Amazon Backer Hanauer Urges Minimum-Wage Hikes to Avert Revolt

Beware, fellow plutocrats, the pitchforks are coming | Nick Hanauer — TED

TED

Unchecked inequality will trigger violent uprisings unless democracies mandate higher wages to fuel the middle-class purchasing power that sustains capitalism.

AI-assisted summary of Beware, fellow plutocrats, the pitchforks are coming | Nick Hanauer — original source. Check the original for full context.

Source published: 2014-08-12

Key ideas

Nick Hanauer warns fellow plutocrats that historic income inequality threatens to transform the United States into a pre-revolutionary French neo-feudal society, risking widespread social uprising. (2:38)
Between 1980 and the 2010s, the top 1% income share surged from ~8% to over 20%, while the bottom 50% dropped to 12%-13%, heading toward 30% and 6% respectively under current trajectories. (2:38)
Advocating for 'middle-out economics,' Hanauer argues that a thriving middle class and living wages drive aggregate demand, debunking trickle-down claims that higher wages destroy jobs. (5:15)
Seattle passed a $15 minimum wage ordinance within 350 days of Hanauer's 2013 Bloomberg op-ed, demonstrating the viability of policy-driven wage increases in high-growth economies. (8:08)

Detailed notes

## Background Published by the TED channel on YouTube on August 12, 2014, this talk features unapologetic venture capitalist Nick Hanauer issuing an urgent wake-up call to his fellow plutocrats. According to the page description, Hanauer warns that surging inequality threatens to recreate the conditions of pre-revolutionary France, arguing that raising the minimum wage can rebuild the middle class and stave off a violent social uprising.

## TL;DR Venture capitalist Nick Hanauer addresses the top 0.01 percent, arguing that extreme wealth concentration is economically self-defeating and heading toward social revolt. He dismantles orthodox trickle-down theory, explaining that rich plutocrats cannot consume enough goods to sustain aggregate demand on their own. Citing Henry Ford's $5-a-day wage and Seattle's successful passage of a $15 minimum wage, Hanauer advocates for 'middle-out economics'—a framework where well-paid workers provide the customer base that drives hiring, innovation, and corporate profits. Ultimately, he urges elites to embrace inclusive capitalism and support working-class prosperity before popular rage culminates in pitchforks outside their gates.

## Atmosphere & style The presentation carries the candid, insider urgency of an ultra-wealthy elite blowing the whistle on his own social class. Hanauer's delivery blends wry, self-effacing humor about his own lifestyle and modest academic record with sharp, cutting assessments of orthodox economic dogma. The mood transitions steadily from an ironic, conversational confession into an escalating, hard-headed warning, making the talk feel less like a dry academic seminar and more like an emergency intervention among billionaire peers.

## Bulletin - [02:38](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=158s) Nick Hanauer warns fellow plutocrats that historic income inequality threatens to transform the United States into a pre-revolutionary French neo-feudal society, risking widespread social uprising. - [02:38](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=158s) Between 1980 and the 2010s, the top 1% income share surged from ~8% to over 20%, while the bottom 50% dropped to 12%-13%, heading toward 30% and 6% respectively under current trajectories. - [05:15](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=315s) Advocating for 'middle-out economics,' Hanauer argues that a thriving middle class and living wages drive aggregate demand, debunking trickle-down claims that higher wages destroy jobs. - [08:08](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=488s) Seattle passed a $15 minimum wage ordinance within 350 days of Hanauer's 2013 Bloomberg op-ed, demonstrating the viability of policy-driven wage increases in high-growth economies.

## Key takeaways - [00:13](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=13s) Hanauer attributes his immense wealth not to superior intellect or effort, but to luck, risk tolerance, and an intuition for future shifts. - [02:38](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=158s) Extreme income inequality in the U.S. mirrors pre-revolutionary France, leading inevitably toward civil unrest or a police state if left uncorrected. - [05:15](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=315s) Capitalism functions as a complex, adaptive evolutionary ecosystem rather than an efficient, self-correcting machine in natural equilibrium. - [05:15](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=315s) Henry Ford's $5-a-day wage established a virtuous feedback loop by turning factory workers into middle-class consumers capable of buying products. - [05:15](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=315s) Economic prosperity represents the sum total of solutions to human problems, requiring wide participation rather than narrow wealth hoarding. - [08:08](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=488s) The rich cannot personally drive an economy because high earners do not consume proportionally more everyday goods than average citizens. - [08:08](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=488s) The push for a $15 minimum wage transitioned from a mocked proposal in Forbes to Seattle city law in roughly 350 days. - [08:08](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=488s) Skyrocketing executive compensation from 30x to over 500x the median wage since 1980 contradicts claims that paying labor more inevitably eliminates positions. - [13:28](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=808s) Real-world evidence from Washington state proved that high baseline and tipped minimum wages were compatible with rapid job creation and booming restaurant sectors. - [13:28](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=808s) The foundational law of capitalism states that when workers have more money, businesses gain more customers and hire more employees. - [15:43](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=943s) The structural function of democratic government is to manage the inherent tendency of complex market systems to drift toward inequality and collapse. - [18:02](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=1082s) Orthodox economic theories often serve as ideological narratives designed to morally justify prevailing elite status and power hierarchies. - [18:02](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=1082s) A thriving middle class is the primary cause of prosperity in capitalist economies rather than a fortunate byproduct of wealthy patrons.

## Detailed walkthrough ### [00:13](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=13s) The Confessions of a Plutocrat

Nick Hanauer introduces himself not as an academic or a politician, but as a member of the top 0.01 percent—an unapologetic capitalist and, by any reasonable definition, a plutocrat. Addressing his fellow oligarchs directly, he explains that it is time for them to have a candid conversation. Hanauer has founded, co-founded, or funded over 30 businesses across diverse industries: he was the first non-family outside investor in Amazon, co-founded aQuantive (which sold to Microsoft for $6.4 billion), and even owns a bank alongside his friends. He readily acknowledges that this capitalist journey has rewarded him obscenely, providing a lifestyle complete with multiple homes, a private plane, and a yacht.

Yet Hanauer insists that his astronomical wealth is not the product of superior intellect or outsized effort. He openly admits he was merely a mediocre student, has zero technical expertise, and cannot write a single line of software code. Instead, he credits his fortune to extraordinary luck—of birth, circumstance, and timing—coupled with an exceptionally high tolerance for risk and a keen intuition about future shifts. Looking ahead today, however, his foresight reveals a dark forecast: he sees pitchforks, carried by angry mobs targeting the wealthy elite as the gap between the richest citizens and everyone else grows untenable.

- **Investments & ventures**: First non-family investor in Amazon.com; co-founder of aQuantive (sold to Microsoft for $6.4 billion); co-owner of a bank; funded or founded 30+ companies. - **Self-assessment**: Not the hardest-working or smartest; mediocre student; non-technical; success driven by luck, risk tolerance, and future intuition.

---

[02:38](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=158s) The Imbalance: From Democracy to Neo-Feudalism

Hanauer charts the dramatic concentration of American wealth over recent decades to demonstrate why popular rage is mounting. In 1980, the top 1% captured around 8% of national income, while the bottom 50% accounted for 18%. Three decades later, the top 1% claims more than 20%, whereas the bottom 50% has dropped to 12% or 13%. If current trends persist for another 30 years, the top 1% will monopolize over 30% of the national income, leaving the bottom half of the country with a meager 6%. While Hanauer emphasizes that some inequality is necessary for a capitalist democracy to function, the current historic extremes threaten to collapse the system entirely, transforming the United States into an 18th-century, pre-revolutionary French neo-feudal rentier society.

Addressing his peers living inside gated bubbles, Hanauer issues an urgent wake-up call, stating: “You show me a highly unequal society, and I will show you a police state or an uprising.” He warns that pitchforks are an inevitability rather than a possibility if inequality is left unaddressed, and the fallout will be disastrous for everyone—especially the plutocrats. He clarifies that his stance is not driven by moral do-gooder liberalism, but by raw self-interest and economic realism: extreme inequality is stupid, self-defeating, and terrible for business.

```mermaid flowchart TD accTitle: Income Share Shift Over 60 Years accDescr: Visualizing the widening gap between the top 1 percent and the bottom 50 percent from 1980 projected through 2044.

subgraph Y1980["1980 Reality"] Top1980["Top 1%: ~8% of Income"] Bottom1980["Bottom 50%: 18% of Income"] end

subgraph Y2010["Today (circa 2014)"] Top2010["Top 1%: >20% of Income"] Bottom2010["Bottom 50%: 12%-13% of Income"] end

subgraph Y2044["30-Year Projection"] Top2044["Top 1%: >30% of Income"] Bottom2044["Bottom 50%: ~6% of Income"] end

Top1980 --> Top2010 --> Top2044 Bottom1980 --> Bottom2010 --> Bottom2044 ```

- **1980 income shares**: Top 1% held ~8%; bottom 50% held 18%. - **Current income shares**: Top 1% holds >20%; bottom 50% holds 12%–13%. - **Projected trajectory (30 years out)**: Top 1% captures >30%; bottom 50% drops to 6%. - **Historical parallel**: Pre-revolutionary France, characterized by extreme wealth concentration and eventual mob uprisings.

---

[05:15](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=315s) Henry Ford and Middle-Out Economics

To resolve this crisis, Hanauer urges capitalists to look to Henry Ford as their operational model. When Ford instituted the landmark $5-a-day wage—doubling the going rate at the time—he did not just boost factory productivity; he transformed exploited, impoverished line workers into a thriving middle class capable of buying the very automobiles they manufactured. Ford recognized that the economy functions like a biological ecosystem governed by feedback loops between businesses and customers: higher wages generate consumer demand, prompting companies to hire more workers, which in turn fuels further wages, demand, and corporate profits. Hanauer laments that this virtuous cycle is the exact component missing from the modern economic recovery.

He calls on leaders to abandon the failed trickle-down dogma shared by both major political parties and replace it with "middle-out economics." Neoclassical economic theory incorrectly models the economy as a mechanistic, linear, efficient machine that naturally seeks equilibrium and fairness. In reality, modern complexity economics reveals that economies are complex, adaptive ecosystems that drift away from equilibrium toward severe inequality unless properly managed. Under this paradigm, capitalism succeeds not merely by shuffling existing resources, but by serving as an evolutionary solution-finding engine that rewards individuals for solving society's problems. A nation's prosperity is simply the sum of the solutions it produces, which explains the immense wealth generated by innovators like Google, Amazon, Microsoft, and Apple.

```mermaid flowchart LR accTitle: The Virtuous Economic Cycle accDescr: Henry Ford's feedback loop connecting living wages directly to heightened business profits.

W["Raise Wages"] --> D["Higher Consumer Demand"] D --> H["Increased Business Hiring"] H --> P["Higher Profits & Further Wages"] P --> W ```

- **Henry Ford’s breakthrough**: Doubled wages to $5 per day, creating the consumer base for his own Model T cars. - **Middle-out vs. Trickle-down**: - *Neoclassical view*: Mechanistic, linear, naturally tends toward fair equilibrium. - *21st-century view*: Complex, non-linear, adaptive ecosystem; drifts toward runaway inequality without intervention. - **True prosperity defined**: The accumulation of solutions to human problems, driven by wide participation rather than narrow capital hoarding.

---

[08:08](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=488s) The Limits of Plutocrat Spending and the $15 Battle

Economic problem-solving requires broad participation from citizens serving as both entrepreneurial problem solvers and well-paid consumers. Hanauer rejects the foundational trickle-down assumption that pampering the rich creates widespread prosperity, observing that his personal consumption cannot support an economy: “I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff, do I?” Demonstrating with his own attire—what his business partner Mike calls his "manager pants"—Hanauer explains that while he bought two pairs, he could never wear or utilize 2,000 pairs. A billionaire cannot consume infinite haircuts or restaurant dinners; therefore, only an empowered middle class can drive robust national aggregate demand.

Addressing peers who claim nothing can be done in the modern era, Hanauer recounts how he decided to test his theories in the public square. On June 19, 2013, he published an article with Bloomberg titled *"The Capitalist’s Case for a $15 Minimum Wage."* The response from corporate circles was immediate ridicule—*Forbes* labeled it “Nick Hanauer's near-insane proposal.” Yet just 350 days later, Seattle Mayor Ed Murray signed an ordinance establishing a citywide $15 minimum wage, more than double the federal rate of $7.25.

Hanauer explains that this campaign succeeded because advocates clearly showed workers and business owners how higher pay benefits everyone: - Low-wage workers rely heavily on taxpayer-funded safety-net programs like food stamps, medical aid, and rental subsidies; a living wage shifts this financial responsibility back onto employers. - Underpaid laborers make ineffective taxpayers, whereas wage bumps generate robust local spending that offsets labor costs across the entire market. - Across-the-board minimum wage increases ensure a level playing field where every competitor adapts equally.

When orthodox economists and politicians protest that increasing the cost of labor inevitably destroys jobs, Hanauer points to executive compensation as clear contradictory evidence. Since 1980, CEO compensation skyrocketed from roughly 30 times the median worker's wage to over 500 times, yet companies have neither automated, offshored, nor eliminated executive jobs. Demand for highly paid tech and finance specialists expanded in tandem with their surging salaries. Hanauer notes that Seattle's wage hike is not a reckless experiment, but a competitive strategy building on the success of Washington state, which already enjoyed the nation's highest minimum wage at $9.32 while outperforming economic competitors.

- **Consumption disparity**: Earning 1,000× the median wage does not yield 1,000× consumption of pants, meals, or haircuts. - **Bloomberg op-ed**: Published June 19, 2013; mocked by *Forbes* as a "near-insane proposal." - **Seattle victory**: Enacted within 350 days by Mayor Ed Murray, doubling the federal baseline of $7.25 to $15.00 per hour. - **Counter-evidence to orthodox wage theory**: Executive pay multiplied from 30× to 500× the median wage since 1980 without lowering CEO headcounts or exporting corporate leadership overseas.

[13:28](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=808s) The Evidence of Washington State and the True Law of Capitalism

Hanauer addresses the orthodox conservative claim that raising the minimum wage destroys employment, testing it against real-world evidence from his home state. At the time, Washington state maintained a minimum wage nearly 30 percent higher than the federal baseline of $7.25, and a staggering 427 percent higher than the federal tipped minimum wage of $2.13. By the logic of trickle-down theory, Washington should have suffered catastrophic joblessness and Seattle should have been economically sliding into the ocean. Instead, Seattle became the fastest-growing major city in the United States, Washington led the country in small-business job creation, and the local restaurant sector boomed. Hanauer explains that this is not an anomaly, but the direct result of basic economic mechanics: when hospitality workers earn enough to actually eat in restaurants, restaurant owners gain a broader customer base.

While acknowledging that economic systems contain complex dynamics, Hanauer demands an end to the fearmongering narrative that higher base pay triggers economic ruin. He identifies the core ideological cruelty embedded in orthodox supply-side thought: its defining offense is not merely claiming that enriching the wealthy helps everyone, but insisting that paying the poor more money harms the broader economy. Furthermore, he skewers the self-aggrandizing myth that billionaire entrepreneurs built American prosperity through sheer personal genius. Without the specific purchasing power of the American public, he points out, even the most capable business leaders would find their talents squandered: “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.”

- Washington state’s baseline minimum wage exceeded the federal rate ($7.25) by almost 30%. - Washington’s rate exceeded the federal tipped minimum wage ($2.13) by 427%. - Despite these mandates, Washington generated small-business jobs faster than any other major state, while Seattle led the nation in big-city growth. - As Hanauer summarizes the fundamental dynamic: “Because the fundamental law of capitalism is, when workers have more money, businesses have more customers and need more workers.”

[15:43](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=943s) Designing a "New Capitalism" Through Inclusion and Democracy

Hanauer outlines an alternative economic framework he terms "new capitalism." Premised on the belief that market mechanisms remain the best system available, this approach argues that capitalism functions better the wider its circle of participation becomes. He challenges conservatives on their own terms regarding the size of government: rather than shrinking government by gutting assistance programs for vulnerable citizens, policymakers should ensure employers pay wages high enough that working people have no need for welfare in the first place. Reinvesting in the middle class creates genuine competition, unlocking the talent needed to solve human problems—which Hanauer identifies as the authentic engine of economic growth.

```mermaid flowchart TD accTitle: Inclusive Capitalism Feedback Loop accDescr: Diagram contrasting how middle class investment drives growth versus how unmanaged capitalism leads to collapse.

subgraph Virtuous ["The Inclusive Economy"] A["Higher Wages & Public Investments"] --> B["Increased Middle-Class Purchasing Power"] B --> C["Greater Demand for Goods & Services"] C --> D["Broad-Based Business Growth & Innovation"] D --> A end

subgraph Unmanaged ["Unchecked Capital Dynamics"] E["Capital Accumulation & Power Imbalance"] --> F["Multiplicative Concentration of Wealth"] F --> G["Stagnant Consumer Demand & Instability"] G --> H["Social Fracture & Systemic Collapse"] end ```

Left entirely to its own devices, capitalism inherently destabilizes itself. Because complex systems exhibit multiplicative mathematical dynamics, unmanaged markets tilt inexorably toward wealth concentration, extreme inequality, and eventual collapse. Hanauer asserts that the structural purpose of a democratic government is to counter this drift by fostering broad inclusion rather than shielding oligarchic fortunes. Pragmatic capitalists should therefore view basic social safeguards—livable wages, affordable healthcare, paid sick leave, and progressive tax rates funding education and research—not as burdensome concessions, but as the foundational investments that make wealth generation possible.

- “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.” - “Balancing the power of capitalists like me and workers isn't bad for capitalism. It's essential to it.”

[18:02](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=1082s) Plutocratic Storytelling and the Threat of the Pitchforks

Hanauer takes aim at the pretense of economics as a neutral, value-free hard science. Instead, he views it largely as an ideological apparatus employed to formalize and sanctify prevailing power structures, social status, and moral hierarchies. Throughout history, ruling elites have required compelling moral justifications to persuade the public that extreme hierarchy serves everyone's interest. Centuries ago, monarchies justified their privileged status by invoking the divine right of kings; in modern America, economic elites justify it through trickle-down doctrine, claiming that plutocrats are indispensable job creators while working people are interchangeable and expendable.

Under this prevailing narrative, tax breaks for the wealthy are framed as engines of growth, while public investments in regular citizens are demonized as fiscal recklessness that will bankrupt the republic. Hanauer dismisses this rhetoric as transparently self-serving fiction. He reminds his peers that American society created their fortunes, not the other way around, and that middle-class purchasing power is the indispensable prerequisite for capitalist success. He closes with an urgent ultimatum to his fellow elites: they can proactively adopt an inclusive capitalism that safeguards the nation's future, or retreat behind the gates of their estates, private schools, superyachts, and private jets—and wait for the pitchforks.

- “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...” - “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.” - Hanauer's final warning to his peers: “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.”

## Notable quotes > [02:38](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=158s) You show me a highly unequal society, and I will show you a police state or an uprising. — Nick Hanauer

> [15:43](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=943s) Balancing the power of capitalists like me and workers isn't bad for capitalism. It's essential to it. — Nick Hanauer

> [15:43](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=943s) 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. — Nick Hanauer

> [18:02](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=1082s) 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. — Nick Hanauer

> [15:43](https://www.youtube.com/watch?v=q2gO4DKVpa8&t=943s) 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. — Nick Hanauer

## Mentioned Nick Hanauer, Amazon, aQuantive, Microsoft, Henry Ford, Google, Apple, Bloomberg, Forbes, Ed Murray, Seattle, Washington

## Video description Nick Hanauer is a rich guy, an unrepentant capitalist — and he has something to say to his fellow plutocrats: Wake up! Growing inequality is about to push our societies into conditions resembling pre-revolutionary France. Hear his argument about why a dramatic increase in minimum wage could grow the middle class, deliver economic prosperity ... and prevent a revolution.

Watch more TED Talks on inequality: http://www.ted.com/topics/inequality

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[Source](https://www.youtube.com/watch?v=q2gO4DKVpa8)

中文简报

亚马逊早期投资人哈瑙尔呼吁提高最低工资以避免动荡若任由不平等蔓延，恐将引发暴力反抗，除非民主政体强制提高薪资，以增强支撑资本主义运转的中产阶级购买力。风险投资家尼克·哈瑙尔向排名前0.01%的极富阶层发话，指出财富的极度集中在经济上适得其反，并正将社会推向动荡边缘。他批驳了传统的“滴漏理论”，指出极少数富豪单凭自身无法消费足够的商品来支撑总需求。哈瑙尔援引亨利·福特推行的日薪5美元政策以及西雅图成功通过15美元最低工资标准的先例，倡导“由中向外经济学”——在这一框架下，收入良好的劳动者能够构成庞大的客户群体，进而推动招聘、创新和企业利润的增长。最终，他敦促精英阶层拥抱包容性资本主义，并在大众怒火蔓延至自家门前之前，支持工人阶级的繁荣。尼克·哈瑙尔向同侪富豪发出警告，指出历史性的收入不平等正威胁着将美国变成法国大革命前夕的新封建社会，面临普遍社会动荡的风险。 (2:38) 从1980年到2010年代，前1%人群的收入份额从约8%飙升至超过20%，而后50%人群的份额则降至12%-13%；按当前走势，两者或将分别迈向30%和6%。 (2:38) 哈瑙尔提倡“由中向外经济学”，认为蓬勃发展的中产阶级和体面的生活工资能够拉动总需求，从而驳斥了所谓提高工资会摧毁就业机会的滴漏理论主张。 (5:15) 在哈瑙尔2013年于彭博社发表评论文章后的350天内，西雅图就通过了15美元最低工资法令，证明了在高速增长型经济体中通过政策推动薪资上涨的可行性。 (8:08)

Source quotes

[2:38] Nick Hanauer: You show me a highly unequal society, and I will show you a police state or an uprising. [15:43] Nick Hanauer: Balancing the power of capitalists like me and workers isn't bad for capitalism. It's essential to it. [15:43] Nick Hanauer: 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. [18:02] Nick Hanauer: 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. [15:43] Nick Hanauer: 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.

Original transcript

[0:13] You probably don't know me, [0:15] but I am one of those .01 percenters [0:19] that you hear about and read about, [0:20] and I am by any reasonable definition a plutocrat. [0:25] And tonight, what I would like to do is speak directly [0:28] to other plutocrats, to my people, [0:30] because it feels like it's time for us all [0:33] to have a chat. [0:35] Like most plutocrats, I too am a proud [0:37] and unapologetic capitalist. [0:40] I have founded, cofounded or funded [0:43] over 30 companies across a range of industries. [0:47] I was the first non-family investor in Amazon.com. [0:50] I cofounded a company called aQuantive [0:53] that we sold to Microsoft for 6.4 billion dollars. [0:57] My friends and I, we own a bank. [1:00] I tell you this — (Laughter) — [1:02] unbelievable, right? [1:04] I tell you this to show [1:07] that my life is like most plutocrats. [1:10] I have a broad perspective on capitalism [1:13] and business, [1:15] and I have been rewarded obscenely for that [1:19] with a life that most of you all [1:21] can't even imagine: [1:23] multiple homes, a yacht, my own plane, [1:26] etc., etc., etc. [1:30] But let's be honest: I am not the smartest person you've ever met. [1:33] I am certainly not the hardest working. [1:35] I was a mediocre student. [1:37] I'm not technical at all. [1:39] I can't write a word of code. [1:41] Truly, my success is the consequence [1:44] of spectacular luck, [1:47] of birth, of circumstance and of timing. [1:52] But I am actually pretty good at a couple of things. [1:56] One, I have an unusually high tolerance for risk, [2:01] and the other is I have a good sense, [2:03] a good intuition about what will happen in the future, [2:06] and I think that that intuition about the future [2:09] is the essence of good entrepreneurship. [2:13] So what do I see in our future today, [2:15] you ask? [2:17] I see pitchforks, [2:19] as in angry mobs with pitchforks, [2:24] because while people like us plutocrats [2:29] are living beyond the dreams of avarice, [2:32] the other 99 percent of our fellow citizens [2:35] are falling farther and farther behind. [2:38] In 1980, the top one percent of Americans [2:41] shared about eight percent of national [income], [2:43] while the bottom 50 percent of Americans [2:46] shared 18 percent. [2:48] Thirty years later, today, the top one percent [2:52] shares over 20 percent of national [income], [2:55] while the bottom 50 percent of Americans [2:57] share 12 or 13. [3:00] If the trend continues, [3:03] the top one percent will share [3:04] over 30 percent of national [income] [3:06] in another 30 years, [3:08] while the bottom 50 percent of Americans [3:10] will share just six. [3:12] You see, the problem isn't that we have [3:14] some inequality. [3:16] Some inequality is necessary [3:19] for a high-functioning capitalist democracy. [3:22] The problem is that inequality [3:24] is at historic highs today [3:27] and it's getting worse every day. [3:30] And if wealth, power, and income [3:33] continue to concentrate [3:35] at the very tippy top, [3:37] our society will change [3:39] from a capitalist democracy [3:41] to a neo-feudalist rentier society [3:45] like 18th-century France. [3:47] That was France [3:50] before the revolution [3:51] and the mobs with the pitchforks. [3:53] So I have a message for my fellow plutocrats [3:56] and zillionaires [3:58] and for anyone who lives [3:59] in a gated bubble world: [4:02] Wake up. [4:03] Wake up. It cannot last. [4:07] Because if we do not do something [4:09] to fix the glaring economic inequities in our society, [4:13] the pitchforks will come for us, [4:16] for no free and open society can long sustain [4:20] this kind of rising economic inequality. [4:23] It has never happened. There are no examples. [4:26] You show me a highly unequal society, [4:27] and I will show you a police state [4:29] or an uprising. [4:31] The pitchforks will come for us [4:33] if we do not address this. [4:35] It's not a matter of if, it's when. [4:39] And it will be terrible when they come [4:42] for everyone, [4:44] but particularly for people like us plutocrats. [4:49] I know I must sound like some liberal do-gooder. [4:52] I'm not. I'm not making a moral argument [4:54] that economic inequality is wrong. [4:58] What I am arguing is that rising economic inequality [5:02] is stupid and ultimately self-defeating. [5:05] Rising inequality doesn't just increase our risks [5:09] from pitchforks, [5:11] but it's also terrible for business too. [5:15] So the model for us rich guys should be Henry Ford. [5:19] When Ford famously introduced the $5 day, [5:23] which was twice the prevailing wage at the time, [5:26] he didn't just increase the productivity [5:28] of his factories, [5:30] he converted exploited autoworkers who were poor [5:33] into a thriving middle class who could now afford [5:36] to buy the products that they made. [5:39] Ford intuited what we now know is true, [5:43] that an economy is best understood as an ecosystem [5:47] and characterized by the same kinds [5:49] of feedback loops you find [5:52] in a natural ecosystem, [5:54] a feedback loop between customers and businesses. [5:58] Raising wages increases demand, [6:01] which increases hiring, [6:03] which in turn increases wages [6:05] and demand and profits, [6:07] and that virtuous cycle of increasing prosperity [6:12] is precisely what is missing [6:14] from today's economic recovery. [6:19] And this is why we need to put behind us [6:24] the trickle-down policies that so dominate [6:28] both political parties [6:30] and embrace something I call middle-out economics. [6:33] Middle-out economics rejects [6:35] the neoclassical economic idea [6:38] that economies are efficient, linear, mechanistic, [6:42] that they tend towards equilibrium and fairness, [6:45] and instead embraces the 21st-century idea [6:49] that economies are complex, adaptive, [6:52] ecosystemic, [6:54] that they tend away from equilibrium and toward inequality, [6:58] that they're not efficient at all [6:59] but are effective if well managed. [7:03] This 21st-century perspective [7:06] allows you to clearly see that capitalism [7:09] does not work by [efficiently] allocating [7:12] existing resources. [7:14] It works by [efficiently] creating new solutions [7:20] to human problems. [7:22] The genius of capitalism [7:24] is that it is an evolutionary solution-finding system. [7:29] It rewards people for solving other people's problems. [7:35] The difference between a poor society [7:38] and a rich society, obviously, [7:40] is the degree to which that society [7:43] has generated solutions in the form [7:45] of products for its citizens. [7:48] The sum of the solutions [7:49] that we have in our society [7:51] really is our prosperity, and this explains [7:54] why companies like Google and Amazon [7:56] and Microsoft and Apple [7:58] and the entrepreneurs who created those companies [8:01] have contributed so much [8:05] to our nation's prosperity. [8:08] This 21st-century perspective [8:10] also makes clear [8:13] that what we think of as economic growth [8:15] is best understood as [8:17] the rate at which we solve problems. [8:20] But that rate is totally dependent upon [8:23] how many problem solvers — [8:27] diverse, able problem solvers — we have, [8:29] and thus how many of our fellow citizens [8:32] actively participate, [8:34] both as entrepreneurs who can offer solutions, [8:38] and as customers who consume them. [8:42] But this maximizing participation thing [8:46] doesn't happen by accident. [8:47] It doesn't happen by itself. [8:49] It requires effort and investment, [8:53] which is why all [8:56] highly prosperous capitalist democracies [8:59] are characterized by massive investments [9:01] in the middle class and the infrastructure [9:04] that they depend on. [9:07] We plutocrats need to get this [9:09] trickle-down economics thing behind us, [9:12] this idea that the better we do, [9:14] the better everyone else will do. [9:16] It's not true. How could it be? [9:20] I earn 1,000 times the median wage, [9:25] but I do not buy 1,000 times as much stuff, [9:27] do I? [9:28] I actually bought two pairs of these pants, [9:32] what my partner Mike calls [9:34] my manager pants. [9:35] I could have bought 2,000 pairs, [9:38] but what would I do with them? (Laughter) [9:41] How many haircuts can I get? [9:44] How often can I go out to dinner? [9:48] No matter how wealthy a few plutocrats get, [9:52] we can never drive a great national economy. [9:55] Only a thriving middle class can do that. [10:01] There's nothing to be done, [10:03] my plutocrat friends might say. [10:07] Henry Ford was in a different time. [10:10] Maybe we can't do some things. [10:12] Maybe we can do some things. [10:15] June 19, 2013, [10:19] Bloomberg published an article I wrote called [10:23] "The Capitalist’s Case for a $15 Minimum Wage." [10:28] The good people at Forbes magazine, [10:31] among my biggest admirers, [10:33] called it "Nick Hanauer's near-insane proposal." [10:37] And yet, just 350 days [10:41] after that article was published, [10:43] Seattle's Mayor Ed Murray signed into law [10:46] an ordinance raising the minimum wage in Seattle [10:50] to 15 dollars an hour, [10:52] more than double [10:53] what the prevailing federal $7.25 rate is. [10:58] How did this happen, [11:00] reasonable people might ask. [11:02] It happened because a group of us [11:03] reminded the middle class [11:05] that they are the source [11:06] of growth and prosperity in capitalist economies. [11:10] We reminded them that when workers have more money, [11:14] businesses have more customers, [11:15] and need more employees. [11:17] We reminded them that when businesses [11:20] pay workers a living wage, [11:23] taxpayers are relieved of the burden [11:25] of funding the poverty programs [11:26] like food stamps and medical assistance [11:29] and rent assistance [11:31] that those workers need. [11:33] We reminded them that low-wage workers [11:36] make terrible taxpayers, [11:39] and that when you raise the minimum wage [11:41] for all businesses, [11:43] all businesses benefit [11:44] yet all can compete. [11:47] Now the orthodox reaction, of course, [11:49] is raising the minimum wage costs jobs. Right? [11:53] Your politician's always echoing [11:55] that trickle-down idea by saying things like, [11:58] "Well, if you raise the price of employment, [12:00] guess what happens? You get less of it." [12:03] Are you sure? [12:06] Because there's some contravening evidence. [12:09] Since 1980, the wages of CEOs in our country [12:14] have gone from about 30 times the median wage [12:16] to 500 times. [12:19] That's raising the price of employment. [12:22] And yet, to my knowledge, [12:25] I have never seen a company [12:27] outsource its CEO's job, automate their job, [12:31] export the job to China. [12:33] In fact, we appear to be employing [12:35] more CEOs and senior managers than ever before. [12:38] So too for technology workers [12:42] and financial services workers, [12:44] who earn multiples of the median wage [12:47] and yet we employ more and more of them, [12:49] so clearly you can raise the price of employment [12:54] and get more of it. [12:56] I know that most people [12:58] think that the $15 minimum wage [13:00] is this insane, risky economic experiment. [13:04] We disagree. [13:06] We believe that the $15 minimum wage [13:08] in Seattle [13:09] is actually the continuation [13:11] of a logical economic policy. [13:14] It is allowing our city [13:16] to kick your city's ass. [13:19] Because, you see, [13:20] Washington state already has [13:22] the highest minimum wage [13:24] of any state in the nation. [13:25] We pay all workers $9.32, [13:28] which is almost 30 percent more [13:29] than the federal minimum of 7.25, [13:32] but crucially, 427 percent more [13:36] than the federal tipped minimum of 2.13. [13:40] If trickle-down thinkers were right, [13:42] then Washington state should have massive unemployment. [13:45] Seattle should be sliding into the ocean. [13:48] And yet, Seattle [13:51] is the fastest-growing big city in the country. [13:55] Washington state is generating small business jobs [13:59] at a higher rate than any other major state [14:02] in the nation. [14:03] The restaurant business in Seattle? Booming. [14:07] Why? Because the fundamental law of capitalism is, [14:12] when workers have more money, [14:13] businesses have more customers [14:15] and need more workers. [14:17] When restaurants pay restaurant workers enough [14:20] so that even they can afford to eat in restaurants, [14:24] that's not bad for the restaurant business. [14:27] That's good for it, [14:28] despite what some restaurateurs may tell you. [14:33] Is it more complicated than I'm making out? [14:35] Of course it is. [14:36] There are a lot of dynamics at play. [14:38] But can we please stop insisting [14:40] that if low-wage workers earn a little bit more, [14:43] unemployment will skyrocket [14:44] and the economy will collapse? [14:46] There is no evidence for it. [14:48] The most insidious thing [14:50] about trickle-down economics [14:51] is not the claim that if the rich get richer, [14:54] everyone is better off. [14:55] It is the claim made by those who oppose [14:58] any increase in the minimum wage [15:00] that if the poor get richer, [15:02] that will be bad for the economy. [15:04] This is nonsense. [15:06] So can we please dispense with this rhetoric [15:10] that says that rich guys like me [15:12] and my plutocrat friends [15:15] made our country? [15:18] We plutocrats know, [15:20] even if we don't like to admit it in public, [15:22] that if we had been born somewhere else, [15:24] not here in the United States, [15:26] we might very well be just some dude standing barefoot [15:29] by the side of a dirt road selling fruit. [15:32] It's not that they don't have good entrepreneurs in other places, [15:35] even very, very poor places. [15:37] It's just that that's all [15:38] that those entrepreneurs' customers can afford. [15:43] So here's an idea for a new kind of economics, [15:47] a new kind of politics [15:49] that I call new capitalism. [15:52] Let's acknowledge that capitalism [15:54] beats the alternatives, [15:56] but also that the more people we include, [16:00] both as entrepreneurs and as customers, [16:04] the better it works. [16:06] Let's by all means shrink the size of government, [16:10] but not by slashing the poverty programs, [16:12] but by ensuring that workers are paid enough [16:14] so that they actually don't need those programs. [16:18] Let's invest enough in the middle class [16:21] to make our economy fairer and more inclusive, [16:24] and by fairer, more truly competitive, [16:28] and by more truly competitive, [16:29] more able to generate the solutions [16:32] to human problems [16:34] that are the true drivers of growth and prosperity. [16:39] Capitalism is the greatest social technology [16:43] ever invented [16:44] for creating prosperity in human societies, [16:47] if it is well managed, [16:49] but capitalism, because of the fundamental [16:52] multiplicative dynamics of complex systems, [16:55] tends towards, inexorably, inequality, [16:58] concentration and collapse. [17:03] The work of democracies [17:05] is to maximize the inclusion of the many [17:10] in order to create prosperity, [17:13] not to enable the few to accumulate money. [17:16] Government does create prosperity and growth, [17:20] by creating the conditions that allow [17:23] both entrepreneurs and their customers [17:26] to thrive. [17:27] Balancing the power of capitalists like me [17:31] and workers isn't bad for capitalism. [17:34] It's essential to it. [17:36] Programs like a reasonable minimum wage, [17:38] affordable healthcare, [17:40] paid sick leave, [17:42] and the progressive taxation necessary [17:45] to pay for the important infrastructure [17:47] necessary for the middle class like education, R and D, [17:51] these are indispensable tools [17:54] shrewd capitalists should embrace [17:56] to drive growth, because no one benefits from it [18:00] like us. [18:02] Many economists would have you believe [18:04] that their field is an objective science. [18:07] I disagree, and I think that it is equally [18:10] a tool that humans use [18:12] to enforce and encode [18:14] our social and moral preferences and prejudices [18:17] about status and power, [18:21] which is why plutocrats like me [18:23] have always needed to find persuasive stories [18:27] to tell everyone else [18:29] about why our relative positions [18:33] are morally righteous and good for everyone: [18:37] like, we are indispensable, the job creators, [18:42] and you are not; [18:44] like, tax cuts for us create growth, [18:47] but investments in you [18:49] will balloon our debt [18:51] and bankrupt our great country; [18:54] that we matter; [18:56] that you don't. [18:58] For thousands of years, these stories were called [19:00] divine right. [19:02] Today, we have trickle-down economics. [19:06] How obviously, transparently self-serving [19:10] all of this is. [19:12] We plutocrats need to see [19:14] that the United States of America made us, [19:17] not the other way around; [19:18] that a thriving middle class is the source [19:21] of prosperity in capitalist economies, [19:24] not a consequence of it. [19:26] And we should never forget [19:29] that even the best of us in the worst of circumstances [19:33] are barefoot by the side of a dirt road selling fruit. [19:38] Fellow plutocrats, I think it may be time for us [19:41] to recommit to our country, [19:43] to commit to a new kind of capitalism [19:46] which is both more inclusive and more effective, [19:50] a capitalism that will ensure [19:52] that America's economy remains [19:55] the most dynamic and prosperous in the world. [19:59] Let's secure the future for ourselves, [20:01] our children and their children. [20:04] Or alternatively, we could do nothing, [20:07] hide in our gated communities [20:09] and private schools, [20:12] enjoy our planes and yachts [20:14] — they're fun — [20:16] and wait for the pitchforks. [20:18] Thank you. [20:19] (Applause)