0:00:01.458,0:00:04.125
I am a capitalist,

0:00:05.458,0:00:08.393
and after a 30-year career in capitalism

0:00:08.417,0:00:10.934
spanning three dozen companies

0:00:10.958,0:00:14.309
generating tens of billions[br]of dollars in market value,

0:00:14.333,0:00:20.208
I'm not just in the top one percent,[br]I'm in the top .01 percent of all earners.

0:00:21.500,0:00:24.518
Today, I have come[br]to share the secrets of our success,

0:00:24.542,0:00:28.726
because rich capitalists like me[br]have never been richer.

0:00:28.750,0:00:31.375
So the question is, how do we do it?

0:00:32.292,0:00:33.851
How do we manage to grab

0:00:33.875,0:00:37.708
an ever-increasing share[br]of the economic pie every year?

0:00:38.875,0:00:42.792
Is it that rich people are smarter[br]than we were 30 years ago?

0:00:43.833,0:00:46.208
Is it that we're working harder[br]than we once did?

0:00:47.500,0:00:50.000
Are we taller, better looking?

0:00:51.292,0:00:52.542
Sadly, no.

0:00:53.542,0:00:56.143
It all comes down to just one thing:

0:00:56.167,0:00:57.417
economics.

0:00:58.250,0:00:59.822
Because, here's the dirty secret.

0:01:00.667,0:01:03.018
There was a time[br]in which the economics profession

0:01:03.042,0:01:04.518
worked in the public interest,

0:01:04.542,0:01:06.434
but in the neoliberal era,

0:01:06.458,0:01:08.184
today,

0:01:08.208,0:01:10.643
they work only for big corporations

0:01:10.667,0:01:12.226
and billionaires,

0:01:12.250,0:01:14.833
and that is creating[br]a little bit of a problem.

0:01:15.792,0:01:19.601
We could choose to enact economic policies

0:01:19.625,0:01:21.500
that raise taxes on the rich,

0:01:22.417,0:01:26.268
regulate powerful corporations,[br]or raise wages for workers.

0:01:26.292,0:01:27.809
We have done it before.

0:01:27.833,0:01:30.309
But neoliberal economists would warn

0:01:30.333,0:01:34.351
that all of these policies[br]would be a terrible mistake,

0:01:34.375,0:01:37.125
because raising taxes[br]always kills economic growth,

0:01:38.083,0:01:40.351
and any form of government regulation

0:01:40.375,0:01:42.059
is inefficient,

0:01:42.083,0:01:44.458
and raising wages always kills jobs.

0:01:45.375,0:01:47.458
Well, as a consequence of that thinking,

0:01:48.542,0:01:52.768
over the last 30 years, in the USA alone,

0:01:52.792,0:01:57.059
the top one percent has grown[br]21 trillion dollars richer

0:01:57.083,0:02:02.518
while the bottom 50 percent[br]have grown 900 billion dollars poorer,

0:02:02.542,0:02:06.434
a pattern of widening inequality[br]that has largely repeated itself

0:02:06.458,0:02:07.934
across the world.

0:02:07.958,0:02:12.601
And yet, as middle class families[br]struggle to get by

0:02:12.625,0:02:16.518
on wages that have not budged[br]in about 40 years,

0:02:16.542,0:02:20.684
neoliberal economists continue to warn[br]that the only reasonable response

0:02:20.708,0:02:24.809
to the painful dislocations[br]of austerity and globalization

0:02:24.833,0:02:27.625
is even more austerity and globalization.

0:02:28.708,0:02:31.625
So, what is a society to do?

0:02:32.833,0:02:35.726
Well, it's superclear to me[br]what we need to do.

0:02:35.750,0:02:37.667
We need a new economics.

0:02:39.167,0:02:43.226
So, economics has been described[br]as the dismal science,

0:02:43.250,0:02:46.351
and for good reason,[br]because as much as it is taught today,

0:02:46.375,0:02:47.976
it isn't a science at all,

0:02:48.000,0:02:51.393
in spite of all[br]of the dazzling mathematics.

0:02:51.417,0:02:54.601
In fact, a growing number[br]of academics and practitioners

0:02:54.625,0:03:00.601
have concluded that neoliberal[br]economic theory is dangerously wrong

0:03:00.625,0:03:04.226
and that today's growing crises[br]of rising inequality

0:03:04.250,0:03:05.934
and growing political instability

0:03:05.958,0:03:11.143
are the direct result[br]of decades of bad economic theory.

0:03:11.167,0:03:17.143
What we now know is that the economics[br]that made me so rich isn't just wrong,

0:03:17.167,0:03:19.184
it's backwards,

0:03:19.208,0:03:21.143
because it turns out

0:03:21.167,0:03:24.934
it isn't capital[br]that creates economic growth,

0:03:24.958,0:03:26.208
it's people;

0:03:27.250,0:03:32.018
and it isn't self-interest[br]that promotes the public good,

0:03:32.042,0:03:33.292
it's reciprocity;

0:03:34.542,0:03:38.809
and it isn't competition[br]that produces our prosperity,

0:03:38.833,0:03:40.458
it's cooperation.

0:03:41.333,0:03:46.351
What we can now see is that an economics[br]that is neither just nor inclusive

0:03:46.375,0:03:50.768
can never sustain the high levels[br]of social cooperation

0:03:50.792,0:03:53.434
necessary to enable[br]a modern society to thrive.

0:03:53.458,0:03:56.042
So where did we go wrong?

0:03:57.250,0:04:01.434
Well, it turns out[br]that it's become painfully obvious

0:04:01.458,0:04:07.476
that the fundamental assumptions[br]that undergird neoliberal economic theory

0:04:07.500,0:04:10.601
are just objectively false,

0:04:10.625,0:04:14.434
and so today first I want to take you[br]through some of those mistaken assumptions

0:04:14.458,0:04:20.500
and then after describe where the science[br]suggests prosperity actually comes from.

0:04:21.416,0:04:25.559
So neoliberal economic[br]assumption number one is

0:04:25.583,0:04:30.018
that the market is[br]an efficient equilibrium system,

0:04:30.042,0:04:36.059
which basically means that if one thing[br]in the economy, like wages, goes up,

0:04:36.083,0:04:40.250
another thing in the economy,[br]like jobs, must go down.

0:04:41.333,0:04:43.708
So for example, in Seattle, where I live,

0:04:44.958,0:04:49.976
when in 2014 we passed[br]our nation's first 15 dollar minimum wage,

0:04:50.000,0:04:54.417
the neoliberals freaked out[br]over their precious equilibrium.

0:04:55.375,0:04:58.226
"If you raise the price[br]of labor," they warned,

0:04:58.250,0:05:00.268
"businesses will purchase less of it.

0:05:00.292,0:05:02.809
Thousands of low-wage workers[br]will lose their jobs.

0:05:02.833,0:05:04.726
The restaurants will close."

0:05:04.750,0:05:06.000
Except ...

0:05:07.000,0:05:08.250
they didn't.

0:05:08.917,0:05:12.125
The unemployment rate fell dramatically.

0:05:13.125,0:05:16.018
The restaurant business in Seattle boomed.

0:05:16.042,0:05:17.292
Why?

0:05:18.083,0:05:20.500
Because there is no equilibrium.

0:05:21.917,0:05:24.726
Because raising wages[br]doesn't kill jobs, it creates them,

0:05:24.750,0:05:26.226
because, for instance,

0:05:26.250,0:05:31.143
when restaurant owners are suddenly[br]required to pay restaurant workers enough

0:05:31.167,0:05:35.184
so that now even they[br]can afford to eat in restaurants,

0:05:35.208,0:05:37.226
it doesn't shrink the restaurant business,

0:05:37.250,0:05:39.458
it grows it, obviously.

0:05:41.333,0:05:42.601
(Applause)

0:05:42.625,0:05:44.042
Thank you.

0:05:46.208,0:05:48.458
The second assumption is

0:05:49.917,0:05:54.893
that the price of something[br]is always equal to its value,

0:05:54.917,0:05:58.476
which basically means[br]that if you earn 50,000 dollars a year

0:05:58.500,0:06:01.434
and I earn 50 million dollars a year,

0:06:01.458,0:06:05.750
that's because I produce[br]a thousand times as much value as you.

0:06:06.583,0:06:08.226
Now,

0:06:08.250,0:06:11.893
it will not surprise you to learn

0:06:11.917,0:06:13.893
that this is a very comforting assumption

0:06:13.917,0:06:16.601
if you're a CEO paying yourself[br]50 million dollars a year

0:06:16.625,0:06:19.559
but paying your workers poverty wages.

0:06:19.583,0:06:23.726
But please, take it from somebody[br]who has run dozens of businesses:

0:06:23.750,0:06:26.143
this is nonsense.

0:06:26.167,0:06:28.559
People are not paid what they are worth.

0:06:28.583,0:06:31.851
They are paid what they have[br]the power to negotiate,

0:06:31.875,0:06:34.643
and wages' falling share of GDP

0:06:34.667,0:06:38.184
is not because workers[br]have become less productive

0:06:38.208,0:06:41.375
but because employers[br]have become more powerful.

0:06:42.333,0:06:43.601
And --

0:06:43.625,0:06:45.208
(Applause)

0:06:47.167,0:06:52.643
And by pretending that the giant imbalance[br]in power between capital and labor

0:06:52.667,0:06:54.309
doesn't exist,

0:06:54.333,0:06:58.059
neoliberal economic theory[br]became essentially

0:06:58.083,0:07:00.333
a protection racket for the rich.

0:07:01.500,0:07:04.018
The third assumption,[br]and by far the most pernicious,

0:07:04.042,0:07:05.351
is a behavioral model

0:07:05.375,0:07:09.226
that describes human beings[br]as something called "homo economicus,"

0:07:09.250,0:07:14.476
which basically means[br]that we are all perfectly selfish,

0:07:14.500,0:07:18.500
perfectly rational[br]and relentlessly self-maximizing.

0:07:19.958,0:07:21.559
But just ask yourselves,

0:07:21.583,0:07:25.393
is it plausible that every single time[br]for your entire life,

0:07:25.417,0:07:27.601
when you did something[br]nice for somebody else,

0:07:27.625,0:07:30.893
all you were doing[br]was maximizing your own utility?

0:07:30.917,0:07:34.768
Is it plausible that when a soldier jumps[br]on a grenade to defend fellow soldiers,

0:07:34.792,0:07:37.518
they're just promoting[br]their narrow self-interest?

0:07:37.542,0:07:39.351
If you think that's nuts,

0:07:39.375,0:07:42.476
contrary to any reasonable[br]moral intuition,

0:07:42.500,0:07:44.309
that's because it is,

0:07:44.333,0:07:46.101
and according to the latest science,

0:07:46.125,0:07:47.768
not true.

0:07:47.792,0:07:50.309
But it is this behavioral model

0:07:50.333,0:07:53.601
which is at the cold, cruel heart[br]of neoliberal economics,

0:07:53.625,0:07:57.309
and it is as morally corrosive

0:07:57.333,0:07:59.851
as it is scientifically wrong,

0:07:59.875,0:08:04.934
because if we accept at face value

0:08:04.958,0:08:07.768
that humans are fundamentally selfish

0:08:07.792,0:08:10.018
and then we look around the world

0:08:10.042,0:08:13.042
at all of the unambiguous[br]prosperity in it,

0:08:14.083,0:08:16.934
then it follows logically,

0:08:16.958,0:08:18.768
then it must be true by definition,

0:08:18.792,0:08:22.643
that billions of individual[br]acts of selfishness

0:08:22.667,0:08:26.684
magically transubstantiate[br]into prosperity and the common good.

0:08:26.708,0:08:29.601
If we humans are merely[br]selfish maximizers,

0:08:29.625,0:08:33.207
then selfishness[br]is the cause of our prosperity.

0:08:34.125,0:08:36.726
Under this economic logic,

0:08:36.750,0:08:38.707
greed is good,

0:08:39.667,0:08:42.018
widening inequality is efficient,

0:08:42.042,0:08:44.393
and the only purpose of the corporation

0:08:44.417,0:08:46.893
can be to enrich shareholders,

0:08:46.917,0:08:50.018
because to do otherwise[br]would be to slow economic growth

0:08:50.042,0:08:51.833
and harm the economy overall.

0:08:53.333,0:08:56.726
And it is this gospel of selfishness

0:08:56.750,0:09:00.976
which forms the ideological cornerstone[br]of neoliberal economics,

0:09:01.000,0:09:04.643
a way of thinking[br]which has produced economic policies

0:09:04.667,0:09:08.393
which have enabled me and my rich buddies[br]in the top one percent

0:09:08.417,0:09:12.375
to grab virtually all of the benefits[br]of growth over the last 40 years.

0:09:13.083,0:09:14.934
But,

0:09:14.958,0:09:17.018
if instead

0:09:17.042,0:09:20.684
we accept the latest empirical research,

0:09:20.708,0:09:24.059
real science, which correctly[br]describes human beings

0:09:24.083,0:09:27.268
as highly cooperative,

0:09:27.292,0:09:28.559
reciprocal

0:09:28.583,0:09:31.518
and intuitively moral creatures,

0:09:31.542,0:09:34.184
then it follows logically

0:09:34.208,0:09:36.726
that it must be cooperation

0:09:36.750,0:09:38.351
and not selfishness

0:09:38.375,0:09:40.143
that is the cause of our prosperity,

0:09:40.167,0:09:42.518
and it isn't our self-interest

0:09:42.542,0:09:45.167
but rather our inherent reciprocity

0:09:46.250,0:09:49.083
that is humanity's economic superpower.

0:09:49.833,0:09:54.309
So at the heart of this new economics

0:09:54.333,0:09:59.101
is a story about ourselves that grants us[br]permission to be our best selves,

0:09:59.125,0:10:02.101
and, unlike the old economics,

0:10:02.125,0:10:04.851
this is a story that is virtuous

0:10:04.875,0:10:07.708
and also has the virtue of being true.

0:10:09.000,0:10:10.893
Now,

0:10:10.917,0:10:13.101
I want to emphasize[br]that this new economics

0:10:13.125,0:10:15.768
is not something I have personally[br]imagined or invented.

0:10:15.792,0:10:18.601
Its theories and models[br]are being developed and refined

0:10:18.625,0:10:20.643
in universities around the world

0:10:20.667,0:10:23.976
building on some of the best[br]new research in economics,

0:10:24.000,0:10:25.893
complexity theory, evolutionary theory,

0:10:25.917,0:10:29.018
psychology, anthropology[br]and other disciplines.

0:10:29.042,0:10:33.851
And although this new economics[br]does not yet have its own textbook

0:10:33.875,0:10:36.226
or even a commonly agreed upon name,

0:10:36.250,0:10:38.268
in broad strokes

0:10:38.292,0:10:42.458
its explanation of where prosperity[br]comes from goes something like this.

0:10:43.458,0:10:48.018
So, market capitalism[br]is an evolutionary system

0:10:48.042,0:10:50.476
in which prosperity emerges

0:10:50.500,0:10:52.059
through a positive feedback loop

0:10:52.083,0:10:57.018
between increasing amounts of innovation[br]and increasing amounts of consumer demand.

0:10:57.042,0:11:01.667
Innovation is the process[br]by which we solve human problems,

0:11:02.583,0:11:05.893
consumer demand is the mechanism[br]through which the market selects

0:11:05.917,0:11:08.309
for useful innovations,

0:11:08.333,0:11:11.559
and as we solve more problems,[br]we become more prosperous.

0:11:11.583,0:11:15.559
But as we become more prosperous,

0:11:15.583,0:11:17.393
our problems and solutions

0:11:17.417,0:11:20.184
become more complex,

0:11:20.208,0:11:23.351
and this increasing technical complexity

0:11:23.375,0:11:27.893
requires ever higher levels[br]of social and economic cooperation

0:11:27.917,0:11:30.809
in order to produce[br]the more highly specialized products

0:11:30.833,0:11:35.125
that define a modern economy.

0:11:36.042,0:11:40.726
Now, the old economics[br]is correct, of course,

0:11:40.750,0:11:44.309
that competition plays a crucial role[br]in how markets work,

0:11:44.333,0:11:46.434
but what it fails to see

0:11:46.458,0:11:51.143
is that it is largely a competition[br]between highly cooperative groups --

0:11:51.167,0:11:55.934
competition between firms,[br]competition between networks of firms,

0:11:55.958,0:11:58.643
competition between nations --

0:11:58.667,0:12:02.559
and anyone who has ever run[br]a successful business knows

0:12:02.583,0:12:06.333
that building a cooperative team[br]by including the talents of everyone

0:12:07.792,0:12:12.208
is almost always a better strategy[br]than just a bunch of selfish jerks.

0:12:13.417,0:12:18.250
So how do we leave neoliberalism behind

0:12:20.458,0:12:23.917
and build a more sustainable,[br]more prosperous

0:12:25.042,0:12:28.018
and more equitable society?

0:12:28.042,0:12:31.542
The new economics suggests[br]just five rules of thumb.

0:12:32.042,0:12:38.583
First is that successful economies[br]are not jungles, they're gardens,

0:12:39.667,0:12:43.351
which is to say that markets,

0:12:43.375,0:12:46.167
like gardens, must be tended,

0:12:47.208,0:12:51.934
that the market is the greatest[br]social technology ever invented

0:12:51.958,0:12:53.434
for solving human problems,

0:12:53.458,0:12:58.643
but unconstrained by social norms[br]or democratic regulation,

0:12:58.667,0:13:02.018
markets inevitably create[br]more problems than they solve.

0:13:02.042,0:13:03.309
Climate change,

0:13:03.333,0:13:05.309
the great financial crisis of 2008

0:13:05.333,0:13:07.042
are two easy examples.

0:13:07.500,0:13:10.976
The second rule is

0:13:11.000,0:13:15.000
that inclusion creates economic growth.

0:13:16.208,0:13:18.768
So the neoliberal idea

0:13:18.792,0:13:21.393
that inclusion is this fancy luxury

0:13:21.417,0:13:25.917
to be afforded if and when we have growth[br]is both wrong and backwards.

0:13:27.208,0:13:29.667
The economy is people.

0:13:30.667,0:13:32.726
Including more people in more ways

0:13:32.750,0:13:36.792
is what causes economic growth[br]in market economies.

0:13:37.875,0:13:39.934
The third principle

0:13:39.958,0:13:46.143
is the purpose of the corporation[br]is not merely to enrich shareholders.

0:13:46.167,0:13:49.934
The greatest grift[br]in contemporary economic life

0:13:49.958,0:13:52.934
is the neoliberal idea that[br]the only purpose of the corporation

0:13:52.958,0:13:55.851
and the only responsibility of executives

0:13:55.875,0:13:58.958
is to enrich themselves and shareholders.

0:13:59.958,0:14:05.393
The new economics must and can insist

0:14:05.417,0:14:07.143
that the purpose of the corporation

0:14:07.167,0:14:10.059
is to improve the welfare[br]of all stakeholders:

0:14:10.083,0:14:12.309
customers, workers,

0:14:12.333,0:14:14.417
community and shareholders alike.

0:14:16.208,0:14:18.226
Rule four:

0:14:18.250,0:14:20.458
greed is not good.

0:14:22.583,0:14:26.351
Being rapacious[br]doesn't make you a capitalist,

0:14:26.375,0:14:28.434
it makes you a sociopath.

0:14:28.458,0:14:30.893
(Laughter)

0:14:30.917,0:14:35.018
(Applause)

0:14:35.042,0:14:40.226
And in an economy as dependent[br]upon cooperation at scale as ours,

0:14:40.250,0:14:44.375
sociopathy is as bad for business[br]as it is for society.

0:14:45.375,0:14:46.625
And fifth and finally,

0:14:48.250,0:14:50.667
unlike the laws of physics,

0:14:51.833,0:14:55.375
the laws of economics are a choice.

0:14:56.542,0:14:58.226
Now, neoliberal economic theory

0:14:58.250,0:15:03.268
has sold itself to you[br]as unchangeable natural law,

0:15:03.292,0:15:07.184
when in fact it's social norms[br]and constructed narratives

0:15:07.208,0:15:08.667
based on pseudoscience.

0:15:09.917,0:15:13.434
If we truly want a more equitable,

0:15:13.458,0:15:16.976
more prosperous[br]and more sustainable economy,

0:15:17.000,0:15:19.726
if we want high-functioning democracies

0:15:19.750,0:15:21.976
and civil society,

0:15:22.000,0:15:24.000
we must have a new economics.

0:15:24.792,0:15:26.768
And here's the good news:

0:15:26.792,0:15:28.851
if we want a new economics,

0:15:28.875,0:15:32.768
all we have to do is choose to have it.

0:15:32.792,0:15:34.059
Thank you.

0:15:34.083,0:15:39.042
(Applause)

0:15:51.708,0:15:54.875
Moderator: So Nick,[br]I'm sure you get this question a lot.

0:15:56.333,0:15:59.434
If you're so unhappy[br]with the economic system,

0:15:59.458,0:16:04.184
why not just give all your money away[br]and join the 99 percent?

0:16:04.208,0:16:06.976
Nick Hanauer: Yeah, no, yes, right.

0:16:07.000,0:16:08.934
You get that a lot. You get that a lot.

0:16:08.958,0:16:11.684
"If you care so much about taxes,[br]why don't you pay more,

0:16:11.708,0:16:14.601
and if you care so much about wages,[br]why don't you pay more?"

0:16:14.625,0:16:15.917
And I could do that.

0:16:17.083,0:16:18.601
The problem is,

0:16:18.625,0:16:20.434
it doesn't make that much difference,

0:16:20.458,0:16:22.018
and I have discovered a strategy

0:16:22.042,0:16:24.976
that works literally[br]a hundred thousand times better --

0:16:25.000,0:16:26.268
Moderator: OK.

0:16:26.292,0:16:29.851
NH: which is to use my money[br]to build narratives and to pass laws

0:16:29.875,0:16:31.934
that will require[br]all the other rich people

0:16:31.958,0:16:34.018
to pay taxes and pay their workers better.

0:16:34.042,0:16:35.851
(Applause)

0:16:35.875,0:16:37.226
And so, for example,

0:16:37.250,0:16:40.601
the 15-dollar minimum wage[br]that we cooked up

0:16:40.625,0:16:42.601
has now affected 30 million workers.

0:16:42.625,0:16:43.893
So that works better.

0:16:43.917,0:16:45.184
Moderator: That's great.

0:16:45.208,0:16:47.851
If you change your mind,[br]we'll find some takers for you.

0:16:47.875,0:16:50.333
NH: OK. Thank you.[br]Moderator: Thank you very much.