The government needs to put money in the hands of consumers — not businesses, says NYU marketing professor Scott Galloway.
“If you want to juice the economy, you put money into the system where there's going to be a greater multiplier, which is across lower and middle-income households,” Galloway told Yahoo Finance’s On The Move on Wednesday.
“Protect people, not companies. I think every bailout, stimulus, whatever you want to call it, in the past where we bail out an industry or companies results in a moral hazard,” said Galloway.
“Small companies are the wolves of the global economy,” said Galloway. “A pandemic is no less historic than an 11-year bull economy. We are turning the wolves of small business in America into poodles waiting for the government to come home and feed them.”
His comments come on the same day Federal Reserve Chairman Jerome Powell said the road to economic recovery from pandemic may take some time to gather momentum. Powell called on fiscal policy makers on Capitol Hill to do more to avoid long term damage to the economy.
“I worry ... that all we're doing with an artificial stimulus that artificially inflates or keeps the current employment roles, small businesses, all we're doing is kicking the can down the road,” said Galloway.
He blames both Republicans and Democrats for being “complicit” in stimulus spending.
“We're transferring opportunity and wealth from future generations — because someone's going to have to pay this back — so Nana and Pop-pop can continue to be on Crystal Cruises instead of Carnival. This is, in my view, such reckless behavior,” said Galloway.
‘Protect those people if and when they get laid off’
Galloway says bankruptcy and failure are part of regular economic cycles.
“The thing about America, the reason we hire faster than any in the world is we're allowed to fire faster. I don't think the worst thing in the world is laying off people. What we need to do though is protect those people if and when they are laid off,” said Galloway.
Galloway is calling for greater redistribution of wealth and a minimum wage increase across the nation to $15 per hour.
“If you're working at Amazon ... there's a good chance that you're fearful. There's a good chance that you're worried not only about this pandemic hitting you, but bankrupting,” said Galloway. “I mean there are just some ugly truths we're going to have to face here.”
Ines covers the U.S. stock market from the floor of the New York Exchange. Follow her on Twitter at @ines_ferre