Waking up from the American Dream

Does school really help?

I was recently watching an interview of Scott Galloway – a NYU professor in business and marketing, and serial entrepreneur – where he imparted career and life advice largely around how to find success. When Scott began speaking on poverty it struck a nerve with me. He stated “poverty is a disease” and bemoaned how difficult it is for poor kids to compete and get ahead because of how poverty sets them back in schooling. In his own words: “If you’re hungry it’s hard to study. If your mom doesn’t have any money, it’s hard to have an iPad for remote learning.”

It is hard for me to understand how such a clearly intelligent and accomplished NYU professor and businessperson could be so shortsighted and limited in his diagnosis of societal problems. Why does he think that the issue is that poor kids can’t get ahead in school – and not that children are forced through the narrow sieve of credentialing and gatekeeping of compulsory schooling in order to board the onramp to prosperity in our country.

At first take, Scott’s diagnosis of the issue does not quite add up. Mr. Galloway is a multi-multi-millionaire – yet, he admits earlier in the interview that he was an average to subpar student throughout high school and most of undergrad. Why do the poor to have to take on the added burden of excelling in school when that was never a hoop that Mr. Galloway had to jump through?

Scott mentions how the golden age of American prosperity in the midcentury has passed and even laments how much more difficult and competitive it is in today’s environment for children to get ahead. Yet he doesn’t bring himself to question why the road to achievement is so much more fraught today than it was historically.

In 1940, high school graduation rates were had just broken through 50%, a decade later they were only 10% higher, but in neither case were they significantly below the 86% graduation rate of 2019. How was a golden age brought about by so many people lacking the high refinement of schooling? Is it possible that the added benefit of time spent behind a desk whether rich or poor, hungry or well-fed, is a farce?

The youngest working-age groups in the US are the “most educated generations” yet they earn significantly less than older generations and are widening an already dramatically large generational wealth gap. Why is the proposed solution more of the same? Why are we proposing that poor kids should have access to iPads to better the prospects that they receive a credentialing piece of paper whose additive value seems dubious at best? And why are we not proposing a critical examination of why schooling is increasingly considered only viable path to success in our country?

A counter argument for why we need more schooling could be that we live in a much more technical world than during mid-century and thus we supposedly need more technical training – which academic credentialing is (supposedly) a proxy for. The world may be more technologically complex however many technical advancements were done by people who eschewed if not outright bucked systematic schooling – many of the figureheads of the tech industry are college if not high school dropouts. Isn’t that Peter Thiel’s whole schtick? Even in the hard sciences the benefit of scholastic gatekeeping is questionable. The head of the private partner of the Human Genome project, Craig Venter had poor grades all through school and only managed to graduate by getting a D- instead of an F on his final paper. Thomas Edison who had only a few months of attendance at any type of school himself, hated how close minded college graduates were and so created an elaborate job interview to weed them out.

Are these examples cherry-picked? No – the standard assertion is that schooling is a necessary prerequisite for success and achievement in our land (if it wasn’t then what good reason would we light over $600bn dollars aflame annually foisting it on children who are forced to attend?). A singular counter example would be enough to refute this claim, not the numerous ones I have provided, nor the hundreds of further examples there for those willing to look.

Setting aside the idea that schooling is at best neutral in its ability to aid success (and not potentially harmful), if one were to make a counterargument that because of the globalized playing field, there needs to be an institutionalized and standardized manner of credentialing among people entering employment – I would again state they are wrong. This argument is circular: we need large, institutionalized credentialling because we live in a large, institutionalized society – and the potential employee needs to be legibly classified to be commoditized and used as a human resource. We need an institutional system because it’s the best way for the institutional system to exist is a tautology and a rather nefarious one at that. Urging people to accept this logic is only further helping to propagate the issue at hand.

I am what some may call moderately professionally successful – but growing up, my mother always told me to only do the bare minimum I needed to in school and provided me with numerous sick day notes and other tactics to make sure I didn’t focus too much on the classroom. She knew intuitively that schooling was a trap to indoctrinate children into an institutional status-quo more so than it was about any meaningful level of education, discovery, or self-mastery. So, I skipped as much class as I could, skirted as many assignments as possible, and spent the majority of my time reading and learning about topics that were of actual interest to me, while still maintaining decent grades. I was able to get through a rather prestigious high school and elite college, and eventually enter the workforce only to find that all of the most important aspects of my job were things that were never taught in my college classes even though my major was inline with my field of work. I am glad I did not waste more time on those studies, I wish I could have done even less.

Cut-off paths

As alluded to above, only a radically institutionalized society would demand that all children be forced into institutionalized schools in order to be given the permission to advance and have security in the affairs of their own life. In Democracy in America Alexis de Tocqueville wrote:

“[Administrations] covers the surface of society with a net-work of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided: men are seldom forced by it to act, but they are constantly restrained from acting: such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrious animals, of which the government is the shepherd.”

That was from a chapter titled: “What Sort of Despotism Democratic Nations Have to Fear” and I believe de Tocqueville was spot-on in his analysis, a democratic nation should always be weary of this encroachment of institutional system over personal volition. This is exactly the type of society we have become – a perverse admixture of massively large government and massively large corporations where the ability to live from under of the thumb of either is rapidly dwindling.

On the individual economic front avenues for a person to make gains for his or herself are continuing to shut-off. We have seen a dramatic decrease in entrepreneurship following the global financial crisis, and the problem has become even more exacerbated during the pandemic where small businesses saw a 33% increase in closures from March 2020 to Feb 2021. Further estimates state that a majority of small businesses could close if lockdown measures persist or reappear.

More and more the only choice people have to make a living is to duck into the servitude of employment to large bureaucratic institutions. I distinctly remember a friend of Mr. Galloway, Andrew Yang’s NYC mayoral platform of shutting down street vendors while executives at CBRE described him as embracing big business in the city and all that it stood for. Unfortunately, this tale of two treatments – punishing the individual while servicing the institution, is not limited to a failed politician like Mr. Yang – but is actually writ large across this nation.

While cities, states, and other municipalities look to give billions of dollars in tax breaks[1] to corporations one should not forget the story of Ferguson, MO where City Officials directly requested the Police Chief increase fines and fees on citizens in order to secure the city budget. This led to thousands of tickets, fines, and warrants for things like jaywalking (“walking unsafely in the street”) or providing a false statement (telling an officer that one’s name was “Mike” instead of “Michael”). Unfortunately, Ferguson is far from the only area with an extractive, belligerent, and abusive police force examples also exist in Miami, Cleveland, Albuquerque, and numerous other areas.[2]

While institutionalized pools of money (hedge funds, endowments, etc.) dodge over $40bn annually in taxes through tax-loss harvesting strategies and open-ended investment funds skirted another $60bn in taxes annually through in-kind redemptions. The IRS and US treasury is looking to impose a tighter dragnet over actual US citizens, monitoring all their banking transactions over $600, even though the investigators already have a habit of violating due process.

While at the same time government regulators claim that they lack the resources and means to investigate, police, and prosecute the misdeeds of large corporations (remember, no one has gone to jail over the predatory lending or general misdeeds of the financial crisis). The average US citizen lives in an effective surveillance state – which the government is only looking to expand and further increase enforcement. The US has the largest prison population in the world and largest proportion of prisoners per capita. While we perhaps can’t afford to go after big corporations for their misdeeds, we can’t afford not to prey on our populace as contracts for prison management alone are worth $5bn in profits and telecom companies make $1.6 billion a year on per-minute prison phone calls.

The fact is writ large across society that If you want to get by through swindling – you better do it through the proper institutional pathways because if you look to get ahead in America not through the pre-defined routes (legal or otherwise) the bramble is getting thicker and more tortuous.

Passive investing

Scott describes how over 2/3rds of his wealth came from simply buying stock in Apple, Nike, and other large companies a year or so after the crisis and “just forgetting about them,” and he advises others to do the same: to just buy into the large-cap stocks of the market and sit and wait. What is the implicit logic behind this call for action – or rather inaction? To sit passively and not work for your wealth but rather to feed it into the hands of other institutions. To not look for value that you can unlock with your own toils, or small business, or creating something for those you actually know and love – but instead to allow giant trillion-dollar corporations to create shareholder value in the abstract? The edict is simple: one should passively ride-along – or even better be an employee for these giant corporations – and whatever dribs and drabs of money you can steal away, throw it directly back into the hands of the market, allowing valuations to drift ever higher.

Scott has repeatedly extolled young people to not follow their passions. He states people should not do what they love but rather what they’re good at if they want to get ahead in life. Sound advice or not, in the backdrop of the above context it rings in my ears like a commandment to abandon what last bits of life may be private and human and to dedicate oneself to be another soulless cog in this giant machine. Make as much money as you can as quickly as possible, lord knows our precious fleeting time on earth cannot be squandered away on things that create love, joy, and deepened human connection – instead all energies should be focused on squeezing every cent we can out of ourselves and those around us – value is strictly relegated to economic measurements.

The sad fact is that Scott’s advice when it comes to investing seems to be spot on. For the individual small-time investor the cards are certainly stacked against him of her and it is likely better to just be as passive as possible and throw one’s money in with the predetermined investments than to actively self-navigate and select. The individual investor will never have access to the advantages institutional investors receive in boosted leverage, cheaper financing rates, and general better access to liquidity. And this doesn’t even touch on the gross inflation in prices we have seen in all asset classes over the past decade that put any semblance of asset ownership out of reach for most people. While the route for already large masses of money to accumulate more is made easier, the avenues for the individual to lift his or herself up is made more arduous. Even if an individual or group of individuals find success despite all the obstacles in their path – as the brief foray with investing success that those Redditors who bought AMC and GameStop experienced showed us – the authorities will come cracking down to put them in their place.

It must be considered that Warren Buffett didn’t make his billions setting and forgetting investments, he actively sought out stocks that he found deep-value in and actively de-invested from them when they failed to continue to do so - though he now tells others to just passively invest as well – a classic case of “do as I say not as I do”. Further, he wasn’t urged to build wealth through fractional shares in an Interactive Brokers account. As a matter of fact, he went the non-prefabricated route as a young adolescent hustling, doing odds and ends jobs that serviced his local community: everything from building a golf ball retrieval business to a pinball machine rental enterprise, even delivering papers. It should also be noted that Buffett wanted to skip college as he considered it a distraction from focusing on business ventures. How viable is Buffet’s route today? Are we too concerned that poor kids can’t have iPads or that they cannot work to make their own wealth?

The past few years my cousin and I began as a side project to purchase and rehab run-down buildings in and around our hometown. It proved not only a way to refurbish local eyesores, but also a way of building some financial means and wealth for ourselves. I wanted some of my high school and college friends to pool their money to help invest alongside us but was chided by numerous experienced people in the business that it wasn’t worth bringing along friends or family or pooling local money. Their reason for reproach was not because of the hassle of juggling personal relationships or a separation of business and personal life – but because of the added reporting and regulatory burden of having non-accredited investors join in your investment pool.

In this land of opportunity, most people are denied access to whole swaths of potentially wealth generating investments because they do not carry the title of accredited investor, which all banks, and most funds and other institutions do by default. Many investments in real estate, start-ups, and private companies are considered just too exotic for the common man or woman on the street to be able to wrap their heads around. What sad commentary on the outlook in human nature: in managing the affairs of one’s own life you are likely too naïve, ignorant, or stupid for your own good – better to leave the decision making to the expert institutions that know better. Why not put control in their hands while you sit passively by?

The Divide

This essay may come off as some ambitious call for government to wrangle in the wealth of the prosperous through more laws and bureaucracy. But before you think I am ready to saunter down the red-carpet in a “Tax The Rich” dress and call for more regulation of industry, we should remember the effects of Dodd-Frank. The Dodd-Frank act was enacted post the Global Financial crisis nominally to protect the public from the greed of financiers on Wall St. (a group I am not want to defend) but in reality it wound up putting onerous compliance and reporting costs on all banks. The mega banks could shoulder the strain but smaller banks struggled. In the 5 years following passage of Dodd-Frank the rate of small community bank shutdowns doubled. Further, because of the regulation brought on by the act, community banks could no longer base their loan decisions on what they knew about the applicant but rather standardized prefabricated application requirements. In one fell swoop the costs of small community banks rose, while their competitive advantage – the ability to maintain intimate local relationships for the basis of extending credit – were destroyed. Further, small businesses suffer as their access to credit and financial services dwindle – while mega-banks, and the mega corporations who have the best relationships with them, gain in winner-take-all effects.

Regulations will always favor large corporations. Their lobbying and white papers will shape the regulation, through the revolving door their former and future executives will be the ones who actually carry out the regulating, and they will have the resources to hire armies of lawyers and accountants to find any and all loopholes in the regulations.

The faux dynamic of big business versus big government is not applicable here. Paraphrasing John Gatto, the effect of a large, socialist government as contrasted with a society run by gigantic, all-powerful corporations is of little difference. Both societies are run by a managerial class of pseudo technocrats, both are coldly materialistic in outlook, and both organize the human masses into a large Kafkaesque hierarchy that thrives off needless credentialling and gatekeeping – rituals whose purpose is signaling subjugation and obedience to the powers that be rather than actual competence.

This is not an issue of left vs right. These corporate institutions use the left to raise regulation which builds a bigger moat around them, then uses the right to slash their taxes – both sides being played as pawns to the same end. The culture wars are in general a distraction – a divide and conquer tactic to distract people from the fact that the promise of liberty and personal volition that we are told of as children is atrophying – if it even exists at all anymore.

Dream Deferred

Towards the end of the interview Scott describes how the traditional American dream is wealth. I, like Scott, grew up in a household rocked by financial instability. I, like Scott, desperately pursued financial means to “make it” and acquire wealth spurred on by this hunt for financial salvation. For years I sacrificed my own values, time, health, and relationships with friends and loved ones in order to gain wealth. Fortunately, I was able to wake-up from my mindless pursuit and change my priorities before I had done permanent damage in these areas.

I work less than a ten minute walk from the World Trade Center site – and it almost strikes me as too on the nose that at the site of the largest scene of death on American soil since Pearl Harbor we have put in its place a the largest luxury shopping in Manhattan. George Washington in his private correspondence stated that though personal cleanliness and appearance were important, that people should spend as little on clothing and accoutrement as possible, because it shows a needless focus on fashion over more important traits of character and personal refinement. As a nation we seem to have forgotten that the original American dream was about liberty, not money, and though surely prosperity and economic independence are both tied to liberty, the path to those endpoints should matter just as much if not more than the final destination.

Thomas Jefferson once said “Good citizens always make the society they live in, only bad citizens adapt themselves to fit the reality they inherit.” America may have risen to global prominence and become the world’s wealthiest nation; however, if in the process we have squandered our ability and liberty to blaze our own individual path then what is it for? If our fates are not in our own hands but are predetermined by the powers that be, if we are robbed of volition – then what did we fight a revolution for in the first place? Scott mentions that he wants to be remembered as a patriot. The only country I would believe worth being patriotic about is one where the chief concern is an ability to shape my own life and destiny and not that I have an iPad in my hand.

[1] Most of the tax incentives in the Amazon news story noted here are explicitly performance-based tax incentives, where, based on salary paid out by Amazon, the company will receive a tax break that the municipalities and states will look to recoup through taxes on their employees, so it is explicitly a transfer of tax burden from the corporation to individuals. Trickle-down taxation.

[2] Rather telling that most stories of abusive police practices are focused on someone getting the shit beat out of them and not about the extortive ticketing and fining. Seems the media (or those who run it) are willing to remove some bullying grunts but not a system of extortive revenue.