CONNECTING WEALTH WITH HAPPINESS | Scott Galloway on Making Sense With Sam Harris

Check out the Making Sense Episode Page & Show Notes

Key Takeaways

  • According to a study by Daniel Karheman and Angus Deaton, evaluations of happiness, can be separated into two categories: the remembrant self and the experiential self
    • Remembrant self: immediate thoughts concerning the emotional quality of everyday life
      • This measure of happiness plateaus for people making $75k+
    • Experiential self: retrospective thoughts about one’s overall life experience
      • This measure of happiness increases with income since more money means = more opportunity to live the life you want
  • A great analogy: Money is the ink in your pen—it allows you to write more but the story itself is up to you
  • “The majority of people in the US are capitalists who believe in fair progressive tax policy, but don’t want to demonize wealthy people. They want to be them.”Scott Galloway
  • “If you look at returns the last 10 years, somewhere between 22 and 33 percent, of the S&P’s gains have been around six stocks: “The Four” and Microsoft and Netflix”Scott Galloway
    • “To not invest in those companies because of moral issues, and I respect people that do that, is to say, ‘I’m not going to participate in the upside in our economy'”
  • “I think Facebook is the most dangerous organization in the world”Scott Galloway
  • On Woke Culture: “We’re exceptionally tolerant and forgiving and understanding of people who don’t look like us, but we’re not especially tolerant of people who don’t think like us”Scott Galloway

Intro

Scott’s Background Before Academia

  • “I’m a product of big government, raised by a single mother who lived and died a secretary [for] the University of California. The California taxpayers, their vision and generosity, are the reason why I’m here.” – Scott Galloway
  • Scott started a brand strategy firm while at the Berkeley Haas School of Business
    • He grew it to 400 employees and later sold
  • In the 90’s Scott divorced, resigned from his board positions, and moved to New York to teach
    • He’s been at NYU since 2002

When Scott’s Life Changed

  • In school, Scott smoked weed, played sports, and watched movies until his mother became ill.
    • “My mother was very sick and I remember coming home from grad school and feeling emasculated and feeling like I wasn’t able to take care of her”Scott Galloway
      • Scott decided he had to make money
  • Scott studied economics out of necessity, not interest
    • “When wealthy people tell you to follow your passion it’s because they’re already rich” – Scott Galloway

Thoughts On Woke Culture From a Professor

  • “On a regular basis, my colleagues and students are looking to score virtue points”Scott Galloway
  • Scott would have been “cancelled” at any other university.
    • The deans at NYU have defended Scott because they believe universities are meant to provoke original thoughtswhich cannot flourish without debate and conflict
  • “We’re exceptionally tolerant and forgiving and understanding of people who don’t look like us, but we’re not especially tolerant of people who don’t think like us”Scott Galloway

The Connection Between Wealth and Happiness

  • People are ignoring a large part of the seminal study by Daniel Kahneman and Angus Deaton that established that happiness plateaus around $75,000 a year
    • Evaluations of subjective well-being (happiness) fall into two categories
      • Remembrant self: immediate thoughts on the emotional quality of everyday life
        • This measure of happiness is what plateaus for people making $75k+ a year
      • Experiential self: retrospective thoughts evaluating overall life experience
        • This measure of happiness increases with a person’s income
        • It’s logical since more money means = more opportunity to live the life you want
  • But, the classic phrase ‘money doesn’t buy happiness’ still rings true
    • Scott’s father lives off his $58K Royal Navy pension
    • He is happier than many multimillionaires
  • A great analogy: Money is the ink in your pen—it allows you to write more but the story itself is up to you
  • “Wealthy people like to pretend that we don’t think about money, and the reality is wealthy people I know don’t have to think about it from a stress level, but one of the reasons they’re wealthier is that they’re absolutely conscious of it on a variety of dimensions” – Scott Galloway

Does anyone not stress about money?

  • Scott doesn’t know anyone who doesn’t stress about money, even billionaires
    • “It’s a different type of stress. The stress moves from economic to maintaining relevance, but the scorecard for the relevance is their ability to increase their wealth.” – Scott Galloway
    • “Money is something that I spend a fair amount of time thinking about and it does cause stress, but it’s a different kind of stress because it’s working and not working would be worse stress” – Sam Harris

Social Security

  • “Everything is nothing but an elegant transfer of wealth from young people to Baby Boomers who have totally co-opted, in my opinion, the government”Scott Galloway
    • “The largest socialist program in the world, Social Security, at $1 trillion is greater than the European and American defense budgets”
  • Proponents of Social Security claim it has solved poverty for seniors, but what about kids
    • 1/3 kids live in food insecure households
    • The same % of elders would be in poverty without Social Security,
    • But, we don’t drop off $300 worth of food per week at every house with families
  • “Policy has not kept up with demographics. . . The fastest growing demographic group in America is centenarians”
    • People are taking out 3x-6x of what they ever contributed to Social Security because they’re living longer
  • Social Security for most people just upgraded their lives–not about poverty
    • Scott finds it ridiculous his father and multimillionaire friends receive Social Security
  • To Scott, the youth’s pull toward socialism isn’t an ideological battle, but a battle of nomenclature. The Boomers have already created a socialist economy for themselves, they just gave it names like Social Security

Wealth Inequality

  • “That’s the bad news, that we have dramatic wealth inequality. The good news is that it almost always self corrects, but the further bad news is that those mechanisms of correction are usually war, famine, or revolution.”Scott Galloway
    • “It seems like it’s now shaping up to be the big political problem of this election cycle and our time” – Sam Harris
  • We all agree we should help the less fortunate but the question is how
    • The Warren and Sanders camp believes there is no ethical way to become a billionaire
      • This is obviously not true. J.K. Rowling went from rags to riches by writing Harry Potter and bringing joy to millions of people around the world
  • Wealth taxes have been implemented before, like in France, and have resulted in capital flight to other locations
    • Wealthy people are intelligent and can move wherever is best for them
  • People have a cartoon image of a mean rich person and apply it to reality
    • Highly successful people are good people because being an ethical, nice person helps you build relationships and become successful in the first place
  • Possible solutions to reducing wealth inequality besides a 70% wealth tax:
    • A more equitable corporate income tax
    • Capital gains could be taxed at a higher rate than income. Sweat & muscle should be worth more than money making money.

Going Further Into Tax Policy

  • There are simpler, more effective, less expensive solutions to income inequality than UBI
    • “Senator Michael Bennett proposed expanding the child’s earned income tax credit that most studies show would take 40-60% of kids out of poverty and be $40 billion instead of $1 trillion” – Scott Galloway
  • “Taxes are progressive until . . . [the] majority of your income [is] from capital gains, then you hit light-speed and your tax rate plummets”Scott Galloway
    • “Tax complexity favors the wealthy because we have accountants”
  • “The majority of people in the US are capitalists who believe in fair . . . progressive tax policy, but don’t . . . want to demonize wealthy people. They want to be them.”Scott Galloway
    • Sam thinks it’s politically unwise for Democrats to be drumming up class warfare” – Sam Harris
  • Debt spending can be effective to spur growth but how the debt is invested is the real question.
    • “Are we investing in technology? No.” – Scott Galloway
    • “Are we investing in our young people and subsidized education or trade schools [to] make our nation more competitive? No.” – Scott Galloway
    • “Are we investing in infrastructure that would improve quality of life? . . . No.” – Scott Galloway

2020 Election

  • Scott thinks Trump will win: “We’ve [never] kicked a president out, mid-cycle, without a recession”Scott Galloway
    • The only way Democrats have a chance is if they win over independents
    • Independents are moderates. Scott anticipates a pivot back to the center as they realize they have to win the election

Scott’s Thoughts on Big Tech

  • “I think Facebook is the most dangerous organization in the world”Scott Galloway
    • He believes Zuckerberg is a sociopath. Zuckerberg got his start evaluating women based on their looks, screwed over all his friends, and got his best-friend kicked out of college to advance his position
  • “If you look at returns the last 10 years, somewhere between 22 and 33 percent, of the S&P’s gains have been around six stocks: “The Four” and Microsoft and Netflix”Scott Galloway
    • “The Four” = Amazon, Apple, Facebook, and Google
    • “To not invest in those companies because of moral issues . . .is to say, ‘I’m not going to participate in the upside in our economy'”
    • “If it’s a choice between my moral clarity and my Range Rover, I’m picking my Range Rover”
  • “As society becomes wealthier and more educated the reliance on a super-being and church goes down, but that need for spiritual clarity and guides and mentors only increases” – Scott Galloway
  • A small number of companies are aggregating all the spoils so no one else can compete
    • “The one thing the government always gets right is antitrust” – Scott Galloway
    • The only stakeholder that loses in a breakup is typically the CEO who wants to sit on the Iron Throne of Westeros rather than one of the seven realms”