The Prof G Pod with Scott Galloway - The Future of Cities & Maximizing Human Capital — with Dror Poleg

Episode Date: September 22, 2022

Dror Poleg, an economic historian and author of “Rethinking Real Estate: A Roadmap to Technology’s Impact on the World’s Largest Asset Class”, joins Scott to discuss wealth inequality, the digital dollar, TikTok, and the future of cities. Follow Dror on Twitter, @drorpoleg.  Scott opens with his thoughts on his move to London, office space, and Meta’s misadventures.  Algebra of Happiness: there’s no such thing as quality time, there’s just time. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 197. Titanic, Men in Black, and Goodwill hunting all premiered in 1997 what does a hootie of the blowfish concert and the titanic have in common i miss the 90s i miss all the interesting personalities what did jeffrey dummer ask lorena bobbitt are you going to eat that it's just meat go, go. Welcome to the 197th episode of the Prop G Pod. In today's episode, we speak with Jor Polig, an economic historian and author of the award-winning book, Rethinking Real Estate, a roadmap to technology Technology's Impact on the World's Largest Asset Class.

We spoke with Jor back in April 2021, and he joins us again today to discuss wealth inequality, the digital dollar, TikTok, and the future of cities. Okay, what is happening? All right, well, before we get into what's going on in business, let's talk about the big news. Let's take it to my favorite subject, me. I've officially landed in London, as in literally about seven hours ago, I flew in from Las Vegas via Chicago and where I was speaking at InfoTech Live and also spent the weekend in Vegas with friends. We have been going to Vegas for almost 40 years. We've been going since our senior year in high school every year, and we meet up every year and just enjoy each other's company. Although our trips have changed

dramatically. They used to involve gambling and strippers, and now they're about the spa and maybe taking an edible and going to bed at 8 p.m. So Vegas means something entirely different in my age. But anyways, why am I here? Why did I move to London? And this is kind of my first real day in London, although I announced the move with great fanfare two months ago and my family moved here. I immediately got a bunch of work stuff in the U.S. and today is my first day here. So why? The first is, or the obvious answer is, or the straightforward answer is, is because we can. And people immediately leap to, well, have our politics bummed you out? Or is America become too, I don't know, are you leaving because of something that has afforded me, specifically the opportunities, the connections, the camaraderie that American taxpayers have provided me or the opportunities vis-a-vis the University of California and our incredible entrepreneurship culture, our incredible

culture of entrepreneurship, rule of law, taxes that get reinvested in America has resulted in a level of economic freedom such that I can do awesome things, including moving to the United Kingdom where my parents are from. I've always felt a bit of a draw, a bit of a calling here, and I've always wanted to live here, and also would really like my kids to experience something different. Also, just in general, I think about cities and countries a lot. I've probably circumnavigated the globe, I don't know, 80 or 100 times. I think I have spent at least 30 days in 16 of the 20 super cities around the globe. And one of my basic observations is that America is still the best place to make money, but Europe is the best place to spend it. I think the food, the culture,

the vibe, the tempo, the art, the architecture, I just think Europeans get it, at least in terms of how to spend money. I'm not sure they get it in terms of how to make money. But the ultimate arbitrage from a lifestyle standpoint, I think a lot about maximizing for happiness and for relationships is I want to spend time at a Bayern Munich game with my sons. I want to go with my partner and roam around Rome. I want to do these wonderful things. And I realize that's from a place of privilege. But my advice is if you're young, try and get to Europe or try and get to another country for a couple of years just to experience a different culture. It's wonderful.

And then once, if you're fortunate enough to get some money, I think you want to take advantage of trying to put your family in a different locale. Now, having said that, I'm here and the cable is not working and the place is a construction zone and it's cloudy. But anyways, my son and I took a walk and went to Pret-a-Manger, his new favorite restaurant. Anyways, it's wonderful to be here. I also expect to be an evangelist for American values over here. I will be generous. I will be obnoxious. And I will be very loving. I'm going to try and use this as an excuse to be a nicer person and not give in to my anger and depression and be an asshole on a regular basis, which I am, as my colleagues, friends, and family can attest to. Okay, anyways, let's check in on what's happening to office space. The Wall Street Journal reported that although U.S. workers are heading back to offices at the greatest rate since 2020,

office use is on average roughly half of what it was during the pre-pandemic days of 2020. U.S. office vacancy is the highest it's been since the start of the pandemic at 12.4%. So, I read this stat, and they said as if it was good news that about 48% of offices or office utilization is up to around 48%. And I really thought, let me get this. Over half of office space isn't being used. Offices aren't going away, but we're about to see the end, in my view, of long-term leases and assigned offices. Lyft, for example, plans to rent out nearly half its office space in New York, Nashville, San Francisco, and Seattle. Sublease availability is near record highs in top metro areas,

including New York, San Francisco, and D.C. In Manhattan, more than 20 million square feet of office space was available for sublease in Q1 of this year. WeWork's office occupancy was 72% at the end of Q2, matching its pre-pandemic levels. And a PwC report from 2021 said that 87% of executives have plans that include consolidating office space in desirable locations and or opening more satellite locations. 56% of executives expect to need more office space over the next three years. So what's going on here? There's a lot

of nuance. I would say the number one question I get from CEOs has to do with human capital and culture and work from home or get back to the office. And George is going to speak to that. My sense is that the top office space is going to be fine because we are no longer in the before times. That shit is over. The kind of nine to five, get up, put on a pantsuit,

blow dry your hair, and expect it to be a work from X to Y, unless you're a service worker or you directly interact with the general public, I just don't think that's going to hunt. If you have any currency in the marketplace, if you make over $80,000 or $100,000 a year, chances are you're going to be able, with modest effort, to find a job that is remote some or all of the time. And where we're going to end up here is in the middle. Like any complicated issue, we want to immediately try and bifurcate it into zero one, all remote or all in office. And the reality is 90 plus percent of companies are going to be somewhere in between. I would bet it nets

out somewhere where Apple is, where they're going to ask you to be in the office two to three days a week. Most likely that'll be two. They'll ask you to be in the office two to three days a week. Most likely that'll be two. They'll ask for three. They'll get two. But right there, even with additional office space for areas to socialize and inspire community and more conference rooms and a nicer coffee bar and more snacks to try and make it more inspiring, you're going to see a net destruction of 20% to 40% of all office space, which at a $10 trillion asset class means the GDP of Germany is going to leave that asset class. You're going to see a collapse in some of the less aspirational office space. I do believe companies are going to spend more per square foot.

They're going to want to make office space more inspiring, not just a place to sort of warehouse workers. So the high end in office does really well. We're going to need a lot less of it. And we're going to see just unbelievable destruction once there is a number of marks or sales. And we're going to see that some of this stuff, as Peter Drucker said, is going to be like the pyramids where people are going to come marvel at them, but they'll serve no functional purpose. I look at these huge buildings in Midtown, which are not very aspirational, don't have very nice views and feel somewhat soylent green. Like I go to the 17th floor and work for 40 years until my organs are harvested and mashed up and fed to the next generation of more ambitious workers. But it's

just, there's something about those buildings. I wonder how on earth are they going to fill this space and what are they going to do with it? And if you think about the unlock, I think the really exciting thing around office space or remote work is the care worker. And that is if you're taking care of kids, taking care of old people, managing your own mental health or own physical challenges. Think about the unlock here. Think about the amount of time you can save. If you think about what it takes to get ready, get to the railroad station, get on the Long Island Railroad, get into the office. It used to take me seven minutes just to get from the entryway of my building at Morgan Stanley in Midtown Manhattan to my desk. Times that by two, 14 minutes, by five, 70 minutes,

by 52 or 50, because they gave me a whole two weeks off back then in the late 80s. And you're talking about a lot. What is that? 14 minutes, 70 minutes, 50, that's 3,500 minutes. That's 60. That's a week and a half. I save a week and a half a year just from the point I enter an office to get to my desk. So, despite very real concerns that you're not as productive, there's a lot of excess hours to try and compensate for that productivity. At the same time, and I've said this a bunch, young people, oh my gosh, young people, self-impose some structure that forces you to do one thing, and that is be around strangers in the agency of something, in the agency of work, in the agency of volunteering, in the agency of sports,

in the agency of God, in the agency of your country, agency of sports and the agency of God and the agency of your country, something. Young people are social. My kid didn't suffer or my kids didn't suffer from not being in school. They didn't need more school. I mean, that was part of it. What they really needed was more kids.

Young people need to be around each other. They need to make friendships. They need to learn how to read the room. They need structure. They need to fall in love. They need to fall out of love. They need to figure out how to get along with people older than them, get along with groups. And especially young men struggle with that without a lot of interaction and a lot of training as young adults. Anyways, office space, the high end's going to do

really well. The middle is going to get absolutely crushed. The stuff that's so cheap will probably be reconverted to warehouses or some such. You have seen nothing in terms of value destruction yet because it's a bit of a standoff where if you want to talk to some people who are in a consensual hallucination with the marketplace, talk to people who own B office space. Also, even medical office space, which was supposedly bulletproof, I think is going to really struggle as people realize they don't need to go in for a pre and post consultation on their vasectomy. They just need to get the work done and they can do everything else over Zoom. Recording in progress. All right, moving on to our final story. Meta is cutting its responsible innovation team. That's a shocker. Who would have thought that? Responsible innovation team. Okay. Yeah, those two words should never be in the same sentence. In a building owned or leased by Meta, this team was put in place to address concerns about the potential downsides of its products.

The potential downsides. There you go. I don't think any good news has come out of Meta for a long time, and its stock keeps getting pummeled, which I think is good news. Couldn't happen to a nicer group of people. I love the fact that all of these people going to Meta who have decided to wash over what's going on there and rationalize it by saying, well, maybe I can help, or they're good people, or Scott, you don't understand that Meta is just a larger proxy for what happens on the internet. No, you're working for a Meta is just a larger proxy for what happens on the

internet. No, you're working for a company that has weaponized our elections, that has depressed teens, and has made our discourse more coarse. And something that makes me happy is you have made no fucking money. Or maybe you've made a good salary and have good healthcare. I shouldn't say that. You probably make more money than a lot of people, but you've made no value from your, or no money from your options. Meta, the shares are down 60% over the past year. They're at their lowest point since March of 2020. I believe it's at a five-year low right now. And it reported its first ever ad revenue decline during its last earnings report. That's right. Revenues are actually down. Quarterly revenue was down 1%

in July compared to a year ago, and profit was down 36% from a year earlier. The percentage of teens using Facebook has declined from 71% in 2014 to just 32%. Meanwhile, Snap, Insta, and TikTok have all increased their share of teens on their platform. So in sum, Snap, Insta, and TikTok have taken share from the big blue icon. There's no data showing that VR is going to be a viable way into the metaverse, which is what Meta is placing a big bet on. Meta has sold about 15 million of its Quest VR headsets since it launched in 2020. Meanwhile, Roblox has about 55 million daily active users

and roughly three quarters of them are accessing the gaming platform via a mobile phone. There's really only one kind of portal into the metaverse, and it's either your iPhone or a TV screen or a handheld. I could not have devised a more brilliant strategy to take down, to hamstring, to diminish meta's power than a CEO with total control because of dual-class voting shares, where he controls the company vis-a-vis a special class of stock, then him deciding to go all in and spend between $10 and $20 billion to try and replicate our world across business, across entertainment, across gaming, across education, he's that arrogant. Think about the video game industry. For 30 years, they've been innovating, investing billions of dollars, incredible skill set, and they have got gaming not figured out, but they've earth more habitable. And we have one mendacious

fuck who's also a billionaire who's being taken out on a stretcher, at least economically. He's lost about two-thirds of his wealth. Why? Because he's arrogant enough to believe that he can use processing power and computer science to replicate our world. Well, guess what, boss? You are wrong. This is the biggest tech failure of the last decade. We'll be right back for our conversation with Jor Polig. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals,

you'll discover what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. What software do you use at work? The answer to that question is probably more complicated than you want it to be. The average U.S. company

deploys more than 100 apps, and ideas about the work we do can be radically changed by the tools we use to do it. So what is enterprise software anyway? What is productivity software? How will AI affect both? And how are these tools changing the way we use our computers to make stuff, communicate, and plan for the future? In this three-part special series, Decoder is surveying the IT landscape presented by AWS. Check it out wherever you get your podcasts. Welcome back. Here's our conversation with Jor Polak, an economic historian and author of Rethinking Real Estate, a roadmap to technology's impact on the world's largest asset class. Jor, welcome back.

Where does this podcast find you? I'm still in New York, this time not in my mother-in-law's basement hiding from COVID. Now just in my office near home. Nice. Okay, so you spend a lot of time thinking about the way that human capital intersects with work. What are your thoughts on the future of cities? So cities, we started talking about it last time we met, are now becoming a matter of choice.

So they're becoming a consumer product. Economists have been thinking that companies and talented people must be in cities and that this will be the new paradigm of the internet era, which is something that we saw from 2000 to around 2015.

But even before COVID, we started to see that actually companies come to cities for two main reasons. One is because they value that in-person interaction and that kind of collisions that cities enable and that cause innovation both within your team and also kind of bumping into people from other teams or other industries. And the second reason, and the more important ones, is the importance of being able to tap into a large talent pool. So to be able to match very specific skills to very specific tasks. The best example of that is the dating market. You know, when you date in a larger city, you're much more likely to find that perfect person that has all of the weird specific

characteristics that you're looking for. And if you date in a small village, you can't achieve the same thing. Now, what companies started to realize before COVID and more so during COVID is that if you hire from an even larger pool, you can increase the rate of innovation. You can tap into even more specialized talent. And at some point, those two things that used to define the city,

so the in-person interaction and the large talent pool, started to be in conflict with each other. Because now, to tap into a large talent pool, you don't just go to the largest city on earth. You can actually hire from multiple cities and you can hire from anywhere, which means that companies increasingly are choosing to hire from a broader pool. They're adopting remote, they're adopting flexibility. Even when they're not, they're opening multiple offices in different places, which then means that people have a choice. They no longer have to be in London or in New York in order to access the best opportunities. And employers don't necessarily have to hire only from those cities in order to hire the best people. Now, it doesn't mean that people will not want to be in London or New York,

but it means that they'll have to want to be there for different reasons, for lifestyle, for other things that they enable them to do. And also that they'll be willing to be there up to a certain price. And if they become too costly, then a lot of people are going to have the option now to go and live somewhere else or to adjust their priorities. Where do you think this whole remote work, you know, there's Jamie Dimon and David Solomon saying, get back to work five days a week. There's companies saying we can be all remote all the time. Where do you think it nets out? So the industry that Jamie Dimon and David Solomon represent

has been losing employees for about a decade now. It's much less important than it was pre-2008 or even around 2012. Here in New York, even, tech is now a bigger employer than banking and finance. And even within finance, some of those banks, they employ 30, 40, 50,000 software engineers. Now, so that means a whole cultural shift internally. These are no longer these, you know, traders who are coming to like sweat on each other on the trading floor. These are coders and they have their own habits and they have their own options as well

in terms of where they can work. And if you want to hire them and you want to have the best people, you will probably have to adjust to whatever it is that they're interested in. Or you'll have to hire other people that are not the best, which is probably what the banks are doing now.

So a couple, and I sound like a boomer when I say this, but I want you to respond to two theses around remote work. One is if your job can be moved to Boulder, it can be moved to Bangalore. So there's some risk. And I think ultimately people who end up with remote, totally remote work will have less leverage in terms of compensation. And two, that young people especially really miss out when they don't get into an office

on a regular basis in terms of connecting and forming new relationships. Your thoughts? Yeah, so two, I'll take them one by one. I think that to a certain extent, if your job can be moved to Bangalore, you know, yes, it will not remain in Boulder. However, if that can happen, it will happen regardless of whether you go to the office and insist on, you know, doing your job from there. So the factory workers in Michigan, you know, if they keep coming to the Ford factory, that's not going to bring back the jobs from China or from Mexico. Yeah, that's a good point. So I think, unfortunately, the way our economy works,

if something is doable, then it will be done. A silver lining here is that for a lot of the knowledge-intensive jobs, I think moving them overseas is a little harder than it seems because of cultural reasons, because the best talent is still in America. And a lot of it is because in-person interaction still matters, but it doesn't matter on a nine to five basis every day. So, you know, these teams still meet, maybe it's once a week, maybe it's once a month,

but proximity still matters to them. So there's that. But I think overall, we will see more and more knowledge work and even service work, things that we didn't think could even be outsourced, like fitness instructors or some types of medical professionals

or other kind of very hands-on things suddenly move overseas and being done remotely, at least to a certain extent. And that's going to happen whether we like it or not. As to your second point, I do think that this is to the detriment of especially young men. I mean, I know you've commented on this as well. I think this idea of getting up in the morning, shaving, showering, putting on your clothes, going somewhere, being mentored, even just being you've commented on this as well. I think this idea of getting up in the morning, shaving, showering, putting on your clothes, going somewhere, being mentored, even just being monitored and being kind of funneled into a routine is super important for young men. And it's also super important for everyone in general because it helps them advance, it helps them connect with people. So I think as a social need or as a social good, it's definitely something

that's going to have a price. But I don't think this will, I mean, this is not a reason for the economy to do it that way. I mean, this is more of a social problem, which I agree is a problem. But I don't think that this will prevent this shift from happening. I heard this term or term that I think you created or are responsible for called inevitable inequality. What do you mean by that? So let me start with an anecdote maybe. You know, in 1971, a journalist asked Don McLean, what is the meaning of American pie and Don McLean thought a little, and then he told him the song, what the song

means is that I'll never have to work again. Now, what he was alluding to was the fact that obviously in showbiz, you have one hit, you succeed, you make more money than you'll ever need. And probably you can keep milking that success for 40 years as he has been doing or 50 years now. Now, in the past, we saw inequality as something that is either inherent to some professions like showbiz or sports and entertainment, or as a result of some sort of injustice. Someone didn't get an opportunity, someone didn't get enough education, etc. as equal as possible, more and more professions are going to have the same characteristics that showbiz and entertainment have, which means that they'll be dominated by superstars. And also that luck will play an incredibly large role in determining who gets to pull ahead. So not just plain skill, but actually luck. And again, we're starting to see that with teachers, with doctors, with peloton instructors, with all sorts of professions that historically we thought, okay,

these things can be done in person. They're very safe. The income kind of spreads along more or less the bell curve. So maybe you'll not be the most successful, but you'll be successful enough to make a living. We're seeing in more and more professions that that's no longer true, that the best performers or the luckiest performers in the world can encroach on your turf, come into your market, take a big piece of it, and then leave you to either go do something else or capture a much smaller piece of the pie. Isn't it kind of a similar effect that once a sector gets digitized or innovation comes in, it becomes kind of a winner take most, whether it's books, social media, search, and even in

my industry now, the top 1% of academics are making a lot more because when everyone has access to everything, they gravitate towards the top 1%. And the top 1% now no longer has geographic constraints. They can sell their goods and services to the entire world. So basically, the top 1% aggregates more and more, and the other 99% all aggregate less and less. Isn't it just a function of digitization and access? So digitization is a huge function of that. I mean, you've spoken and we've spoken before about the same effects on Tinder, on YouTube, on Spotify. We thought that the Internet will be a democratizing force by giving people more opportunity.

And it is a democratizing force by giving people more opportunity. And it is a democratizing force by giving people more opportunity. But actually more opportunity tends to boil down to more inequality as well. So by making the economy even more efficient, it is actually becoming more unequal, which is something that is hard for a lot of people to come to terms with because we kind of assume

that all of the good things are on the same side. And we'll make it more equal. So then we'll give people more opportunities so more people will pull ahead. But that's not how the world works. That's not how nature works. And that's not how technology works. And I think with some professions,

even the ones that, again, that are not a movie star, you see multiple things that help people scale themselves. So both in terms of time optimization, so the best doctor in the world can now just see a few more people a day because, you know, maybe he's seeing them remotely and he doesn't need to travel. Then there's that matching engine that we spoke about earlier. The best doctor in the world or the best consultant in whatever field can now match with the customers anywhere on earth that are willing to pay the most for his time.

Then there's AI that comes into this and can augment people's skills in all sorts of ways that it couldn't have been done before. So to allow them to do more with their time, but still under their brand, leveraging their own specific expertise. There's more and more ways for people to productize their knowledge today. So, you know, you and I both, we teach, we create courses, we create content, we create all sorts of things that kind of make money for us, even when we're not working by the hour. And again, these things are now available not just for movie stars, but everything is becoming content

and everything is becoming kind of driven by the internet. And also everything is mediated by those algorithms that create those winner-take-all dynamics. Because if something is popular, then they show it to more people. It becomes even more popular,

et cetera, et cetera. And at the same time, when the algorithm changes, suddenly all sorts of new stars emerge. So even the most successful people are anxious and don't know for how long they can keep going, even in the safest professions or the boring professions, like a teacher or a doctor or an accountant.

Let's use that as a bridge to, if you believe our right, we live in a capitalist society. We have decided there's going to be winners and losers. We have decided we're going to have billionaires. We've decided we're going to have people who don't make good livings and struggle. And that's part of the winners and losers economy in a capitalist society. It's a conscious decision we make. When it gets just crazy out of control, when there's five people in the U.S. worth more than the bottom half or worth more than the bottom half or worth more than the entire population of three states. Generally speaking, most people are

uncomfortable with that. So how do we, in your view, revisit it? Is it UBI? Is it a massive increase in minimum wage? Is it worker retraining? A lot of people would argue that it's not inevitable we have this type of inequality, that a lot of it has been because we haven't reinvested back in upskilling people to give them the new skills they need. What are your thoughts around, let's assume we're not comfortable with massive exponential inequality, how do we address it? So first, I would like to say that I think we should embrace inequality. And what I mean by that is that we need to actually enable people to make the most of their potential. And I also think that, again we need to actually enable people to make the most of their potential.

And I also think that, again, giving people more opportunity will actually result in more inequality. It will result in more amazing people like Elon Musk that kind of pull ahead and come up with crazy ideas and build $200 billion or $1 trillion companies. But that in itself is not necessarily bad because this is, I mean, so far we spoke about entertainment and even people like us, which at the end of the day are more entertainers than actually inventing anything that, you know, saves people's lives, let's say. But I think that the same is true in other fields. Once we have, we hire from a larger pool, we enable people to be matched with wherever their skills can be used to the best extent. We're actually going to see more innovation. We'll see more people that are actually solving really, really important questions that make humanity as a whole wealthier and healthier. Let me just pause there. Let me acknowledge incentives are really powerful. And giving people the ability to be a billionaire is a huge incentive. And also,

just a general acceptance that some people, whether it's luck, hard work, intelligence, connections, are going to do better than others and have a better life, we've embraced that. And I think that, again, it goes back to incentives. You talked about Elon Musk. Does it make sense that, say, I don't see it as inevitable. He's worth $200 billion and pays a lower tax rate than the majority of the people that work at his factory. He is able to leverage the infrastructure in California and the investments California taxpayers have made. And then about the time he wants to realize a capital gain and sell stock, he decides to move to Texas where there's a 0% state tax. It feels to me that a lot of our policies are actually deliberately resulting in inequality, that it's not sort of this natural phenomenon. There is some network of facts that win or take most impact.

But we have made these decisions that when someone gets the gold medal, we're going to give them the bronze and the silver as well. Your thoughts? So generally, I agree, but I would like to make some distinctions. So you stopped me in the middle. So I was getting to the policy part. Sorry about that. I do that. Go ahead.

I think the important thing that we should address is not trying to cut the legs of people who are pulling ahead, but change the cost calculus of inequality. Meaning, one, obviously to make it really difficult or impossible for people that pull ahead to pull the ladder up from everyone else. You know, to impact policy, to impact elections, to capture institutions. So that's a no-brainer.

But I think on the other side of it, California, for example, is a great example. I mean, they have the largest tax base in the world, probably for a country that size. And I think we have a lot of issues with how we're actually using that money and with the quality of our institutions. And it's very easy to say, let's tax people more, which I'm down with that. But I don't think that that care. The education of my kids is highly dependent on my ability to be a multimillionaire. My health outcomes are probably getting worse by the minute, even though I live in the wealthiest country on earth. Even if I'm a millionaire in America, I'm still at a risk of going bankrupt if I get sick or my child gets sick, even with nothing too unusual. But if two bad things happen in a row,

I'm suddenly in big trouble. So I think we need to change on that side. So I think public schools, if we're talking about opportunity, should be really public. They should get the same funding wherever they are and try to meet the same standard anywhere in the country. They shouldn't be tied to property taxes because that essentially means that they're becoming private schools. If you can afford to pay $20,000 a year in property taxes, your kids can go to a good school. If you can't, they'll go to a terrible school, probably. Likewise with healthcare. Even as a relatively wealthy person in New York, I know that when I'm going to a hospital, that there's a better thing that I can get if I had $20 million. And that's a really unfortunate thing, I think. And it's not like that in many

countries. And it doesn't mean that you shouldn't have a private tier, but it does mean that the public, the base tier should just be much better than it is. So, I mean, putting that basic safety net, I think, before we even get to things like UBI, I think is much more important, you know, so basic education, basic healthcare, affordable housing, which means actually building more, which again is about taking power away from kind of smaller neighborhoods or your neighbors and asking them whether you should be allowed to build another building in New York and giving it more to the state or even the federal government and saying, this is our priority as a country and as a society, that more people will be able to live, let's say, close to New York City in order to have access to those

opportunities. So there's a bunch of things on the policy side that we can do better. We'll be right back. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you?

And what privacy issues should you ultimately watch out for? And to help us out, we are joined by Kylie Robeson, the senior AI reporter for The Verge, to give you a primer on how to integrate AI into your life. So, tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. company knows what really matters when it comes to AI. As part of their 2024 tech sector report, Alex Partners spoke with nearly 350 tech executives from across North America and Europe to dig deeper into how tech companies are responding to these changing headwinds. And in their 2024 digital disruption report, Alex Partners found that 88% of executives report seeing potential for growth from digital disruption, with 37% seeing significant or even Thank you. dot A-L-I-X partners dot com slash V-O-X. In the face of disruption, businesses trust Alex Partners to get straight to the point and deliver results when it really matters.

So let's switch gears and talk about crypto. You wrote in your newsletter that the U.S. should launch a digital currency, but that currency should not mimic the dollar. Instead, it should compete with it. What do you mean by that? So people have been trying to move away from the dollar as a reserve currency for decades. And they've been talking about China playing a bigger role. The euro has been playing a bigger role. There's, of course, crypto itself,

Bitcoin or Ether kind of trying to become global currencies. And there's a growing interest in that. So even though crypto is now down, I think the Fed is scared of, you know, people moving to alternative currencies. And there's a growing interest in that. So even though crypto is now down, I think the Fed is scared of people moving to alternative currencies, which is why they even want to launch anything, the Treasury and the Fed. And what they're thinking about is to launch kind of a clone of the dollar, like a version of the dollar that will be more digital, which means it'll be easier to use, the infrastructure will be cheaper, it'll be easy to track different types of crimes. But essentially, they want more of the same.

They want to retain the same powers that they have. What I think is that this is an actual opportunity to launch an alternative currency to the dollar that behaves a little differently, that is governed a little differently, that doesn't allow people to arbitrarily make decisions, but that operates based on some predefined logic. It can still be beneficial to the US and the US can still have some special powers that it can kind of intervene if it really wants to, but it will be much harder to it. And I think that will both make us more disciplined financially as a country and make better decisions. It will maybe start to rejuvenate or restrict our institutions.

And it will also make that new dollar more attractive for international investors because they'll have something first that is easy to use, designed for the 21st century, works well, doesn't go through SWIFT and all sorts of other pipes and things that cost a lot of money to use. But at the same time,

they'll know that even though it was designed by America, it cannot be inflated at will. And it also cannot be confiscated at will. You know, even some of the stuff that we did with Russia, justified as it was, when other countries look at America and they say, oh, if I have dollars, then America can suddenly freeze them and not give me access to my own reserves, you know, just because I'm doing something that America doesn't like.

Countries are worried about that. And again, in Russia's case, maybe it was justified, but you don't want your money to be in the hands of some country that, you know, tomorrow there's some politician that decide that whatever your country is doing is not acceptable to them and they're going to freeze that. A good analogy for this is the internet itself. You know, we kind of invented it.

We created most of the early infrastructure for it. We set a lot of the ground rules, but we set them in a way that, you know, we don't have any special powers, at least not on paper. And we allow the whole world to embrace it. And still, if we ever want to really intervene and mess things up and change it, we still have more power than anyone else because we initiated the whole process. But we designed something to be a good for the whole world and for global trade rather than just to be something that we can abuse at will, which ultimately, I think, harms us more than anyone else. So I would take the other side of that, and that is that I think the most either liked or commented tweet, and I was not expecting this that I ever

put out, the most controversial, I put out that I'm doubling down on the premier payment technology in history, USD. And everyone highlighted that this thing has lost 90% of its value because of inflation and that I didn't get it, et cetera, et cetera, kind of shut up boomer. But my sense is, distinct of all the issues, the valid issues you raise, the USD really hasn't given up much ground as the world's reserve currency. I think it's still two-thirds. I mean, you want to do any business of any serious kind of, you know, any serious bling, it's going to come through the USD at some point. And I find that it's the most powerful aircraft carrier squadron that's not kinetic power, that it just is a tremendous advantage for us. So the idea of having a digital dollar, I think, makes all the sense in the world.

We should innovate around it. But I can't imagine we would ever want to give up that reserve currency status because it means our sanctions have teeth. It means, as you said, we have more flexibility in terms of funding stuff and going into debt. I love what you're saying about the notion that it's a bit addictive, that you don't, if you can just eat ice cream, if there's an, our instincts haven't caught up to our ability or our fiscal responsibility has not caught up to our ability to print. And that's why I think every fiat currency in history has ultimately gone out of business, right?

And you can see that happening here. But it feels like the USD, and we're the fastest tortoise right now, despite the fact we keep printing dollars. The USD is up, what, 26% against a basket of currencies. So it feels like a digital dollar I buy, I cannot see policymakers policymakers or the CIA or the Fed ever agreeing to endorse another type of reserve currency? Am I too inside the beltway here? No. I mean, one, I don't think there's conflict between our positions. I think that the USD is now in a great position. And the fact that people are running back to it, despite all the mess in the world. Makes it now a good time to try to make some changes. And actually what I'm talking about first is still having a dollar as a reserve currency, but a new kind of dollar that behaves a little differently, that's suited for the 21st century.

In order, first and foremost, to protect our own institutions, because I don't think they'll ever catch up. You kind of treated it like something that one day will get better, but it's only getting worse. We're only abusing this privilege more and more. And the way I see it, this is actually a bet on America. This means optimism. This means that if we'll give people a choice, they'll still come back to our economy.

And if they want to participate in the US economy and have anything to do with us, they're going to use that currency that we're launching now. And that's the true source of our power. So they're not going to switch to something else because they can, but they're going to keep coming back to us. But we should worry about what it does to us as a country and again, and to our institutions. And because of that, we'll accept certain limits on ourselves, even though the world doesn't enforce them on us. Because when the world will enforce them on us, it will be too late. It would mean that they're going away. But yeah, I agree that it's not terribly feasible from a policy

standpoint, but I think it's an important idea to start talking about. And when they're talking about launching a new currency, this is a great time to discuss those things. So that's what I'm thinking about. Not as something to undermine America, but it's something that actually sets the infrastructure for American success, but also on fairer terms for everyone else. And in a way that ultimately undermines tyrants, I think, because the more freedom you give people, you know, it will give us more headaches and the CIA more headaches and U.S. policymakers more headaches. But it's going to destroy people who are not aligned with our values. So you're sort of an original gangster around TikTok. You wrote in February that future historians will be astounded that the U.S. allowed the social platform to gain

such dominance here. What do you think we should do about TikTok? We should just ban it. It's very simple. You know, I'm all for capitalism. I'm all for competition. But, you know, I lived in China for 10 years and the website I was writing for was one of the first English speaking websites that actually got blocked by China in 2009, even before Twitter and Facebook. I think they blocked us. And, you know, just on an economic basis, World Trade Organization, they don't allow our companies to compete there and to operate there. There's no reason, even before before we get to national security to let their companies come here and do business you know and just do whatever they want uh then is there a middle ground is there could you spin it could you have an american company acquire it yeah you could but but it would have to be real

you know and that's hard they spoke about oracle we're not going to give them access to the data yes give them access you know it either becomes fully an American company or it doesn't. And I think it's, I assume that there'll be a lot of compromises done in the process and it'll be watered down. And by the end of it, I think when there's like political momentum, you just have to cut to the chase and, you know, solve the problems. I think it's really hard to just drag it on over years because people forget about it. There'll be other things.

And then we get just to the damage of TikTok itself. I think China knows very well why it doesn't like TikTok for itself. It censors its own version of TikTok. It's much more tame. And by censors, I'm not just talking about politics or dissidents. They censor stuff about what they call unproductive behavior. So, you know, LGBTQ, people with tattoos, hip hop, whatever it is that they think is kind of not keeping people focused on the goal, they censor. And I think what ultimately scares them in TikTok is the velocity

of memes that emerge. So I see it as a parallel to COVID. China has not just a zero COVID policy, but it also has a zero meme policy. It doesn't want new ideas to be able to emerge quickly and spread out so quickly because that in itself is really, really dangerous. Now, as we saw in the US, it's dangerous to us as well. We have a lot of stupid ideas circulating and driving people to do a lot of stupid stuff, you know, up to storming the Capitol. But the beauty of America is that we gradually develop immunity to these type of stupidities. In America, there's stupid ideas, but they don't last for very long because people lose their patience with it. And very quickly, they just become some marketing segment and people find something to sell to those people

that are excited about that thing. And we all move on with our lives. China doesn't have that type of immunity. They think that they control the spread of memes and information indefinitely. And I think that ultimately one of those memes is going to sneak through the cracks and destroy the whole place because ideas are really powerful. So, you know, I don't like TikTok as a product in general,

but I think we can tolerate it. But we definitely shouldn't allow a Chinese control company to operate in the US or anywhere else the way they do now. So, Jory, you sort of, an understatement, you see the forest for the trees. My sense is you really, we're all sort of playing checkers and you're playing chess. If you're advising a young man or woman on a sector, a type of job, an approach to work, what are some best practices you would offer up as that if you adopt, a young person has a greater chance of being one of those lucky folks that gets to enjoy that sort of disproportionate or crowding of wealth or opportunities that's taken place in our society? So one, I think you need to build an audience and you need to have a voice. Almost regardless of what profession you're in, you need to have your own brand. You need to have a point of view. It doesn't mean that you're trying to become a global star, but you need to stand for

something. You need to be memorable and you need to be noticeable. Everyone's a media company. Everyone's a media brand. Everything is a media company. And even worse than that, you know, in the past, we came up with media in order to sell stuff. So, you know, we had soap operas because P&G could make soap. Now we create the media first and then we figure out later what we want to sell.

You know, Kylie Jenner became popular on Instagram because of whatever. And then she said, okay, now I can sell this and this and this. And Mr. Beast became popular on YouTube. And now he decided to sell burgers or to sell other things. So in a way, your voice and your channel is more important than even whatever product you're focusing on. Second, I would go through all of that list of things that help people become scalable and try to see how they apply to you. How can I use technology to optimize my time, to see more customers per day? How can I increase my chances at matching with the people who value me most wherever they are? And here, content plays a huge role because you have to put yourself out there. As I said before, every tweet is a lottery ticket.

Every blog post is a lottery ticket. You send it out there, somebody might match with it and say, okay, this guy, I want to talk to him. He can help me. And you never know where it's going to end. You have to look at tools, AI or other things that help you scale yourself, that help you leverage your time better. You have to think of ways to productize your knowledge and your expertise. So whether it is courses or canned lines of code that you sell, whatever it is. Just a final question, and this is more, I'm just personally interested. New York and London real estate. What do you think of the, what do you think of,

how would you describe the prospects for real estate in kind of our super cities? I think office is in trouble and I think that trouble is not fully priced in, probably in both cities, which doesn't mean that all office buildings are priced in, probably in both cities, which doesn't mean that all office buildings are terrible. It actually means, again, polarization. It means the best buildings are going to become more valuable than ever. The middle disappears and stuff that

is really cheap, maybe people will always pay for it, but they'll be competing. Or converted. What about residential? I think residential, I'm bullish on. And again, bullish, I'm talking 15, 20 years. It doesn't mean that there's not going to be drops and bumps. But I think once you connect the whole world and people can live wherever they want, what will likely happen is that the places that already have a lot of people are actually only going to become bigger than ever.

So again, just like we saw in music or in YouTube, the biggest stars are bigger today. But that's not something that's going to happen automatically. Those cities will have to adjust to accommodate that demand. So to fight crime, to have better schools, to allow housing to be built, to allow offices to be converted to other things. But I think the overwhelming force here is towards more people living in those cities. And it's not so hard to imagine.

One of the amazing statistics that I always come back to is that Manhattan's population 100 years ago was actually higher than it is today. More people used to live in the city. There were fewer offices, the city was more geared towards people living there. To be fair, some of them were living in tenements and in places that we don't want to rebuild,

but there's still room to build much more than we have today. So cities will be for living, for people that they want to walk, they want to rebuild, but there's still room to build much more than we have today. So cities will be for living for people that, you know, they want to walk, they want to hang out, they want to go to the parks, they want to access culture. And those human interactions are going to become a premium thing because most people are not going to work or spend too much time offline. So I think Marshall McLuhan said that, you know, when the horse wasn't needed anymore to power things, it became a source of entertainment.

And I think the same thing is going to happen to people themselves. When we need to work less, the main thing that we're going to do for each other is just entertain each other. And I think there'll be whole industries of people just providing each other in-person services or not in-person services that today look completely ridiculous. And you were a soldier in the Israeli army, correct, Shor? I was, yes. What are your thoughts on some sort of conscription or national service in the United States? I like it. I think we need that, not necessarily to go and fight more wars, but to do something for the public.

Which is what they do in Israel, right? You don't necessarily have to go in the army, right? You can do all sorts of things. It's a form of national service. Most people in Israel don't go into the military, and most people in the military don't go into actual combat, maybe 5% of every cohort. And I think one of the most formidable things in the military in Israel is the fact that you're forced to be with all sorts of other people and kind of realize that they exist and learn to get along with them. Israel is getting worse at that as well, but I think at a slower pace than America,

because America is much more diverse and open, but I think it's incredibly valuable. And frankly, it ties into other things that I think we should do when we speak about the health of our society. I think we shouldn't be shy to have a center to kind of say, listen, this is America. These are certain things that we believe in. There are certain things that everyone should know. And, you know, it's important to us that you will know them. And it doesn't mean that we can't accept people with differences or that we should stop immigration. It's actually the opposite. It means that, you know, when we invite people here, we should give them the tools to do whatever it is that they need to do to become successful based on what everybody else has been doing for the last 150 years to become successful.

So instead of letting people just come and do whatever they want, I think trying to force people, both from locals that are wealthy and immigrants that are just arriving, to force them together into working on shared problems. Yeah, I like that idea. I'm willing to volunteer to lead a squad. Good to know. Jor is willing to serve. Jor Pollack is an economic historian exploring technology's impact on how people work and live.

He's also the author of the award-winning book Rethinking Real Estate, which predicted the rise of flexible work and the reshuffling of offices and homes. He joins us from his office in New York City. Jor, thanks so much for coming on again. You are now a two-time guest. I learn something every time we speak. Thanks for your insights. Thank you, Scott. I really appreciate it. how's your happiness i have jet lag i am depressed i'm upset but i recognize it i always get this way

on jet lag jet lag seriously fucks with me i don't i don't know what happens to my amangala or my serotonin receptors but when i have jet lag i just get very down. And the object of my depression today is that I came to our new home in London and saw my 12-year-old, which is awesome. We went to Ippudo for noodles. We went and he helped me pick out a suit. I'm going to an event tomorrow night and I don't have a suit here. And then we were gonna go to the Apple store

and look at the new iPhones. And we went and got Boba, which he loves. And just being around him restores me, makes me feel better. But the marker here and the thing I can't stop focusing on is my 15-year-old is gone. My 15-year-old is at boarding school and it's the right thing for him. He loves it. He's doing great there. It's an experience I wish I'd had. Everyone you talk to or almost everyone you actually went to boarding school absolutely loves it. He's thrilled. It's a wonderful school. It's going to be great for him. But there's just no getting around it. It's a marker. And the marker is you have a favorite. The good news is it switches back and forth. And they're your favorite for different reasons.

My 12-year-old who I was with today, he's just like an alien. I don't recognize anything about him. He doesn't look like me. He's super interested in things I have no interest in. He looks at the world differently. And it's just so joyous and interesting. I learned so much through him, just the way he approaches problems. And sometimes I find that so captivating. He's my

favorite. My oldest, the 15-year-old, is a mini-me. He just looks like me. I predicted his height and weight for the last year because I knew when he was going to start breaking out with zits. I'm like, okay, January of this year, you're going to start getting acne. I know everything about this kid because he is me. And that is so rewarding and just sort of intoxicating to see this little you running around. And then when he leaves or he's no longer here, it is just like a spear through the fucking heart. There's no getting around it. It's sad, it's lonely, and it's a marker in time. And I've always thought that one of the keys to marketing in a consumer world can be summed up in one word, and that is scarcity. And the reason you become so emotionally invested in your kids is they're scarce. So the ultimate example is scarcity.

And that is you show up after being on the road for the last three weeks, and my 12-year-old is a little bit taller. That 12-year-old I left just three and a half weeks ago is gone. That individual, kids are the most scarce thing in the world. When I see my 15-year-old this weekend, I will know that he's a little bit different, and the 15-year-old that was living with us is gone. And this makes you just sad. It makes you kind of really long for what you used to have. What's the lesson here? I wish there was something profound, but just what everyone says. Take a lot of pictures and there is no such thing as quality time. There's just time.

And spend as much time with your kids as possible. They will remember it and you will cherish it. Our producers are Caroline Shagrin, Claire Miller, and Drew Burrows. Sammy Resnick is our associate producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Profiteer Pod from the Vox Media Podcast Network. We will catch you next week. Support for this podcast comes from Klaviyo.

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