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'We will lose a generation of doctors, civic leaders' over school closures: Scott Galloway on education

NYU Professor of Marketing Scott Galloway joins Yahoo Finance Live to weigh in on the state of education during the coronavirus pandemic.

Video Transcript

ZACK GUZMAN: We're continuing the discussion with NYU professor of marketing Scott Galloway, sharing a lot of thoughts here on big tech. But I wanted to ask, professor, about the stimulus negotiations and where we're at in this recovery as well, because we've seen that discussion maybe shift a little bit back from where we were when we got the CARES Act through, obviously, the framework back there was to help businesses survive, keep people on payrolls until you could get this bridge back to reopening.

Now that we're past that, though, and we have businesses moving in the opposite direction with states locking down again-- New Mexico, for example-- what do you make of how long this negotiation has taken to get something through and how this recovery is looking shakier and shakier?

SCOTT GALLOWAY: Well, Zack, first I want to acknowledge that you can't let-- excuse me. You can't let perfect be the enemy of good here. There's a lot of people hurting. And you probably need a certain amount of-- you know, a trillion dollars of prevention here might be worth $2 trillion of permanent scarring that might happen if we have permanent job loss or people who get evicted, what have you.

You know, I would argue that the stimulus-- in retrospect, we're going to decide that the stimulus itself was not deftly deployed. And I believe that in general, you need to protect people, not businesses. We have a tendency to personify companies and make it sound tragic that a restaurant goes out of business. What you need to do is put the money in the hands of the employees. And then, quite frankly, let them decide which restaurants survive and which go away.

Because the food business and the quick service food business is going to be reshaped permanently. And I worry that a lot of the stimulus financed not bridges to the other side, but piers, and a lot of these companies are going to go out of business. And the real tragedy here-- government is supposed to prevent a tragedy of the commons. The real tragedy here is, there's more time on business news networks talking about restaurants going out of business.

The real tragedy that's doing real damage to our society is we placing-- more restaurants are open right now while schools are closing. I mean, you want to talk about a household that comes crumbling down. Whether they can get food at Shake Shack, I mean that's an inconvenience. But a 9-year-old at home whose mom is not home to help him or her with the iPad-- and let's be honest, it's usually the mom who is no longer socializing. You can see families literally imploding under the weight of school closure.

And the fact that we haven't been able to allocate resources to keep schools open, we are going to lose a generation of doctors, civic leaders, of scientists. Because what's happening in public schools is that to date-- to date-- low income kids keep track or track with their middle and higher income peers in public schools.

Since the novel coronavirus and remote learning became the norm, over half of lower income kids have substantially fallen behind. That's not only morally wrong, it's stupid for our economy. We're going to lose 50% of our leaders and our scientists.

So yeah, restaurants closing down and going out of business is meaningful. A loss of a generation of young people is profound. We need to rethink our priorities. And the only reason we're not sending stimulus to schools is because nine-year-olds don't vote. So I think our priorities are messed up here. I think we've lost the script.

AKIKO FUJITA: Do you think there's a backlash waiting on the other end? When you talk about that generation that's being affected right now, certainly they're not a voting age, but you're already hearing from some of the younger students in high school or college who are saying, look, we're in this position because of a lack of leadership from the top. What does that backlash you think look like?

SCOTT GALLOWAY: I certainly hope so. I mean, we did see greater turnout among young people. And for the first time, people under the age of 18, 18-year-olds, sub-18-year-old Americans are now-- whites are in the minority. And if you look at the Biden-Harris administration, their numbers just went higher and higher as you went younger and younger and more people of color. So there's just no getting around it. Demographics are destiny.

I would like to think that the Gen X and the millennials and the Gen Zs that we've all have jokes around them being expectant jerks, I would like to think that we're maturing a generation that looks at us and says, we need to embrace our species's superpower, which is cooperation. Why does Taiwan have six deaths with 20 million people? And with a similar population, New York has 28,000.

Why have we decided to leave the Paris Accords? Why have we decided to not hold hands with our brothers and sisters overseas and embrace the treaty and the cooperation that has kept the peace, the North Atlantic Treaty? Why wouldn't we elect people who have served in social service and see the country before party?

So I would like to think we're maturing a generation that looks at us and says, OK, you borrowed from my future with record deficits such that you could keep your champagne and cocaine party going. But I've learned from this. And I'm more about cooperation. I'm more about empathy. I realize that forward-leaning investments such that one in five households with children aren't food insecure is a good investment. That ultimately, these families end up in emergency rooms, or we pay for this injustice one way or another.

So the silver lining here is I'm optimistic, hopefully, we're producing a maturing generation. I think there's evidence of this that have-- that realized capitalism has to sit on a base of empathy, or it collapses on itself. So I'm hopeful that this new generation is taking notes and learning.

ZACK GUZMAN: Yeah, I'm not sure how optimistic some of those millennials might be when you look at, I guess-- you know, one of my favorite stats is the fact that that's the highest percentage of millennials now living with mom and dad in history. And that's obviously one problem here. You're a professor. I'm sure you know well maybe students being worried about graduating into this economy right now.

On that front, a lot of people are talking about whether or not Joe Biden is going to move forward with some more progressive ideas about canceling student debt for a lot of Americans out there. I'd be curious to get your take on that since some economists are going back and forth on saying, to your point exactly, that it might not be that big of a boost in terms of demand out there when you wipe people debt-- when you wipe student debt off. So where would you fall on maybe that argument?

SCOTT GALLOWAY: So a lot of calls on the progressive side of the party around debt elimination or free college. And I would argue that I'm all in for a debt relief for social service or for entering into certain types of neighborhoods or certain types of jobs in certain low income neighborhoods.

But what do you say-- I'm not for debt relief at the end of the day. What do you say to the people who have sacrificed for the last 20 years-- and there's a lot of them-- to pay off their student loans? And the day they pay them off, all of a sudden, there's debt relief.

And almost every bailout, I believe, including this one, only results in moral hazard that results in a bigger bailout, whether it was the bailout of Chrysler that led to a bailout of the two of the remaining three 15 years later or the bailout of long-term credit management that resulted in a bigger bailout of Wall Street in 2008. You create moral hazard here.

And also, free college is nothing but a continued transfer of wealth from the poor to the rich. Because who are in our colleges? Mostly middle income and wealthy kids. Wealthy kids are 77 times more likely to get into an Ivy League college than the other 99% of income-earning households.

So if you make college free, be clear-- be clear-- you're just, again, transferring more money from taxpayers to the wealthy. You need to make-- college shouldn't be free. It's not your birthright to go to college, but college should be affordable for good kids that get into school such that any kid can go to college.

I went to UCLA and Berkeley undergrad and grad for a total tuition of $7,000. And I had-- I needed student loans. I needed to work. And there's nothing wrong with that. But it was attainable for the son of a single immigrant mother who lived and died a secretary.

We need to go back to higher ed. We need to increase admittance rates. We need to lower our costs so it takes its-- it takes back its rightful position as the upward lubricant of the middle class versus the engine of the casting system, which it has become. So free college, absolutely not. Debt forgiveness, debt reduction, yes. But debt elimination and free college are nothing, again, but a transfer of wealth from poor people to rich people.

ZACK GUZMAN: Yeah, we've seen these arguments play out. We're going to see where the final answers come down as President-elect Biden moves forward with his agenda items. But appreciate you taking the time to chat as always. NYU professor of marketing Scott Galloway, appreciate it again.

SCOTT GALLOWAY: Thanks, guys.