No Mercy / No Malice: High Anxiety

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1:28I'm Scott Galloway, and this is No Mercy, No Malice. College is a wonder drug. College admissions is a nightmare. High anxiety, as read by George Hahn.

1:47I just returned from the U.S. and was struck by how tense things are. It feels similar to what I imagine the mood was during the Vietnam War. So let's take a break and discuss something even more stressful. College admissions. Yay! Last week I did a college tour with my son. It was a chance for us to bond and bask in the infinite possibilities that stretch out in front of him. The previous sentence is a lie. The college admissions process has kicked off two years before he sets foot on a campus, and it's already a flaming bag of shit, where a flaming bag of shit is a ton of unnecessary stress.

2:30My industry, higher ed, is corrupt, and second only to poverty regarding preventable stress in U.S. households. Note, you likely had the reflexive synapsifier of reducing poverty is not that simple. No, it is that simple. It would just mean lower stock prices and a more progressive tax policy. The incumbents deploy the illusion of complexity as a weapon of mass distraction from a simple hard truth. The U.S. chooses to let one in five households with children live in poverty. But that's another post. Despite the lie we tell ourselves, you don't need college, in a vain attempt to opt out of the stress, higher education is in fact a wonder drug, a pill that extends life, makes you happier, healthier, and wealthier, and strengthens your relationships.

3:32America is the world's premier manufacturer, producing a compound at a purity no other manufacturer can rival. No nation dominates any industry the way the U.S. dominates higher ed. millions come to the U.S. to access this drug. In a rational world, we'd scale it. Instead, we sequester it behind ivy-covered walls and tuition that commands a gross margin of 90 % plus. And for centuries, we prescribed this cure-all exclusively to white men. Despite a 6 % increase in applications this year, there's a narrative questioning the value of a college degree. I'm often asked, is college worth the price?

4:21My answer? Mostly yes. My hunch is that decades of news stories about for-profit scam schools, student loan debt, and income inequality have dinged the college brand as those narratives speak to a sense of stagnation for people who once viewed universities as an on-ramp to a wealthy lifestyle. In a digital economy, where everyone has access to everything, there are more students applying to the top schools, giving the top schools access to better students, all of which creates an upward spiral of strength among the strong. Lower-tier schools, however, are struggling. Since 2020, 64 colleges have either closed or merged.

5:09Meanwhile, the myth of education always pays off has been busted at Tier 2 schools, many of which offer a Hyundai for a Mercedes price. The strongest brands in the world, MIT, Apple, Hermes, the U.S., are built on the artificial choking of supply via rejectionist admissions, premium pricing strategies, limited production, and rationing visas, respectively. My business intelligence firm, L2, advised nearly every luxury business. The firm was founded on a simple premise. Prestige brands trade at higher multiples of revenue due to increasing income inequality and their ability to manufacture scarcity.

5:59We sold the company in 2017 for eight times revenue. Mirroring our client base, we were disciplined about pricing and said no to many potential clients My first consulting firm, Profit, said yes to every client, and it sold for 2.8 times revenue It was the right decision at the time, as I didn't have the capital to utter the sexiest word in the English language No Saying no is the correct strategy for a consulting firm or a luxury brand, but not for a university. Yet the top 2 % of institutions have decided they are luxury brands, saying no to more than 90 % of their applicants. When I applied to UCLA, the acceptance rate was 76%.

6:50Last year, it was 9%. Throughout the second half of the 20th century, higher education was the key that allowed remarkably unremarkable kids, like me, to unlock America's promise of upward mobility. Today, Higher Ed is a bouncer at the entrance to an exclusive club Where wealthy kids and a cadre of freakishly remarkable 18-year-olds Build lasting relationships and lucrative networks with elite peers While obtaining certification that gives them access to the greatest wealth-generating vehicles in history S &P 500 companies In my sophomore year at UCLA I learned my limits were not my real limits, crew, realized I would not be a doctor, chemistry, became less insecure about my insecurities, psychology, fell in love for the first time and developed resilience, heart broken.

7:57I'd like to think all these things would have happened whether or not I attended college. But they likely wouldn't have happened in such a safe and joyous place. But my sense is the college experience isn't as appealing as it once was. The University of Michigan, for example, is a world-class institution that also provides students with the college experience. Except there's something rotten in Ann Arbor. Michigan invested$250 million in DEI programs over the past decade. The result? More conflict, a culture of grievance, and a 33x increase in complaints involving race, religion, or national origin.

8:44Meanwhile, Michigan's pro-Palestinian Student Assembly voted to withhold$1.3 million in funding for student activities until the university divested from Israel. Two months into the fall semester, the same student assembly reversed course when they realized defunding Ultimate Frisbee made zero fucking sense. In response, pro-Palestinian activists accused the assembly members of complicity in genocide. It may be this March of the Zombies at elite schools that explains why Southern universities experienced a 30 % jump in applicants from kids in the Northeast between 2018 and 2022. Georgia, 48 % acceptance rate Clemson, 51 % acceptance rate and Alabama, 83 % acceptance rate aren't elite schools but Southern schools are generally less expensive and seen as less political They're also more likely to embrace the traditional college experience i.e.

9:56football games, Greek life and fun State schools have registered an 82 % increase in applications since 2019 as they offer a better value. The whales of high-tuition prestige universities are international students. At NYU, they constitute 22 % of our student body and likely half our cash flow as they're ineligible for financial aid. We claim we let them in for diversity. This is bullshit. International students are the least diverse cohort on Earth, i.e., they are the richest kids on campus. Letting in the daughter of a Taiwanese private equity billionaire isn't helping diversity, but claiming it is illustrates just how far we've fallen from the original goal of affirmative action.

10:56Note, international Ph.D. students, whom we pay, are some of the most impressive young people on the planet. In 1960, Harvard, Yale, and Princeton had a total of 15 black students out of a combined enrollment of 3 ,000. That was a problem, and shifting to race-based admissions made sense. In 2024, 65 % of students at Harvard identified as non-white The Ivy League as a whole now scores high in the U.S. News & World Report Diversity Index This is a wonderful thing as black students, along with Asians, women, LGBTQ people, and folks from other groups Have historically been excluded from elite colleges But at this point, the cost of race-based affirmative action outweighs the utility.

11:55Affirmative action should be based on one color, green. It's poor kids who need a hand up. Identity politics have been weaponized by a DEI apparatus on campuses that doesn't translate to progress, but student debt. When the University of California system banned affirmative action in 1995, the number of Black and Latino first-year students plunged by nearly half at UCLA and UC Berkeley. But over time, the numbers rebounded. By 2021, UCLA's first-year class included more Black students, 346 or 7.6%, than its 1995 class. 259 or 7.3%. While the UC Chancellor submitted an amicus brief supporting affirmative action at elite private schools, they achieved similar results by implementing an admission guarantee to top-performing students statewide, as well as an admissions process that factors in the location of an applicant's home and high school.

13:13While the Supreme Court banned race-based admissions, affirmative action for the rich, a.k.a. legacy admissions, continues. Not-so-fun fact? Elite schools began using legacy admissions in the 1920s, along with standardized tests, interviews, and extracurricular activities to keep out Jews. Despite its ugly origins, more than half the schools in the U.S. continue to use legacy admissions, and 40 % of students nationwide benefit from such preferences. At Harvard, legacies accounted for 36 % of the class of 2022. Culture wars center the fight around race-based preferences, but elite universities are businesses, and the only color that really matters is, again, green.

14:10For loyal, wealthy customers, the legacy advantage is remarkable. Here's the thing. I don't have a problem with legacy admissions. When I was at Haas, there was a student who was obviously a legacy, i.e. their billionaire father donated to get them into business school. That's a good thing if the money is used to expand access for other students. My problem with higher education is that we're whores who aren't transparent about being whores. Many faculty and administrators forego higher-paying careers as they believe in the mission. Most, like the rest of us, wake up every day and ask, how can I increase my compensation while reducing my accountability?

14:57They found the answer in the LVMH strategy. Only a hitch? College degrees aren't Birkin bags. And higher ed is not only the best path to economic security, it will also shape the view of many, if not most, of the people running the world for the next century. The last time I wrote about higher ed, I received three cease and desist letters from universities we said were likely to perish. DEI, ethics, sustainability, leadership, and near anything with the word studies in its title is no longer about helping people, but welfare for the overeducated. Here's the dirty secret. Using AI, software, the abolishment of tenure, and higher standards for faculty, we could cut costs 30 % and tuition conservatively in half.

15:58We wouldn't need student debt bailouts because kids wouldn't need student loans. Five states and a handful of elite schools recently banned legacy admissions. My Prof G. Markets co-host Ed Elson believes the practice will be gone in a few years as donations no longer guarantee acceptance. I disagree. Donating isn't entirely transactional. When I gave to UCLA and UC Berkeley, the chancellors were explicit. A donation wouldn't make it easier for my kid to get in. In fact, it likely makes it harder. And that's fine. I donated to give an overdue nod to the Californian and American taxpayers who invested in me.

16:48I also donated out of ego. it wasn't anonymous. Being a provider makes me feel masculine. Still, Ed has a point about why many people donate. Last year saw a 2 % drop in private donations to universities, despite the strong economy and the market hitting new highs. The$1.5 billion that might otherwise have gone toward donations is likely up for grabs, as parental admissions anxiety is closely correlated with the size of your bank account. Such anxiety will likely supersize the emerging college admission consulting complex. Soon it won't be an advantage to hire a consultant, but a disadvantage if you don't.

17:33I'm not suggesting we shouldn't have elite schools that have exceptionally high standards, but embracing a for-profit business model more suited for Panerai than a public service, unnecessarily restricting supply for money and ego is just plain wrong. We have the pill, the miracle drug. Any university that has an endowment over a billion that's not expanding its freshman class faster than the population should lose its tax-free status, as they are no longer a place of learning but a hedge fund offering classes. And schools should be on the hook for 50 % of bad debt from student loans. I can't imagine the economic stress levied across American households who don't have a spare$250 ,000 lying around.

18:27It should be noted that many schools, like ASU, Purdue, the University of Illinois system, offer free tuition to students who meet minimum academic requirements. Also, 17 states provide tuition-free vocational programs via community colleges. If grief is love's souvenir, then anxiety is love's tax. I never cared much about anything until I had boys. But now I'm anxious all the time, despite having the funds for my boys' education. We've lost the script. The leadership and faculty of elite universities have morphed from public servants to Birkinbags. Whether you're a stressed kid in high school, a family saving for college, an anxious parent, a college grad or dropout struggling with student debt that's difficult to discharge in bankruptcy, or someone being asked to bail out someone who had opportunities not afforded to you, we're all paying the price.

19:38Life is so rich.