Mises Wire

Scott Galloway’s TED Talk Reveals a Basic Ignorance of Economics

Scott Galloway, a professor in marketing from New York University and a frequent guest on networks like the execrable CNBC, gave a recent TED talk titled How the US Is Destroying Young People’s Future.

With a title like that, you might expect a hard-hitting indictment of the United States regime’s fiscal profligacy, the welfare- and war-state leviathans, and the Federal Reserve’s insistence on robbing Americans by at least 2 percent per year while creating an endless cycle of boom and bust that benefits those proximate to government at the expense of everyone else.

You would be sorely disappointed. Galloway gives a roughly fifteen-minute talk steeped in collectivist ethics and confused premises. The result is a mélange of unoriginal, ineffective, and immoral ideas—all involving the elevation of the state and the diminution of the individual.

Differential Diagnosis

Galloway begins his talk by correctly identifying that price-adjusted purchasing power is declining for young people. Two striking examples of this are the ratio of home price to median income, and the percentage of thirty-year-olds earning more than their parents did at the same age.

                                                      Figure 1: US home price to median household income ratio

A graph showing a line

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                      Source: Longtermtrends.

Home prices are more than seven times household incomes, compared to roughly four times for previous generations. This disparity is even worse when comparing home prices to first year (i.e., new college graduate) income. In 1987, this ratio was 4.4 times. Today it’s 8.5 times.

Galloway later mentions that, in certain markets, excessively high home prices are due to overregulation and excessive permitting that favors incumbent homeowners. Well done, Mr. Galloway.

By the same token, less than 50 percent of today’s thirty-year-olds earn more than their parents did at the same age—the first time this dynamic has been recorded in the history of this country.

At this point in the talk, the nonsense begins in earnest.

Galloway goes on to say that this generational imbalance creates rage and shame, leading to “righteous” movements like Black Lives Matter and #MeToo (his examples). He decries the low federal minimum wage, saying that it should be north of twenty-two dollars per hour.

His first big policy proposal is to spend $500 billion of taxpayer money by giving $1 billion, weighted by size, to each of the five hundred biggest academic institutions. In exchange, those institutions must reduce tuition by 2 percent per year and expand enrollment by 6 percent per year. Voilà! In ten years, each of those institutions will have double the freshman seats and cost half as much as they do today.

Confusing cost with value and ignoring what government subsidies have already done to the cost of college and university, Galloway’s bright idea is to essentially nationalize higher education. What his proposal will do to the quality of that education, such as it is, is left to the imagination.

Galloway goes on to bemoan the massive disparity between wage growth and that of the stock market but mentions nothing about the Fed put, zero interest-rate policy, or the Fed’s endless monetary expansion as possible causes or even contributory factors. He presents a graph illustrating this disparity from 1975 to 2021 but fails to mention that the Fed’s balance sheet increased by 900 percent from 2008 to 2021.

He continues, discussing Social Security (emphasis added): “Every year, we transfer $1.4 trillion from a cohort that is increasingly doing less well to the cohort that is the wealthiest in the history of this planet. I’m not against social security, but the criteria should be whether you need it.”

One wonders if Mr. Galloway would support the motto, “To each according to his need, from each according to his ability.”

Nevertheless, the professor detours to make a few cogent points. Namely, that social security is a wealth transfer scam from the young to the old, and covid relief funding was simply an acceleration of the stock market bubble, via deficit spending, that occurred for much of the last ten years. He also discusses the real dangers to kids from social media but puts the blame on tech executives and none on parents, and he correctly points out that American obesity is a problem.

Galloway then begins his descent into unimpeded foolishness. He starts by saying that because we have a stock market bubble, the resources are there to provide a number of government programs including free tuition at all public universities, eliminate all lead pipes, build universal pre-K facilities, and provide national paid family leave. Ostensibly, Galloway believes that the gains produced by the stock market bubble are a collective asset, to be used by government at its whim.

He prefaces his subsequent policy prescriptions with “We need” and rattles them off. The following is a near-complete list (with my comments in italics):

  • A twenty-five dollar minimum wage, which will “go into the economy” because poor people spend all the money they have and don’t save.
  • How many business owners will hire the unskilled young and poor at twenty-five dollars per hour?
  • More progressive tax structure with an alternative minimum tax for corporations and wealthy individuals, supported by increased funding for the Internal Revenue Service.
  • Aside from being immoral, what precisely does this accomplish, since it has almost no impact on federal deficits? One can only assume this is just part of the politically fashionable war on the rich.
  • Universal basic income, but it should be called a “negative income tax” for branding purposes.
  • More welfare, in other words.
  • Eliminate the capital gains tax deduction.
  • Galloway implies that this is needed because the money that labor earns is more noble than that earned by capital. He fails to recognize that capital doesn’t appear out of nowhere—somebody has to produce it using their “labor.”
  • Break up big tech companies.
  • Galloway fails to make the connection between the size of big tech and protective regulations in place. He also fails to connect the bubble policies of the Fed with this phenomenon.
  • Age-gate social media so that only those sixteen or older can access it.
  • Galloway’s implicit premise is that this is the job of government, not parents. As with all socialists, not only does your property belong to them, but your children do as well.
  • Universal pre-K.
  • Again, Galloway puts child-rearing in the hands of government, not parents.
  • More affirmative action.
  • Galloway describes affirmative action as a “wonderful thing” but that it should be based on economic need. More welfare, in other words.
  • A national service requirement to remind the young that they live in the greatest country on earth.
  • Will the beatings continue if morale doesn’t improve?

Straight out of the modern monetary theory playbook, Galloway finishes by saying that “we have the resources” to implement all of his “we need” action items.

What “We Need” Really Means

Scott Galloway is someone who has received, or given, instruction at some of the finest learning institutions in this country, for what that’s worth. Yet, he doesn’t know the harm a high minimum wage does to young workers or the impact the Federal Reserve and various federal subsidizing agencies have on home prices. He is unfamiliar with the severe damage the welfare state has done to the psyche of Americans, minorities in particular. Remarkably, Galloway appears oblivious to the immorality of theft as long as it’s under the auspices of government fiat directed to projects of which he approves.

No matter. Like all socialists, what Galloway really means by “we need” is “I want.” And he is fine with the use of force to make sure everybody gets what he wants.

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