months. You don't fire your son. We're not a family.

At best, we're a team, hopefully, but let's be honest, we're not a family. And I think that's right. And also, I think you have to respect that there's a really large population of people whose political viewpoint is to be apolitical. And or there's a reason that we vote behind a curtain. Some people don't want to have, it's, I think a politics of work is almost like an additional tax on workers. And that is, not only do you have to be good at what you do, not only have to get along with people, not only do you have to shave. and shower and put on a clean suit or a nice pantsuit and get into work, you have to thread the needle of being politically acceptable in your viewpoint. And that's just, do we want to impose

another tax on employees and management? I personally think there's real value to what the CEO Shopify said, look, that's just not the business we're in. You know, the eight hours or 10 hours a day you're here. That's not what we're going to expect of you or ask of you or quite frankly even tolerate. I remember certain companies saying back in the 90s, you weren't allowed to send out a solicitation for a fundraiser for your kid. They're like, look, just don't bring that shit to work. I'm sure it's a worthwhile cause. Don't bring it to work. And I kind of empathize with that, right? Right. So I do think we're saying a snapback, long-winded way of saying that. Yeah. One of the things that you wrote about in post-corona, your latest book, was that when the pandemic hit, you were much more likely to lose your job if you're making under $40,000 than if you were making over $100,000. Just thinking about the political shift that we may see in this country, I think that right now, like, it's a big shuffle in terms of who the party's bases are. Yet we see a lot of democratic politics end up in the places where the, you know, among people who aren't hurt very much by some of the stuff.

going on and seem to be the winners in the winner and lose their economy. Do you think, you know, the Republicans right now are saying that there's like a big chance that they want to be the party of the working class. Do you think there's a chance we're going to see that shift? I mean, this whole conversation that we just had about politics in the workplace made me think of it. So I'm curious what you think. Well, like, a couple things in that. I do think we've essentially outsourced this pandemic to poor people of color who are overweight. It's just, you know, If you're rich and thin, the pandemic has meant more time with family, more time with Netflix, and your stocks have exploded. Okay, I'm wealthier and I get to hang out at home.

I mean, it's just, which I think has been dangerous because I think it's dampened our response. I don't think this virus has seen what America is capable of in terms of a full-throated capitalist response. Within seven days of Pearl Harbor, Chrysler converted its largest factory from manufacturing Pontiacs to manufacturing M1 Bradley tanks, and we punched out more tanks than the entire Third Reich did during the entire war. So this has, I think, muted our response. So I think it's been dangerous. People over $100,000 have seen no change in employment. Sixty percent of them can work from home. If you make less than $40,000 a year, 40 percent of those people have seen some sort of interruption or job interruption, and less than 10 percent can work from home. They tend to be more overweight. They tend

to have the underinsured, so they've got to throw their Diet Coke and their diabetes medication in an igloo cooler and head out with an Uber app and put themselves in harm's way. So there's just no doubt about it. We have absolutely, I mean, nothing has changed here. We've just accelerated it. We knew that the 40% of America was like one big bill away from financial ruin or living in their car, and we have accelerated that. So that's been, I think, one of the really, really ugly parts of this pandemic is it's,

it's drawn as closer to or really shoved in our face what happens when you show such a lack of empathy. I think capitalism doesn't survive unless it sits on a bed of empathy. I just don't, you know, the redistribution of income has to happen. I don't, I think, I think capitalism, you know, collapses on itself. And if there's a, if there's a one big mistake, I think we'll, in retrospect, think, or absorb coming out this pandemic is that we should have been protecting people, not corporations. We're much more empathetic with corporations than we are with people for some reason.

Yeah, but let's end with this. Do you think that there's still, you know, people talk about the U.S. as like a land of opportunity. They talk about the American dream. Do you think that still exists? We talk about a tilted system. People call it a rigged system. But it does seem like there's still like a good amount of opportunity out there. So, you know, I guess I would just like to like hear your perspective.

on like what the truth of the matter is in this regard. Yeah, look, I'm obviously a glass half-empty kind of guy. But look, I believe what Bill Clinton believed. And that is I don't think there's anything wrong with America that can't be fixed with what's right with America. I think that the immunities are kicking in. We're taking antitrust against monopolies. We might unlock incredible time savings with health care or health tech by letting a mother

with a child of diabetes take the 12 weeks a year she spends managing that child's diabetes down to four weeks with. remote technologies. I think giving people the opportunity to work from home is huge. I think the most recent stimulus that increases the wages or the take home income of the bottom quintile of income earning households by 20%. I think we see how important cooperation is, or hopefully we'll see how important cooperation is. So I don't think there's anything that can't be fixed with, like I said, with, you know, I think we can't, that we can fix anything that's wrong with America with what's right with America. But we have to recognize that we are the apex species.

And what is the super weapon or superpower of our species, cooperation? The way we have leveraged cooperation into prosperity is through capitalism. And capitalism is full body contact violence at a corporate level that creates competition and prosperity such that we can be more empathetic and loving with people, such that we can ensure that our seniors don't die on the streets. We can provide food stamps to people who are on need. And we need to just, reflect more of that empathy towards people and less towards corporations and billionaires. The immunities are kicking in. We are going to see antitrust. We are going to see a greater redistribution of income to our brothers and sisters who are struggling and are food insecure.

But it is up to us. It is not an organic process. It is up to us. Okay, Scott Galloway. What a note to end it on. Thank you so much for joining. Thanks for having me, Alex. Best of luck to you. Appreciate it. Is there anything that you want to shout out, the podcast or the books? Nope. At the end? Okay. Well, we read them all at the beginning. Thanks everybody for listening. Thanks, Nick Guatney for editing and Red Circle for hosting and selling the ads. Appreciate you all being with us till the very end, and we look forward to seeing you next week.