Last year I wrote a Red Pen Edit about Scott Galloway’s interview with NY Mag about the future of higher education. Today, Galloway is back, this time with a viral TED Talk about the future of America. This talk is fascinating. I don’t think I’ve ever watched such a short video where I’ve vigorously agreed and disagreed with so much. I recommend watching the full video here. Below are some of Galloway’s quotes (with the pink bars) and my comments. All the graphics are from Galloway’s TED talk unless otherwise noted.
This is a great slide. It addresses the biggest concern for young Americans, specifically the final column. Housing prices have exploded across the United States, which I view as one of the fundamental challenges facing America today (I talk about it here). As I’ll shout until I get blue in the face, housing cannot be both a good investment and stay affordable for the typical American. It has to be one or the other, and over the last few decades, public policy has decided to elevate the former above the latter at all costs.
The social contract that is now no longer in place and for the first time in the US's history, a 30-year-old is no longer doing as well as his or her parents were at 30. This is a breakdown in the fundamental agreement we have with any society, and it creates rage and shame.
There’s some disagreement over this fact, especially as Millennial wealth has caught up as housing prices have exploded. But overall, yes, it does seem to be a problem. It used to be the case that a hefty majority of 30-year-olds were wealthier than their parents were at 30. Now, it’s a coin flip.
It’s important to note that, contrary to popular belief, median household income has risen. This graph probably does not include governmental transfers, which would push the blue line even higher. From an income perspective, the average household is doing better today than in the 1980s. The major exception is the housing market. The explosion in home prices means that even if you bought a home at the peak of the housing market “bubble” in 2005, you’ve likely built a large amount of equity in your house not even 20 years later.
By the way, the most expensive homes in the world, based on this metric, are number three, Vancouver. Why? Because 60 percent of the cost of building a home goes to permits. Because guess what, the incumbents that own assets have weaponized government to make it very difficult for new entrants to ever get their own assets, thereby elevating their own net worth.
This is true. How is possible that housing prices keep on rising? Because homeowners have spent the last half-century making it difficult (or impossible) to build new housing. Why? Because if you’re a homeowner, the easiest way to increase your wealth without doing any work is to increase the value of your home. And the easiest way to increase the value of your home is to make it impossible for anyone to build new homes. In a free market, a housing price boom like Vancouver has seen would be followed by a housing building boom. Instead, housing prices have gone meteoric while housing units slowly climbed upward.
Ugh. There might be a valid point underlying these pie charts. Unfortunately, as is they are terribly misleading. Yes, those in their 70s have a considerably bigger share of American wealth in 2023 than they did in 1989. This is partially because they have put restrictions on housing. But there are other variables at play. Most importantly, there are a lot more Americans above 70 years old in 2023 than there were in 1989. Just take a look at the population pyramid of the United States in 1989 and 2023 (this graphic is not from Galloway’s TED talk):
The Baby Boomers have aged. The proportion of Americans in their 80s has increased by 50 percent! Similar increases for Americans in their 70s and 90s. America has greyed over the last 40 years. That means that older Americans will have a bigger chunk of the pie. Not because they are greedy or unfair, but because there are more of them! Now, I think those 70+ have been greedy and unfair, but the pie charts don’t prove that at all.
I received a 2.23 GPA from UCLA. I learned nothing but how to make bongs out of household items and every line from "Planet of the Apes." And the greatest public school in the world, Berkeley, decided to let me in with a 2.27 [sic] GPA. And that's what higher ed is about. Higher ed is about taking unremarkable kids and giving them a shot at being remarkable.
Same problem here: multiple variables are changing. First, a 2.23 (or 2.27, it’s unclear what Galloway’s true GPA was), in the 1980s was a lot different than a 2.23 today. College GPAs have exploded as universities have moved away from tenure and toward an adjunct model where the incentive for instructors is to be as lenient as possible. How does a 2.23 from 1987 compare to today?
Additionally, higher ed can still take unremarkable kids and give them a shot at being remarkable. It’s just not going to be at the top schools. This might seem unfair, but it seems perfectly fair to me. I didn’t get into a top economics PhD program because I wasn’t a top applicant. Graduate schools should certainly take remarkable students before unremarkable students. Otherwise get rid of the application process entirely and just make it a lottery! Thirty years ago fewer students wanted to go to top graduate schools so they were easier to get into. There’s no way around that. Top schools are not like housing - you can’t just build another 100 “top” universities.
Me and my colleagues in higher ed wake up every morning and ask ourselves the same question when we look in the mirror, “How can I increase my compensation while reducing my accountability?”
This is a quintessential Galloway. It’s a line that is guaranteed to shock but is unfalsifiable and divorced from reality. I have a lot of problems with academia, but regarding accountability, it’s that higher ed has gained far too much responsibility over the last few decades. Universities are now accountable for everything that happens on a college campus and to our students. We have somehow assumed in loco parentis status - for adults.
And we have found the ultimate strategy. It's called an LVMH strategy, where we artificially constrain supply to create aspiration and scarcity such that we can raise tuition faster than inflation. And old people and wealthy people have done the same thing with housing. All of a sudden, once you own a home, you become very concerned with traffic, and you make sure that there's no new housing permits.
Absolutely not. The problem with the housing market is that there are entire counties where the median earner cannot afford a home. The problem with higher education, according to Galloway, is that unremarkable students can’t get into a top school. These are problems of different magnitudes. It’s the difference between having not enough food and not having enough steak. The former is the current state of the housing market, the latter the current state of American higher education.
Any university that doesn't grow their freshman class faster than population that has over a billion dollars in endowment should lose their tax-free status because they're no longer in higher education. They're a hedge fund offering classes.
I actually like this idea. There should be some restrictions on endowments and access to public loans and tax-free status. It’s absurd that a university with billions of dollars in its endowment not only doesn’t have to pay taxes but gets millions from the government every year to help students pay tuition.
Biden should take some of that 750 billion earmarked to bail out the one third of people that got to go to college on the backs of the two thirds that didn't.
This is somehow an obvious yet often missed point. Any government program is paid for by all US taxpayers. Sometimes, that seems fair. It makes sense that all of us have to pay for emergency services regardless of the number of times we’ve used them. College, on the other hand, strikes me as unfair. Why would two-thirds of Americans bail out a disproportionately wealthy one-third?
By the way, our job in higher ed isn't to identify a top one percent of people who are freakishly remarkable or have rich parents and turn them into a super class of billionaires. It's to give the bottom 90 a chance to be in the top ten.
Again, Galloway is so laser-focused on the top schools (he teaches at NYU), that he’s blind to the reality of higher education in America. I teach at the University of New Haven. We are regionally ranked by US News and World Report and are in the Princeton Review for best colleges. That puts us in the top quarter of all four-year institutions in the United States. We are an above-average but unremarkable university. I believe we deliver a good product. Most of our faculty are excellent teachers, our programs are well-developed, and our students are largely successful in the labor market. And our acceptance rate? Over 90 percent. We take almost everyone. So yes, while there are the top 100 universities that exclude as many as they can, that’s the exception, not the rule.
This is a great slide. It should be the wake-up call that there is something fundamentally amiss with the welfare system. In the 1970s, senior poverty and child poverty were too high. The government response? Dump endless money into programs designed to help the elderly. And it worked! Senior poverty was cut in half. Job well done. Kids, on the other hand, were left out in the cold. This is the opposite of what should have happened, for two reasons. First, senior citizens have had the most time to make it through the world. To accumulate wealth and success. Yet they are chosen to be the beneficiaries of America’s welfare system? It seems absurd to me to give a check to old people every month regardless of need. Second, children are the only constitutionally disenfranchised group of American citizens. They don’t get to have any say in who decides the policies that rule their lives. If there is one group that deserves the most from the government, it’s the group that doesn’t get a seat at the table.
And every year we transfer 1.4 trillion dollars from a cohort that is increasingly doing less well to the cohort that is the wealthiest cohort in the history of this planet. I'm not against Social Security, but the criteria should be if you need it, not whether you have a catheter. It is bankrupting our nation. And we have fallen under this mythology that somehow it's this great social program. No it's not. It's the great transfer of wealth from young to old.
Preach!
Where does a young person find disruption? When you bail out the baby boomer owner of a restaurant, all you're doing is robbing opportunity from the 26-year-old graduate of a culinary academy that wants her shot. We need disruption.
I don’t know how to feel about this point. On one hand, as stated as a fact, it’s true. We need bankruptcies and churn and disruption to keep America’s economy strong. At the same time, plenty of local restaurants have gone under in the last five years (and in any five-year period - owning a restaurant is really hard!), so it’s an odd example to pick.
I think Mark Zuckerberg has done more damage to the young people in our nation while making more money than any person in history.
I mean, I think social media is harming society and culture in a lot of ways, but let’s not go crazy. Those behind the Vietnam War did a lot of damage to the young people of America.
Oh, but wait, it could be worse. It's as if we let an adversary implant a neural jack into our youth to raise a generation of civic, military and business leaders that hate America. How can we be this stupid?
He’s referencing TikTok, and I totally agree with him. It’s a no-brainer that TikTok cannot be allowed to continue to operate in the United States while under the influence of the Chinese government.
We have to have or restore a progressive tax structure with alternative minimum tax on corporations and wealthy individuals. We need to refund the IRS. We need to reform Social Security. It should be based on whether you need the money, not on how old you are.
These few sentences encapsulate how I feel about Galloway. So much right and so much wrong in one place. Social Security does need to be reformed. The IRS should be properly funded to allow them to enforce the laws our elected officials have passed. But we do have a progressive tax structure, by some measures one of the most progressive in the world. The problem with our tax system isn’t that the rich don’t pay their share, it’s that everyone is taxed too little based on the social programs we want to provide.
We need to eliminate the capital gains tax deduction. When did we decide that the money that capital earns is more noble than the money that sweat earns?
Ugh. Galloway knows better than this. There are sound economic arguments for having a capital gains tax that is less than income tax. First and foremost - you’ve already paid tax on that money. If I get paid a dollar for my labor, the government gets a big chunk of it. Then, if invest that money, and make some profit, it shouldn’t be taxed to kingdom come again.
Also, our tax system does not rest on nobility as a principle or even as a consideration. Things are not taxed because of “nobility”. What a meaningless phrase.
We need to tell people in the United States and Canada that they live in the greatest countries in the world, and we need to remind them of that every day by exposing them to other great Americans where they feel connective tissue.
Yes.
If you acknowledge that [children] are doing more poorly than previous generations, if you believe there’s a chance that the illusion of complexity has done nothing but provide cloud cover for the unbelievable transfer of good will, of well-being and of prosperity from young to old, and if you believe we can actually fix these problems and we have the resources, then I present to you, I posit, I augur the question that I hope has more veracity than it did 17 minutes and 24 seconds ago. And that's the following question:
Do we love our children?
This is another Galloway platitude, but credit where credit’s due: the man knows how to speak.
It occurs to me, professor, that a podcast discussing between the two of you (his?), would be interesting and illuminating. I would spend 50-90 minutes listening to that. If I find a way of making the suggestion to him I will. I do listen to his podcast from time to time.