The Prof G Pod with Scott Galloway - No Mercy / No Malice: How I Got Here

Episode Date: January 7, 2023

As read by George Hahn. Follow George on Twitter, @georgehahn. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. I'm Scott Galloway, and this is No Mercy, No Malice. It's easy to credit your grit and your character for your success and blame the markets for your failures. I have no such delusions. My success is largely a function of one, my mother's irrational passion for my well-being and big government, specifically the University of California that was investing in the unremarkables in the 80s. It's time to fall back in love with the unremarkables. How I got here, as read by George Hahn.

I've been writing and speaking about higher ed for years now, specifically how it's turned into a luxury good, exclusive, scarce, expensive. In 2020, it looked as if an accelerant, the pandemic, and a disruptor, technology, would change this. It hasn't. Colleges doubled down on exclusivity. Unremarkable young Americans continue to be denied access to the best path to being remarkable, making this post, which I wrote over three years ago,

more relevant. That's not a good thing. The following was originally published on March 15, 2019. State-sponsored education is who I am and how I got here. My admittance to UCLA is singular. No other event or action has had a more positive impact on my life and the lives of people around me. Although, in light of the recent college admissions scandals, it appears I did it all wrong. I tried out for the crew team after I was admitted and actually got my ass up at 5 a.m. six days a week so I could move one-eighth of a shell through the water at speeds supercomputers can't process

to nearly pass out, throw up from exhaustion, and, wait for it, keep rowing. It's easy to credit your character and hard work for your success and the market for your failures. I have no such delusions. And to be clear, I'm not modest. I believe I'm talented, maybe even in the top one percent. Yeah, big fucking deal. That gets you entering into a room with 75 million other people, nearly the population of Germany. There are two reasons for my success. My mom's irrational passion for my well-being, and my being born in California. The college admissions scandal is a small part of a revolution in its early stages,

as income inequality reaches a tipping point. Historically, when we see this type of wealth concentration, one of three correcting mechanisms takes place. War, famine, or revolution. Parents paying ringers to take their kids SATs for them and coaches being bribed to claim an applicant as an athletic recruit isn't just wrong, it's criminal. Parents paying consultants to get their kids into college feels less bad, but it's a reflection of one of the greatest threats to our country. The middle class and capitalism are the gears that turned back

Hitler and AIDS, and the lubricant for the middle class is education. We are now throwing sand in the gears of upward mobility. For the first time, 30-year-olds are worse off than their parents were at 30. Kids aren't getting into schools as prestigious as their parents. For many families, this is the first encounter with technicolor inequality, where being in any cohort other than the top 1% means the leaves of opportunity are shedding prematurely from your family tree. How many in our generation say about the college we attended, I couldn't get in today?

From 2006 to 2018, the acceptance rate among the top 50 U.S. universities fell 36%, and it declined even more among the top 10 universities, 60%. Stanford has an admissions rate of 4%. Harvard, 5%. The fact that your gene pool is no longer bound for UCLA but Pepperdine feels like you've failed as a parent. The thrust on the fuselage for the first 10 years of a kid's adult life is the school you did or didn't get them into. And let's be honest, any appraisal of a 17-year-old is an appraisal of their parents. Your son wearing your old Stanford shirt until he gets rejected and ends up at UNLV is the grist for a budding revolution where people give up on capitalism and turn to populism or PG-13 socialism. Some numbers on admittance, cost, and the importance of college. 61% of high

school graduates from families earning more than $100,000 a year attend a four-year university, compared to only 39% of students from families earning less than $30,000. 38 colleges, including five Ivies, have more students from the top 1% of the U.S. income scale than from the bottom 60%. The cost to attend a four-year university has increased eight times faster than wages in the U.S. A master's degree is worth an average of $1.3 million more in lifetime earnings than a high school diploma. Almost a third of married college grads from top schools met in college. This creates a multiplier effect

for income and opportunity in that household. What happened? How did the lubricant of our prosperity become the casting of our country? There are several macro factors, as pedestrian as population growth and the increase in the number of girls attending, 70% of high school valedictorians are girls, that are raising demand. But the hard truth is that much of the sand in the gears comes from a seemingly more benign source. Just as a frog can't detect water getting incrementally warmer, academics and school administrators have missed just how far we've turned up the heat on our youth. There is now more student debt than credit card debt. Young people are buying houses, getting married, and starting businesses later or never

because we've raised the price of our goods faster than any sector except health care. On Monday night's last spring, I taught 160 kids who range from Marines from Athens to IT consultants from Delhi. They are impressive, good kids, looking to better themselves and increasingly the world. We, NYU, charge each of them more than $7,000 to take brand strategy, where for 12 nights, for 2 hours and 40 minutes, they get me barking at slides and at them about differentiation, brand identity, and big tech platforms. In an effort to balance the scales, I give 100% of my comp

back to NYU. But for the students, that's still about $100,000 a night in tuition, most of it financed in debt that will be on their young shoulders for a decade or more. Seriously, what is wrong with us? We've lost the script and begun believing we are luxury goods, not public servants. Faculties have become drunk with the notion of exclusivity. Leaders share their pride about how impossible it is to get into our institution. We beam describing the superhuman, if not just strange, attributes of the 18-year-olds blessed with entrance this year. Tenure is a guild, only more inefficient and costly. However, the workmanship is worse. It's meant to protect academics from the dangers of provocative original thinking, like Galileo.

But in my field, marketing, it's hard to imagine anybody needs protection as nobody is really saying anything. Tenure in this age is protecting the people who need it the least. And the cost is staggering. Many universities set aside several million dollars, a reserve against any future and expected unproductive years for any individual they grant tenure to. Meeting someone who was recently awarded tenure is to meet them at the top of a mountain, having achieved great things to get there and about to begin their descent. What needs to happen? The U.S. needs a Marshall Plan to partner with states to dramatically increase the number of seats at state schools

while decreasing the cost of four-year universities and junior colleges. Endowments over approximately $85 billion, greater than the GDP of many Latin American nations. If an organization is growing cash at a faster rate than the value they're providing, they aren't a nonprofit, but a private enterprise. A dean of a top-ten school needs to be a class trader and cease new tenure grants. This would require greater comp in the short run to attract world-class academics, but productivity would skyrocket as academics would find that the market,

while a harsh arbiter, often brings out great things in people, such as competition. We need companies, like Apple, to seize the greatest business opportunity in decades and open tuition-free universities that leverage their brand and tech expertise to create certification programs. Apple, arts, Google, programming, and Facebook, crisis management. The business model is to flip the model and charge businesses to recruit, shifting costs from students to firms, bypassing the cartel that is university accreditation. Apple training, certification, testing, and reporting would lead to bidding wars among their graduates, the secret sauce for any university.

Higher education is a $2 trillion industry sticking its chin out to be disrupted. Think of another product that charges over $100,000 that gets 90-plus points of gross margin. Other than a pharmaceutical for a rare cancer, there's no product in the world, not Hermes, not Ferrari, not Apple, that gets these sorts of extraordinary margins for a product that largely hasn't changed in five decades. So quite frankly, we have this coming.

I'm home after traveling, and I've put my sons to bed. My oldest puts on his Invisalign, lies down next to me, and drifts off in my arms. I can't help but stare at this thing that sort of looks, smells, and feels like me, but so much newer and better. Suddenly he stirs and begins to smile. He opens his eyes and tells me he and his buddies did an improv play at school and it was hilarious. He drifts back to sleep. He is warm, safe, loved, and next to a dad who wonders if he, like his dad, is unremarkable,

but might still, like his dad, have remarkable opportunities. In August 1982, I took a job installing shelving for $18 an hour, as I'd been rejected by UCLA and had no other options for college. UCLA admission would have meant I could live at home. On September 19, 1982, I got a call from an empathetic admissions director at UCLA, nine days before classes started. She said they had reviewed my appeal, and despite my mediocre grades and SAT scores, they were letting me in as I was, quote, a son of a single mother and the great state of California, end quote. No joke, her exact words. My mom told me that as the first person from either side of the state and the union, jobs created, tens of millions in taxes paid, etc.

It has also resulted in the profound, the resources to help my mom die at home, her wish, and to create a loving and secure environment for my kids. Seats at world-class universities are a zero-sum game. Full stop. When rich, uber-unimpressive kids are admitted via fraud and bribery, a middle-class kid ends up at a lesser or no university. And the American dream becomes just that, a dream. Bob Dylan said, money doesn't talk, it swears. When millionaire actors and partners in private equity firms commit fraud to take a seat from someone more deserving, it's the rich showing the middle class their middle finger. State-sponsored education is who I am and how I got here.

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