It’s Time to Rethink Capitalism

Capitalism favours the wealthy and what we have seen this entire millennium is that this is more true than ever. Inequality is on the rise pretty much everywhere, and this is a problem. In this TED Talk, Paul Tudor Jones II, examines the current problematic state of capitalism and how we can rethink it.

Paul Tudor Jones II loves capitalism. It’s a system that has done him very well over the last few decades. Nonetheless, the hedge fund manager and philanthropist is concerned that a laser focus on profits is, as he puts it, “threatening the very underpinnings of society.” In this thoughtful, passionate talk, he outlines his planned counter-offensive, which centers on the concept of “justness.”

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We Need to Hold Banks Accountable (again)

The financial sector is like a hydra and we need to get it under control. The bad news is that bankers have been able to get away with some unethical practices for the last decade or so. The good news is that finally American politicians are taking notice of this and are talking about what to do.

This discourse is needed now while the banks are stable to try to ensure that the their crazy actions don’t lead to yet another financial boondoggle.

Yes, the banks are back. As the New York Times’s Neil Irwin reported, employment has returned to 2007 levels; the gap between the pay of Wall Street workers and everyone else is back near record levels, and the profits of the financial sector are soaring.

This is, as Irwin notes, a glaring contrast to what occurred after the crash that led to the Great Depression in the 1930s. Then banks were shackled, tightly regulated and greatly diminished in scope and license. The result was decades without major financial crises, during which the economy boomed and the United States grew together, with inequality decreasing. Now, however, while Dodd-Frank reforms have forced some changes, the big banks are more concentrated than ever. They continue to profit from high leverage, exotic trades and very high risk. They remain too big to fail — and apparently the bankers are too big to jail.

More and more studies, including one by the International Monetary Fund, hardly a radical bastion, suggest that a bloated financial sector is bad for an economy. It generates destructive booms and busts. Its high pay entices the most creative to use their talents on financial schemes rather than in more productive activities. Its culture of greed corrupts not just Wall Street but also our politics and economy more generally.

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Young Investors Care More About Using Money for Good

It turns out that people born after 1980 care more about investing in companies that make the world better than investing in companies that don’t. Traditionally investors were told to only care about one thing: profit. Younger investors have seen that way of thinking not work out given the ongoing lame economic performance of that attitude and the environmental destruction it wrought.

It’s good to see money going to places that can make the world a better place.

Another reason why it’s anticipated that Millennials could increase demand for impact investing is they indicate less interest in traditional style equity investing. A study by U.S. Trust found that 51% of Millennials feel that investing in equities is overrated, and are also hesitant about investing in the stock market due to fears of losing money. However, they are still interested in investing, as 81% believe that buying investments and holding them over the long term is the best way to grow money over time.

One way that Millennials are putting fears aside and putting their money to work is investing in good causes. As seen below, they are more willing than older generations to take on higher risk and lower returns in order to invest in companies that positively affect society or the environment.

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When Investing, Millennials Care More Than Previous Generations

Millennials are savvy investors who care about the planet and social justice. Previous generations have treated their investments as risky and didn’t care about the environment or other important issues. Some financial advisors are shocked to find out that not only are young investors interested in creating a better world, but that they are risk-adverse due to the economic disasters previous generations created.

The financial advisers at British firm deVere Group recently surveyed baby boomer, Generation X and millennial investors to get a sense of their priorities. The group discovered that while all three were scared away from risk by the recent financial crisis, millennials want more out of their investments than just an unending stream of payouts. Social responsibility matters, and that may not be millennials’ youthful ideals talking.

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No Strings Attached: Giving Cash to Poor People

GiveDirectly is a charity that just gives money to poor people in Kenya. There isn’t anything complicated about the idea: it’s just straight up handing out cash with no deliverables. The NPR recently investigated the operation.

Planet Money reporters David Kestenbaum and Jacob Goldstein went to Kenya to see the work of a charity called GiveDirectly in action. Instead of funding schools or wells or livestock, GiveDirectly has decided to just give money directly to the poor people who need it, and let them decide how to spend it. David and Jacob explain whether this method of charity works, and why some people think it’s a terrible idea. (28 minutes)

Listen to it here.

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