How Did America Go “Adrift?” Scott Galloway Explains | Amanpour and Company

now while the current social and economic crisis in the United States seems complex our next guest believes that it can be fixed marketing Professor Scott Galloway examines the future of this America in his new book and joins Hari sreenivasan to discuss the dangers of a shrinking middle class Christian thanks Scott Galloway thanks again for joining us um my favorite kind of book lots of pictures lots of graphs lots of charts this is called adrift first of all what's the title about well we're not lost I would argue as a country I would argue we're adrift and that is we can see land I think all the problems or most of the problems that ALS are fixable and we can see land it's just a function of all rowing and Unison and getting back to to where we've been so they thought a lot about the title I'd say we're a drift we're a bit unborn unmoored if you will but I don't think we're lost yeah you kind of single out a period in the early 70s that you think was one of the points where we kind of turned why then uh there's there's entire websites and studies around this but essentially wage growth and productivity uh were inextricably linked and wound up together pretty closely and then something happened in the 1970s where they disarticulated and since then over the last five decades wage growth has essentially gone flat while productivity is up and to the right so in between those two that Delta you have trillions of dollars in Surplus value that's mostly been captured by shareholders so essentially in the early 70s whether it was shareholder rights activism or kind of an Embrace of Milton Friedman economics where the shareholder kind of Reigns Supreme we have optimized almost everything we do for shareholder value and there's some benefit to that we have the best Capital markets in the world companies have more access to more Capital here we built amazing companies but there's just no getting around it if uh minimum wage had kept pace with productivity it'd be 23 dollars an hour right now your economic kind of thesis here isn't a radical one it's to say that we've done well when we've invested in the middle class and what has happened to our real middle class versus our perception I mean so many people when you ask them or do you feel middle class they say yes but when you actually look at what is the middle class versus what's the top and what's the bottom what's happening to the country so we've lost uh several million maybe even like 10 or 20 million people from the middle class as a cohort it's defined by the middle three quintiles economically but in contrast if you look at China they've brought a half a billion people into the middle class over the last several decades which is arguably one of the biggest Feats in mankind and I think a decent proxy for the power and health of a nation is how robust its middle class is and what you've seen in the U.S is that essentially I would argue that we've just optimized for the top one percent for the first time we have a regressive tax structure what's interesting about our tax structure that's a bit of a unknown is it's convenient to say well the poor in the middle class are doing really poorly and the the rich are doing great but it's the near Rich of the workhorses that have actually been the big losers from a tax standpoint and that is take the couple that's making say between 300 000 and a million dollars a year played by the rules great college degrees works really hard super successful mom's a partner in a law firm dad's a chiropractor they're actually playing upwards of 50 53 percent in taxes now because they usually have to be in an urban area that's usually in a blue state to maintain that type of income trajectory and people don't feel sorry for them but it's not until you make millions of dollars and then can invest and get the majority of your income from capital gains where your tax rate plummets so kind of the 98th and 99th percentile are paying the highest tax rate and once you get above the 99th it drops so we truly do have a regressive tax system one of the charts you have is income growth or wage growth by income level there's a massive Gap here in how the rich have seen the last 25 30 years and how their wages are going up versus everyone else yeah I think so what I'm trying to do with the book is there's a lot of knowns and I think income inequality gets a lot of warranted attention what doesn't get as much attention is age inequality and that is people over the age of 75 are 70 wealthier than they were several decades ago and people under the age of 40 are 22 percent less wealthy the percentage of uh GDP as evidenced by the wealth that people under the age of 40 command has dropped from 19 of GDP to nine percent and a lot of people will throw up their arms and typically it's the incumbents for people who are already rich and claim that these are forces beyond our control which is just not true there's an illusion of complexity here and that is if you look at the two largest tax deductions in America capital gains and mortgage interest uh who owns homes and own stocks people my age who rents and who gets the majority of their income from current income and salary young people Social Security is the largest transfer payment in the history of mankind a trillion and a half dollars a year mostly funded by young people is transferred to the wealthiest generation in the history of the planet old people so whether it was PPP the bailout programs where the majority of money ended up in older uh wealthier households whether it's skyrocketing education what we've seen is a concerted effort and we've made these decisions it's not not Network effects to transfer wealth from young people to older people and the result is for the first time in our nation's history a 30 year old man or woman isn't doing as well as his or her parents were at the same age and that's really the fundamental compact in any society and that compact has broken down you know we've had previous conversations about your views on higher education and education and you know as a society we feel like investing in ourselves giving ourselves that education is a way to have that social mobility and one of the charts that you point out is how what you make with that college degree it's just the return on investment is poor and poorer yeah so 40 years ago one in three jobs needed a college degree now it's two and three and me and my colleagues at academic institutions all over the nation were capitalists but I think I think for the most part you could argue that every morning we wake up and ask ourselves the same question and that is how do I increase my compensation and reduce my accountability and we found the perfect strategy we've embraced this luxury brand positioning where we artificially constrain Supply Deans get rewarded alumni get very excited when we reject 70 80 90 of our applicants and it's part of a larger problem Across America as led by universities where we've entered into this rejectionist exclusionary nimbius culture but once I have a degree I don't want other people getting into my alma mater once someone has a house they show up to board meetings or local local review boards and make sure no one else can get a development approved and once someone has a tech company that's working they spend a lot of money on lobbying to try and ensure there are no new entrants and so I think we've we need to go back to uh I'll call it the 80s when I applied UCLA the acceptance rate was 76 percent this year it'll be six percent so we talk a lot about skyrocketing uh admissions or skyrocketing tuition well what about just plain accessibility so if you just make it harder and harder for people to find on-ramps into the middle class and then you don't have the same vocational infrastructure that Germany has where 50 of its if its citizens have vocational training and it's less than five percent in the U.S you're creating just fewer and fewer opportunities America used to be about finding unremarkable kids uh who grew up in single parent households and giving them unbelievable opportunities now it's about trying to identify the top one percent by income or by frequently remarkable achievements and turn them into billionaires that's not America we need to fall back in love with the unremarkables so what happens then if this trend continues and you see another one of your charts talks about how basically the world is investing more in r d than they used to compared to us I mean we have enormous numbers of Nobel laureates and every uh sort of sector but how long until everyone else starts to kind of reap the rewards of putting in that investment well you're seeing it I mean we reference China China spends uh per capita as a percentage of its GDP 10 times more in infrastructure and where you're seeing these things start to creep up in American life is that we have record levels of depression we have record levels of deaths of Despair among young people especially young men so we've had tremendous Prosperity but a lack of progress I mean you know what's what's the point of any of this we get on the show and we talk about politics and the NASDAQ but what's the point of any of this if our kids are depressed or if people aren't aren't finding Partners in mating or finding jobs or attaching to work or to school so America is becoming a very prosperous place with a lot of people who are very depressed you know we're also enduring a crisis of loneliness the number of people or the number of high schoolers that see their friends every day has been cut in half one in five people say they don't have a single a single friend we're a social species and we need to bump off of each other and the Really uh unfortunate thing here is if America if you were to equate our problems to a horror movie The call is coming from inside of the house you could argue that relatively speaking we've never been stronger we're food independent we're energy independent we still attract the best and brightest but a third of each party sees the other party as the mortal enemy a court of Americans are are would accept an autocrat if it was their autocrat 54 percent of Democrats are worried the kid's going to marry to Republican and what Americans need to I think realize is that they have some of the most successful companies and brightest people who have a profit incentive to pit us against each other and I think some of those platforms are weaponized by Bad actors outside of the United States and that Americans will never have better allies than other Americans we're not each other's enemy our enemies pouring over the Border in Ukraine so I I you know just as I started the book The Four is sort of a love letter and it turned out being a cautionary tale I started this as the glass half empty but I think all of these things can be fixed and I think there's an illusion of complexity put on us by Tech leaders and incumbents and the people already rich pretending or imagining that these problems are intractable we can fix absolutely all of this we have face down much bigger issues than any issue facing us today so how do we start I mean let's let's kind of attack just the idea of a shared reality and a shared set of facts and you have several charts in here about misinformation and one that was fascinating to me is how fast a lie can spread on Twitter versus the actual truth I think there's some basic things we could do the first is Americans need more connective tissue again and the reason why we had so much great legislation in the 50s and 60s and 70s was that our elected leaders had served in the same uniform and saw themselves as Americans well well before they saw themselves as Democrats or Republicans I believe we should Implement some sort of national service especially for especially for young men who quite frankly need to red shirt and probably sit out a year in between high school and college a chance to meet each other a chance to to build something American with other people with other strangers meet people from different ethnic demographic and income backgrounds I think we need to dramatically expand freshman seats at our great public universities to provide more opportunities and also demand that these universities Implement non-traditional one and two-year degrees that foot to our economy whether it's cyber security or construction recognizing that a lot of kids just don't want to or not cut out for college 33 of every thousand workers in Germany in the United Kingdom are called apprentices in the U.S it's three so we need to break out of this weird notion that you failed as a parent if your kid isn't at MIT or going to work for Google and KKR and start creating many more on ramps in the middle class and also just a massive investment in leveling up young people who have seen their wealth dramatically decline at the kind of what I'll call the weaponization of government in the tax system by Baby Boomers you also point out um in several different ways how Our Heroes have changed and who we look up to has changed and how they make their money and what we see is acceptable I think there's a basic phenomena and that is as Nations become wealthier and more educated their Reliance on a super being in church attendance goes down but we need new idols and into that void has stepped in Tech innovators and it's understandable because technology is the closest thing we have to mysticism or magic or religion as you know we have an iPhone we don't understand how it works and I would argue that Jesus Christ of our information age is Steve Jobs and perhaps Elon Musk and that is they aggregate incredible wealth they build unbelievable things that it's hard to understand but the downside is they end up not being held to the same standards as previous leaders or previous companies if you are the wealthiest Tech person in the world Hari that would mean there's a one in three chance this year you would be times person of the year so I think this idolatry of innovators has infected at us and I think the Tech Community has a terrible virus and that is they conflate Talent with luck it's no accident that Elon Musk didn't start an EV company in South Africa or begin shooting Rockets out of Vancouver the moment you leave U.S borders the likelihood you're going to be able to establish this type of extraordinary wealth or or technological traction diminishes dramatically and yet these individuals are the ones that are most likely to criticize the government or just say that the government should get out of the way so I find it hardening that our most patriotic citizens are our veterans because they've invested the most and anybody who has kids knows what it's like to be invested in someone because of your investment but the people are most fortunate our technology Community tend to be the least patriotic or at least the least appreciative or sober of Their Blessings so how do we change our own Focus here it's kind of both a supply and demand demand side question I guess the people who are creating the news and information for others to see how do you change their focus on saying you need to be paying attention to bigger picture things and not just the shiny object and at the same time how do we change our expectations where um you know our most pressing question is not who Trevor Noah is or is not dating yeah I don't know I think it's difficult to try an Arbiter or be an Arbiter of what people find uh interesting what I think you can do though is say all right if you have if you have misinformation on an election or vaccine misinformation yeah the dissenter's voice is important what is dangerous about our current media environment is that through technology the dissenter the the dissenting opinion that that creates the most enragement gets the most sunlight so should you be able to say that the vaccine Alters your DNA I believe yes I think one of the Hallmarks of a Democratic Society is that pretty much anyone can say pretty much anything about pretty much anybody but should these companies have a profit incentive to give more sign sunlight more circulation more oxygen to the most enraging things because as a species we're like a Tyrannosaurus Rex we're drawn to movement and violence so these conspiracy theories would just not organically get this kind of Interest or legitimacy unless they enrage people and unfortunately we now have a profit incentive around enragement because enragement equals engagement so I think certain carve outs to section 230 around medical information or election misinformation that would make these platforms subject to the same liability that you and I are subject to when we do a podcast or write a book makes a lot of sense but in terms of telling people what they should or shouldn't be interested in I think just as parents we need to do a better job of telling the history of the U.S exposing more people to more civil Civic workers to stop being so critical of our government I believe the US government is the most noble organization in history and just telling better stories to our children about just how America is responsible for 50 percent of philanthropy globally it starts here the most important product of the last hundred years isn't their iPhone or Tick Tock it's the vaccines that have saved one to two million Americans and by the way no one's lining up to get a Chinese or a Russian vaccine so I think it's incumbent upon us to tell the stories and I do think we have to do something to ensure that the most incendiary misinformation doesn't get unnatural organic reach the book is called adrift Scott Galloway thanks so much thank you har good to see you [Music] [Music]

Channel: Amanpour and Company

Views: 346,198

Keywords: interview, CNN, PBS, Christiane Amanpour, world news, news anchor, news show, news, public affairs, late-night TV, journalist, Chief International Correspondent, Scott Galloway, Hari Sreenivasan, economy, Adrift: America in 100 Charts

Id: tOqDIryhcOg

Length: 17min 38sec (1058 seconds)

Published: Mon Oct 03 2022