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  • We have made immoral behavior far more profitable.

  • We have, in the course of the changes in our society,

  • been establishing greater and greater incentives for people

  • to behave in ways that most of us regard as immoral.

  • You know, the traditional form of Capitalism is:

  • Put a product to market, put a service to market

  • and make money.

  • The way I contemplate entrepreneurship is figure out

  • how the world is better off because of your product and service

  • and bring that into the marketplace.

  • Business is kind of construct for people to get together

  • to achieve some kind of result.

  • So why not take business as a tool to achieve

  • a more progressive result?

  • Instead of seeing Capitalism as evil and destroying humanity

  • and the planet, you can take Capitalism and say,

  • "Use it with a conscience to create a purposeful result –

  • a just and equitable society."

  • Can't we agree that Capitalism is an economic system?

  • A system for the production and distribution of things

  • we need and want?

  • Go back 70 years.

  • Think about what "Made in Japan" meant in the 1940's and 50's,

  • post World War Two.

  • You have Capitalism as a key tool in building economies.

  • (announcer) It's new, it's automatic, it dictates, records,

  • seals, sterilizes, stamps and delivers in one operation

  • without human hand!

  • "Made in China", "Made in Taiwan", and "Made in Hong Kong"

  • in the 70's and 80's...

  • (announcer) What do I bid? What do I offer?

  • Sold! Who's next!

  • These are global economies that are major economies of the world.

  • What is next?

  • (announcer) Out of the crowds of the Empire City,

  • the Wonder City, the Windy City, the Passion City...

  • Is it made in Bangladesh?

  • (announcer) Get the big money. You make a pile

  • and raise a pile. That makes another pile!

  • We come full-face into what happens when Capitalism is left unfettered.

  • (announcer) We reached a million! Two million! Five million!

  • Watch us grow!

  • The 20th century model of Capitalism has one rule

  • in its operating system, which is:

  • the purpose of the corporation is to maximize

  • share-holder value exclusively.

  • Even if that means that there are significant,

  • for the benefit of the doubt, unintended consequences.

  • It's amazing to me how consumers just have this unshakable trust

  • in what they buy.

  • (announcer) Pestroy DDT. Used right, it is absolutely harmless

  • to humans and animals.

  • (announcer) And when drinking water comes out sparkling clear,

  • an asbestos cement pipe may have helped guard it

  • from reservoir to home.

  • It's laden with chemicals and it's from questionable factories

  • and I think some of these scares has done us a favor on some level

  • in raising the dialogue.

  • New communications channels like social media primarily

  • are driving transparency into companies.

  • They can't get away with uncareful behavior anymore.

  • They need to be very, very diligent about how they

  • serve their communities that they work in.

  • That's driving corporate social responsibility,

  • it's driving better governance,

  • and it's certainly driving sustainability.

  • That's been a constant trend over the last 15 to 20 years.

  • When you consider the world the baby boomers up grew in,

  • it was post World War Two. Their parents, who lived through the war,

  • they grew up in a world of scarcity.

  • People who were successful had stuff.

  • So the baby boomer generation grew up in a world where

  • if I had stuff, I was successful.

  • This shaped the minds of that generation.

  • So by the time the baby boomers get in control of the economy,

  • in the 1980's, excess was everywhere.

  • It became about stuff. And you had the big stories of the 80's,

  • like the Tycos, the Enrons.

  • The corporations became about adding book value for share-holders,

  • not adding societal value for all stake-holders.

  • In the last 50 years of business, companies are rewarded

  • based on success of one metric, and that is profit.

  • CEOs who are successful deliver profit to share-holders.

  • Our entire stock exchange is founded upon that,

  • so it's hard for us to criticize CEOs for forsaking other things

  • like supplier relations or social impact or other causes.

  • As companies began to feel the pressure of global competition,

  • the sole focus on making profit, without regard for society,

  • seemed like a promising idea.

  • Inspired in part by a 1970 New York Times article by Milton Friedman,

  • the most respected and influential economist of the late 20th century.

  • And now, ladies and gentleman, the Milton Friedman choir.

  • We had a very simplistic view of the world, where we would

  • just define profit as "dollars in" minus "dollars out"

  • equals profit. What we need to do now is quantify

  • all the soft costs.

  • It's very competitive in the international marketplace

  • to find really low cost labor.

  • When you manufacture something in another country,

  • and you import it, they put on a duty rate.

  • Countries like Bangladesh – there is no duties.

  • Because of that, you can save 18%.

  • That's a huge amount of money.

  • So what they do is they go to a lot of these countries that are exempt.

  • My auditor of fabric mills told me that they had gone to Bangladesh.

  • He said to me, "Do you know how many factories had

  • a waste water treatment plant?"

  • And I said, "No. How many?"

  • Two. Out of 300 that they visited.

  • And there's a lot more than 300 fabric mills in Bangladesh.

  • Where's the chemicals and dye stuffs after dying it

  • pink and blue? Where's that going?

  • Straight into the river. Straight into the creek.

  • Are those creeks and rivers connected to oceans

  • that we live beside? Yes. This was all connected.

  • This is what people forget when they buy a product that comes from

  • a country that has no regulations. But they have to,

  • for the corporate culture. They have to make profit.

  • There's been another horrific incident at a garment factory

  • in Bangladesh.

  • It came crashing down, trapping hundreds of people inside.

  • Officials discovered cracks in the building yesterday.

  • Producing clothes bound for some major American retailers...

  • This afternoon, a British retailer, Primark, announced it would

  • compensate victim's families.

  • Loblaw is reacting. The company said late today

  • that it will provide compensation to the families

  • of those killed in Bangladesh.

  • There's something to be said if you're going to be

  • in factories and pushing for low cost labor.

  • There's always a cost.

  • And, on some level, I think a lot of those brands

  • are stepping up and paying a cost at the end

  • of what they didn't pay at the beginning.

  • The core indicator of a country's health is the GDP.

  • It's the total market value of goods and services

  • produced in a single year.

  • Social impact is not considered.

  • The environment is not relevant.

  • The health, happiness, and fulfillment

  • of its citizens doesn't matter.

  • Financial metrics are all that count.

  • We've got to a point now where quarterly returns

  • are more important, it seems, in the news and more important

  • to the way we cover businesses, than the longer term work that they do.

  • So we're trapped in this short return cycle,

  • when most of these big problems and these big contributions

  • to society actually take far longer cycles.

  • They can be three, five, seven, 10 plus year cycles.

  • If we're judging companies on quarterly cycles,

  • we're never gonna get the traction on these long-run goals.

  • So there's something in the way that we look at companies,

  • there's something in the way we judge companies

  • performance that needs to change.

  • It's 1987.

  • - Open this gate. - (crowd cheers)

  • Reaganomics is in full swing...

  • The Simpsons debuts on television...

  • - Change the channel. - No.

  • and the Unabomber is on the loose.

  • It's business as usual in America.

  • Then it hits.

  • There's only one word to describe what's happening

  • and that is "panic".

  • Black Monday, the worst day ever on Wall Street.

  • The market has fallen over 400 points.

  • 508.32

  • 500 billion dollars in paper values have been lost.

  • When you see around the globe the mal-distribution

  • of wealth, the desperate plight of millions of people

  • in underdeveloped countries – when you see so few haves

  • and many have-nots, when you see the greed and the concentration

  • of power, did you ever have a moment of doubt about Capitalism