Courtesy of Scott Galloway
- NYU professor Scott Galloway spoke to Paul Constant about his book “Adrift: America in 100 Charts.”
- Galloway says we need to bring back the middle class, but there’s still hope for the US.
- Paul Constant is a writer at Civic Ventures and the cohost of the “Pitchfork Economics” podcast.
When many authors set out to write about political economy, they first finish writing the book and then find charts that illustrate their points. But NYU business-school professor and popular podcaster Scott Galloway decided to work backwards when drafting his latest book, “Adrift: America in 100 Charts“: He selected 100 striking charts that highlight America’s growing inequality from 1945 to the present day, then wrote about the findings.
This process offered him several important new insights into the decaying of the American middle class — and a surprising sign of optimism for the future. “If you look at some of the darkest moments in history over the last hundred years, it usually begins with economic problems,” Galloway said on a recent episode of the “Pitchfork Economics” podcast.
Until the early 1970s, Galloway said, productivity and wages “were like two snakes intertwined.” Now, “the delta between flat wage growth and increased productivity in America is literally trillions of dollars in surplus values” — money that’s gone to the richest shareholders, he added.
Galloway believes America has been its own worst enemy, with outsized political division keeping us from solving the problem of inequality. “If America’s problems are a horror movie, the call is coming from inside the house,” he said.
‘The best place to stay rich’
A wide array of economic policies were consciously reversed in order to redirect the flow of funds away from everyday Americans and toward the wealthy. “When you decide that the two largest tax breaks are mortgage interest and capital gains, who owns homes or owns assets, and who makes their money from stocks? Older, wealthy people,” Galloway said. As a result, he added, people over the age of 70 have become on average 72% wealthier while people under the age of 40 have become on average 22% less wealthy in the last 40 years.
Galloway said the federal government has also built elaborate safety nets to protect the superrich and corporations in times of crisis. While recessions used to present opportunities for young professionals looking to buy homes and launch small businesses, government policies are now geared toward bailing out banks and making it hard for entrepreneurs to borrow money when the markets are soft.
“America used to be the best place to get rich,” he said. “Now it’s the best place to stay rich.”
Investing back in the middle class
The best way to immediately restore more of the balance that used to exist in the economy, Galloway said, is to lower taxes for the middle class while ensuring the wealthy and corporations pay more of their share.
Our tax system currently taxes profits from investments like stocks and real estate at a much lower rate than it taxes the salary earned from a week of hard work. Galloway estimated that if profitable American corporations and people earning more than a million dollars a year paid 30% in annual taxes as opposed to 21% and 24.7% respectively, pretty much everyone else in the economy would pay a 14% tax rate, representing a tax cut of nearly 10% for the average American.
Galloway added that we need to also get back to the kind of broadly prosperous — and popular — economic policies that invested in working Americans and the middle class and made America an economic powerhouse for the whole of the 20th century. Policies like the GI Bill that made it easier for young veterans from all economic backgrounds to have access to affordable education, housing, and small-business loans would go a long way to rebuilding widespread American prosperity today.
“First you have to acknowledge that the middle class is an accident, and it’s not self-sustaining,” Galloway said.
Room for hope
Galloway said that while he’s often a pessimist, researching all the data that went into “Adrift” has given him a tremendous amount of hope in America. “It’s just hard not to acknowledge our incredible achievements.”
For example, America now produces nearly as much economic activity in any given month than it did over the course of an entire year in the 1950s. We’ve eliminated diseases, helped to get the AIDS epidemic under control, and made great strides in cutting poverty.
“If you look at America as a competitor relative to all of its other competitors in that as nations, we’re winning,” Galloway said.
Just as he argued that America is causing its own biggest problems, Galloway also believes America has the resources, brainpower, and skills to solve them. “I was the son of a single immigrant mother who lived and died a secretary, and America was wonderful to us,” he said. “We know how to get back there. If you don’t create incentives, specifically dignity around work, we’re just going to lose ourselves.”
“It’s wonderful to work hard, to make and spend money. That’s part of what it means to be America.”
