0:00:01.640,0:00:04.779 This is a story about capitalism. 0:00:04.779,0:00:06.567 It's a system I love 0:00:06.567,0:00:11.291 because of the successes and opportunities[br]it's afforded me and millions of others. 0:00:11.791,0:00:18.056 I started in my 20s trading commodities,[br]cotton in particular, in the pits, 0:00:18.056,0:00:21.682 and if there was ever a free market[br]free-for-all, this was it, 0:00:21.682,0:00:25.300 where men wearing ties [br]but acting like gladiators 0:00:25.300,0:00:28.787 fought literally [br]and physically for a profit. 0:00:29.437,0:00:32.360 Fortunately, I was good enough[br]that by the time I was 30, 0:00:32.360,0:00:36.020 I was able to move into the upstairs [br]world of money management, 0:00:36.020,0:00:39.572 where I spent the next three decades[br]as a global macro trader. 0:00:39.572,0:00:42.846 And over that time, I've seen[br]a lot of crazy things in the markets, 0:00:42.846,0:00:47.529 and I've traded a lot of crazy manias. 0:00:47.529,0:00:49.638 And unfortunately, 0:00:49.638,0:00:52.938 I'm sad to report that right now [br]we might be in the grips 0:00:52.938,0:00:56.894 of one of the most disastrous,[br]certainly of my career, 0:00:56.894,0:01:00.115 and one consistent takeaway is[br]manias never end well. 0:01:00.775,0:01:03.581 Now, over the past 50 years, 0:01:03.581,0:01:09.432 we as a society have come to view[br]our companies and corporations 0:01:09.432,0:01:14.238 in a very narrow, almost[br]monomaniacal fashion 0:01:14.988,0:01:18.255 with regard to how we value them, 0:01:18.255,0:01:21.924 and we have put[br]so much emphasis on profits, 0:01:21.924,0:01:24.710 on short-term quarterly[br]earnings and share prices, 0:01:24.710,0:01:27.550 at the exclusion of all else. 0:01:27.550,0:01:32.319 It's like we've ripped the humanity[br]out of our companies. 0:01:32.319,0:01:36.313 Now, we don't do that --[br]conveniently reduce something 0:01:36.313,0:01:39.521 to a set of numbers that you[br]can play with like Lego toys -- 0:01:39.521,0:01:41.869 we don't do that in our individual life. 0:01:41.869,0:01:45.072 We don't treat somebody or value them 0:01:45.072,0:01:49.213 based on their monthly income [br]or their credit score, 0:01:49.213,0:01:51.020 but we have this double standard 0:01:51.020,0:01:53.565 when it comes to the way[br]that we value our businesses, 0:01:53.565,0:01:55.050 and you know what? 0:01:55.050,0:01:58.215 It's threatening the very[br]underpinnings of our society. 0:01:58.215,0:01:59.817 And here's how you'll see. 0:01:59.817,0:02:04.322 This chart is corporate profit margins[br]going back 40 years 0:02:04.322,0:02:06.400 as a percentage of revenues, 0:02:06.400,0:02:10.707 and you can see that we're[br]at a 40-year high of 12.5 percent. 0:02:10.707,0:02:14.259 Now, hooray if you're a shareholder,[br] 0:02:14.259,0:02:18.526 but if you're the other side of that,[br]and you're the average American worker, 0:02:18.526,0:02:21.833 then you can see it's not[br]such a good thing. 0:02:21.833,0:02:25.410 ["U.S. Share of Income Going to Labor vs.[br]CEO-to-Worker Compensation Ratio"] 0:02:25.410,0:02:28.527 Now, higher profit margins[br]do not increase societal wealth. 0:02:28.527,0:02:33.766 What they actually do is they[br]exacerbate income inequality, 0:02:33.766,0:02:36.166 and that's not a good thing. 0:02:36.166,0:02:38.627 But intuitively, that makes sense, right? 0:02:38.627,0:02:42.250 Because if the top 10 percent[br]of American families 0:02:42.250,0:02:44.610 own 90 percent of the stocks, 0:02:44.610,0:02:47.571 as they take a greater share[br]of corporate profits, 0:02:47.571,0:02:51.514 then there's less wealth left[br]for the rest of society. 0:02:51.514,0:02:54.300 Again, income inequality[br]is not a good thing. 0:02:54.300,0:02:56.761 This next chart,[br]made by The Equality Trust, 0:02:56.761,0:03:01.614 shows 21 countries from Austria[br]to Japan to New Zealand. 0:03:01.614,0:03:04.818 On the horizontal axis[br]is income inequality. 0:03:04.818,0:03:08.116 The further to the right you go,[br]the greater the income inequality. 0:03:08.116,0:03:11.459 On the vertical axis[br]are nine social and health metrics. 0:03:11.459,0:03:14.222 The more you go up that,[br]the worse the problems are, 0:03:14.222,0:03:19.470 and those metrics include life expectancy,[br]teenage pregnancy, literacy, 0:03:19.470,0:03:22.210 social mobility, just to name a few. 0:03:22.210,0:03:25.391 Now, those of you in the audience[br]who are Americans may wonder, 0:03:25.391,0:03:27.736 well, where does the United States rank? 0:03:27.736,0:03:29.593 Where does it lie on that chart? 0:03:29.593,0:03:31.288 And guess what? 0:03:31.288,0:03:33.370 We're literally off the chart. 0:03:33.970,0:03:35.793 Yes, that's us, 0:03:35.793,0:03:37.952 with the greatest income inequality 0:03:37.952,0:03:42.248 and the greatest social problems,[br]according to those metrics. 0:03:42.248,0:03:44.802 Now, here's a macro forecast[br]that's easy to make, 0:03:44.802,0:03:48.401 and that's, that gap between[br]the wealthiest and the poorest, 0:03:48.401,0:03:50.421 it will get closed. 0:03:50.421,0:03:52.010 History always does it. 0:03:52.010,0:03:54.159 It typically happens in one of three ways: 0:03:54.159,0:04:00.560 either through revolution,[br]higher taxes, or wars. 0:04:00.560,0:04:02.889 None of those are on my bucket list. 0:04:02.889,0:04:04.025 (Laughter) 0:04:04.025,0:04:06.086 Now, there's another way to do it, 0:04:06.086,0:04:10.226 and that's by increasing justness[br]in corporate behavior, 0:04:10.226,0:04:12.989 but the way that we're[br]operating right now, 0:04:12.989,0:04:16.983 that would require[br]a tremendous change in behavior, 0:04:16.983,0:04:20.930 and like an addict trying to kick a habit, 0:04:20.930,0:04:24.436 the first step is to acknowledge[br]that you have a problem. 0:04:24.436,0:04:28.337 And let me just say,[br]this profits mania that we're on 0:04:28.337,0:04:30.636 is so deeply entrenched 0:04:30.636,0:04:33.167 that we don't even realize[br]how we're harming society. 0:04:33.167,0:04:37.184 Here's a small but startling example[br]of exactly how we're doing that: 0:04:37.184,0:04:40.247 this chart shows corporate giving 0:04:40.247,0:04:45.632 as a percentage of profits, [br]not revenues, over the last 30 years. 0:04:45.632,0:04:51.401 Juxtapose that to the earlier chart[br]of corporate profit margins, 0:04:51.401,0:04:55.528 and I ask you, does that feel right? 0:04:56.758,0:04:59.699 In all fairness, when I[br]started writing this, I thought, 0:04:59.699,0:05:02.160 "Oh wow, what does my company,[br]what does Tudor do?" 0:05:02.160,0:05:07.693 And I realized we give one percent[br]of corporate profits 0:05:07.693,0:05:09.423 to charity every year. 0:05:09.423,0:05:13.324 And I'm supposed to be a philanthropist. 0:05:13.324,0:05:19.623 When I realized that, I literally[br]wanted to throw up. 0:05:19.623,0:05:22.101 But the point is, this mania[br]is so deeply entrenched 0:05:22.101,0:05:27.263 that well-intentioned people like myself[br]don't even realize that we're part of it. 0:05:27.943,0:05:30.274 Now, we're not going[br]to change corporate behavior 0:05:30.274,0:05:35.591 by simply increasing corporate[br]philanthropy or charitable contributions. 0:05:35.591,0:05:38.725 And oh, by the way,[br]we've since quadrupled that, 0:05:38.725,0:05:42.974 but -- (Applause) -- Please. 0:05:42.974,0:05:46.713 But we can do it by driving[br]more just behavior. 0:05:46.713,0:05:49.754 And one way to do it is actually trusting 0:05:49.754,0:05:52.169 the system that got us[br]here in the first place, 0:05:52.169,0:05:54.282 and that's the free market system. 0:05:54.282,0:05:56.975 About a year ago,[br]some friends of mine and I 0:05:56.975,0:06:00.025 started a not-for-profit[br]called Just Capital. 0:06:00.025,0:06:01.493 Its mission is very simple: 0:06:01.493,0:06:03.988 to help companies and corporations 0:06:03.988,0:06:09.263 learn how to operate in a more just[br]fashion by using the public's input 0:06:09.263,0:06:15.574 to define exactly what the criteria are[br]for just corporate behavior. 0:06:15.574,0:06:17.989 Now, right now, there's[br]no widely accepted standard 0:06:17.989,0:06:22.331 that a company or corporation can follow,[br]and that's where Just Capital comes in, 0:06:22.331,0:06:27.651 because beginning this year and every year[br]we'll be conducting a nationwide survey 0:06:27.651,0:06:31.781 of a representative sample[br]of 20,000 Americans 0:06:31.781,0:06:34.701 to find out exactly what they think 0:06:34.701,0:06:38.579 are the criteria for justness[br]in corporate behavior. 0:06:38.579,0:06:41.591 Now, this is a model that's going[br]to start in the United States 0:06:41.591,0:06:44.226 but can be expanded[br]anywhere around the globe, 0:06:44.226,0:06:46.107 and maybe we'll find out 0:06:46.107,0:06:48.975 that the most important[br]thing for the public 0:06:48.975,0:06:54.326 is that we create living wage jobs,[br]or make healthy products, 0:06:54.326,0:06:57.577 or help, not harm, the environment. 0:06:57.577,0:07:01.850 At Just Capital, we don't know,[br]and it's not for us to decide. 0:07:01.850,0:07:03.846 We're but messengers, 0:07:03.846,0:07:07.956 but we have 100 percent confidence [br]and faith in the American public 0:07:07.956,0:07:09.190 to get it right. 0:07:09.880,0:07:13.410 So we'll release the findings[br]this September for the first time, 0:07:13.410,0:07:15.850 and then next year, we'll poll again, 0:07:15.850,0:07:18.149 and we'll take the additive step this time 0:07:18.149,0:07:21.168 of ranking the 1,000[br]largest U.S. companies 0:07:21.168,0:07:25.720 to number one to number 1,000[br]and everything in between. 0:07:25.720,0:07:28.551 We're calling it the Just Index, 0:07:28.551,0:07:33.800 and remember, we're an independent[br]not-for-profit with no bias, 0:07:33.800,0:07:38.953 and we will be giving[br]the American public a voice. 0:07:38.953,0:07:43.156 And maybe over time, we'll find out[br]that as people come to know 0:07:43.156,0:07:45.176 which companies are the most just, 0:07:45.176,0:07:49.216 human and economic resources[br]will be driven towards them, 0:07:49.216,0:07:51.190 and they'll become the most prosperous 0:07:51.190,0:07:54.021 and help our country[br]be the most prosperous. 0:07:55.351,0:07:59.457 Now, capitalism has been responsible[br]for every major innovation 0:07:59.457,0:08:03.608 that's made this world a more inspiring[br]and wonderful place to live in. 0:08:04.578,0:08:07.443 Capitalism has to be based on justice. 0:08:07.443,0:08:09.649 It has to be, and now more than ever, 0:08:09.649,0:08:13.480 with economic divisions[br]growing wider every day. 0:08:13.480,0:08:16.498 It's estimated that 47 percent[br]of American workers 0:08:16.498,0:08:19.796 can be displaced in the next 20 years. 0:08:19.796,0:08:21.769 I'm not against progress. 0:08:21.769,0:08:26.650 I want the driverless car and the jet pack[br]just like everyone else. 0:08:26.650,0:08:32.500 But I'm pleading for recognition[br]that with increased wealth and profits 0:08:32.500,0:08:37.930 has to come greater[br]corporate social responsibility. 0:08:37.930,0:08:43.665 "If justice is removed," said Adam Smith,[br]the father of capitalism, 0:08:43.665,0:08:49.419 "the great, the immense fabric[br]of human society must in a moment 0:08:49.419,0:08:53.626 crumble into atoms." 0:08:53.626,0:08:57.390 Now, when I was young,[br]and there was a problem, 0:08:57.390,0:09:01.573 my mama used to always[br]sigh and shake her head and say, 0:09:01.573,0:09:05.630 "Have mercy, have mercy." 0:09:05.630,0:09:10.181 Now's not the time for us,[br]for the rest of us to show them mercy. 0:09:10.181,0:09:13.370 The time is now for us[br]to show them fairness, 0:09:13.370,0:09:15.846 and we can do that, you and I, 0:09:15.846,0:09:21.100 by starting where we work,[br]in the businesses that we operate in. 0:09:21.100,0:09:24.460 And when we put justness[br]on par with profits, 0:09:24.460,0:09:28.408 we'll get the most wonderful thing[br]in all the world. 0:09:28.408,0:09:31.774 We'll take back our humanity. 0:09:31.774,0:09:34.421 Thank you. 0:09:34.421,0:09:38.246 (Applause)