Scott Galloway is an enthusiast for capitalism, just like Michael Zwaagstra a local counsellor here in Steinbach . But that is where the resemblance ends. Zwaagstra recently wrote an article in our local Carillon News and said capitalism was doing just fine and he could hardly wait to get right back to it without any changes. Why change what’s pretty close to perfect? Zwaagstra dismissed any suggestion that anything should change, he liked it exactly the way it was. Of course, those most comfortable with things as they are, tend to feel that way.
Scott Galloway is different. He is also enthusiastic about capitalism, but he believes changes are needed. Badly. Galloway wrote a book called Post Corona: From Crisis to Opportunity. I heard him interviewed on Amanpour and Company.
Hari Sreenivasan interviewed Galloway and pointed out that in the US more than 250,000 people have already died from Covid-19. (Since then the numbers have doubled.) Sreenivasan pointed out that the disease has exposed some serious weaknesses but has also provided an opportunity to fix some of those weaknesses. Someone once said, we should never waste a crisis. Zwaagstra and the other Panglossians want to do exactly that. Why fix something that is not broken?
Galloway pointed out that before the pandemic there were a lot of people who were optimistic to the point of arrogance. The system was working well for many people, but for others it was disastrous. The pandemic made clear to all that many of the governmental institutions had been woefully underfunded. Galloway is a capitalist, but he recognized the importance of government. His eyes are not shut. The crisis has allowed us to spend more time with our families, it has allowed us to look closely at our educational system. Our health care system needs a close examination in the light of what we have learned from the pandemic. It has shown how ecommerce can work. To him, unlike Zwaagstra, a crisis is a terrible thing to waste.
In health care Galloway believes the greatest shift in stakeholder value is about to occur in the business history of the US. In the US 17% of the GDP is heath care.
As he said,
“It is arguably the largest business in the world clocking in at 3 or 4 trillion dollars a year, but the outcomes have been decreasing. Life expectancy has been going down and mortality is stuck at a certain level. Customer satisfaction is pretty anemic. The medical profession as retail is probably the second worst retail in America behind gas stations. Imagine going to a store for a sunblock and someone sides a plexi-glass gives you a form and says to you ‘Here fill out this paperwork and we’ll see you in 30 minutes! It’s a fairly uninspiring experience. The exciting thing is that 99% of the people who have contracted, endured, and developed anti-bodies for the coronavirus did it without entering a doctor’s office let alone a hospital.”
He said that morning he got his Covid-19 test in his kitchen. Things are changing rapidly and sometimes for the better.
“Just as ecommerce took the store to your living room, just as the movie theatre moved into your living room, the doctor’s office, hospitals, and diagnostics moved to your house.”
These things are a sea change. I know I had a doctor’s examination from my cottage at the lake while the doctor was in his office. I had a blemish or spot on my head that worried me. My wife took a photo and emailed it to the doctor who looked at it and said, “I think it’s benign.” While I wished he could have said that with a little more confidence, the experience with my physician was shockingly good.
As Galloway said,
“This might give us not just an opportunity to reduce costs but to take us off our heels as a nation being reactive and defensive about our health and get on our toes and talk more about primary care. It made people more comfortable with their relationship with their health care provider. Amazon just announced that they would have 24/7 pharmacists available and 2-hour delivery. So, we could see an explosion of innovation in health care. You could arguably say it is the most exciting place to be in our economy post-covid. Regulations have come crashing down. Consumers are now comfortable receiving health care over their hand held instruments in their home.”
I admit that describes me. I want to see my doctor from time to time, but often I don’t need to go his or her office. By phone or Ipad often is good enough and saves me a lot of time. My time is valuable too.
In ecommerce it took years for the kind of growth we have seen. I hate what Amazon is doing to small businesses around the world. I hate the thought of giving any more money to the richest man in the world (now he is second). Before the pandemic he was earning $1 million every 50 minutes. All this while he is crushing small business everywhere and while many of his employees wear diapers because they can’t afford to take a washroom break or they won’t be able to meet their quotas. Now he is doing much better than that and I have helped him out, as have millions of others. We have done that because we came to realize how convenient it was. For many things we don’t really have to go to a store to look them over. Ordering them from our homes for some is just easier, simpler, and cheaper. Other businesses will have to learn that we have learned something and if they don’t change, we will change where and how we shop. Not for everything but for many things. Capitalists had better innovate or they will be left on the dust heap.
That does not mean all has been rosy. As Sreenivasan pointed out,
“It has been a boon for those who could afford it. There has been a blue collar pandemic and a white collar pandemic. For the white collar people it was great. I can get everything from Instacard and Amazon. But if you’re an essential worker that doesn’t really apply to you.”
For others not so much. And some of us still care a little bit about fairness. Fairness and competition.
Galloway agreed completely:
“If you’re in the top 10% of income earners there is no change in employment. It means you’re no more vulnerable than you were before the pandemic. There’s a 60% likelihood you can work from home. You can spend more time with your family. You maybe got 10 hours back a week. If you make less than $40,000 a year, 40% of those people have lost their jobs and less than 10% can work from home. You don’t like to say this out loud, but if you’re in the top 10% and you’re blessed with good health you’re most likely spending more time with Netflix, your kids, and less time commuting, and by the way your stocks are probably up and I would argue that a lot of the stimulus unfortunately hasn’t been about arresting the pandemic, and helping our neediest, it’s been about flattening the curve for rich people. The savings rate in American has never been higher. The Nasdaq has never been higher. If you do a google search for covid and markets you’ll find more articles than if you do covid and mortality. It’s as if as a nation our priorities are reflected in our spending. The velocity of death is unprecedented. More people are dying every day from this than any crisis in history! And that’s meaningful. But what would be profoundly tragic would be if the Nasdaq declines! At least that’s what our spending seems to indicate. We want to save restaurants, but not keep schools open. We seem to want to ensure that the markets are washed in liquidity and people are wanting stimulus, but we aren’t protecting people. We see infection rates rise. And we see our health professionals wanting for PPE equipment. It does definitely seem that we have decided that corporations are people and they are the ones that we have to save.’
And remember all of this is not coming from some crazy leftwing extremist. This is coming from a self-described enthusiast for capitalism. He is an insider. He likes the system. Perhaps not as much as Zwaagstra, but he is no bleeding socialist.
Once again Wall Street is doing much better than Main Street. This is always an interesting phenomenon. In my view this will always happen in a system that permits plutocracy, and even worse in a system that encourages plutocracy. If we let the rich rule, they will do what is in their best interests. It really is that simple.
As Galloway said,
“As a nation we suffer from an idolatry of innovators. And we personify companies and believe that it all starts with the shareholders. The shareholder class is the premier class and as long as the economy is strong everything will fall into place. And we measure the economy’s health by these dangerous indices called the Nasdaq where 90% of the stock are owned by the top 10%. The Nasdaq and the Dow are not indicators of the health of our economy they are proxies for how well the wealthy are doing. And–spoiler alert–they’re killing it.”
No one should be surprised by this. We have a system that is designed by the wealthy for the wealthy and inevitably such a system will deliver the goods to the wealthy as our system does so well. It just sucks to be poor.