The Prof G Pod with Scott Galloway
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?
00:40:54 · Heather Cox Richardson
[00:40:54] S1: No. And so there... It hasn't been overturned before, but there... There's not... Been nothing in terms of a Supreme Court decision like that. What you did have in the eighteen nineties were a very few robber barons, as we call them now industrialists, who did in fact run the political system. And one of those statistics I like is that JD Rockefeller controlled about 2% of the nation's g d... GDP. Elon Musk controls 3%. So so we do have a moment in which we had very wealthy people controlling our political system, and that gets overturned, of course, in the twentieth century, both beginning with the progressive era and then later on. So we've had it before, but I would say I agree with you. Citizens United is the the thing that's gotta go first. That being said, there is something interesting about the idea of the breakup of these monopolies and the the large corporations. And that said, of course, this is exactly exactly where we were in the election of nineteen twelve. And in that case, all three of the major candidates running were running as progressives. Gene Debs was also running. He was running as a socialist. It's the highest any presidential candidate is running as a socialist ever, number of votes such a person ever got. But the the reason that Teddy Roosevelt, Theodore Roosevelt, was apoplectic about Woodrow Wilson running as a democrat. There are many reasons, but one of the ones that he was upset about in terms of trusts was that Woodrow Wilson kept calling for the destruction of the trusts that everybody recognized were a problem and along with it, the destruction of a federal government. Get rid of the federal government. Make it small. Put everything back to the states. And what Teddy Roosevelt kept saying was the minute you do that, those trusts are just gonna reform. So he came up with a system that called for the breakup of the trusts, but also insisted on having a strong government that maintained the the destruction of trusts and maintained a world in which there was there was economic competition. And at the end of the day, it didn't really matter because Woodrow Wilson ends up in World War one and ends up with a system that looks very much like Theodore Roosevelt's system.