What the U.S. Can Learn from Canada's Safety Net + The Real Cost of Private Schools and Clubs

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SPEAKER_2 (0:31)

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Scott Galloway (1:32)

Welcome to Office Hours with Prof G. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to officehoursatprofgmedia.com. Again, that's officehoursatprofgmedia.com, or post your question on the ScottGalloway subreddit, and we just might feature it in our next episode.

Question number one.

Betty (1:55)

Hi, Scott. I'm Betty from Edmonton, Canada. At the Toronto Pivot Live event, Scott said that innovation basically stops the Canadian border. My daughter, who now lives in the US, argues that Canada's stronger social safety net kills ambition and makes people less hungry to innovate. My question is, how would you strengthen the US social safety net without dampening the country's innovation engine or ambitious culture? And second, do you think the US could adopt any parts of Canada's safety net without losing what makes its economy dynamic in the first place? Thanks.

Scott Galloway (2:31)

Okay, so just some data. The US and Canada spend about the same share of their economies and social programs, but they do it very differently. Canada mostly uses public benefits. The US leans heavily on private ones, including employer health, insurance and pensions. On average, a family gets about $21,000 a year in support from Canadian provinces compared to about $12,000 from US state programs. When it comes to startups, the US massively outperformed Canada at almost any scale. Canada needs about 55 percent more investment to produce a single big startup success. Over the last decade, US metric capital exits total 2.6 trillion in the US compared to just 56 billion in Canada. And while some of that is misleading because of the population, it still on any level dwarfs what happens in Canada. And the US produced more than 4,000 exits over 10 million. Canada had fewer than 200 The trade-off is security versus upside. Canada offers a stronger safety net that isn't tied to having a job. In the US, health care benefits are often tied to work, so losing a job or a startup can mean losing coverage too. In some, America delivers bigger wins, Canada delivers more protection. So let's take a step back. Why do we do startups? Why do we want economic growth and exits?

Economic security is a wonderful thing, but if you look at happiness in where people are the happiest, it's not typically the countries that have the most upside, it's countries that oftentimes have a decent amount of upside and less real harsh downside. In other words, happiness is not only a function of what you can get or what you have, it's a function of an absence of anxiety of what can be taken from you. I think four or six of the 10 happiest countries are in Northern Europe where there's still capitalism and upside opportunity, but there's some dignity knowing you're not going to be homeless or lose your house, or be able to find health care for your kid. I would argue that in the US, we believe in winners and losers. If you want to enter into the thunderdome of unlimited upside that is America, that we have actively decided to have a lower safety net. The question is, when that safety net is just a cement floor and it ends up being economically damaging and just inhuman.