AI transcript
0:00:04 Support for this show comes from Constant Contact.
0:00:07 If you struggle just to get your customers to notice you,
0:00:10 Constant Contact has what you need to grab their attention.
0:00:15 Constant Contact’s award-winning marketing platform offers all the automation,
0:00:20 integration, and reporting tools that get your marketing running seamlessly,
0:00:23 all backed by their expert live customer support.
0:00:27 It’s time to get going and growing with Constant Contact today.
0:00:30 Ready? Set. Grow.
0:00:34 Go to ConstantContact.ca and start your free trial today.
0:00:38 Go to ConstantContact.ca for your free trial.
0:00:41 ConstantContact.ca.
0:00:51 Autograph collection hotels offer over 300 independent hotels around the world,
0:00:54 each exactly like nothing else.
0:00:59 Hands selected for their inherent craft, each hotel tells its own unique story
0:01:02 through distinctive design and immersive experiences,
0:01:05 from medieval falconry to volcanic wine tasting.
0:01:09 Autograph collection is part of the Marriott Bonvoy portfolio
0:01:12 of over 30 hotel brands around the world.
0:01:16 Find the unforgettable at AutographCollection.com.
0:01:21 Do you feel like your leads never lead anywhere?
0:01:23 And you’re making content that no one sees,
0:01:26 and it takes forever to build a campaign?
0:01:29 Well, that’s why we built HubSpot.
0:01:32 It’s an AI-powered customer platform that builds campaigns for you,
0:01:34 tells you which leads are worth knowing,
0:01:39 and makes writing blogs, creating videos, and posting on social abrees.
0:01:42 So now, it’s easier than ever to be a marketer.
0:01:45 Get started at HubSpot.com/Marketers.
0:01:52 I’m Scott Galloway, and this is No Mercy, No Mouse.
0:01:54 College is a wonder drug.
0:01:58 College admissions is a nightmare.
0:02:02 High anxiety, as read by George Hahn.
0:02:11 I just returned from the U.S. and was struck by how tense things are.
0:02:16 It feels similar to what I imagined the mood was during the Vietnam War.
0:02:20 So let’s take a break and discuss something even more stressful.
0:02:24 College admissions. Yay!
0:02:27 Last week, I did a college tour with my son.
0:02:31 It was a chance for us to bond and bask in the infinite possibilities
0:02:33 that stretch out in front of him.
0:02:35 The previous sentence is a lie.
0:02:41 The college admissions process has kicked off two years before he sets foot on a campus,
0:02:44 and it’s already a flaming bag of shit,
0:02:49 where a flaming bag of shit is a ton of unnecessary stress.
0:02:54 My industry, higher ed, is corrupt and second only to poverty
0:02:58 regarding preventable stress in U.S. households.
0:03:02 Note, you likely had the reflexive SNAPS fire of,
0:03:05 “Reducing poverty is not that simple.”
0:03:09 No, it is that simple.
0:03:15 It would just mean lower stock prices and a more progressive tax policy.
0:03:18 The incumbents deploy the illusion of complexity
0:03:22 as a weapon of mass distraction from a simple hard truth.
0:03:28 The U.S. chooses to let one in five households with children live in poverty,
0:03:31 but that’s another post.
0:03:34 Despite the lie we tell ourselves,
0:03:35 you don’t need college,
0:03:38 in a vain attempt to opt out of the stress,
0:03:43 higher education is in fact a wonder drug.
0:03:47 A pill that extends life makes you happier, healthier and wealthier
0:03:51 and strengthens your relationships.
0:03:54 America is the world’s premier manufacturer,
0:03:59 producing a compound at a purity no other manufacturer can rival.
0:04:05 No nation dominates any industry the way the U.S. dominates higher ed.
0:04:09 Millions come to the U.S. to access this drug.
0:04:12 In a rational world, we’d scale it.
0:04:16 Instead, we sequester it behind ivy-covered walls
0:04:21 and tuition that commands a gross margin of 90% plus.
0:04:28 And for centuries, we prescribed this cure all exclusively to white men.
0:04:32 Despite a 6% increase in applications this year,
0:04:37 there’s a narrative questioning the value of a college degree.
0:04:40 I’m often asked, “Is college worth the price?”
0:04:43 My answer? Mostly yes.
0:04:47 My hunch is that decades of news stories
0:04:52 about for-profit scam schools, student loan debt and income inequality
0:04:54 have dinged the college brand,
0:04:59 as those narratives speak to a sense of stagnation for people
0:05:04 who once viewed universities as an on-ramp to a wealthy lifestyle.
0:05:07 In a digital economy where everyone has access to everything,
0:05:10 there are more students applying to the top schools,
0:05:13 giving the top schools access to better students,
0:05:18 all of which creates an upward spiral of strength among the strong.
0:05:22 Lower-tier schools, however, are struggling.
0:05:28 Since 2020, 64 colleges have either closed or merged.
0:05:31 Meanwhile, the myth of “education always pays off”
0:05:34 has been busted at tier two schools,
0:05:39 many of which offer a Hyundai for a Mercedes price.
0:05:46 The strongest brands in the world, MIT, Apple, Hermes, the US,
0:05:49 are built on the artificial choking of supply
0:05:54 via rejectionist admissions, premium pricing strategies,
0:05:59 limited production, and rationing visas, respectively.
0:06:01 My business intelligence firm, L2,
0:06:04 advised nearly every luxury business.
0:06:07 The firm was founded on a simple premise.
0:06:11 Prestige brands trade at higher multiples of revenue
0:06:14 due to increasing income inequality
0:06:18 and their ability to manufacture scarcity.
0:06:22 We sold the company in 2017 for eight times revenue.
0:06:24 Mirroring our client base,
0:06:26 we were disciplined about pricing
0:06:30 and said no to many potential clients.
0:06:34 My first consulting firm, Profit, said yes to every client,
0:06:38 and it sold for 2.8 times revenue.
0:06:39 It was the right decision at the time,
0:06:42 as I didn’t have the capital to utter the sexiest word
0:06:46 in the English language, no.
0:06:48 Saying no is the correct strategy
0:06:52 for a consulting firm or a luxury brand,
0:06:55 but not for a university.
0:06:58 Yet the top 2% of institutions
0:07:01 have decided they are luxury brands,
0:07:05 saying no to more than 90% of their applicants.
0:07:09 When I applied to UCLA, the acceptance rate was 76%.
0:07:14 Last year, it was 9%.
0:07:16 Throughout the second half of the 20th century,
0:07:18 higher education was the key
0:07:22 that allowed remarkably unremarkable kids, like me,
0:07:26 to unlock America’s promise of upward mobility.
0:07:31 Today, higher ed is a bouncer at the entrance to an exclusive club
0:07:33 where wealthy kids and a cadre
0:07:36 of freakishly remarkable 18-year-olds
0:07:38 build lasting relationships
0:07:41 and lucrative networks with elite peers
0:07:43 while obtaining certification
0:07:44 that gives them access
0:07:48 to the greatest wealth-generating vehicles in history.
0:07:53 S&P 500 companies.
0:07:55 In my sophomore year at UCLA,
0:07:58 I learned my limits were not my real limits.
0:08:00 Crew.
0:08:02 Realized I would not be a doctor.
0:08:04 Chemistry.
0:08:07 Became less insecure about my insecurities.
0:08:09 Psychology.
0:08:11 Fell in love for the first time
0:08:13 and developed resilience.
0:08:16 Heart broken.
0:08:17 I’d like to think all these things
0:08:21 would have happened whether or not I attended college,
0:08:23 but they likely wouldn’t have happened
0:08:26 in such a safe and joyous place.
0:08:28 But my sense is the college experience
0:08:32 isn’t as appealing as it once was.
0:08:34 The University of Michigan, for example,
0:08:36 is a world-class institution
0:08:40 that also provides students with the college experience.
0:08:43 Except there’s something rotten in Ann Arbor.
0:08:48 Michigan invested $250 million in DEI programs
0:08:50 over the past decade.
0:08:52 The result?
0:08:54 More conflict.
0:08:55 A culture of grievance.
0:09:00 And a 33x increase in complaints involving race,
0:09:03 religion, or national origin.
0:09:07 Meanwhile, Michigan’s pro-Palestinian student assembly
0:09:11 voted to withhold $1.3 million in funding
0:09:12 for student activities
0:09:16 until the university divested from Israel.
0:09:18 Two months into the fall semester,
0:09:21 the same student assembly reversed course
0:09:24 when they realized defunding ultimate frisbee
0:09:27 made zero fucking sense.
0:09:30 In response, pro-Palestinian activists
0:09:37 accused the assembly members of complicity in genocide.
0:09:40 It may be this march of the zombies at elite schools
0:09:43 that explains why southern universities
0:09:46 experienced a 30% jump in applicants
0:09:51 from kids in the northeast between 2018 and 2022.
0:09:54 Georgia, 48% acceptance rate.
0:09:58 Clemson, 51% acceptance rate.
0:10:02 And Alabama, 83% acceptance rate.
0:10:06 Aren’t elite schools, but southern schools
0:10:07 are generally less expensive
0:10:10 and seen as less political.
0:10:12 They’re also more likely to embrace
0:10:14 the traditional college experience,
0:10:20 i.e. football games, Greek life, and fun.
0:10:24 State schools have registered an 82% increase
0:10:27 in applications since 2019
0:10:31 as they offer a better value.
0:10:34 The whales of high-tuition prestige universities
0:10:37 are international students.
0:10:41 At NYU, they constitute 22% of our student body
0:10:44 and likely half our cash flow
0:10:47 as they’re ineligible for financial aid.
0:10:50 We claim we let them in for diversity.
0:10:52 This is bullshit.
0:10:57 International students are the least diverse cohort on earth,
0:11:01 i.e. they are the richest kids on campus.
0:11:05 Letting in the daughter of a Taiwanese private equity billionaire
0:11:07 isn’t helping diversity,
0:11:10 but claiming it is illustrates just how far we’ve fallen
0:11:14 from the original goal of affirmative action.
0:11:18 Note, international PhD students, whom we pay,
0:11:23 are some of the most impressive young people on the planet.
0:11:27 In 1960, Harvard, Yale, and Princeton
0:11:30 had a total of 15 black students
0:11:33 out of a combined enrollment of 3,000.
0:11:35 That was a problem,
0:11:39 and shifting to race-based admissions made sense.
0:11:47 In 2024, 65% of students at Harvard identified as non-white.
0:11:49 The Ivy League, as a whole,
0:11:55 now scores high in the U.S. News & World Report Diversity Index.
0:11:56 This is a wonderful thing,
0:12:01 as black students, along with Asians, women, LGBTQ people,
0:12:03 and folks from other groups,
0:12:06 have historically been excluded from elite colleges.
0:12:11 But at this point, the cost of race-based affirmative action
0:12:13 outweighs the utility.
0:12:19 Affirmative action should be based on one color, green.
0:12:22 It’s poor kids who need a hand-up.
0:12:27 Identity politics have been weaponized by a DEI apparatus
0:12:31 on campuses that doesn’t translate to progress,
0:12:35 but student debt.
0:12:37 When the University of California system
0:12:40 banned affirmative action in 1995,
0:12:43 the number of black and Latino first-year students
0:12:47 plunged by nearly half at UCLA and UC Berkeley.
0:12:51 But over time, the numbers rebounded.
0:12:56 By 2021, UCLA’s first-year class included more black students,
0:13:00 346 or 7.6%,
0:13:07 than its 1995 class, 259 or 7.3%.
0:13:10 While the UC Chancellor submitted an amicus brief
0:13:14 supporting affirmative action at elite private schools,
0:13:18 they achieved similar results by implementing
0:13:23 an admission guarantee to top-performing students statewide,
0:13:27 as well as an admissions process that factors in the location of an applicant’s
0:13:32 home and high school.
0:13:35 While the Supreme Court banned race-based admissions,
0:13:39 affirmative action for the rich, aka legacy admissions,
0:13:43 continues. Not so fun fact?
0:13:47 Elite schools began using legacy admissions in the 1920s,
0:13:50 along with standardized tests, interviews,
0:13:56 and extracurricular activities to keep out Jews.
0:14:00 Despite its ugly origins, more than half the schools
0:14:03 in the U.S. continue to use legacy admissions,
0:14:10 and 40% of students nationwide benefit from such preferences.
0:14:17 At Harvard, legacies accounted for 36% of the class of 2022.
0:14:21 Culture wars center the fight around race-based preferences,
0:14:26 but elite universities are businesses, and the only color that really matters
0:14:31 is, again, green. For loyal, wealthy customers,
0:14:36 the legacy advantage is remarkable. Here’s the thing.
0:14:38 I don’t have a problem with legacy admissions.
0:14:43 When I was at Haas, there was a student who was obviously a legacy, i.e. their
0:14:46 billionaire father donated to get them into business school.
0:14:50 That’s a good thing if the money is used to expand
0:14:55 access for other students. My problem with higher education
0:14:59 is that we’re whores who aren’t transparent about being whores.
0:15:03 Many faculty and administrators forego higher paying careers
0:15:08 as they believe in the mission. Most, like the rest of us,
0:15:13 wake up every day and ask, “How can I increase my compensation
0:15:18 while reducing my accountability?” They found the answer in the LVMH
0:15:24 strategy, only hitch. College degrees aren’t Birkenbags,
0:15:28 and higher ed is not only the best path to economic security,
0:15:32 it will also shape the view of many, if not most,
0:15:36 of the people running the world for the next century.
0:15:41 The last time I wrote about higher ed, I received three cease and desist letters
0:15:46 from universities we said were likely to perish.
0:15:53 DEI, ethics, sustainability, leadership, and near anything with the word
0:15:57 “studies” in its title, is no longer about helping people,
0:16:04 but welfare for the overeducated. Here’s the dirty secret. Using AI,
0:16:09 software, the abolishment of tenure, and higher standards for faculty,
0:16:17 we could cut costs 30% and tuition conservatively in half.
0:16:21 We wouldn’t need student debt bailouts because kids wouldn’t need
0:16:24 student loans.
0:16:31 Five states and a handful of elite schools recently banned legacy admissions.
0:16:35 My Prof. G. Markets co-host Ed Elson believes the practice will be gone in a
0:16:40 few years, as donations no longer guarantee acceptance.
0:16:45 I disagree. Donating isn’t entirely transactional.
0:16:50 When I gave to UCLA and UC Berkeley, the chancellors were explicit.
0:16:55 A donation wouldn’t make it easier for my kid to get in.
0:16:59 In fact, it likely makes it harder. And that’s fine.
0:17:03 I donated to give an overdue nod to the Californian
0:17:08 and American taxpayers who invested in me. I also donated out of ego.
0:17:14 It wasn’t anonymous. Being a provider makes me feel masculine.
0:17:18 Still, Ed has a point about why many people donate.
0:17:22 Last year saw a 2% drop in private donations to universities
0:17:26 despite the strong economy and the market hitting new highs.
0:17:31 The $1.5 billion that might otherwise have gone toward donations
0:17:35 is likely up for grabs, as parental admissions anxiety is closely
0:17:38 correlated with the size of your bank account.
0:17:43 Such anxiety will likely supersize the emerging college admission consulting
0:17:47 complex. Soon it won’t be an advantage to hire a
0:17:52 consultant, but a disadvantage if you don’t.
0:17:56 I’m not suggesting we shouldn’t have elite schools that have exceptionally
0:18:00 high standards, but embracing a for-profit business model
0:18:04 more suited for Panerai than a public service,
0:18:07 unnecessarily restricting supply for money and ego,
0:18:13 is just plain wrong. We have the pill, the miracle
0:18:17 drug. Any university that has an endowment
0:18:21 over a billion that’s not expanding its freshman class
0:18:25 faster than the population should lose its tax-free status,
0:18:29 as they are no longer a place of learning but a hedge fund
0:18:34 offering classes. And schools should be on the hook for 50% of bad
0:18:40 debt from student loans. I can’t imagine the economic stress levyed across
0:18:46 American households who don’t have a spare $250,000 lying around.
0:18:51 It should be noted that many schools like ASU, Purdue, the University of
0:18:54 Illinois system offer free tuition to students who
0:19:01 meet minimum academic requirements. Also, 17 states provide tuition free
0:19:06 vocational programs via community colleges.
0:19:12 If grief is love’s souvenir, then anxiety is love’s tax.
0:19:16 I never cared much about anything until I had boys,
0:19:20 but now I’m anxious all the time despite having the funds for my boys’
0:19:25 education. We’ve lost the script. The leadership and
0:19:29 faculty of elite universities have morphed from public servants
0:19:35 to Birkenbags. Whether you’re a stressed kid in high school,
0:19:40 a family saving for college, an anxious parent, a college grad or dropout
0:19:45 struggling with student debt that’s difficult to discharge in bankruptcy,
0:19:48 or someone being asked to bail out someone who had opportunities not
0:19:55 afforded to you, we’re all paying the price.
0:20:05 Life is so rich.
0:20:09 [Music]
0:20:17 [BLANK_AUDIO]
0:00:07 If you struggle just to get your customers to notice you,
0:00:10 Constant Contact has what you need to grab their attention.
0:00:15 Constant Contact’s award-winning marketing platform offers all the automation,
0:00:20 integration, and reporting tools that get your marketing running seamlessly,
0:00:23 all backed by their expert live customer support.
0:00:27 It’s time to get going and growing with Constant Contact today.
0:00:30 Ready? Set. Grow.
0:00:34 Go to ConstantContact.ca and start your free trial today.
0:00:38 Go to ConstantContact.ca for your free trial.
0:00:41 ConstantContact.ca.
0:00:51 Autograph collection hotels offer over 300 independent hotels around the world,
0:00:54 each exactly like nothing else.
0:00:59 Hands selected for their inherent craft, each hotel tells its own unique story
0:01:02 through distinctive design and immersive experiences,
0:01:05 from medieval falconry to volcanic wine tasting.
0:01:09 Autograph collection is part of the Marriott Bonvoy portfolio
0:01:12 of over 30 hotel brands around the world.
0:01:16 Find the unforgettable at AutographCollection.com.
0:01:21 Do you feel like your leads never lead anywhere?
0:01:23 And you’re making content that no one sees,
0:01:26 and it takes forever to build a campaign?
0:01:29 Well, that’s why we built HubSpot.
0:01:32 It’s an AI-powered customer platform that builds campaigns for you,
0:01:34 tells you which leads are worth knowing,
0:01:39 and makes writing blogs, creating videos, and posting on social abrees.
0:01:42 So now, it’s easier than ever to be a marketer.
0:01:45 Get started at HubSpot.com/Marketers.
0:01:52 I’m Scott Galloway, and this is No Mercy, No Mouse.
0:01:54 College is a wonder drug.
0:01:58 College admissions is a nightmare.
0:02:02 High anxiety, as read by George Hahn.
0:02:11 I just returned from the U.S. and was struck by how tense things are.
0:02:16 It feels similar to what I imagined the mood was during the Vietnam War.
0:02:20 So let’s take a break and discuss something even more stressful.
0:02:24 College admissions. Yay!
0:02:27 Last week, I did a college tour with my son.
0:02:31 It was a chance for us to bond and bask in the infinite possibilities
0:02:33 that stretch out in front of him.
0:02:35 The previous sentence is a lie.
0:02:41 The college admissions process has kicked off two years before he sets foot on a campus,
0:02:44 and it’s already a flaming bag of shit,
0:02:49 where a flaming bag of shit is a ton of unnecessary stress.
0:02:54 My industry, higher ed, is corrupt and second only to poverty
0:02:58 regarding preventable stress in U.S. households.
0:03:02 Note, you likely had the reflexive SNAPS fire of,
0:03:05 “Reducing poverty is not that simple.”
0:03:09 No, it is that simple.
0:03:15 It would just mean lower stock prices and a more progressive tax policy.
0:03:18 The incumbents deploy the illusion of complexity
0:03:22 as a weapon of mass distraction from a simple hard truth.
0:03:28 The U.S. chooses to let one in five households with children live in poverty,
0:03:31 but that’s another post.
0:03:34 Despite the lie we tell ourselves,
0:03:35 you don’t need college,
0:03:38 in a vain attempt to opt out of the stress,
0:03:43 higher education is in fact a wonder drug.
0:03:47 A pill that extends life makes you happier, healthier and wealthier
0:03:51 and strengthens your relationships.
0:03:54 America is the world’s premier manufacturer,
0:03:59 producing a compound at a purity no other manufacturer can rival.
0:04:05 No nation dominates any industry the way the U.S. dominates higher ed.
0:04:09 Millions come to the U.S. to access this drug.
0:04:12 In a rational world, we’d scale it.
0:04:16 Instead, we sequester it behind ivy-covered walls
0:04:21 and tuition that commands a gross margin of 90% plus.
0:04:28 And for centuries, we prescribed this cure all exclusively to white men.
0:04:32 Despite a 6% increase in applications this year,
0:04:37 there’s a narrative questioning the value of a college degree.
0:04:40 I’m often asked, “Is college worth the price?”
0:04:43 My answer? Mostly yes.
0:04:47 My hunch is that decades of news stories
0:04:52 about for-profit scam schools, student loan debt and income inequality
0:04:54 have dinged the college brand,
0:04:59 as those narratives speak to a sense of stagnation for people
0:05:04 who once viewed universities as an on-ramp to a wealthy lifestyle.
0:05:07 In a digital economy where everyone has access to everything,
0:05:10 there are more students applying to the top schools,
0:05:13 giving the top schools access to better students,
0:05:18 all of which creates an upward spiral of strength among the strong.
0:05:22 Lower-tier schools, however, are struggling.
0:05:28 Since 2020, 64 colleges have either closed or merged.
0:05:31 Meanwhile, the myth of “education always pays off”
0:05:34 has been busted at tier two schools,
0:05:39 many of which offer a Hyundai for a Mercedes price.
0:05:46 The strongest brands in the world, MIT, Apple, Hermes, the US,
0:05:49 are built on the artificial choking of supply
0:05:54 via rejectionist admissions, premium pricing strategies,
0:05:59 limited production, and rationing visas, respectively.
0:06:01 My business intelligence firm, L2,
0:06:04 advised nearly every luxury business.
0:06:07 The firm was founded on a simple premise.
0:06:11 Prestige brands trade at higher multiples of revenue
0:06:14 due to increasing income inequality
0:06:18 and their ability to manufacture scarcity.
0:06:22 We sold the company in 2017 for eight times revenue.
0:06:24 Mirroring our client base,
0:06:26 we were disciplined about pricing
0:06:30 and said no to many potential clients.
0:06:34 My first consulting firm, Profit, said yes to every client,
0:06:38 and it sold for 2.8 times revenue.
0:06:39 It was the right decision at the time,
0:06:42 as I didn’t have the capital to utter the sexiest word
0:06:46 in the English language, no.
0:06:48 Saying no is the correct strategy
0:06:52 for a consulting firm or a luxury brand,
0:06:55 but not for a university.
0:06:58 Yet the top 2% of institutions
0:07:01 have decided they are luxury brands,
0:07:05 saying no to more than 90% of their applicants.
0:07:09 When I applied to UCLA, the acceptance rate was 76%.
0:07:14 Last year, it was 9%.
0:07:16 Throughout the second half of the 20th century,
0:07:18 higher education was the key
0:07:22 that allowed remarkably unremarkable kids, like me,
0:07:26 to unlock America’s promise of upward mobility.
0:07:31 Today, higher ed is a bouncer at the entrance to an exclusive club
0:07:33 where wealthy kids and a cadre
0:07:36 of freakishly remarkable 18-year-olds
0:07:38 build lasting relationships
0:07:41 and lucrative networks with elite peers
0:07:43 while obtaining certification
0:07:44 that gives them access
0:07:48 to the greatest wealth-generating vehicles in history.
0:07:53 S&P 500 companies.
0:07:55 In my sophomore year at UCLA,
0:07:58 I learned my limits were not my real limits.
0:08:00 Crew.
0:08:02 Realized I would not be a doctor.
0:08:04 Chemistry.
0:08:07 Became less insecure about my insecurities.
0:08:09 Psychology.
0:08:11 Fell in love for the first time
0:08:13 and developed resilience.
0:08:16 Heart broken.
0:08:17 I’d like to think all these things
0:08:21 would have happened whether or not I attended college,
0:08:23 but they likely wouldn’t have happened
0:08:26 in such a safe and joyous place.
0:08:28 But my sense is the college experience
0:08:32 isn’t as appealing as it once was.
0:08:34 The University of Michigan, for example,
0:08:36 is a world-class institution
0:08:40 that also provides students with the college experience.
0:08:43 Except there’s something rotten in Ann Arbor.
0:08:48 Michigan invested $250 million in DEI programs
0:08:50 over the past decade.
0:08:52 The result?
0:08:54 More conflict.
0:08:55 A culture of grievance.
0:09:00 And a 33x increase in complaints involving race,
0:09:03 religion, or national origin.
0:09:07 Meanwhile, Michigan’s pro-Palestinian student assembly
0:09:11 voted to withhold $1.3 million in funding
0:09:12 for student activities
0:09:16 until the university divested from Israel.
0:09:18 Two months into the fall semester,
0:09:21 the same student assembly reversed course
0:09:24 when they realized defunding ultimate frisbee
0:09:27 made zero fucking sense.
0:09:30 In response, pro-Palestinian activists
0:09:37 accused the assembly members of complicity in genocide.
0:09:40 It may be this march of the zombies at elite schools
0:09:43 that explains why southern universities
0:09:46 experienced a 30% jump in applicants
0:09:51 from kids in the northeast between 2018 and 2022.
0:09:54 Georgia, 48% acceptance rate.
0:09:58 Clemson, 51% acceptance rate.
0:10:02 And Alabama, 83% acceptance rate.
0:10:06 Aren’t elite schools, but southern schools
0:10:07 are generally less expensive
0:10:10 and seen as less political.
0:10:12 They’re also more likely to embrace
0:10:14 the traditional college experience,
0:10:20 i.e. football games, Greek life, and fun.
0:10:24 State schools have registered an 82% increase
0:10:27 in applications since 2019
0:10:31 as they offer a better value.
0:10:34 The whales of high-tuition prestige universities
0:10:37 are international students.
0:10:41 At NYU, they constitute 22% of our student body
0:10:44 and likely half our cash flow
0:10:47 as they’re ineligible for financial aid.
0:10:50 We claim we let them in for diversity.
0:10:52 This is bullshit.
0:10:57 International students are the least diverse cohort on earth,
0:11:01 i.e. they are the richest kids on campus.
0:11:05 Letting in the daughter of a Taiwanese private equity billionaire
0:11:07 isn’t helping diversity,
0:11:10 but claiming it is illustrates just how far we’ve fallen
0:11:14 from the original goal of affirmative action.
0:11:18 Note, international PhD students, whom we pay,
0:11:23 are some of the most impressive young people on the planet.
0:11:27 In 1960, Harvard, Yale, and Princeton
0:11:30 had a total of 15 black students
0:11:33 out of a combined enrollment of 3,000.
0:11:35 That was a problem,
0:11:39 and shifting to race-based admissions made sense.
0:11:47 In 2024, 65% of students at Harvard identified as non-white.
0:11:49 The Ivy League, as a whole,
0:11:55 now scores high in the U.S. News & World Report Diversity Index.
0:11:56 This is a wonderful thing,
0:12:01 as black students, along with Asians, women, LGBTQ people,
0:12:03 and folks from other groups,
0:12:06 have historically been excluded from elite colleges.
0:12:11 But at this point, the cost of race-based affirmative action
0:12:13 outweighs the utility.
0:12:19 Affirmative action should be based on one color, green.
0:12:22 It’s poor kids who need a hand-up.
0:12:27 Identity politics have been weaponized by a DEI apparatus
0:12:31 on campuses that doesn’t translate to progress,
0:12:35 but student debt.
0:12:37 When the University of California system
0:12:40 banned affirmative action in 1995,
0:12:43 the number of black and Latino first-year students
0:12:47 plunged by nearly half at UCLA and UC Berkeley.
0:12:51 But over time, the numbers rebounded.
0:12:56 By 2021, UCLA’s first-year class included more black students,
0:13:00 346 or 7.6%,
0:13:07 than its 1995 class, 259 or 7.3%.
0:13:10 While the UC Chancellor submitted an amicus brief
0:13:14 supporting affirmative action at elite private schools,
0:13:18 they achieved similar results by implementing
0:13:23 an admission guarantee to top-performing students statewide,
0:13:27 as well as an admissions process that factors in the location of an applicant’s
0:13:32 home and high school.
0:13:35 While the Supreme Court banned race-based admissions,
0:13:39 affirmative action for the rich, aka legacy admissions,
0:13:43 continues. Not so fun fact?
0:13:47 Elite schools began using legacy admissions in the 1920s,
0:13:50 along with standardized tests, interviews,
0:13:56 and extracurricular activities to keep out Jews.
0:14:00 Despite its ugly origins, more than half the schools
0:14:03 in the U.S. continue to use legacy admissions,
0:14:10 and 40% of students nationwide benefit from such preferences.
0:14:17 At Harvard, legacies accounted for 36% of the class of 2022.
0:14:21 Culture wars center the fight around race-based preferences,
0:14:26 but elite universities are businesses, and the only color that really matters
0:14:31 is, again, green. For loyal, wealthy customers,
0:14:36 the legacy advantage is remarkable. Here’s the thing.
0:14:38 I don’t have a problem with legacy admissions.
0:14:43 When I was at Haas, there was a student who was obviously a legacy, i.e. their
0:14:46 billionaire father donated to get them into business school.
0:14:50 That’s a good thing if the money is used to expand
0:14:55 access for other students. My problem with higher education
0:14:59 is that we’re whores who aren’t transparent about being whores.
0:15:03 Many faculty and administrators forego higher paying careers
0:15:08 as they believe in the mission. Most, like the rest of us,
0:15:13 wake up every day and ask, “How can I increase my compensation
0:15:18 while reducing my accountability?” They found the answer in the LVMH
0:15:24 strategy, only hitch. College degrees aren’t Birkenbags,
0:15:28 and higher ed is not only the best path to economic security,
0:15:32 it will also shape the view of many, if not most,
0:15:36 of the people running the world for the next century.
0:15:41 The last time I wrote about higher ed, I received three cease and desist letters
0:15:46 from universities we said were likely to perish.
0:15:53 DEI, ethics, sustainability, leadership, and near anything with the word
0:15:57 “studies” in its title, is no longer about helping people,
0:16:04 but welfare for the overeducated. Here’s the dirty secret. Using AI,
0:16:09 software, the abolishment of tenure, and higher standards for faculty,
0:16:17 we could cut costs 30% and tuition conservatively in half.
0:16:21 We wouldn’t need student debt bailouts because kids wouldn’t need
0:16:24 student loans.
0:16:31 Five states and a handful of elite schools recently banned legacy admissions.
0:16:35 My Prof. G. Markets co-host Ed Elson believes the practice will be gone in a
0:16:40 few years, as donations no longer guarantee acceptance.
0:16:45 I disagree. Donating isn’t entirely transactional.
0:16:50 When I gave to UCLA and UC Berkeley, the chancellors were explicit.
0:16:55 A donation wouldn’t make it easier for my kid to get in.
0:16:59 In fact, it likely makes it harder. And that’s fine.
0:17:03 I donated to give an overdue nod to the Californian
0:17:08 and American taxpayers who invested in me. I also donated out of ego.
0:17:14 It wasn’t anonymous. Being a provider makes me feel masculine.
0:17:18 Still, Ed has a point about why many people donate.
0:17:22 Last year saw a 2% drop in private donations to universities
0:17:26 despite the strong economy and the market hitting new highs.
0:17:31 The $1.5 billion that might otherwise have gone toward donations
0:17:35 is likely up for grabs, as parental admissions anxiety is closely
0:17:38 correlated with the size of your bank account.
0:17:43 Such anxiety will likely supersize the emerging college admission consulting
0:17:47 complex. Soon it won’t be an advantage to hire a
0:17:52 consultant, but a disadvantage if you don’t.
0:17:56 I’m not suggesting we shouldn’t have elite schools that have exceptionally
0:18:00 high standards, but embracing a for-profit business model
0:18:04 more suited for Panerai than a public service,
0:18:07 unnecessarily restricting supply for money and ego,
0:18:13 is just plain wrong. We have the pill, the miracle
0:18:17 drug. Any university that has an endowment
0:18:21 over a billion that’s not expanding its freshman class
0:18:25 faster than the population should lose its tax-free status,
0:18:29 as they are no longer a place of learning but a hedge fund
0:18:34 offering classes. And schools should be on the hook for 50% of bad
0:18:40 debt from student loans. I can’t imagine the economic stress levyed across
0:18:46 American households who don’t have a spare $250,000 lying around.
0:18:51 It should be noted that many schools like ASU, Purdue, the University of
0:18:54 Illinois system offer free tuition to students who
0:19:01 meet minimum academic requirements. Also, 17 states provide tuition free
0:19:06 vocational programs via community colleges.
0:19:12 If grief is love’s souvenir, then anxiety is love’s tax.
0:19:16 I never cared much about anything until I had boys,
0:19:20 but now I’m anxious all the time despite having the funds for my boys’
0:19:25 education. We’ve lost the script. The leadership and
0:19:29 faculty of elite universities have morphed from public servants
0:19:35 to Birkenbags. Whether you’re a stressed kid in high school,
0:19:40 a family saving for college, an anxious parent, a college grad or dropout
0:19:45 struggling with student debt that’s difficult to discharge in bankruptcy,
0:19:48 or someone being asked to bail out someone who had opportunities not
0:19:55 afforded to you, we’re all paying the price.
0:20:05 Life is so rich.
0:20:09 [Music]
0:20:17 [BLANK_AUDIO]
As read by George Hahn.
High Anxiety
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