President Obama’s Remarks at the 2023 Democracy Forum, McCormick Place – Chicago, Illinois. As Delivered
Chicago (Special to ZennieReport.com) – Hello, Chicago! Thank you, Alina, for that outstanding introduction. I will say that Michelle would be jealous to see that she has a six-month old at home and she doesn’t look tired. More importantly, thank you for everything that you’re doing to connect people with jobs and reduce inequality in the city that we love.
President Obama Welcomes All To 2nd Annual Democracy Forum
I want to thank our amazing panelists, who you’ve already heard from and who you’re going to hear from, all the leaders who are part of our network group who’ve come from far and wide, all the experts who generously agreed to join us for our second annual Democracy Forum. I want to say just how blessed we are to have you here.
Now, I have always believed that the ideas of a now 62-year-old, gray haired, although still relatively fit, ex-president are less relevant than the ideas and insights of you, a new generation of leaders.
That’s why after leaving the White House, Michelle and I started the Obama Foundation, to inspire and empower and connect those of you who are going to be driving change for years to come. We now have a global network of hundreds of young leaders from practically every continent, who are tackling some of the most important issues of our time.
Obama Says The World Needs Us Now More Than Ever
We have never needed you more than we need you today. As we speak, the world feels more unstable and more dangerous than it has in a very long time. Russia’s brutal invasion of Ukraine continues to challenge the international order. This summer delivered record breaking temperatures across the planet, with an uptick in drought and flooding and wildfires.
Right here in America, but also around the world, we’ve seen a continued assault on democratic norms, escalating political polarization, a lot of it fueled by a steady stream of misinformation, and bile on social media.
And of course, over the last few weeks, we have watched a deadly struggle unfold in the Middle East, triggered by the horrific murder of more than 1,400 mostly civilian Israelis, many of them children, at the hands of Hamas, as well as the abduction of over 200 hostages; and then an Israeli response that has so far resulted in the displacement of well over a million people, the death of at least 9,000 Palestinian civilians, thousands of them also children, the cutoff of water, food, electricity to a captive population that risks creating an even greater humanitarian crisis.
Obama On Israel’s Right To Exist And Palestinian Self-Determination
And all of this is taking place against the backdrop of decades of failure to achieve a durable peace for both Israelis and Palestinians, one that is based on genuine security for Israel, a recognition of its right to exist, and a peace that is based on an end of the occupation and the creation of a viable state and self-determination for the Palestinian people.
Now, I will admit it is impossible to be dispassionate in the face of this carnage. It is hard to feel hopeful. The images of families mourning, of bodies being pulled from rubble force a moral reckoning on all of us. The ensuing debate has roiled college campuses, divided friends and allies, laid bare generational divides, and set off a surge of antisemitism and anti-Muslim sentiment.
Even here, within our Obama Foundation family, we’ve had to sort through our anguish, our outrage, our fears, and our differences on the issues. Not so much differences in the outcome we wish for. I had a conversation with a group of you around this issue, and you were passionate and pushed me around some of the public statements I had made.
The issue is not a wish for different outcomes, an end to the killing, peaceful coexistence between two sovereign and free peoples, but rather different assessments of the path that we need to take in order to get there, and the roles each of us have to play in order to maximize the chances of what seems impossible right now.
And yet, as heartbreaking as the news is right now – and it is heartbreaking – as daunting as all the challenges that we face may be, I stand here convinced that it is within our power, or more specifically within your power to make this world better.
Democracy Forum Is About A Better World
That’s what this Democracy Forum is all about. It’s an affirmation of our shared, unyielding belief that war and racial division and religious conflict and poverty and hunger and catastrophic climate change are not inevitable.
We’re here because we believe that humanity can bridge our differences and make better choices, that we can see each other and listen to each other, and imagine each other’s hardships and pain, and that this better future is most likely to happen under democratic systems of government, democracies in which everyone’s dignity is recognized, where the rule of law and human rights are respected by everybody, where people have a voice in how they’re governed, where we all have a stake in maintaining the social order, and where we can disagree with each other, sometimes bitterly, without losing sight of the ties that bind us together.
That’s why we’re here. That’s the work you’re doing. And if we’re right, that a renewed commitment to democracy is a key ingredient to solving all our other big challenges.
And we have so much more work to do. Because right now, we’re up against a set of economic and technological and cultural trends that are sweeping across the globe, and they’re weakening people’s commitment to democratic values. And they are promoting violence, and domination. And they’re making us blind to each other. And they’re making us cynical about our capacity to work together and govern ourselves.
Now, in the lead up to last year’s forum, we focused on one such trend, and that was the flood of toxic content on social media. We heard how thought leaders and civic organizations, academia, the tech sector, are starting to reimagine the ways that we use this technology to strengthen communities instead of weakening them, how we can change the paradigm to reinvigorate journalism and combat lies and hate speech and rebuild social trust.
This year, we’ve gathered together an equally impressive group of thinkers and practitioners to look at another major factor that’s eroding confidence in democracy, and that’s the widespread sense that the global economy is rigged, that it serves the few at the expense of the many, and that even popularly elected governments either can’t or won’t deliver on the promise of a better life for the average family.
Now, obviously, this is a huge topic. I am fairly certain we will not solve the problems of 21st century capitalism in this form, and certainly not in a single speech. And you will be relieved to know that I don’t intend to try.
In the time I have left, my goal is modest. I want to offer a few thoughts about how we can start reframing our economic debate. I want to highlight a few ways that innovators, including some of you, are already starting to build an economic order that’s more inclusive, more sustainable, more just, even if it’s still right now on a micro level. And then we’re going to bring up people who know more about this than I do to share a discussion around these issues.
Let me start with some admittedly oversimplified economic history, and I’m going to make a couple of assertions that you may or may not agree with.
First, the market-based economic system we commonly know as capitalism has been the greatest generator of wealth and innovation that the world has ever seen. Some of you may think that’s controversial, but it really is hard to argue otherwise.
Before the Industrial Revolution, economic growth barely budged, and the average person struggled to scrounge up enough to eat, for centuries, millennium. And then the combination of scientific advances, combined with market-based principles, caused production to explode and standard of living to accelerate.
The main alternative to capitalism that emerged, a communist system based on centralized command and control planning, worked better in theory than in practice. Ask China, which shifted from a command and control model to a more market-based system and managed, within a few decades, the unprecedented feat of lifting hundreds of millions of people out of extreme poverty.
The bottom line is this: While there may be, in fact, better ways than capitalism to organize the productive capacity of large modern societies, we haven’t discovered those systems yet. Maybe one of you will invent them. Maybe there’s an Adam Smith out there somewhere.
But just because an economic system generates wealth and innovation, it doesn’t mean it guarantees and good society. Because from the outset, it turns out market-based systems have been compatible with slavery, caste systems, colonialization, war, exploitation, corruption, fraud, autocracy, the poisoning of our natural environment.
Fortunately, thanks to the accumulated efforts, bit by bit, of reformers and organizers and visionaries, not so different from many of you, some, mostly democratic governments, began to recognize the need to moderate capitalism’s excesses.
Especially after the Great Depression and World War II, governments began making public investments in education and transportation, scientific research and housing. They constructed a social safety net to protect at least some of their citizens from destitution. They granted workers the right to organize, passed laws to protect consumer and environment, enacted policies designed to maintain the integrity of the financial system, to prevent monopolies and bring the system back into balance.
Now, granted these developments were uneven, some countries overregulated, others underregulated, some opted for a more generous safety net, others left too many people to fend for themselves. But by the 1990s, as the Iron Curtain came down, the consensus was that the economic debate had been settled. There was going to be the spread of the free market as far as the eye can see, global trade would steadily increase, and all this would lead to the advance of western style liberal democracies around the world. Also, everybody would be able to buy Big Macs.
Most of you came of age just as that consensus was starting to unravel.
Why is that? Well, it turned out that things like globalization, automation, the internet, allowed big corporations and high finance to set up and do business anywhere, shift money around, trillions, with a click of a button. And not surprisingly, many of them shifted money and operations to places with lower wages, lower taxes, fewer regulatory constraints, because for multinational corporations and high finance, that meant lower costs, higher profits, a bigger rate of return.
That meant workers lost bargaining power, small businesses couldn’t compete, local economies were gutted, and we were left with a winner-take-all economy that dramatically increased inequality within countries, between countries, between cities and rural areas.
The other thing is that as business and finance went global, governments, including democratic governments, had more trouble enforcing tax laws and regulations, and trying to bring balance to the economy.
In democratic countries, unequal economic power translated into unequal political power, and the wealthiest people and the largest corporations who could afford lobbyists and political donations were able to press to weaken labor laws, ease regulations, slash taxes, punch holes in the safety net, and reduce government investment in public goods.
Meanwhile, China and Russia showed once again that capitalism actually could function quite nicely under authoritarian and/or corrupt regimes.
Meanwhile, the financial crisis in 2008, just as I was about to become president, as well as the pandemic a decade later, showed how, in a more connected world, vulnerabilities anywhere could put every economy at risk.
What does this mean for ordinary people? Even in the richest countries, all these trends led to stagnant wages, lower savings, more debt, greater job insecurity, higher costs, and maybe most profoundly, increasing doubt that their children would be able to match, much less exceed their own living standards.
More and more people came to believe that their government wasn’t looking out for them, and that politics was a zero-sum game. And as anger and frustration rose, so did anti-immigrant sentiment, so did right wing populism, so did a strident nationalism that has all too often led to the promotion by politicians of anti-Democratic ideas and has often led to international conflict.
So how should we respond? There are some who argue that capitalism’s overwhelming emphasis on growth and consumption is the problem, its voracious consumption of our planet’s resources, the sense that the only measure of our wellbeing is more stuff. I think, particularly in light of the potential for catastrophic climate change, I think a lot of people in your generation are thinking in those terms. And there’s wisdom in some of this; reforming our economy, as I’ll return to at the end of this talk, really does require not just better policies, but a shift in our mindset.
But I’m going to argue that growth, productivity is still important. Those of you who are idealistic, and progressive and are upset about inequality, you can’t ignore growth. You can’t ignore making the economy work, wherever you are working, whatever level development the communities where you’re affiliated with, maybe.
Obama Says We Need Economic Growth
In Asia, in Africa, in Latin America, in inner cities here in the United States, in rural communities here in the United States, in some cases, in places where the highest birth rates and the youngest populations are growing up, there are millions, in some cases, billions of people who still lack reliable electricity, adequate shelter, access to medicine. Even if we could redistribute all the wealth of every billionaire on Earth, address what rightly feels like an obscene amount of inequity, it still wouldn’t be enough to lift all those people out of poverty. We’d still need economic growth to do that.
Also, in richer democracies, like the United States or Europe, it’s always been easier to build support for more robust social programs, and more public investment, and more opportunity for marginalized groups, and more generous foreign assistance when the economic pie is getting bigger, and people’s wages are going up, and people feel more secure. When things get tighter, people start feeling a little more selfish. While it’s important for us to focus on sustainable growth and inclusive growth, broad based growth, we can’t afford to ignore growth entirely, which brings me to a related point.
With automation replacing so many blue-collar jobs and pretty soon, white-collar jobs, with the problems we’ve seen with social media, there is a temptation to blame technology itself for much of what ails us. And again, there are elements of truth in some cases to some of the work that’s been done on the effects of and disruptions of technology. But the truth is automation and disruptive technologies are not going away.
It’s hard to find an instance in human history where something is invented and isn’t used, whether that’s the printing press or gunpowder, or the computer. In fact, technological disruptions are only going to accelerate as AI models get more sophisticated. I think you may have already heard that from a panel, or maybe it’s coming up.
Obama On The Risk And Promise Of AI
And there are some big risks associated with AI, and I’m encouraged that the Biden administration and other governments are beginning to recognize that and build out a possible regulatory framework to guard against those risks, and, in some cases, slow down the widespread rollout of more powerful models before they’ve been tested. But it’s coming, and in some cases, we’re actually going to need AI and other powerful new technologies to help us solve tough problems, like the transition to a zero carbon economy. That’s a hard thing to do. If we can come up with pathways for new carbon free energy sources, we have to seize them.
The question isn’t how to stop these advances from happening completely, it’s how to make sure they’re subject to public debate, and consider public safety and welfare concerns, and that the benefits of these new technologies flow to everyone, and that they’re accessible not just in the places where they’re invented or the companies that make them, but also in other countries and in poor communities.
With that framework in mind, let me quickly preview some of our work, some of the key opportunities that our working group identified to build a more inclusive and sustainable economy.
At the top of the list are measures they can not only help workers find a job, but also get a bigger share of the economic pie to return that balance. At the macro level, that starts with us making sure our governments, those in charge of managing the economy, support fiscal and monetary policies that encourage full employment. For decades, economists told us we couldn’t go below a natural unemployment rate – they estimated it might be around 5%-5.5% – without sparking inflation.
But as it turns out, there’s nothing natural about a steady unemployment rate that leaves millions of people out of work, and that is twice as high, in some cases, in African-American communities or in rural communities. And recent experience right here in the United States shows that government actually can bring unemployment down to just under 4% while keeping inflation manageable.
Lower unemployment and tighter labor markets give workers more power to ask for higher pay and move to better jobs, but it doesn’t eliminate the ups and downs of the business cycle. So over the long run, and we can’t just rely on the Federal Reserve or a bunch of remote government officials, and one of the best ways to also raise wages and provide more financial security is to reverse the declining rate of unionization.
Now, I will give you a few quick statistics for the United States. Obviously, this is an international audience there. There are differences, but I know U.S. pretty good.
Here in the U.S., at the peak of Union power in the 1950s, about a third of private sector jobs were unionized, one-third. And correspondingly, a larger share of the nation’s GDP went to ordinary workers. And income inequality was at a low ebb, and the economy grew at a consistently high rate.
Since then, the rate of unionization has steadily fallen, not by accident, not because it was inevitable, but because of a combination of policy, and business and economic changes. Conservative state legislatures passed so-called “right to work” laws. Congress and federal agencies weakened national collective bargaining rules. Manufacturers shifted operations to “right to work” states, or, as we already noted, offshored, shifted jobs out of the country. And those that remained, they perfected techniques to beat back organizing drives. Meanwhile, the economy grew primarily in the service sector, which traditionally hadn’t been the focus of unions.
At Democracy Forum President Obama Says Only 6 Percent Of Jobs Are Unionized
Take that all together, and the result is that today, only 6% of private sector jobs in the U.S. are unionized, 6% of private sector jobs are unionized. In the UK and Canada, it’s twice that. It’s still not great.
The good news is that positive attitudes towards unions in the U.S. are the highest that they’ve been in more than 50 years. (Applause.) And we’ve also seen successful strikes, most recently between autoworkers and the big three automakers, that show the power of unions to get a better deal for their workers.
We need to take advantage of this changing mood to push for stronger labor laws, both at the national level and the state levels. And we should support international movements to create unions in other economies. But if unions want to grow their memberships, they’re also going to have to change how they do business.
For example, unions used to be most heavily represented in manufacturing industries with predominantly male workforces. Oftentimes, those unions, not all, but many, and especially the trade unions here in the United States, were not particularly welcoming to folks that looked like me.
Today, 84% of private sector jobs are in the service sector. That number keeps on growing. And in the education and health services sector, just to take one example, more than three-quarters of the workforce is women. It’s surprising, isn’t it, that really important jobs that don’t pay any money are traditionally women’s jobs. (Laughter.) It’s curious, how that happened.
Now to organize those workers in these fastest growing sectors, it won’t be enough to just negotiate over wages and traditional benefits, although that’s really important. Unions are also going to have to find new and creative ways to meet the needs of these new workers. And those needs may not match up with somebody who was working on the factory floor. It may include things like continuing education, or reliable and affordable childcare, or the ability to adapt to new technologies.
Now, already some unions are doing just that. For example, during the pandemic, unions at the healthcare giant, Kaiser Permanente, negotiated to get workers up to $300 a week for childcare. (Laughter.) Locals in both the United Food and Commercial Workers, and the Teamsters successfully negotiated for more flexible schedules to accommodate childcare needs.
And then, in terms of adapting to the new economy, look at the new contract between Hollywood writers and studios. It wasn’t just about pay. It also stipulates that studios can’t treat AI-generated content as, quote unquote, source material, and then force screenwriters to clean up whatever Joe and ChatGPT generated for less credit and a lower fee. That kind of adaptability, that kind of creative thinking, that will increase the appeal of unions to a more diverse set of workers across a wider cross-section of the economy.
And by the way, it also has the potential to be good for business, because if workers are satisfied, if they’re not stressed, if they’re not trying to deal with what to do with a young child at home, that boosts productivity, reduces high turnover rates. And that matters in terms of how your business performs.
Obama Wants Us To Think About Social Safety Net At Democracy Forum
All right, second thing we need to think about, how do we adapt the social safety net to new economic realities? I already talked about this. There’s always been a difference in size and scope of social benefits that various democracies or non-democracies provide their citizens. Among rich countries, the U.S. has a particularly stingy safety net, in contrast to citizens in the Nordic countries. They historically have been willing to pay significantly higher taxes to support more high quality public services and more generous social insurance benefits.
What accounts for the difference? Well, it turns out that one of the foundations for building political support for a strong safety net is high measures of social trust. People need to believe that everybody is putting money into these programs and everybody is taking money out, that right now, I’m doing okay, but I might lose my job, I might get sick, something might happen. There but for the grace of God, go I, so that I don’t resent it when I’m not sick, somebody else is down on their luck.
That kind of social trust is easier to do in smaller countries, where everybody is named Sven. (Applause.) I mean, for any Nordics out there, I’m just messing with you. (Laughter.) But the point is relevant. It is harder to build social trust and hence, generous social programs, in big, diverse countries like the U.S. where, let’s face it, politicians who may have an agenda of just wanting to keep taxes low and not have to put in, they can play on racial stereotypes about freeloading minorities to weaken support for social insurance.
But if our goal is to build social cohesion and strengthen democracy, then moving closer to a Nordic model makes sense. There are some tradeoffs, but as long as government programs are well-managed and transparent, more public benefits in exchange for higher taxes typically means lower inequality and greater economic security for everybody. It also means high-quality public schools.
In Finland, in Denmark, rich people send their kids to the same schools as poor people, because the schools are super good with really well paid, highly trained, high-status teachers. And that produces well-educated, healthy citizens who also have shared experiences. And that, in turn, makes them more invested in how their government works and more invested in maintaining these social programs, and creating good outcomes for the next generation.
That’s my view about making social programs more robust. But whether we’re talking about Denmark or the United States, rapid changes in the economy are still going to require other changes in the design of social insurance programs.
At Democracy Forum Obama Says Healthcare And Unemployment Insurance Should Be Portable
In the US, for example, the rise of self-employment, people much more likely to churn between jobs means healthcare, retirement plans, unemployment insurance can’t be tied to a particular job or employer. That idea of portability, it goes with you, that’s part of what the Affordable Care Act was all about. (Applause.) But we need to do more of that.
And if AI ends up eliminating entire categories of jobs, if it means that as much stuff or as many services can be produced with fewer workers, not just on the factory floor, but in law firms or in graphic design shops, we may need to consider bigger changes. And we should start talking about that now, things like a shorter workweek or a universal basic income – or guaranteed income, ideas that can spread work around and supplement the incomes of people as they shift to the much needed work that I mentioned earlier, that can’t be automated, that a program alone can’t do, things like childcare, and education, and healthcare and elder care.
Some of these ideas are being tested as we speak. Right here in Chicago, there’s a pilot program called Chicago Promise that’s been giving thousands of low-to-moderate income families $500 in cash every month to help them meet basic needs. And it’s modeled after a similar program in Stockton, California. And it’s showing early promise because the thesis is you improve financial stability, you improve well-being of low income families, they actually can fix a busted car. They don’t have electricity turned off. Their lives are more stable. It doesn’t discourage them from working full time. It, in fact, makes it easier for them to go out and find a job and work full time.
And more broadly, one of the bright spots coming out of the pandemic has been evidence that the generous benefits people received during the lockdowns, which is unusual for the United States. Maybe one of the reasons why the U.S. economy has actually seen an unprecedented increase in new business formation over the past couple of years, because people had a little bit of a cushion to go out and take a risk and try that new idea.
And that’s the thing about giving people a safety net and helping them achieve their basic needs. Not only does it relieve hardship, not only does it strengthen our democracy, it can also empower people to be more productive, and raise their ambitions, and set an example for their children. And that benefits all of us, and that benefits the economy and that benefits business.
All right, number three, we need to work on how to enforce tax and regulatory standards across national borders. As I said earlier, in every country, the wealthy, the biggest corporations wield disproportionate political influence, and they typically use it to push back against taxes and regulations. Globalization only increases their leverage. They can shift money and operations anywhere. Even the threat of doing so often leads governments to engage in what I call a race to the bottom. They compete to see who can create the most, quote unquote, business-friendly environment, which means letting companies do whatever they want.
The only answer to this is more global cooperation. And of course, that is not easy to do when we’ve got wars in Ukraine and the Middle East, and you’ve got increasing hostility between the United States and China. This is not a short-term project. Part of what also makes it harder is, although over the long run, it’s in the interest of all countries to regain some measure of control over their economies, in the short run, small countries may decide us serving as a tax haven for the wealthy, us disregarding environmental or labor laws, it’s our only chance to develop, though in some cases with less than scrupulous regimes, it may also be an optimal way to engage in corruption.
Now, the good news is we’re starting to see examples. Despite all the challenges internationally, we’re starting to see some examples of strategic cooperation on this issue. For instance, two years ago, more than 130 countries agreed to a global minimum tax as a way to stop this race to the bottom track. Countries are supposed to share information, enforce mutually their tax standards. And it’s still early. Getting every country to actually enforce the agreement is going to be hard, but it’s a start. And we should build on this approach.
We’re going to need similar international agreements to maintain global trade and shift to a more sustainable and clean energy economy. On trade, over the last century, trade has allowed poorer countries to pursue an export-driven strategy to develop themselves by accessing wealthier markets. A lot of time, it’s just extractive industries. It does not help those countries develop. In some cases, it has.
In any event, increasingly, that bargain may not work. And part of the reason is because countries like China have gamed the system. They flooded export markets long after they had become one of the two biggest economies in the world and had moved into so-called middle income status. And partly, it’s because workers in more advanced economies, like the United States or Great Britain, have pushed back against an arrangement that allows them to buy cheap TVs and sneakers, but may mean they lose their job. Not a great trade off.
Building a trade regime that helps everyone and not just some, and that can garner political support will require new models of cooperation. We’re going to have to create trade deals where wealthy countries are willing to open up to the poorest countries, even if those poor countries don’t completely reciprocate. They’re allowed to protect some of their own infant industries. But once those countries graduate to middle income status like China, then they have to provide more reciprocal access and start relying more on expanding their own internal markets in order to grow.
And that same principle is going to be crucial if we’re going to deal with climate change. Countries like China, countries like India, not to mention most of the African continent, they’re absolutely right to insist they shouldn’t be expected to sacrifice their own development while we’re driving our SUVs. Their people still have a smaller carbon footprint on a per capita basis. Most of the problem was created by countries in the Global North. All true, but the planet is cooked. If they keep burning fossil fuels the way we have in the past, the way we’re doing now and the way they’re doing now. The United States could reduce its emissions down to zero tomorrow, but if China and India kept on going at their current trajectory, we still have a problem.
The good news is that innovation has actually driven the price of clean energy down more than even the most optimistic projections predicted. So now, we need to encourage both more private investment, and faster adoption and transition to clean energy. That’s what President Biden did when he signed the Inflation Reduction Act, the most ambitious investment in combating climate change in history.
But the world is also going to have to subsidize the transfer and adoption of some of these latest clean energy technologies to the Global South, and help these countries build up the necessary infrastructure. The Paris Accord recognizes this. Not all countries have to do the same thing under the deal, but every country has to do something. The thing is, we have to move faster, not only because climate change will impact every country, but because it’s likely to worsen problems like mass migration, cross border conflicts that stress our democracies, which brings me to the last key issue that our working group explored.
If we are going to encourage more private investment in the common good, if we’re going to create more worker-friendly policies, we have to reimagine how corporations are governed and operate. For more than 50 years, corporate managers have embraced the view popularized by Milton Friedman, that their only responsibility is to increase shareholder value. That’s all.
The thing is, Friedman’s formula isn’t drawn from stone tablets. It’s not immutable scientific principle. This is not one of the laws of physics. It is a societal choice about values.
At Democracy Forum Obama Says Corporate Responsiblity Is Beyond Shareholders
Corporations are perfectly capable of operating efficiently and profitably while considering the impact they have on their workers, and on their communities, and on the planet and on our democracy. And I would argue that taking that broader view may actually improve their bottom line, because in today’s interconnected world, the best companies have to consider long-term strategies that will help them retain talent or recruit talent from an increasingly diverse workforce. They’ve got to maintain their brand or somebody is going to cancel them on their phone. They have to continue to innovate.
Narrow obsessions with quarterly earnings reports to satisfy Wall Street often makes that harder. And despite what some politicians might say about companies acting too woke, your generation is less and less interested in doing business with or working for companies that are not good, corporate citizens. And maybe that’s why, for the first time in years, you’re already having an impact, just buying stuff, stuff. For the first time in years, we’re starting to see a noticeable shift in how at least corporations talk about their mission.
Our job is to make sure their talk is matched by action. I’ll give you an example.
There’s a lot of discussion right now. It’s fashionable to talk about impact investing. And the idea is financial institutions claim that not all their portfolios, but some of them, will only invest in companies that provide some social good, along with a market rate of return. When you look under the hood, and I’ve talked to a number of the folks who are pitching this, sometimes, too often, these impact investing funds really are branding exercises in which pretty conventional investments of dubious social benefit – they may not be bad, but they’re not solving huge problems – are dressed up and repackaged to make them more appealing.
Fortunately, there have been serious efforts underway both by nonprofits, and academic researchers and, to their credit, even some of the investment funds involved to bring some analytical rigor to the idea. So, you reform rating systems that measure and certify companies, give them a Good Housekeeping Seal of Approval that they really are having meaningful impact on issues like climate change or providing education to the underserved. And we should encourage that. If we can make that work, that could be impactful.
We also need to explore new types of corporate structures, from worker-owned companies to purpose-driven, public benefit corporations that allow companies to operate for a profit, to benefit from the efficiencies and discipline that comes with the market, but also allow those same companies to pursue broader social goals at the same time.
Take Patagonia. Last year, the company’s founder announced they would be transferring 100% of voting and non-voting stock to a trust and non-profit set up to sustain their values and fight climate change. But Patagonia will still be able to hire, and grow and make those coats. But now, all profits will be distributed to groups that are dedicated to protecting the planet.
Getting workers more leverage, expanding and redesigning the social safety net, improving cross-border cooperation to help governments tax, and regulate, and negotiate fair trade deals and transition to clean energy, exploring new ways for corporations to operate in a way that’s consistent with profits and the common good, none of these steps are easy.
We will not eliminate, through any of these steps, all inequality. We’re not going to eliminate poverty. We’re not going to entirely ward off the disruptions that come from AI and other new technologies. But if we take these steps, which are achievable, they would make our economy work better. They’d improve people’s lives. They would reduce inequality. They would strengthen our democracies.
One last point before we bring on the panel of folks who know more about this stuff than I do. Achieving any of these things will require more than just innovative policy making. It will require more than just savvy strategic politics. It will require a broader shift in values.
The other day, I went back and reread one of my favorite passages from one of Bobby Kennedy’s speeches back in the ‘60s. That’s Bobby Kennedy, the father, not the son. In it, he describes the standard measure of economic performance that countries, and international agencies and economists use, gross domestic product GDP. And he describes how it reflects what he calls the poverty of satisfaction that afflicts us all.
And he goes on to talk about how GDP, as we use it, measures the locks on our doors and the locks that we put on our prisons. It counts the destruction of our forests and cigarette advertising. It counts nuclear warhead construction and armored cars for the police to contain unrest in our cities. What it doesn’t measure is the health of our children, or the quality of their education, or the joy of their play. It doesn’t account for our wit or wisdom, our compassion or our devotion to country. “It measures everything,” he says, “except that which makes life worthwhile.”
When talking about the economy, many of us, including those of us who consider ourselves progressive, we obsess over the material measures of progress, income, and taxes, and wages, and trade balances and the latest inflation numbers. And that is important, especially important for poor people. For working families with little margin for error, having a job that pays enough to cover the bills, putting food on the table, managing through a crisis, that’s still out of reach.
Material things matter, but goods, money is not the only thing that drives us. A job provides an income, a paycheck, but it can also provide a sense of pride and belonging. People may want new furniture or the latest Air Jordans, but they also want more time with their families. They want a neighborhood where they can take a walk without being afraid, or passing by somebody who they know has nothing and is cold. They want to sense a purpose to their days.
The choices we make about our economy affect all those things that make life worthwhile, and we shouldn’t be afraid to talk about that.
One silver lining of the pandemic was that it forced millions of people, especially young people, to step back and take stock of what’s really important. Your generation is starting to ask tough questions about how you want to live, and work and spend your time. And it may be that by answering those questions, you can help all of us realign our economic policies with our deepest values.
Almost 200 years ago, Alex de Tocqueville described American society, American social and economic equality as, quote, “The fundamental fact from which all others seem to be derived.” He wrote that, “Americans put a kind of heroism in their way of doing commerce.”
But at a time when our bonds of trust are growing weaker, at a time when we are drowning in stuff, and yet, people seem deeply anxious and unfulfilled, we need a new generation of heroes to strengthen our bonds of trust, to create an economic system that supports and sustains those things that matter, including our democratic values for years to come. That’s what many of our young leaders are doing, and it’s up to the rest of us to do everything we can to support them.
Thank you, everybody. All right. Thank you.