Welcome to the Hunger Games Economy
An exclusive excerpt from Scott Galloway’s new book, ‘Post Corona’
The logical alternative to capitalism is socialism, and on its face, there is a lot to like. Socialism is rooted in altruism and humanism; it seeks to build up community rather than the atomized individual. These are noble goals. But the sacrifice in productivity is immense, especially with the compounding effects of time. Capitalism creates dramatically many more spoils, so any of those noble goals have more to work with.
The toxic cocktail, however, is to combine the worst of both systems. For the last 40 years, we’ve been doing this in the United States. We have capitalism on the way up. If you can create value in this country, you can be rewarded with spoils vastly beyond anything comparable in history. If you can’t create value — if you’re born into the wrong family or you catch a bad break — you’ll likely live on the edge and pay dearly for your mistakes. A Hunger Games economy.
Should you reach the heights of wealth (or more likely, be born into them), circumstances change. Despite our rhetoric about personal responsibility and freedom, we’ve embraced socialism — at the top and on the way down. We don’t tolerate failure here in our socialist paradise. Rather than let companies fail — a defining and essential feature of capitalism — we have bailouts. But bailouts are hate crimes against future generations, sticking our children and grandchildren with the resulting debt.
Crisis after crisis, our rationales vary: After 9/11 it was national security. In 2008 it was liquidity, and in 2020 it was protecting the vulnerable. But our response is always the same. Protect the shareholder class, protect the executive class. Keep these firms on life support so their owners and managers don’t suffer. Pay for it with debt, a burden to be borne by middle-class taxpayers and, ultimately, by our children. However, history tells us, nearly every bailout, whether it’s Chrysler or Long-Term Capital Management, only creates a moral hazard that results in a bigger failure and a more costly bailout. Every time, we’re told “this is different, historic, and requires intervention” and that taxpayers should bail out shareholders.
Corporations are simply…