You probably don't know me,
but I am one of those .01 percenters
that you hear about and read about,
and I am by any reasonable definition a plutocrat.
And tonight, what I would like to do is speak directly
to other plutocrats, to my people,
because it feels like it's time for us all
to have a chat.
Like most plutocrats, I too am a proud
and unapologetic capitalist.
I have founded, cofounded or funded
over 30 companies across a range of industries.
I was the first non-family investor in Amazon.com.
I cofounded a company called aQuantive
that we sold to Microsoft for 6.4 billion dollars.
My friends and I, we own a bank.
I tell you this — (Laughter) —
unbelievable, right?
I tell you this to show
that my life is like most plutocrats.
I have a broad perspective on capitalism
and business,
and I have been rewarded obscenely for that
with a life that most of you all
can't even imagine:
multiple homes, a yacht, my own plane,
etc., etc., etc.
But let's be honest: I am not the smartest person you've ever met.
I am certainly not the hardest working.
I was a mediocre student.
I'm not technical at all.
I can't write a word of code.
Truly, my success is the consequence
of spectacular luck,
of birth, of circumstance and of timing.
But I am actually pretty good at a couple of things.
One, I have an unusually high tolerance for risk,
and the other is I have a good sense,
a good intuition about what will happen in the future,
and I think that that intuition about the future
is the essence of good entrepreneurship.
So what do I see in our future today,
you ask?
I see pitchforks,
as in angry mobs with pitchforks,
because while people like us plutocrats
are living beyond the dreams of avarice,
the other 99 percent of our fellow citizens
are falling farther and farther behind.
In 1980, the top one percent of Americans
shared about eight percent of national [income],
while the bottom 50 percent of Americans
shared 18 percent.
Thirty years later, today, the top one percent
shares over 20 percent of national [income],
while the bottom 50 percent of Americans
share 12 or 13.
If the trend continues,
the top one percent will share
over 30 percent of national [income]
in another 30 years,
while the bottom 50 percent of Americans
will share just six.
You see, the problem isn't that we have
some inequality.
Some inequality is necessary
for a high-functioning capitalist democracy.
The problem is that inequality
is at historic highs today
and it's getting worse every day.
And if wealth, power, and income
continue to concentrate
at the very tippy top,
our society will change
from a capitalist democracy
to a neo-feudalist rentier society
like 18th-century France.
That was France
before the revolution
and the mobs with the pitchforks.
So I have a message for my fellow plutocrats
and zillionaires
and for anyone who lives
in a gated bubble world:
Wake up.
Wake up. It cannot last.
Because if we do not do something
to fix the glaring economic inequities in our society,
the pitchforks will come for us,
for no free and open society can long sustain
this kind of rising economic inequality.
It has never happened. There are no examples.
You show me a highly unequal society,
and I will show you a police state
or an uprising.
The pitchforks will come for us
if we do not address this.
It's not a matter of if, it's when.
And it will be terrible when they come
for everyone,
but particularly for people like us plutocrats.
I know I must sound like some liberal do-gooder.
I'm not. I'm not making a moral argument
that economic inequality is wrong.
What I am arguing is that rising economic inequality
is stupid and ultimately self-defeating.
Rising inequality doesn't just increase our risks
from pitchforks,
but it's also terrible for business too.
So the model for us rich guys should be Henry Ford.
When Ford famously introduced the $5 day,
which was twice the prevailing wage at the time,
he didn't just increase the productivity
of his factories,
he converted exploited autoworkers who were poor
into a thriving middle class who could now afford
to buy the products that they made.
Ford intuited what we now know is true,
that an economy is best understood as an ecosystem
and characterized by the same kinds
of feedback loops you find
in a natural ecosystem,
a feedback loop between customers and businesses.
Raising wages increases demand,
which increases hiring,
which in turn increases wages
and demand and profits,
and that virtuous cycle of increasing prosperity
is precisely what is missing
from today's economic recovery.
And this is why we need to put behind us
the trickle-down policies that so dominate
both political parties
and embrace something I call middle-out economics.
Middle-out economics rejects
the neoclassical economic idea
that economies are efficient, linear, mechanistic,
that they tend towards equilibrium and fairness,
and instead embraces the 21st-century idea
that economies are complex, adaptive,
ecosystemic,
that they tend away from equilibrium and toward inequality,
that they're not efficient at all
but are effective if well managed.
This 21st-century perspective
allows you to clearly see that capitalism
does not work by [efficiently] allocating
existing resources.
It works by [efficiently] creating new solutions
to human problems.
The genius of capitalism
is that it is an evolutionary solution-finding system.
It rewards people for solving other people's problems.
The difference between a poor society
and a rich society, obviously,
is the degree to which that society
has generated solutions in the form
of products for its citizens.
The sum of the solutions
that we have in our society
really is our prosperity, and this explains
why companies like Google and Amazon
and Microsoft and Apple
and the entrepreneurs who created those companies
have contributed so much
to our nation's prosperity.
This 21st-century perspective
also makes clear
that what we think of as economic growth
is best understood as
the rate at which we solve problems.
But that rate is totally dependent upon
how many problem solvers —
diverse, able problem solvers — we have,
and thus how many of our fellow citizens
actively participate,
both as entrepreneurs who can offer solutions,
and as customers who consume them.
But this maximizing participation thing
doesn't happen by accident.
It doesn't happen by itself.
It requires effort and investment,
which is why all
highly prosperous capitalist democracies
are characterized by massive investments
in the middle class and the infrastructure
that they depend on.
We plutocrats need to get this
trickle-down economics thing behind us,
this idea that the better we do,
the better everyone else will do.
It's not true. How could it be?
I earn 1,000 times the median wage,
but I do not buy 1,000 times as much stuff,
do I?
I actually bought two pairs of these pants,
what my partner Mike calls
my manager pants.
I could have bought 2,000 pairs,
but what would I do with them? (Laughter)
How many haircuts can I get?
How often can I go out to dinner?
No matter how wealthy a few plutocrats get,
we can never drive a great national economy.
Only a thriving middle class can do that.
There's nothing to be done,
my plutocrat friends might say.
Henry Ford was in a different time.
Maybe we can't do some things.
Maybe we can do some things.
June 19, 2013,
Bloomberg published an article I wrote called
"The Capitalist’s Case for a $15 Minimum Wage."
The good people at Forbes magazine,
among my biggest admirers,
called it "Nick Hanauer's near-insane proposal."
And yet, just 350 days
after that article was published,
Seattle's Mayor Ed Murray signed into law
an ordinance raising the minimum wage in Seattle
to 15 dollars an hour,
more than double
what the prevailing federal $7.25 rate is.
How did this happen,
reasonable people might ask.
It happened because a group of us
reminded the middle class
that they are the source
of growth and prosperity in capitalist economies.
We reminded them that when workers have more money,
businesses have more customers,
and need more employees.
We reminded them that when businesses
pay workers a living wage,
taxpayers are relieved of the burden
of funding the poverty programs
like food stamps and medical assistance
and rent assistance
that those workers need.
We reminded them that low-wage workers
make terrible taxpayers,
and that when you raise the minimum wage
for all businesses,
all businesses benefit
yet all can compete.
Now the orthodox reaction, of course,
is raising the minimum wage costs jobs. Right?
Your politician's always echoing
that trickle-down idea by saying things like,
"Well, if you raise the price of employment,
guess what happens? You get less of it."
Are you sure?
Because there's some contravening evidence.
Since 1980, the wages of CEOs in our country
have gone from about 30 times the median wage
to 500 times.
That's raising the price of employment.
And yet, to my knowledge,
I have never seen a company
outsource its CEO's job, automate their job,
export the job to China.
In fact, we appear to be employing
more CEOs and senior managers than ever before.
So too for technology workers
and financial services workers,
who earn multiples of the median wage
and yet we employ more and more of them,
so clearly you can raise the price of employment
and get more of it.
I know that most people
think that the $15 minimum wage
is this insane, risky economic experiment.
We disagree.
We believe that the $15 minimum wage
in Seattle
is actually the continuation
of a logical economic policy.
It is allowing our city
to kick your city's ass.
Because, you see,
Washington state already has
the highest minimum wage
of any state in the nation.
We pay all workers $9.32,
which is almost 30 percent more
than the federal minimum of 7.25,
but crucially, 427 percent more
than the federal tipped minimum of 2.13.
If trickle-down thinkers were right,
then Washington state should have massive unemployment.
Seattle should be sliding into the ocean.
And yet, Seattle
is the fastest-growing big city in the country.
Washington state is generating small business jobs
at a higher rate than any other major state
in the nation.
The restaurant business in Seattle? Booming.
Why? Because the fundamental law of capitalism is,
when workers have more money,
businesses have more customers
and need more workers.
When restaurants pay restaurant workers enough
so that even they can afford to eat in restaurants,
that's not bad for the restaurant business.
That's good for it,
despite what some restaurateurs may tell you.
Is it more complicated than I'm making out?
Of course it is.
There are a lot of dynamics at play.
But can we please stop insisting
that if low-wage workers earn a little bit more,
unemployment will skyrocket
and the economy will collapse?
There is no evidence for it.
The most insidious thing
about trickle-down economics
is not the claim that if the rich get richer,
everyone is better off.
It is the claim made by those who oppose
any increase in the minimum wage
that if the poor get richer,
that will be bad for the economy.
This is nonsense.
So can we please dispense with this rhetoric
that says that rich guys like me
and my plutocrat friends
made our country?
We plutocrats know,
even if we don't like to admit it in public,
that if we had been born somewhere else,
not here in the United States,
we might very well be just some dude standing barefoot
by the side of a dirt road selling fruit.
It's not that they don't have good entrepreneurs in other places,
even very, very poor places.
It's just that that's all
that those entrepreneurs' customers can afford.
So here's an idea for a new kind of economics,
a new kind of politics
that I call new capitalism.
Let's acknowledge that capitalism
beats the alternatives,
but also that the more people we include,
both as entrepreneurs and as customers,
the better it works.
Let's by all means shrink the size of government,
but not by slashing the poverty programs,
but by ensuring that workers are paid enough
so that they actually don't need those programs.
Let's invest enough in the middle class
to make our economy fairer and more inclusive,
and by fairer, more truly competitive,
and by more truly competitive,
more able to generate the solutions
to human problems
that are the true drivers of growth and prosperity.
Capitalism is the greatest social technology
ever invented
for creating prosperity in human societies,
if it is well managed,
but capitalism, because of the fundamental
multiplicative dynamics of complex systems,
tends towards, inexorably, inequality,
concentration and collapse.
The work of democracies
is to maximize the inclusion of the many
in order to create prosperity,
not to enable the few to accumulate money.
Government does create prosperity and growth,
by creating the conditions that allow
both entrepreneurs and their customers
to thrive.
Balancing the power of capitalists like me
and workers isn't bad for capitalism.
It's essential to it.
Programs like a reasonable minimum wage,
affordable healthcare,
paid sick leave,
and the progressive taxation necessary
to pay for the important infrastructure
necessary for the middle class like education, R and D,
these are indispensable tools
shrewd capitalists should embrace
to drive growth, because no one benefits from it
like us.
Many economists would have you believe
that their field is an objective science.
I disagree, and I think that it is equally
a tool that humans use
to enforce and encode
our social and moral preferences and prejudices
about status and power,
which is why plutocrats like me
have always needed to find persuasive stories
to tell everyone else
about why our relative positions
are morally righteous and good for everyone:
like, we are indispensable, the job creators,
and you are not;
like, tax cuts for us create growth,
but investments in you
will balloon our debt
and bankrupt our great country;
that we matter;
that you don't.
For thousands of years, these stories were called
divine right.
Today, we have trickle-down economics.
How obviously, transparently self-serving
all of this is.
We plutocrats need to see
that the United States of America made us,
not the other way around;
that a thriving middle class is the source
of prosperity in capitalist economies,
not a consequence of it.
And we should never forget
that even the best of us in the worst of circumstances
are barefoot by the side of a dirt road selling fruit.
Fellow plutocrats, I think it may be time for us
to recommit to our country,
to commit to a new kind of capitalism
which is both more inclusive and more effective,
a capitalism that will ensure
that America's economy remains
the most dynamic and prosperous in the world.
Let's secure the future for ourselves,
our children and their children.
Or alternatively, we could do nothing,
hide in our gated communities
and private schools,
enjoy our planes and yachts
— they're fun —
and wait for the pitchforks.
Thank you.
(Applause)