Rethinking Success in a Changing World: Scott Galloway's Perspective on Economy, Education, and Technology
Scott Galloway, a successful entrepreneur and professor at NYU's Stern School of Business, often reflects on his humble beginnings. "I was installing shelving in the Inland Empire when I got rejected from UCLA, a college with a 76% admission rate," he recalls. This personal anecdote sets the stage for a startling reality: for the first time in America's 275-year history, 30-year-olds are not doing as well economically as their parents did at the same age.
Galloway's journey is filled with colorful anecdotes that illustrate the changing landscape of opportunity. 'The highlight of my day was, I used to get ridiculously high with my coworkers and then take to the highways of Southern California,' he recalls of his pre-college days. Despite initial academic struggles, including a 2.27 GPA at UCLA, Galloway's perseverance led him to graduate school at Berkeley. 'That's the whole point of higher ed,' he reflects, 'Most of us aren't freakishly remarkable at 18. The whole point is to give unremarkable people a chance of being remarkable.
This generational wealth disparity is not just an American phenomenon but a global trend that's reshaping economies and societies worldwide. While the modern economy presents significant challenges for youth, understanding these issues can reveal unexpected opportunities for success. By examining the economic battlefield, the evolution of higher education, the AI augmentation, and the changing nature of work and social connections, we can navigate this new landscape and uncover paths to prosperity that previous generations might never have imagined.
The Economic Battlefield: A Global Perspective
The broken social compact that once promised each generation would surpass the previous one in economic prosperity is now a global phenomenon. In the United States, the average person under 40 is 24% less wealthy than their counterparts 40 years ago. This trend is mirrored in other developed nations. In the UK, millennials earn 8% less than Generation X did at the same age, while in Japan, the average income for those in their 20s has fallen by 9% since the 1990s.
This global wealth disparity between generations is stark. While the average 70-year-old in the U.S. is 72% wealthier than four decades ago, similar patterns emerge across the G7 nations. In France, for instance, the over-65s now have a higher average income than the rest of the population for the first time in history.
Policies favoring the old over the young are prevalent worldwide. In the U.S., capital gains and mortgage interest deductions primarily benefit older, wealthier individuals. Europe's generous pension systems, while providing security for the elderly, place a heavy burden on younger workers. In Japan, the world's oldest society, policies protecting lifetime employment favor older workers at the expense of youth job prospects.
Counterarguments suggest these policies provide necessary support for an aging population and maintain social stability. Proponents argue that such measures prevent poverty among the elderly and reduce the burden on younger generations to care for their parents directly.
However, the COVID-19 pandemic stimulus packages serve as a case study in intergenerational wealth transfer. In the U.S., 60-80% of the $5-7 trillion stimulus was saved rather than spent, primarily benefiting asset owners – typically older, wealthier individuals. This led to surges in stock market and real estate prices, further widening the wealth gap between generations.
This economic battlefield presents challenges, but understanding these dynamics can help young people navigate the system more effectively and identify opportunities for wealth creation in a changing global economy.
Galloway highlights the unfairness of the current tax system: 'The first 10 million dollars to me, the founder, were tax-free. I've invested in another company - the first 25 million to me because of QSB will be tax-free.' He argues that such policies disproportionately benefit the wealthy, while 'the people who get most screwed by our tax code are what I refer to as the workhorses' - those earning between $150,000 and $1 million annually, often paying effective tax rates of 45-50%.
Higher Education: Luxury Brand or Public Good?
The landscape of higher education has dramatically shifted, with many top institutions adopting what Scott Galloway calls the "LVMH strategy" - creating artificial scarcity to increase prestige and prices. Harvard's endowment has grown by 4000% over the last 40 years, yet freshman seats have increased by only 4%. This approach transforms education from a public good into a luxury brand.
Galloway argues that top universities could dramatically increase access without sacrificing quality: 'They could have 15,000 kids and have absolutely no decrease in the quality of their freshman class,' he asserts. 'We're here to give everyone a shot at being a millionaire, not to identify a superclass of rich kids and turn them into billionaires.
The impact on social mobility is profound, especially in the US. While 38% of students from the top quartile of family income attend elite universities, only 3% from the bottom quartile do. Contrast this with countries like Germany or Norway, where higher education is largely free and accessible, leading to greater social mobility.
Proponents of selectivity argue that it maintains academic standards and prepares students for a competitive global marketplace. They contend that scarcity drives excellence and innovation.
However, potential solutions exist:
Expanding access: Top universities could significantly increase enrollment without sacrificing quality.
Emphasizing vocational training: Countries like Germany, with strong apprenticeship programs, demonstrate the value of alternative educational paths.
Rethinking the four-year degree: Shorter, more focused programs could reduce costs and align education with rapidly changing job markets.
Actionable advice for navigating this landscape:
Consider a range of institutions, not just prestigious names.
Explore vocational and technical programs aligned with growing industries.
Leverage online education platforms for skill development.
Seek out scholarships and financial aid aggressively.
Consider starting at a community college before transferring to a four-year institution.
Galloway strongly advocates for increased focus on vocational training: '11% of LinkedIn profiles in the UK say apprentice, 12% in Germany. In the US, it's 3%,' he notes. 'We've decided if you don't go to MIT and end up at Google, you have failed. Meanwhile, there's an absence of tradespeople.
Galloway also touches on current campus unrest, seeing it as symptomatic of broader societal issues: 'It's an incendiary port on everything that turns any cut into an opportunistic infection,' he says. He notes that while protests make headlines, they often involve a small percentage of students, with the majority simply focusing on their studies. However, he sees these tensions as reflective of a larger societal divide, exacerbated by social media algorithms that promote polarizing content.
The AI Augmentation: Disruption and Creation
The adoption rate of AI is unprecedented, eclipsing previous technological augmentations. While it took decades for technologies like mobile phones and GPS to become ubiquitous, AI tools like ChatGPT reached one million users in just five days. This rapid adoption is reshaping industries at an unprecedented pace.
Job disruptions are inevitable across sectors. McKinsey estimates that by 2030, up to 375 million workers globally may need to switch occupational categories due to AI and automation. Industries like customer service, data entry, and even certain aspects of law and medicine are particularly vulnerable.
However, with disruption comes creation. New business opportunities are emerging, especially in healthcare. AI-driven diagnostics, personalized treatment plans, and drug discovery are transforming patient care. Scott Galloway predicts that the intersection of AI and healthcare will be a hotbed for innovation and wealth creation in the coming decades.
Galloway is particularly optimistic about AI's potential in healthcare. He envisions a future where AI manages personal health: 'Feed in your workouts, your nutrition, your grocery bills, your fitness app data, your credit card receipts, and your blood work, and have an AI model start managing your healthcare,' he suggests. This could transform healthcare from a reactive to a proactive model.
Globally, countries are racing to lead in AI. China aims to become the world's primary AI innovation center by 2030, while the EU is focusing on ethical AI development. These initiatives are driving investment, research, and job creation in the AI sector worldwide.
Actionable advice for positioning oneself in the AI-driven economy:
Develop a strong foundation in data literacy and basic programming.
Focus on skills that complement AI, such as emotional intelligence and creative problem-solving.
Stay informed about AI developments in your industry.
Consider specialized AI courses or certifications.
Look for opportunities to apply AI in your current role or business.
The Loneliness Epidemic: A Hidden Crisis
Loneliness has become a global health crisis, particularly affecting young people. A recent study found that 61% of young adults in the US report feeling lonely "frequently" or "almost all the time or all the time." Similar trends are observed in the UK, Japan, and other developed nations.
Social media and technology play a paradoxical role in this epidemic. While designed to connect, they often lead to increased feelings of isolation. The constant comparison to curated online personas can exacerbate feelings of inadequacy and loneliness.
Cultural differences significantly impact how loneliness is addressed. In collectivist societies like Japan, loneliness is often stigmatized, leading to underreporting. In contrast, Nordic countries have implemented public policies to combat loneliness, recognizing it as a societal issue.
The long-term consequences of AI relationships are concerning. As AI companions become more sophisticated, there's a risk of people retreating further from human interactions, potentially exacerbating the loneliness crisis.
Galloway expresses particular concern for young men: 'Young men who have very few mating opportunities because online dating has kind of consolidated mating where the top 5% of males get 80% of the opportunities... they're going to engage in low-risk, low-barrier relationships with sex bots and AI-trained girlfriends,' he warns. This retreat from human interaction could exacerbate feelings of isolation and depression.
Actionable advice for building meaningful connections in the digital age:
Prioritize face-to-face interactions over digital communications.
Join community groups or clubs aligned with your interests.
Practice active listening and empathy in your relationships.
Set boundaries on social media use and screen time.
Volunteer or engage in community service to foster a sense of belonging.
Navigating the Luxury Economy
The luxury market has experienced unprecedented growth, with ultra-luxury brands outpacing traditional luxury sectors. LVMH, the world's leading luxury group, saw its market capitalization surpass $500 billion in 2023, reflecting the global trend towards premium products and experiences.
Artificial scarcity, a key strategy in the luxury sector, creates perceived value through limited availability. Hermès' Birkin bags, with their years-long waitlists, exemplify this approach. This strategy has proven so effective that it's being adopted across various industries, from tech products to higher education.
For young consumers, the rise of the luxury economy presents both challenges and opportunities. While it may exacerbate feelings of exclusion, it also opens doors for innovative, youth-driven brands. Entrepreneurs can leverage the principles of luxury marketing to create value in unexpected sectors.
Case Study: Glossier, founded by Emily Weiss at 29, disrupted the beauty industry by creating a sense of exclusivity and community around affordable products. By 2019, the company was valued at $1.2 billion, demonstrating the power of applying luxury principles to accessible goods.
The Future of Sports and Entertainment
Galloway predicts a massive increase in the value of sports teams over the next decade. 'As long as we're producing more and more billionaires who happen to be in the midst of a midlife crisis, you're going to see a massive increase in the value of these teams,' he explains. He also notes the increasing interest from Gulf nations in purchasing teams as a way to improve their global image and diversify their economies.
Galloway is notably skeptical about the viability of space tourism: 'Virgin Galactic was nothing but an elegant transfer of wealth from retail investors who wanted to participate in the FOMO tech economy such that Richard Branson could keep this ship operating during COVID,' he asserts. He humorously adds, 'When Bob from accounting gets immolated on the launch pad, this entire industry goes away.'
Actionable advice for leveraging luxury economy principles:
Focus on creating unique, high-quality experiences or products.
Build a strong brand story that resonates with your target audience.
Use scarcity tactically to increase perceived value.
Prioritize exceptional customer service to justify premium pricing.
Explore opportunities in emerging luxury markets, such as sustainable or tech-enhanced products.
Understanding and applying the principles of the luxury economy can help young entrepreneurs and professionals create value and differentiate themselves in an increasingly competitive global marketplace.
Reasons for Optimism: A Long-Term Perspective
While daily news often paints a grim picture, historical trends reveal significant progress. Global extreme poverty has decreased from 36% in 1990 to less than 10% today. Life expectancy has increased worldwide, and literacy rates continue to climb.
These improvements create opportunities for innovation and problem-solving. Climate change challenges, for instance, are driving advancements in renewable energy and sustainable technologies, opening new career paths and entrepreneurial opportunities.
Success stories abound of youth overcoming economic challenges. Consider Boyan Slat, who at 18 founded The Ocean Cleanup, now a multimillion-dollar organization tackling ocean plastic pollution. Or Tara Westover, who overcame a challenging background to earn a PhD from Cambridge and become a bestselling author.
Actionable advice for cultivating a balanced, long-term perspective:
Regularly consume long-form content that provides historical context.
Set long-term personal and professional goals.
Seek mentorship from individuals with diverse life experiences.
Practice gratitude to maintain perspective during short-term setbacks.
Engage in continuous learning to adapt to changing economic landscapes.
Conclusion: Thriving in the Present While Planning for the Future
The economic landscape facing today's youth is undeniably challenging, marked by wealth disparities, educational hurdles, and technological disruptions. Yet, these challenges are accompanied by unprecedented opportunities for innovation, entrepreneurship, and social impact.
The key to navigating this complex terrain lies in balancing long-term planning with present engagement. While strategizing for the future is crucial, it's equally important to be fully present in our daily lives, fostering meaningful connections and experiences.
As we move forward, let's apply these insights to create both personal and societal change. By understanding the economic forces at play, leveraging educational opportunities, embracing technological advancements, and maintaining human connections, we can not only adapt to this new landscape but actively shape it for the better.
Galloway leaves us with a poignant reminder about the importance of presence: 'My biggest fear is that I'll be at the end and I'll look back and go, 'Oh my God, unbelievable blessings, staggering prosperity that I didn't expect, people I love and that love me immensely, but I was never really there for it.' So I leave us with a question, and it's something I'm asking myself all the time now: Are you here?'