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This is a story about capitalism.
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It's a system I love
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because of the success and opportunities
it's afforded me and millions of others.
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I started in my 20s trading commodities,
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cotton in particular, in the pits,
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and if there was ever a free market
free-for-all, this was it,
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where men wearing ties
but acting like gladiators
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fought literally and physically for a profit.
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Now, fortunately, I was good enough
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that by the time I was 30,
I was able to move into
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the upstairs world of money management,
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where I spent the next three decades
as a global macro trader.
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And over that time, I've seen
a lot of crazy things in the markets,
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and I've traded a lot of crazy manias.
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And unfortunately, I'm sad to report
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that right now we might be in the grips
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of one of the most disastrous,
certainly, of my career,
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and one consistent takeaway is,
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manias never end well.
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Now, over the past 50 years,
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we as a society
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have come to view
our companies and corporations
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in a very narrow, almost
monomaniacal fashion
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with regard to how we value them,
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and we have put
so much emphasis on profits,
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on short-term quarterly
earnings and share prices,
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at the exclusion of all else.
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It's like we've ripped the humanity
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out of our companies.
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Now, we don't do that,
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conveniently reduce something
to a set of numbers
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that you can play with like Lego toys,
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we don't do that in our individual life.
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We don't treat somebody or value them
based on their monthly income,
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or their credit score,
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but we have this double standard
when it comes to the way
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that we value our business,
and you know what?
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It's threatening the very
underpinnings of our society.
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And here's how you'll see.
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This chart is corporate profit margins
going back 40 years
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as a percentage of revenues,
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and you can see that we're
at a 40-year high of 12.5 percent.
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Now, hooray if you're a shareholder,
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but if you're the other side of that,
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and you're the average American worker,
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then you can see it's not
such a good thing.
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Now, higher profit margins
do not increase societal wealth.
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What they actually do is
they exacerbate income inequality,
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and that's not a good thing.
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But intuitively, that makes sense, right?
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Because if the top 10 percent
of American families
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own 90 percent of the stocks,
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as they take a greater share
of corporate profits,
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then there's less wealth left
for the rest of society.
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Again, income inequality
is not a good thing.
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This next chart,
made by the Quality Trust,
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shows 21 countries from Austria
to Japan to New Zealand.
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On the horizontal axis
is income inequality.
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The further to the right you go,
the greater in the income inequality.
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On the vertical axis
are nine social and health metrics.
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The more you go up that,
the worse the problems are,
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and those metrics include life expectancy,
teenage pregnancy, literacy,
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social mobility, just to name a few.
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Now, those of you in the audience
who are Americans may wonder,
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well, where does the United States rank?
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Where does it lie on that chart?
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And guess what:
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we're literally off the chart.
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Yes, that's us,
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with the greatest income inequality
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and the greatest social problems,
according to those metrics.
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Now, here's a macro forecast
that's easy to make,
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and that's, that gap between
the wealthiest and the poorest,
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it will get closed.
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History always does it.
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It typically happens in one of three ways:
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either through revolution,
higher taxes, or wars.
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None of those are on my bucket list.
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(Laughter)
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Now, there's another way to do it,
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and that's by increasing justness
in corporate behavior,
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but the way that we're
operating right now,
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that would require
a tremendous change in behavior,
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and like an addict trying to kick a habit,
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the first step is to acknowledge
that you have a problem.
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And let me just say,
this profits mania that we're on
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is so deeply entrenched
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that we don't even realize
how we're harming society.
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Here's a small but startling example
of exactly how we're doing that:
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this chart shows corporate giving
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as a percentage of profits,
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not revenues, over the last 30 years.
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Juxtapose that to the earlier chart
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of corporate profit margins,
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and I ask you, does that feel right?
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In all fairness, when I
started writing this, I thought,
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"Oh wow, what does my company,
what does Tudor do?"
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And I realized we give one percent
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of corporate profits
to charity every year.
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And I'm supposed to be a philanthropist.
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When I realized that, I literally
wanted to throw up.
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But the point is, this mania
is so deeply entrenched
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that well-intentioned people like myself
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don't even realize
that we're a part of it.
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Now, we're not going
to change corporate behavior
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by simply increasing corporate
philanthropy or charitable contributions,
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and oh, by the way,
we've since quadrupled that,
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but -- (Applause) -- please,
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but we can do it by driving
more just behavior.
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And one way to do it is actually trusting
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the system that got us
here in the first place,
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and that's the free market system.
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About a year ago,
some friends of mine and I
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started a non-for-profit
called Just Capital.
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Its mission is very simple:
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to help companies and corporations
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learn how to operate
in a more just fashion
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by using the public's input
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to define exactly what the criteria are
for just corporate behavior.
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Now, right now, there's
no widely accepted standard
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that a company or corporation can follow,
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and that's where Just Capital comes in,
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because beginning this year and every year
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we'll be conducting a nationwide survey
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of a representative sample
of 20,000 Americans to find out
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exactly what they think
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are the criteria for justness
in corporate behavior.
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Now, this is a model that's going
to start in the United States
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but can be expanded
anywhere around the globe,
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and maybe we'll find out
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that the most important thing
for the public is that
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create living wage jobs,
or make healthy products,
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or help, not harm, the environment.
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At Just Capital, we don't know,
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and it's not for us to decide.
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We are but messengers,
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but we have 100 percent confidence
and faith in the American public
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to get it right.
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So we'll release the findings
this September for the first time,
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and then next year, we'll poll again,
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and we'll take the additive step this time
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of ranking the one thousand
largest U.S. companies
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to number one to number one thousand
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and everything in between.
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We're calling it the Just Index,
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and remember, we're an independent
non-for-profit with no bias,
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and we will be giving
the American public a voice.
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And maybe over time, we'll find out
that as people come to know
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which companies are the most just,
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human and economic resources
will be driven towards them,
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and they'll become the most prosperous
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and help our country
be the most prosperous.
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Now, capitalism has been responsible
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for every major innovation
that's made this world
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a more inspiring
and wonderful place to live in,
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but capitalism has to be based on justice.
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It has to be, and now more than ever,
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with economic divisions
growing wider every day.
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It's estimated that 47 percent
of American workers
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can be displaced in the next 20 years.
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I'm not against progress.
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I want the driverless car and the jet pack
just like everyone else.
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But I'm pleading for recognition
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that with increased wealth and profits
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has to come greater
corporate social responsibility.
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"If justice is removed," said Adam Smith,
the father of capitalism,
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"the great, the immense fabric
of human society must in a moment
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crumble into atoms."
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Now, when I was young,
and there was a problem,
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my momma used to always
sigh and shake her head and say,
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"Have mercy, have mercy."
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Now's not the time for us,
for the rest of us to show them mercy.
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The time is now for us
to show them fairness,
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and we can do that, you and I,
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by starting where we work,
in the businesses that we operate in.
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And when we put justness
on par with profits,
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we'll get the most wonderful thing
in the whole world.
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We'll take back our humanity.
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Thank you.
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(Applause)