this is a story about capitalism. it's a system i love because of the successes and opportunitiesit'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 marketfree-for-all, this was it, where men wearing tiesbut acting like gladiators fought literallyand physically for a profit. fortunately, i was good enoughthat by the time i was 30, i was able to move into the upstairsworld of money management,
where i spent the next three decadesas a global macro trader. and over that time, i've seena 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 nowwe might be in the grips of one of the most disastrous,certainly of my career, and one consistent takeaway ismanias never end well. now, over the past 50 years, we as a society have come to viewour companies and corporations
in a very narrow, almostmonomaniacal fashion with regard to how we value them, and we have putso much emphasis on profits, on short-term quarterlyearnings and share prices, at the exclusion of all else. it's like we've ripped the humanityout of our companies. now, we don't do that --conveniently reduce something to a set of numbers that youcan 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 incomeor their credit score, but we have this double standard when it comes to the waythat we value our businesses, and you know what? it's threatening the veryunderpinnings of our society. and here's how you'll see. this chart is corporate profit marginsgoing back 40 years as a percentage of revenues,
and you can see that we'reat 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 notsuch a good thing. ["u.s. share of income going to labor vs.ceo-to-worker compensation ratio"] now, higher profit marginsdo not increase societal wealth. what they actually do is theyexacerbate income inequality, and that's not a good thing. but intuitively, that makes sense, right?
because if the top 10 percentof american families own 90 percent of the stocks, as they take a greater shareof corporate profits, then there's less wealth leftfor the rest of society. again, income inequalityis not a good thing. this next chart,made by the equality trust, shows 21 countries from austriato japan to new zealand. on the horizontal axisis income inequality. the further to the right you go,the greater the income inequality.
on the vertical axisare nine social and health metrics. the more you go up that,the worse the problems are, and those metrics include life expectancy,teenage pregnancy, literacy, social mobility, just to name a few. now, those of you in the audiencewho are americans may wonder, well, where does the united states rank? where does it lie on that chart? and guess what? we're literally off the chart.
yes, that's us, with the greatest income inequality and the greatest social problems,according to those metrics. now, here's a macro forecastthat's easy to make, and that's, that gap betweenthe wealthiest and the poorest, it will get closed. history always does it. it typically happens in one of three ways: either through revolution,higher taxes, or wars.
none of those are on my bucket list. (laughter) now, there's another way to do it, and that's by increasing justnessin corporate behavior, but the way that we'reoperating right now, that would requirea tremendous change in behavior, and like an addict trying to kick a habit, the first step is to acknowledgethat you have a problem. and let me just say,this profits mania that we're on
is so deeply entrenched that we don't even realizehow we're harming society. here's a small but startling exampleof exactly how we're doing that: this chart shows corporate giving as a percentage of profits,not revenues, over the last 30 years. juxtapose that to the earlier chartof corporate profit margins, and i ask you, does that feel right? in all fairness, when istarted writing this, i thought, "oh wow, what does my company,what does tudor do?"
and i realized we give one percentof corporate profits to charity every year. and i'm supposed to be a philanthropist. when i realized that, i literallywanted to throw up. but the point is, this maniais so deeply entrenched that well-intentioned people like myselfdon't even realize that we're part of it. now, we're not goingto change corporate behavior by simply increasing corporatephilanthropy or charitable contributions. and oh, by the way,we've since quadrupled that,
but -- (applause) -- please. but we can do it by drivingmore just behavior. and one way to do it is actually trusting the system that got ushere in the first place, and that's the free market system. about a year ago,some friends of mine and i started a not-for-profitcalled just capital. its mission is very simple: to help companies and corporations
learn how to operate in a more justfashion by using the public's input to define exactly what the criteria arefor just corporate behavior. now, right now, there'sno widely accepted standard that a company or corporation can follow,and that's where just capital comes in, because beginning this year and every yearwe'll be conducting a nationwide survey of a representative sampleof 20,000 americans to find out exactly what they think are the criteria for justnessin corporate behavior. now, this is a model that's goingto start in the united states
but can be expandedanywhere around the globe, and maybe we'll find out that the most importantthing for the public is that we create living wage jobs,or make healthy products, or help, not harm, the environment. at just capital, we don't know,and it's not for us to decide. we're but messengers, but we have 100 percent confidenceand faith in the american public to get it right.
so we'll release the findingsthis september for the first time, and then next year, we'll poll again, and we'll take the additive step this time of ranking the 1,000largest u.s. companies from number one to number 1,000and everything in between. we're calling it the just index, and remember, we're an independentnot-for-profit with no bias, and we will be givingthe american public a voice. and maybe over time, we'll find outthat as people come to know
which companies are the most just, human and economic resourceswill be driven towards them, and they'll become the most prosperous and help our countrybe the most prosperous. now, capitalism has been responsiblefor every major innovation that's made this world a more inspiringand wonderful place to live in. capitalism has to be based on justice. it has to be, and now more than ever, with economic divisionsgrowing wider every day.
it's estimated that 47 percentof american workers can be displaced in the next 20 years. i'm not against progress. i want the driverless car and the jet packjust like everyone else. but i'm pleading for recognitionthat with increased wealth and profits has to come greatercorporate social responsibility. "if justice is removed," said adam smith,the father of capitalism, "the great, the immense fabricof human society must in a moment crumble into atoms."
now, when i was young,and there was a problem, my mama used to alwayssigh and shake her head and say, "have mercy, have mercy." now's not the time for us,for the rest of us to show them mercy. the time is now for usto show them fairness, and we can do that, you and i, by starting where we work,in the businesses that we operate in. and when we put justnesson par with profits,
pros and cons of 3d printing,we'll get the most wonderful thingin all the world.
we'll take back our humanity. thank you. (applause)
