The Prof G Pod with Scott Galloway - No Mercy / No Malice: Hoarders

Episode Date: June 8, 2024

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NMLS 1617539. I'm Scott Galloway, and this is No Mercy, No Malice. Too many people hoard, obtaining more for no other purpose than amassing more. There are good alternatives. Spend it and give it away. Hoarders, as read by George Hahn. Throughout human history, if we had access to more than we needed, we kept the excess to survive in leaner times. Having surplus items also signaled wealth and desirability as a mate,

and key rituals often depended on precious items being stored safely. Our ability to store crops was key to developing an agricultural economy. Artisanal objects, to be preserved for centuries, made us feel closer to God. The most beautiful items were kept in houses of worship, which then became stores of value. The industrial age and ensuing mass production created the mother of all good problems, which soon became just a problem, superabundance. Our instincts have not kept pace with productivity or processing power. We not only gorge, we hoard. It's incredibly challenging to ascend through the soupy atmosphere of youth and sate our desire for things and experiences when an entire economy and society runs on one incentive, more.

It's a cliche, but true. The first million, i.e. launch, is the hardest and most dangerous. The Falcon 9 heavy rocket, which travels thousands of miles, burns a third of its propellant in the first mile. Most folks who reach orbit keep the engines roaring. They aspire to travel from multimillionaire to billionaire to Bezos. Also, it gets easier once you're in space. A touch of thrust or effort moves you thousands of miles versus feet. Capitalism favors capital, so more quickly

becomes irresistible. Unable to turn off the boosters, many uber-wealthy people become hoarders, obtaining more for no other purpose than amassing more. My father and mother were never more than two degrees of separation away from economic anxiety. Yes, my mom was disappointed that my dad left her for another woman, but her financial fear was worse. How would she take care of me and herself by herself? I never realized, and most people never will, how much economic anxiety we carry until the weight has been lifted. Economic security brought something else I did not anticipate,

a multi-year exhale. Not having been able to afford a home nurse when my mom was going through chemo, the feeling of failure when I later lost my business the same month my oldest son was born was acute. I still register an ache in the small of my back remembering those moments. It's unacceptable, full stop, that an economy where one company, NVIDIA, can add the GDP of Australia in one calendar month Also has large swaths of the population who live with this profound anxiety What is the ratio of the explosion of billionaires to deaths of despair in America? My gut tells me it's positive when any decent society would demand the size of these cohorts be inversely correlated.

This anxiety is largely absent in other less wealthy countries. Incumbents will make excuses that these countries sit on oil or are more homogenous. Pro tip, that's a bullshit narrative meant to wallpaper over just how fucking outrageous it is that six people control more wealth than the bottom half of America and pay an average tax rate of 6%. Also, we produce more oil than any country in the world, but I digress.

It's fashionable to disdain spending, but spending puts money back into the economy, often at points with the most impact, generating wages and opportunities. I don't understand people who are wealthy and don't spend their money. Being social creates jobs for waiters, bartenders, and busboys. All jobs I had in college. A busy night at the Westwood Marquis, Chart House Restaurant, or Monty's Steakhouse ask your parents if they lived in West LA in the 90s could change my life that week. It takes hundreds of hands to make a new car or refurbish a vacation home. This isn't an argument for trickle-down economics. We don't need to put more money in the pockets of the

wealthy. But the money they have is better spent in the economy than hoarded in the market. Consumer spending makes up two-thirds of economic activity in the U.S., and the top fifth of households by income account for nearly half of that spending. A million dollars in entertainment spending supports 6.5 jobs directly and another 22.5 indirectly. Modern research confirms Aristotle. Long-term, sustainable happiness doesn't come from wealth, but from relationships with others. The real gift of wealth is being free from the economic anxiety that can stress nearly every relationship. Economic insecurity can rob us of happiness, but wealth offers diminishing returns. The lifestyle and entertainment opportunities available to someone

with $10 million in assets differ in modest degree from those available to someone with $100 million. Going from $100 million to $1 billion is likely a wash. You can buy a football team, but you'll also need private security. I know many centimillionaires and a few billionaires, and I have witnessed no evidence, scientific or anecdotal, that wealth beyond relief from economic anxiety and the ability to do wonderful things with your family results in any incremental increases in happiness. If there's nothing to be gained above a certain amount and nearly everything to buttress low-income households, then isn't a highly progressive tax policy

at the very top income levels a no-brainer? One form of spending that's proven to generate reward and happiness is giving. The more you spend on others, the greater your increase in happiness. In fact, giving to others provides both passing pleasure and long-term happiness, something borne out in numerous studies. MRI scans show that giving money to a food bank lights up the same pleasure center in our brain that responds to cocaine. People who do small acts of kindness for strangers report being happier for weeks afterward.

Volunteering is correlated with a stronger sense of well-being. Giving money away has been shown to have a similar correlation with happiness as making more of it. In sum, if or when you hit your number, good problem, why wouldn't you spend or give away your incremental wealth? Why wouldn't we pursue real wealth, happiness, a sense of belonging, being part of something bigger than ourselves? Any philanthropic effort is probably better than none at all, but not all giving is created equal. There's too much tech and finance bro PR boosting and not enough actual giving. Exhibit A.

In 2010, ambitious Newark Mayor Cory Booker wanted to attract $200 million to fix Newark's corrupt and broken public school system. He convinced Mark Zuckerberg to pledge $100 million and investor Bill Ackman to add $25 million. Then he, Zuck, and Governor Chris Christie all went on Oprah to announce their grand plan. After the show aired, Zuck went back to depressing teens and coarsening our discourse, Christie became a full-time presidential candidate, and Booker rode the attention to D.C. The $200 million disappeared

into the same corrupt and broken school system without a trace. Were they wrong to invest in Newark schools? No, just not effective. Without a sustained structural investment in infrastructure, money from the wealthy is often just a sugar high. Exhibit B. Far too much billionaire philanthropy isn't giving,

but a 12-carat misdirection, shuffling money to avoid taxes and sustain dynasties. 41% of giving from the ultra-wealthy goes to private foundations and donor-advised funds. These organizations pay board members, consultants, and others, donate money to one another, and may never plant one tree or dig one well. Many are warehouses for money to grow tax-free, in effect subsidizing billionaire investing with taxpayer money. The super-wealthy have weaponized the tax code to hoard wealth and then take the moral high ground with philanthropy

that is camouflage for taxes owed. For every dollar a billionaire donates to charity, the government loses 74 cents in revenue. Exhibit C. The Giving Pledge is a promise to give the majority of your wealth away by the time you die. The pledge receives a lot of press. Bill Gates and Warren Buffett introduced it in an effort to spur billionaire giving above the anemic 10% that's been the norm. The good it has done,

however, is dwarfed by its promise and PR. Giving excludes political donations, but that's about it, and notably permits the same private foundations that billionaires have long used to avoid actually giving anyone else a dime. There's an organization behind the pledge that coordinates events and conversations between members, but I believe this has mostly been window dressing, obscuring an obscene level of income inequality that runs unfettered. Gates and Buffett are richer than when they started giving. The 73 members of the Pledge, who were all billionaires in 2010, have tripled their collective wealth in the past decade.

Wouldn't a more apt name be the Hoarding Pledge? I have written before about Mackenzie Scott, who practices a below-the-radar approach to giving that is inspiring. Operating with a small team, she vets possible recipients quietly, often without their knowledge, and makes sizable grants with no strings attached, no PR fanfare, nor any demand for input on issues she has no domain expertise in. She'd given nearly $2 billion before making any public statement, and has given away $14 billion to DATE. Her fellow PNW mega-billionaire, Melinda French Gates,

left the Gates Foundation last month to focus her philanthropy on organizations working on behalf of women and families, and she's already donated $1 billion in gifts spread across dozens of organizations. There's more than meets the eye here. Evolutionary theory suggests kin selection and inclusive fitness comes more naturally for women, who are raised to be more empathetic and have an easier time forming social bonds. Women are also socialized to be more nurturing, cooperative, and community-oriented. The previous sentence is a decent disarticulation of generosity. Women develop a desire to help others without personal recognition. 85% of charitable giving decisions in affluent households

are made or influenced by a woman. In some, women give differently. There's more emphasis on the giving part. I hit my number almost a decade ago. I purposefully paused and spent a great deal of time and consciousness on erecting scaffolding to update and temper my instinct to acquire more wealth. I decided I would spend a great deal of money on experiences with my family or services that gave me more time to spend with them and my friends.

I likely only have a third of my chronological life left, but I'm intent on living four-thirds of my life in that remaining time. Meaning, I want to have a series of experiences that make me feel closer to my family and friends and squeeze as much juice from this seven-continent ellipsoid as possible. After molesting the earth for 30 years for business, it became obvious that staying in the most beautiful places, in the most iconic

cities meant nothing when I was there alone. The previous sentence could also describe my 30s. It's as if that decade never happened, as I was mostly alone. Another observation I've made roaming Terra is that the U.S. is the best place to make money, and Europe is the best place to spend it. One of the reasons we moved to London. In addition, I have a self-imposed tax of 100%. Each year, I add up my spending and give that same amount or more away. The surprise for me around giving is how masculine it makes me feel. I feel my strength and skills are protecting and providing. The hoarding I've described above is relevant to only a small percentage of the population. What is more prevalent is the hoarding of goodwill. Each of us has wealth in

the form of good intentions, positive gestures, and comedy toward others. Do you hoard this goodwill? The first 40 years of my life, I was cheap with my emotions, not telling people how impressive they were or how much I admired and cared about them. This is the real environmental waste in our society, possessing the resources to help people feel better about themselves and not sharing that capital. After finishing this sentence, I am going to clear my mind and wish you well. I want you to be happy and prosperous. I really do wish you well. And there's no reason to hoard that sentiment. Life is so rich.