0:00:00.912,0:00:04.482
I am a capitalist,

0:00:04.482,0:00:09.586
and after a 30-year career in capitalism

0:00:09.772,0:00:11.330
spanning three dozen companies

0:00:11.330,0:00:14.522
generating tens of billions[br]of dollars in market value,

0:00:14.522,0:00:20.031
I'm not just in the top one percent,[br]I'm in the top 0.1 percent of all earners.

0:00:21.686,0:00:24.755
Today, I have come to share[br]the secrets of our success,

0:00:24.755,0:00:28.756
because rich capitalists like me[br]have never been richer.

0:00:28.953,0:00:31.936
So the question is, how do we do it?

0:00:31.936,0:00:34.129
How do we manage to grab

0:00:34.129,0:00:37.611
an ever-increasing share[br]of the economic pie every year?

0:00:39.008,0:00:42.809
Is it that rich people are smarter[br]than we were 30 years ago?

0:00:44.008,0:00:46.423
Is it that we're working harder[br]than we once did?

0:00:47.732,0:00:50.488
Are we taller, better looking?

0:00:51.497,0:00:53.778
Sadly, no.

0:00:53.778,0:00:56.292
It all comes down to just one thing:

0:00:56.292,0:00:58.238
economics.

0:00:58.238,0:01:00.464
Because, here's the dirty secret.

0:01:00.464,0:01:02.804
There was a time in which[br]the economics profession

0:01:02.804,0:01:04.741
worked in the public interest for everyone

0:01:04.741,0:01:06.820
but in the neoliberal era,

0:01:06.820,0:01:07.869
today,

0:01:07.869,0:01:10.726
they work only for big corporations

0:01:10.726,0:01:12.331
and billionaires,

0:01:12.331,0:01:15.547
and that is creating[br]a little bit of a problem.

0:01:16.012,0:01:19.544
We could choose to enact economic policies

0:01:19.544,0:01:21.892
that raise taxes on the rich,

0:01:21.892,0:01:26.616
regulate powerful corporations,[br]or raise wages for workers.

0:01:26.872,0:01:28.200
We have done it before.

0:01:28.200,0:01:30.498
But neoliberal economists would warn

0:01:30.498,0:01:34.302
that all of these policies[br]would be a terrible mistake,

0:01:34.302,0:01:38.114
because raising taxes[br]always kills economic growth,

0:01:38.114,0:01:40.638
and and any form of government regulation

0:01:40.638,0:01:42.376
is inefficient,

0:01:42.376,0:01:44.916
and raising wages always kills jobs.

0:01:45.773,0:01:48.521
Well, as a consequence of that thinking,

0:01:48.521,0:01:52.930
over the last 30 years, in the USA alone,

0:01:52.930,0:01:57.360
the top one percent has grown[br]21 trillion dollars richer

0:01:57.360,0:02:02.811
while the bottom 50 percent[br]have grown 900 billion dollars poorer,

0:02:02.811,0:02:06.855
a pattern of widening inequality[br]that has largely repeated itself

0:02:06.855,0:02:08.226
across the world.

0:02:08.226,0:02:13.521
And yet, as middle class families[br]struggle to get by

0:02:13.521,0:02:16.789
on wages that have not budged[br]in about 40 years,

0:02:16.789,0:02:20.502
neoliberal economists continue to warn[br]that the only reasonable response

0:02:20.502,0:02:25.266
to the painful dislocations[br]of austerity and globalization

0:02:25.266,0:02:28.921
is even more austerity and globalization.

0:02:29.122,0:02:31.967
So, what is a society to do?

0:02:33.192,0:02:36.107
Well, it's super-clear to me[br]what we need to do.

0:02:36.107,0:02:39.780
We need a new economics.

0:02:39.780,0:02:43.509
So, economics has been described[br]as the dismal science,

0:02:43.509,0:02:44.882
and for good reason, because[br]as much as it is taught today,

0:02:44.882,0:02:51.618
it isn't a science at all, in spite of[br]all of the dazzling mathematics.

0:02:51.618,0:02:54.970
In fact, a growing number[br]of academics and practitioners

0:02:54.970,0:03:00.999
have concluded that neoliberal[br]economic theory is dangerously wrong

0:03:00.999,0:03:04.879
and that today's growing crises[br]of rising inequality

0:03:04.879,0:03:06.552
and growing political instability

0:03:06.552,0:03:11.629
are the direct result of decades[br]of bad economic theory.

0:03:11.629,0:03:17.187
What we now know is that the economics[br]that made me so rich isn't just wrong,

0:03:17.187,0:03:19.520
it's backwards,

0:03:19.520,0:03:22.186
because it turns out

0:03:22.186,0:03:25.174
it isn't capital that creates[br]economic growth,

0:03:25.174,0:03:27.322
it's people;

0:03:27.322,0:03:32.051
and it isn't self-interest[br]that promotes the public good,

0:03:32.051,0:03:34.189
it's reciprocity;

0:03:34.189,0:03:38.962
and it isn't competition[br]that produces our prosperity,

0:03:38.962,0:03:41.066
it's cooperation.

0:03:42.353,0:03:46.141
What we can now see is that an economics[br]that is neither just nor inclusive

0:03:46.141,0:03:50.945
can never sustain the high levels[br]of social cooperation

0:03:50.945,0:03:54.134
necessary to enable[br]a modern society to thrive.

0:03:54.134,0:03:57.544
So where did we go wrong?

0:03:57.712,0:04:01.695
Well, it turns out[br]that it's become painfully obvious

0:04:01.695,0:04:07.519
that the fundamental assumptions[br]that undergird neoliberal economic theory

0:04:07.519,0:04:10.068
are just objectively false,

0:04:10.846,0:04:14.974
and so today first I want to take you[br]through some of those mistaken assumptions

0:04:14.974,0:04:20.481
and then after describe where the science[br]suggests prosperity actually comes from.

0:04:21.707,0:04:25.751
So neoliberal assumption number one is

0:04:25.751,0:04:30.268
that the market is an efficient[br]equilibrium system,

0:04:30.268,0:04:36.078
which basically means that if one thing[br]in the economy, like wages, goes up,

0:04:36.078,0:04:40.258
another thing in the economy,[br]like jobs, must go down.

0:04:41.308,0:04:44.472
So for example, in Seattle, where I live,

0:04:44.472,0:04:50.280
when in 2014 we passed our nation's[br]first 15 dollar minimum wage,

0:04:50.280,0:04:55.275
the neoliberals freaked out[br]over their precious equilibrium.

0:04:55.275,0:04:58.114
"If you raise the price[br]of labor," they warned,

0:04:58.114,0:05:00.532
"business will purchase less of it.

0:05:00.532,0:05:03.100
Thousands of low-wage workers[br]will lose their jobs.

0:05:03.100,0:05:04.849
The restaurants will close."

0:05:04.849,0:05:08.456
Except, they didn't.

0:05:09.155,0:05:13.370
The unemployment rate fell dramatically.

0:05:13.370,0:05:16.368
The restaurant business in Seattle boomed.

0:05:16.368,0:05:18.171
Why?

0:05:18.171,0:05:21.935
Because there is no equilibrium.

0:05:21.935,0:05:25.212
Because raising wages[br]doesn't kill jobs, it creates them,

0:05:25.212,0:05:26.685
because, for instance,

0:05:26.685,0:05:31.433
when restaurant owners are suddenly[br]required to pay restaurant workers enough

0:05:31.433,0:05:35.346
so that now even they can afford[br]to eat in restaurants,

0:05:35.346,0:05:37.606
it doesn't shrink the restaurant business,

0:05:37.606,0:05:40.251
it grows it, obviously.

0:05:40.251,0:05:43.907
(Applause)

0:05:43.907,0:05:45.908
Thank you.

0:05:46.491,0:05:49.736
The second assumption is

0:05:49.736,0:05:55.180
that the price of something[br]is always equal to its value,

0:05:55.180,0:05:58.680
which basically means that[br]if you earn 50,000 dollars a year

0:05:58.680,0:06:01.466
and I earn 50 million dollars a year,

0:06:01.466,0:06:06.545
that's because I produce[br]a thousand times as much value as you.

0:06:06.830,0:06:12.215
Now, it will not surprise you to learn

0:06:12.215,0:06:14.127
that this is a very comforting assumption

0:06:14.127,0:06:16.541
if you're a CEO paying yourself[br]50 million dollars a year

0:06:16.541,0:06:19.203
but paying your workers poverty wages.

0:06:19.783,0:06:24.006
But please, take it from somebody[br]who has run dozens of businesses:

0:06:24.006,0:06:26.498
this is nonsense.

0:06:26.498,0:06:28.813
People are not paid what they are worth.

0:06:28.813,0:06:32.143
They are paid what they have[br]the power to negotiate,

0:06:32.143,0:06:34.816
and wages' falling share of GDP

0:06:34.816,0:06:38.266
is not because workers[br]have become less productive

0:06:38.266,0:06:41.615
but because employers[br]have become more powerful.

0:06:41.615,0:06:44.707
(Applause)

0:06:46.939,0:06:52.697
And by pretending that the giant imbalance[br]in power between capital and labor

0:06:52.697,0:06:54.655
doesn't exist,

0:06:54.655,0:06:58.056
neoliberal economic theory[br]became essentially

0:06:58.056,0:07:01.149
a protection racket for the rich.

0:07:01.806,0:07:04.006
The third assumption,[br]and by far the most pernicious,

0:07:04.006,0:07:05.940
is a behavioral model

0:07:05.940,0:07:09.692
that describes human beings[br]as something called "homo economicus,"

0:07:09.692,0:07:14.174
which basically means that[br]we are all perfectly selfish,

0:07:14.174,0:07:18.715
perfectly rational,[br]and relentlessly self-maximizing.

0:07:19.611,0:07:21.872
But just ask yourselves,

0:07:21.872,0:07:25.647
is it plausible that every single time[br]for your entire life,

0:07:25.647,0:07:27.849
when you did something[br]nice for somebody else,

0:07:27.849,0:07:31.186
all you were doing was maximizing[br]your own utility?

0:07:31.186,0:07:34.964
Is it plausible that when a soldier jumps[br]on a grenade to defend fellow soldiers,

0:07:34.964,0:07:37.766
they're just promoting[br]their narrow self-interest?

0:07:37.766,0:07:39.581
If you think that's nuts,

0:07:39.581,0:07:42.722
contrary to any reasonable[br]moral intuition,

0:07:42.722,0:07:44.574
that's because it is,

0:07:44.574,0:07:46.390
and according to the latest science,

0:07:46.390,0:07:48.020
not true.

0:07:48.020,0:07:50.559
But it is this behavioral model

0:07:50.559,0:07:53.900
which is at the cold, cruel heart[br]of neoliberal economics,

0:07:53.900,0:07:58.227
and it is as morally corrosive

0:07:58.227,0:08:00.140
as it is scientifically wrong,

0:08:00.140,0:08:05.176
because if we accept at face value

0:08:05.176,0:08:07.955
that humans are fundamentally selfish

0:08:07.955,0:08:10.045
and then we look around the world

0:08:10.045,0:08:14.014
at all of the unambiguous[br]prosperity in it,

0:08:14.014,0:08:17.332
then it follows logically,

0:08:17.332,0:08:19.098
then it must be true by definition,

0:08:19.098,0:08:22.730
that billions of individual[br]acts of selfishness

0:08:22.730,0:08:26.778
magically transubstantiate[br]into prosperity and the common good.

0:08:26.937,0:08:29.829
If we humans are merely[br]selfish maximizers,

0:08:29.829,0:08:33.374
then selfishness is the cause[br]of our prosperity.

0:08:34.069,0:08:37.026
Under this economic logic,

0:08:37.026,0:08:39.840
greed is good,

0:08:39.840,0:08:42.314
widening inequality is efficient,

0:08:42.314,0:08:44.626
and the only purpose of the corporation

0:08:44.626,0:08:47.069
can be to enrich shareholders,

0:08:47.069,0:08:50.151
because to do otherwise would be[br]to slow economic growth

0:08:50.151,0:08:52.261
and harm the economy overall.

0:08:53.540,0:08:56.857
And it is this gospel of selfishness

0:08:56.857,0:09:01.205
which forms the ideological cornerstone[br]of neoliberal economics,

0:09:01.205,0:09:04.327
a way of thinking which has[br]produced economic policies

0:09:04.327,0:09:08.665
which have enabled me and my rich buddies[br]in the top one percent

0:09:08.665,0:09:13.396
to grab virtually all of the benefits[br]of growth over the last 40 years.

0:09:13.396,0:09:16.707
But, if instead

0:09:16.707,0:09:21.055
we accept the latest empirical research,

0:09:21.055,0:09:24.327
real science, which correctly[br]describes human beings

0:09:24.327,0:09:27.557
as highly cooperative,

0:09:27.557,0:09:28.776
reciprocal,

0:09:28.776,0:09:31.786
and intuitively moral creatures,

0:09:31.786,0:09:34.097
then it follows logically

0:09:34.097,0:09:36.423
that it must be cooperation

0:09:36.423,0:09:38.591
and not selfishness

0:09:38.591,0:09:42.454
that is the cause of our prosperity,[br]and it isn't our self-interest

0:09:42.454,0:09:45.372
but rather our inherent reciprocity

0:09:45.372,0:09:49.098
that is humanity's economic superpower.

0:09:50.112,0:09:54.310
So at the heart of this new economics

0:09:54.310,0:09:59.195
is a story about ourselves that grants us[br]permission to be our best selves,

0:09:59.195,0:10:02.332
and, unlike the old economics,

0:10:02.332,0:10:05.081
this is a story that is virtuous

0:10:05.081,0:10:08.804
and also has the virtue of being true.

0:10:09.217,0:10:13.586
Now, I want to emphasize[br]that this new economics

0:10:13.586,0:10:16.802
is not something I have personally[br]imagined or invented.

0:10:16.802,0:10:19.348
Its theories and models[br]are being developed and refined

0:10:19.348,0:10:21.330
in universities around the world

0:10:21.330,0:10:24.165
building on some of the best[br]new research in economics,

0:10:24.165,0:10:26.521
complexity theory, evolutionary theory,

0:10:26.521,0:10:29.338
psychology, anthropology,[br]and other disciplines.

0:10:29.338,0:10:34.088
And although this new economics[br]does not yet have its own textbook

0:10:34.088,0:10:36.502
or even a commonly agreed upon name,

0:10:36.502,0:10:38.469
in broad strokes

0:10:38.469,0:10:42.949
its explanation of where prosperity[br]comes from goes something like this.

0:10:43.698,0:10:48.084
So, market capitalism[br]is an evolutionary system

0:10:48.084,0:10:50.700
in which prosperity emerges

0:10:50.700,0:10:52.646
through a positive feedback loop

0:10:52.646,0:10:57.090
between increasing amounts of innovation[br]and increasing amounts of consumer demand.

0:10:57.090,0:11:02.802
Innovation is the process[br]by which we solve human problems,

0:11:02.802,0:11:05.992
consumer demand is the mechanism[br]through which the market selects

0:11:05.992,0:11:08.571
for useful innovations,

0:11:08.571,0:11:11.975
and as we solve more problems,[br]we become more prosperous.

0:11:11.975,0:11:15.800
But as we become more prosperous,

0:11:15.800,0:11:17.582
our problems and solutions

0:11:17.582,0:11:20.112
become more complex,

0:11:20.112,0:11:23.436
and this increasing technical complexity

0:11:23.436,0:11:28.049
requires ever higher levels[br]of social and economic cooperation

0:11:28.049,0:11:31.000
in order to produce the more[br]highly specialized products

0:11:31.000,0:11:34.712
that define a modern economy.

0:11:36.361,0:11:40.742
Now, the old economics[br]is correct, of course,

0:11:40.742,0:11:44.463
that competition plays a crucial role[br]in how markets work,

0:11:44.463,0:11:46.473
but what it fails to see

0:11:46.473,0:11:51.442
is that it is largely a competition[br]between highly cooperative groups --

0:11:51.442,0:11:56.096
competition between firms,[br]competition between networks of firms,

0:11:56.096,0:11:58.956
competition between nations --

0:11:58.956,0:12:03.139
and anyone who has ever run[br]a successful business knows

0:12:03.139,0:12:06.793
that building a cooperative team[br]by including the talents of everyone

0:12:06.793,0:12:13.303
is almost always a better strategy[br]than just a bunch of selfish jerks.

0:12:13.303,0:12:18.855
So how do we leave neoliberalism behind

0:12:18.855,0:12:23.778
and build a more sustainable,[br]more prosperous,

0:12:23.778,0:12:27.449
and more equitable society?

0:12:28.195,0:12:31.529
The new economics suggests[br]just five rules of thumb.

0:12:32.578,0:12:39.336
First is that successful economies[br]are not jungles, they're gardens,

0:12:39.336,0:12:43.573
which is to say that markets,

0:12:43.573,0:12:47.018
like gardens, must be tended,

0:12:47.018,0:12:52.202
that the market is the greatest[br]social technology ever invented

0:12:52.202,0:12:53.783
for solving human problems,

0:12:53.783,0:12:58.934
but unconstrained by social norms[br]or democratic regulation,

0:12:58.934,0:13:02.385
markets inevitably create[br]more problems than they solve.

0:13:02.385,0:13:03.471
Climate change,

0:13:03.471,0:13:05.688
the great financial crisis of 2008

0:13:05.688,0:13:07.488
are two easy examples.

0:13:07.488,0:13:10.807
The second rule is

0:13:10.807,0:13:16.331
that inclusion creates economic growth.

0:13:16.519,0:13:19.059
So the neoliberal idea

0:13:19.059,0:13:21.296
that inclusion is this fancy luxury

0:13:21.296,0:13:26.611
to be afforded if and when we have growth[br]is both wrong and backwards.

0:13:26.611,0:13:29.995
The economy is people.

0:13:30.668,0:13:32.764
Including more people in more ways

0:13:32.764,0:13:37.046
is what causes economic growth[br]in market economies.

0:13:37.046,0:13:39.975
The third principle

0:13:39.975,0:13:45.408
is the purpose of the corporation[br]is not merely to enrich shareholders.

0:13:46.202,0:13:50.165
The greatest grift[br]in contemporary economic life

0:13:50.165,0:13:53.673
is the neoliberal idea that[br]the only purpose of the corporation

0:13:53.673,0:13:56.416
and the only responsibility of executives

0:13:56.416,0:13:59.349
is to enrich themselves and shareholders.

0:14:00.478,0:14:05.163
The new economics must and can insist

0:14:05.163,0:14:07.265
that the purpose of the corporation

0:14:07.265,0:14:09.827
is to improve the welfare[br]of all stakeholders:

0:14:09.827,0:14:11.917
customers, workers,

0:14:11.917,0:14:14.942
community and shareholders alike.

0:14:15.570,0:14:21.190
Rule four: greed is not good.

0:14:21.985,0:14:26.674
Being rapacious doesn't[br]make you a capitalist,

0:14:26.674,0:14:28.618
it makes you a sociopath.

0:14:28.618,0:14:30.926
(Laughter)

0:14:30.926,0:14:35.125
(Applause)

0:14:35.125,0:14:40.529
And in an economy as dependent[br]upon cooperation at scale as ours,

0:14:40.529,0:14:44.395
sociopathy is as bad for business[br]as it is for society.

0:14:45.606,0:14:48.463
And fifth and finally,

0:14:48.463,0:14:51.755
unlike the laws of physics,

0:14:51.755,0:14:55.357
the laws of economics are a choice.

0:14:56.618,0:14:58.489
Now, neoliberal economic theory

0:14:58.489,0:15:03.194
has sold itself to you[br]as unchangeable natural law,

0:15:03.194,0:15:07.484
when in fact it's social norms[br]and constructive narratives

0:15:07.484,0:15:09.423
based on pseudoscience.

0:15:09.423,0:15:13.800
If we truly want a more equitable,

0:15:13.800,0:15:17.291
more prosperous[br]and more sustainable economy,

0:15:17.291,0:15:19.985
if we want high-functioning democracies

0:15:19.985,0:15:21.955
and civil society,

0:15:21.955,0:15:24.988
we must have a new economics.

0:15:24.988,0:15:26.934
And here's the good news:

0:15:26.934,0:15:28.896
if we want a new economics,

0:15:28.896,0:15:32.550
all we have to do is choose to have it.

0:15:32.550,0:15:34.069
Thank you.

0:15:34.069,0:15:39.031
(Applause)

0:15:51.965,0:15:54.920
Moderator: So Nick, I'm sure[br]you get this question a lot.

0:15:54.920,0:15:59.467
If you're so unhappy[br]with the economic system,

0:15:59.467,0:16:03.467
why not just give all your money away[br]and join the 99 percent?

0:16:03.467,0:16:06.802
Nick Hanauer: Yeah, no, yes, right.

0:16:06.802,0:16:08.901
You get that a lot. You get that a lot.

0:16:08.901,0:16:12.489
"If you care so much about taxes,[br]why don't you pay more,

0:16:12.489,0:16:14.767
and if you care so much about wages,[br]why don't you pay more?"

0:16:14.767,0:16:16.517
And I could do that.

0:16:16.517,0:16:18.622
The problem is,

0:16:18.622,0:16:20.191
it doesn't make that much difference,

0:16:20.191,0:16:21.953
and I have discovered a strategy

0:16:21.953,0:16:25.720
that works literally[br]a hundred thousand times better --

0:16:25.720,0:16:26.824
Moderator: OK.

0:16:26.824,0:16:30.370
NH: -- which is to use my money[br]to build narratives and to pass laws

0:16:30.370,0:16:32.178
that will require all[br]the other rich people

0:16:32.178,0:16:34.325
to pay taxes and pay their workers better.

0:16:34.325,0:16:36.219
(Applause)

0:16:36.219,0:16:38.581
And so, for example,[br]the 15 dollar minimum wage

0:16:38.581,0:16:42.832
that we cooked up has now affected[br]30 million workers.

0:16:42.832,0:16:44.087
So that works better.

0:16:44.087,0:16:45.194
Moderator: That's great.

0:16:45.194,0:16:46.863
If you change your mind, we'll find[br]some takers for you.

0:16:46.863,0:16:48.014
(Laughter)

0:16:48.014,0:16:49.868
NH: OK. Thank you.[br]Moderator: Thank you very much.

0:16:49.868,0:16:50.440
(Applause)