The Prof G Pod with Scott Galloway
00:31:27 · Scott Galloway
[00:31:27] S0: They don't listen to Heather Cox Richardson. They have a total lack of understanding of history. It doesn't... Or they're comfortable that they're... I mean, this is a crude example. A friend of mine who is a tech billionaire has a plane and a go bag in a bunker in New Zealand. And I just said to him, if if quote unquote things really get real here and you have to get on a Gulfstream to head to your bunker in New Zealand, I'm like, you don't think your pilots are gonna kill you and take your shit? I mean, there is no escaping if things really get this bad. And so I don't... I... In some, I don't think they have a historical reference. And also, and I wanna come come back to your comments, and then I'll... But I'll pose another question. I now believe that one of the keys to, you know, power corrupts, absolute power corrupts. When we have one person worth a trillion dollars who's acting like a nation state turning off and on and throttling back battlefield technology, it is the best argument I have heard for exceptionally progressive tax rates were say above say above a $100,000,000, more money than you could ever spend, more money than you could ever want to be happy, and Daniel Kahneman shows above a number much lower than that, you get no incremental happiness. So you're not really losing anything from these individuals, That exceptionally progressive taxation actually protects us from this type of aggregation of power. A lot there. Your thoughts.
00:32:52 · Heather Cox Richardson, Scott Galloway
[00:32:52] S1: Well, I would say it also protects them in that that one of the geniuses of democracy and the easy transfer of power is that you can leave office. You know, we think about it protecting the people who are in danger of being, suppressed or injured by a leader. But it also protects a leader and enables them to say, I'm sorry I didn't get elected. I'm gonna go home and, know, play with my grandchildren. [00:33:19] S0: Putin's exit is a window right now.
00:33:21 · Heather Cox Richardson
[00:33:21] S1: That's that's right. And and so one of the things that that strikes me... There's two things that strike me in this moment. One is that you were talking about Democrats and their base at this point. They keep talking about farmers and workers a 100%. They're both hurting. But also key to that is entrepreneurs, is small business people who look at a system that they can't break into and are more than happy in moments of political change to join with the farmers and workers and say, listen. We don't like those billionaires either because we're never gonna be able to break into a market that is monopolized by them. And that's a winning coalition. That's what we've seen again, eighteen fifties, eighteen nineties, and nineteen thirties. But then go looking at the nineteen thirties, I think key to that moment was Franklin Delano Roosevelt, the Democratic president elected in '32, was very clear that he was not destroying the capitalist system in The United States. He was protecting it. And the... Because he because he said, listen. Look around the world. You've got the rise of fascism, and you got the rise of communism. The only way to maintain this system is to file off the sharp edges of modern day industrial capitalism and turn it into a regulated system whereby individuals really can work hard and rise. And, of course, under him, we get the great compression where there's much less of a distance between the people at the bottom and the people at the top in terms of their income and wealth both than there is, than there has been since the election of Ronald Reagan in 1981 or since it... There was before FDR was elected in '33. So that idea that what Democrats... And and by the way, I... I'm thinking about, again, is that broad coalition that I think is going to change under that label. Parties always change. What they are... Should be arguing and could be arguing is that what they're really trying to do is is go back, if you will, to the future, to a regulated system that protects the American dream. I'm hearing that word a lot again, which I hadn't for a long time, that protects the American dream by making sure people have access to education and to health care and to loans to start a small business and so on because that's the language that FDR managed to use to create this broad coalition.
00:35:48 · Heather Cox Richardson, Scott Galloway
Although, of course, the very wealthy never liked him. One of my favorite cartoons ever is that one from the New Yorker of all the the rich people in their incredibly fine furs and all that stopping. You know, this one stopping by somebody's ballroom and saying, do come along with us. We're going down to the Trans Luxe to hiss Roosevelt. [00:36:10] S0: When I think of the buckets of capitalism or three key agents, I think of the owners, the earners, and the consumers, right? The gal who owns the factory, gal working in it, and the gal buying their products. I see over the last forty years, the rivers of leverage, prosperity, and income have all flowed from consumers and earners up into the owners. And it feels to me like we are ripe. And also I think the boring stuff is what moves the needle here. And the boring stuff that or the boring thing that I think the moons are lining up around is another great era of trust busting. I feel the concentration that's been allowed to happen at a corporate level is just every day extracting more and more rents from earners, lowest percentage of GDP represented by salaries in history, greatest percentage of corporate profits as a percentage of GDP, both happening at the same time. Based on like Teddy Roosevelt like trust busting or breaking up the railroads or a... Even going to the eighties and AT and T, do you think the moons are lining up around a potential another great next era of trust busting?
00:37:21 · Heather Cox Richardson, Scott Galloway
[00:37:21] S1: 100%. It is worth pointing out, of course, that the Reagan administration changed the way that the country interpreted the idea of trust busting. Under Robert Bork, they decided to enforce the the antitrust only if it meant... What they were really looking at was the cost for consumers. So so long as a merger made things cheaper for consumers, that's all they looked that's all they looked at. So they permitted environmental degradation. They permitted worker degradation and so on. [00:37:53] S0: The consumer test. Yeah. [00:37:54] S1: Yeah. And so flipping that back to the way it was originally, although the Sherman Antitrust Act was always a crock. It it was a a benchmark more than anything else. But flipping it back to the idea that there are societal costs to creating these mega businesses, would change a lot of things without having to pass new legislation off the... Right off the top. But, yeah, I mean, right now, you just have to look around you and recognize just how much power a very few industries have and how that's never gonna take you anywhere good. And and I would love to hear what you have to say about what seems to me anyway to be the over capitalization of AI. Because, again, that looks very much to me like the railroads in the eighteen nineties, the cars in the nineteen twenties, and now AI in the in the two thousand twenties. And that concentration of the real capital in the country behind us, a single industry in the previous two iterations did not turn out well.
00:38:56 · Scott Galloway
[00:38:56] S0: Yeah. What you were talking about with the trust busting, it's it's been Bork and who bested kind of the Brandeisian notion of antitrust where... And now it's the consumer test. It used to be market power. Cause to your notion, even if you can claim as Google does, there's nothing that is better for the consumer than Google continued to let us acquire YouTube and these other... It ends up benefiting the end consumer. Meanwhile, rents on advertisers keep going up and up and up and small businesses are... Have this enormous tollbooth called Google Online. Like, I don't... I think if we're going to see... I I think there needs to be across big chicken, big meat, big pharma, big tech, a dramatic breaking up of these companies. And what the right has done a really good job is of convincing us that somehow that's anathema to corporate profits. If you look up the breakup of AT and T, within eleven years, each of those companies was worth more, each of those seven companies was worth more than the original AT and T. It's good for shareholders, it's good for competition, it's good for tax revenue, employment growth. The only stakeholder that loses is the CEO who wants to sit on the iron throne of a much bigger company. And unfortunately they're usually single share stocks or dual class share stocks, so they have control. And the greatest ROI in history, as I can tell economically, is political donations. I've just never seen anything that have that kind of payoff before. So I'm super excited about what might be a new era of trust busting. Unfortunately, and this goes to and I'm curious if you think there's a historical analogy here For me, it all kinds of reverse engineers, again, to something quite boring and that is Citizens United. Has there been a historical equivalent of Citizens United and has it been overturned before?