Why we need to rethink capitalism

This is a story about capitalism.

It's a system I love

because of the success and opportunities
it's afforded me and millions of others.

I started in my 20s trading commodities,

cotton in particular, in the pits,

and if there was ever a free market
free-for-all, this was it,

where men wearing ties
but acting like gladiators

fought literally physically for a profit.

Now, fortunately, I was good enough

that by the time I was 30,
I was able to move into

the upstairs world of money management,

where I spent the next three decades
as a global macro trader.

And over that time, I've seen
a lot of crazy things in the markets,

and I've traded a lot of crazy manias.

And unfortunately, I'm sad to report

that right now we might be in the grips

of one of the most disastrous,
certainly, of my career,

and one consistent takeaway is,

manias never end well.

Now, over the past 50 years,

we as a society

have come to view
our companies and corporations

in a very narrow, almost
monomaniacal fashion

with regard to how we value them,

and we have put
so much emphasis on profits,

on short-term quarterly
earnings and share prices,

at the exclusion of all else.

It's like we've ripped the humanity

out of our companies.

Now, we don't do that,

conveniently reduce something
to a set of numbers

that you can play with like Lego toys,

we don't do that in our individual life.

We don't treat somebody or value them
based on their monthly income,

or their credit score,

but we have this double standard
when it comes to the way

that we value our business,
and you know what?

It's threatening the very
underpinnings of our society.

And here's how you'll see.

This chart is corporate profit margins
going back 40 years

as a percentage of revenues,

and you can see that we're
at a 40-year high of 12.5 percent.

Now, hooray if you're a shareholder,

but if you're the other side of that,

and you're the average American worker,

then you can see it's not
such a good thing.

Now, higher profit margins
do not increase societal wealth.

What they actually do is
they exacerbate income inequality,

and that's not a good thing.

But intuitively, that makes sense, right?

Because if the top 10 percent
of American families

own 90 percent of the stocks,

as they take a greater share
of corporate profits,

then there's less wealth left
for the rest of society.

Again, income inequality
is not a good thing.

This next chart,
made by the Quality Trust,

shows 21 countries from Austria
to Japan to New Zealand.

On the horizontal axis
is income inequality.

The further to the right you go,
the greater in the income inequality.

On the vertical axis are nine social and health metrics