System Error (2018) - full transcript

- [Narrator] We view growth

as something positive.

It's great watching our kids

grow up or seeing a tree grow.

Yet we are always aware that

all growth must come to an end.

There's a limit.

Nature knows no such

thing as infinite growth.

This rule seems to apply to

every kind of growth but one.

Economic growth is somehow

supposed to continue indefinitely.

- We believed then and

now there are no limits

to growth and human progress when men

and women are free to follow their dreams.

And we were right.

- [Narrator] If that growth

fails to materialize, we panic.

But why?

As one person recognized

150 years ago, growth is

the fundamental principle

of our economic system.

Capitalism only works

when the economy grows.

But Karl Marx recognized

something else as well.

It is this growth that will eventually

destroy the system itself.

And today, have we reached that point?

Is the system about to collapse?

Or might infinite growth

actually be possible?

- The governments don't want

us to even question the G word,

they don't even want to put

a discussion around growth.

If you were looking at

this from the outside,

an alien arriving from outer

space and you're looking

at this society, you would

really wonder what was going on.

What are they doing?

What is this growth that

has to appear in political

sentence and is the basis

of every economics textbook?

What is it all about?

Is it a religion that they have?

Is it a god that they're chasing?

Is it a virus that's taken over them?

And what is this visceral

fear that emerges

as soon as growth starts to go away?

(up tempo music)

- [Narrator] The Federation

of German Industries

is Germany's most influential lobby.

No German government can

afford to ignore its voice.

- [Narrator] Where does this unshakable

belief in economic growth come from?

Has it always been there?

Is it really part of human nature?

(gentle music)

- [Man] It was through

audacious and imaginative

use of mass production

methods that US industry

was able to perform its war time miracles.

To build more planes than

all the united nations

put together, to turn

out ships at the rate

of 200 a month, ships which

carried overseas the armed

might of the United States to

decide the outcome of the war.

- [Narrator] The success story of economic

growth began during World War II.

Mass production of tanks and aircraft led

the American economy out of crisis.

The output of military

equipment was now calculated by

a new statistical measure,

gross domestic product, or GDP.

If production, i.e. GDP,

grew, then so did prosperity.

Americans believed so

firmly in this new formula

that they compelled their

allies to bring their

economic policies in line with it.

From then on, it wasn't people's incomes

that counted, it was only growth.

(dramatic music)

- And it turned out to

be such a useful measure

actually for the war effort

and for understanding

the war effort, that afterwards

there was a lot of effort

put into building this system

of national accounts, having

this number, the GDP,

correctly measured through

the economy, and it became

almost incrementally, it became

the single most important

policy number across the world.

It kind of symbolizes progress to us.

It sort of says, wow, things are getting

bigger so they must be getting better.

That was the birth of the GDP.

- [Narrator] In the three

decades after the war,

the Western economies grew

up to eight percent annually.

In the US, they called it

the golden age of capitalism.

In France, they were

the 30 glorious years.

In Germany, it was the economic miracle.

An entire generation enjoyed material

prosperity and full employment and this

became engraved in the

collective consciousness.

Even though these high

growth rates were only

made possible by massive

war time destruction,

the belief in growth was now unstoppable.

GDP became the most important

benchmark in history.

(up tempo music)

- And the economy and the

grace of the economy was doing

a good job for us when we

were young, if you like,

when as an economy, as a

society, we were young.

And one of the really

important things to say

is that there are some

societies where that is still

necessary, where you still

need that growth, where you

still need food, clothing,

and shelter, where there are

very, very poor undernourished

people living on less than

the price of a skinny latte

from the cafe downstairs.

That's a situation where

growth makes some sense.

But the idea that as human

beings all we want ever is more

and more stuff doesn't really

stack up so after a certain

point you have to ask yourself,

well, how much is enough?

How much more do I need

to grow the economy

to satisfy human appetites?

- The GDP counts everything

that's produced really.

Yeah, sure, it counts

some of the good things

that we need but it also counts ambulances

to clear up carnage on

the streets or the rescue

efforts when an oil

tanker pollutes the ocean.

To some extent all of this is a measure of

the busy-ness of economic activity.

But many of these things,

even though they're getting

bigger, are not really

economic growth, they're more

uneconomic growth because

they're not delivering welfare.

Sometimes they're just clearing

up after the mess we made.

Sometimes they're really creating mess,

really destructive

production if you like of,

you know, things that

actually just destroy stuff.

- [Narrator] The 1970s

saw growth rates sink for

the first time due to the

oil crisis and other factors.

The boom was over, the markets saturated.

Western economies stagnated.

Millions suddenly found

themselves unemployed.

It was uncharted territory.

For the first time, the limits

of growth became visible,

economically, socially, and ecologically.

- [Man] We do have some

understanding about growth.

- [Narrator] In 1972, a group of scholars,

commissioned by the Club

of Rome, presented a report

in Washington entitled

"The Limits to Growth."

Using a computer simulation, researchers

at MIT had calculated

for the first time what

continuous economic growth

would do to the planet.

Their findings set off alarm

bells around the world.

- When resource consumption

is doubling every 20 years.

- [Narrator] For the

first time people were

confronted with the fact

that economic growth

could also have negative consequences.

And that the planet's natural

limits would soon be reached.

The success story of growth was in crisis.

- Most important lesson is that we're near

the end of our development of society.

We've been going on for

about 2,000 years and we've

reached levels of prosperity

which carry the seeds

of disruption and necessitate

a complete re-look at the

whole world's social,

political, and other situations.

- [Narrator] The Club of Rome report sold

30 million copies and

became a global sensation.

The realization that

exponential growth was

destroying the foundation

of human life on this

planet was entirely new and

shocking to many people.

And yet, soon, the scholars

themselves came under attack.

Their calculations were

decried as irresponsible fear

mongering because it's impossible

to admit the unacceptable.

The success story of growth must continue.

Unfortunately many of

the scholars predictions

turned out to be right

and in many cases reality

even surpassed their bleak predictions.

As the Club of Rome report was causing

an international uproar,

the Brazilian rainforest

in the Amazon basin was

still nearly untouched.

The huge Brazilian state of

Mato Grosso, largely populated

by indigenous people, consisted

of forest and savanna.

Today, not much of that is left.

Since the mid '80s, progress,

aided by international

investors, has been eating

away at the rainforest.

35 football fields of forest

disappear every minute.

It's been the same story

over and over again.

Lumberjacks move in first,

then cattle breeders,

and finally, the soybean barons.

- [Narrator] The tropical

climate delivers three to four

harvests per year and

with it massive profits.

Soy and corn for export and animal feed.

Highway 163 is the gateway

to the Amazon basin.

It brought lumberjacks, money,

and destruction into the forest.

Today countless trucks

line the agribusiness

highway transporting their valuable cargo

to the international ports.

They pass an endless

sea of soybean fields,

enormous silos, and

slaughterhouses to one of

the largest boom regions in the world.

Growth rates of up to 20%.

Big business.

- In the '70s, this region,

it was just populized

by Indians, it was just amazing forests.

34 years just of colonization

and it's the most

important region in

agribusiness of the country.

It's the right place to make

new investments, to make money.

Here is the most important, biggest,

food lots in the state of Mato Grosso.

The cattle, a good part are exported

to Russia, China, and other countries.

Here we work.

It's just classify the animals.

- [Matheus Vieira] Cattle goes to the JBS,

the most biggest meat

industry in the world.

He's from Brazil and they have another

12 countries around the world.

- [Interviewer] Do you see any limits?

- No.

Next 10 years with the

technologies, what can I say?

There is no limits.

The limit's probably the sky.

- [Narrator] In just a few years,

Mato Grosso's untouched wilderness was

transformed into the world's

largest food factory.

- [Narrator] In response

to the crisis of the '70s,

economic policy underwent

a change of course.

New growth had to be followed

no matter what the cost.

Even if that meant unleashing the primary

forces of finance capitalism.

These had been contained

after World War II

because they were held responsible for

the Great Depression and the war itself.

Monetarism was the new magic word.

- Monetarism was the idea that

if you put more money into

the economy, liquidity it was

called, that additional money

in the economy would help

real investment that would

help give us more production,

it would allow us to consume

more goods, and we would

get growth back again.

So, this little hiatus, if you

like, in the '70s primarily

caused by the oil crisis led

to a transformation in the

economics of our societies

and in particular how we think

about growth and how we think

about stimulating growth.

- [Narrator] Governments

deregulated financial markets.

Banks, insurance companies,

and investment funds gained

in influence and were now

allowed to gamble with

currencies, stocks, even with

people's retirement funds.

Capital was let loose and the financial

sector was flooded with money.

(jazz music)

It was a pact with the

devil and the beginning

of a slow process of self disempowerment.

In exchange for growth,

governments relinquished

their power to financial markets.

But who do we mean by

financial markets and capital?

And what does it all have to do with us?

The Allianz Group is

Europe's biggest insurance

conglomerate and one

of the biggest players

in the global financial markets.

- And yes, China, contributed

about one percent.

And next you have India,

which was less than 0.2% contribution.

And that's not.

- That's true but China still is a little

bit struggling really

to change their business

model from investment and

production oriented toward

consumption and service

oriented business model.

If we summarize this, moderate

positive growth in China,

therefore also in Asia overall,

some kind of modeled growth

and in the developed markets

in Europe and the US.

There are also no new

growth drivers to be seen.

So, the idea is collaboration

with the World Bank

to do projects together,

directly in emerging markets

based on hard currency,

US dollar or Euro and so

to avoid the local currency volatility.

If we invest in emerging

markets, get a nice collateral,

a nice on it, so we have

a security we can sell

if necessary like in the finance area,

that's let's say a win

win situation for us.

- I take that as a yes.

- [Narrator] The money

of millions of insured

individuals is sent on

its way to multiply.

When Andreas Gruber's

team has a rough idea

to which countries and

sectors the billions

should flow, they hire an asset manager.

He determines what stocks

or bonds to invest in.

- Most of our clients are

institutions, companies, pension

funds, employers federations,

also unions, churches,

central banks, and sovereign

wealth management companies.

What they want is they want their

money invested in the capital market.

Our customers expect their

capital to be returned.

They want their money back and they

want their return on their capital.

And the more growth there

is the higher their return.

Worldwide Pimco manages 1.2 trillion Euros

of assets and in Germany

we're managing 480 billion

Euros of assets we have

under management here.

So, the financial markets,

they have a social role

in distributing people's

savings towards investment.

And that investment is

usually a form of debt.

So, when you take out a loan, for example,

to buy a house, that loan

could end up in a bond

and we could end up buying that bond.

So, growth is important

so that individuals

and companies who borrow

money in the capital

markets can actually pay those loans back.

- No, that's pre-trade.

- [Man] Yeah, but he wouldn't say.

- So, there's always debt in the system.

And we can aggregate that up

to the whole country level

and without growth that

debt cannot be repaid back.

Imagine a world where there's zero growth.

That's a world in which pretty

much everything gets frozen.

If you haven't got a

job, in this new world,

with no growth, bad luck.

You're gonna have to wait for somebody

to retire before maybe you get their job.

A society without growth

probably won't work at all.

Not for long.

It will degenerate into collapse.

- [Narrator] Without growth,

societies will descend into

chaos according to the

financial and political elite.

But is that really the case?

Isn't it rather their blind faith

in growth that leads us to chaos?

In the '80s, the world

of finance operating from

the city of London and

Wall Street increased

its influence on governments and societies

and became the driving

force of capitalism.

Today, financial markets, not governments,

determine the wellbeing

of entire countries.

How did it come to this?

How could financial markets gain such

influence over our own lives?

(electric guitar music)

One person who knows the

financial world better

than almost anyone is Stewart Cowley.

For nearly 30 years, he

was a successful fund

manager on Wall Street

and in the city of London.

- No, I never planned

to be a fund manager.

I was a scientist and I was

at Oxford and one night I was

playing in a jazz quartet and

the drummer was an economist.

We were very drunk and I said, you know,

what's this thing in the city?

And he told us all about

it and I woke up the next

morning with a massive

hangover but remembered what he

said and I went to the

careers department at Oxford

University and got the forms

and filled them in really

badly and before I knew

it I'd been offered a job

and had been offered 20,000 pounds to go

and start on Wall Street in 1987.

And that was the Wild West.

That was the beginning of it really.

And we went into the new

era of Reagan, Thatcher

and liberal trade so

what we're doing is we're

taking the core set of

the system, yes, and we

went through this process

of liberalization.

So, the so-called big bang

in the city was all about

financial deregulation, let's

go, let the market decide

and let's hire people, and

let's see what happens, yes.

As opposed to this really kind

of controlled atmosphere

which we'd had before.

And it was that that we walked

into where money now talks,

now money wins and you

need people, smart people,

to trade the markets and

make finance the powerhouse

behind capitalism which

it's supposed to be because

all capitalism functions

on debt and functions

on money and particularly debt.

And that's what it did and that's when

growth and inflation

exploded in the 1980s.

(up tempo music)

- [Narrator] The plan seemed

to work, stock markets boomed,

growth no longer needed to

be financed by increasing

wages and tax revenue, now

it was all about credit.

Governments and individuals

were to take out

loans from banks and

investors so that they could

be good consumers and

thus generate growth.

- Credit cards come along,

overdraft facilities,

lending for houses

becomes widely available

and it's at that point that it explodes.

That now it's not just

the very wealthy who have

access to all these things,

consumerism, it's now

people lower down the

income scales as well.

And if you look at money

supply and the supply

of credit in the early

'80s, it just explodes.

There's been access to

consumerism and kind

of promotion of consumerism

plus debt which has

created the growth and

created where we are today.

When was the last time

you heard anybody say

that I can't come out tonight 'cause we're

saving up to buy a refrigerator?

It just doesn't happen you know.

Nobody waits anymore.

- [Narrator] The cold logic of the market

took over producing winners and losers.

- [Interviewer] Used to be a poker player.

Is this poker play with other means?

- Well, yeah, I've played

some poker in my lifetime,

I suppose a lot of people

in this business have.

I think there's a common

feeling that playing cards

or playing blackjack or

something like that is gambling

but of course we know it's

not really gambling it's

taking into account the

probability of certain

events occurring and

placing wages accordingly.

We would call that the art of speculation.

- [Narrator] One of the

people who knew best how

to profit from this new

logic was Donald Trump.

- I really think I have

an instinct but I don't

think it's the instinct of a shark.

I think it's the instinct

of maybe getting what

I want or knowing how to get what I want.

- [Narrator] Only a few

recognized the profit

opportunities in this new

era as well as Donald Trump.

He made large scale

purchases of derelict New

York apartment blocks

and promised to transform

them into luxury hotels and apartments.

He received financing from

banks high on the market boom

and through the largest tax

break in New York City history.

Trump himself paid practically nothing.

- Manhattan is an incredible

place where you build

a huge building and it's

sold out in a matter of days.

I mean, you know, you build a building

with literally three or 400 units.

I'm building a building, it's

one of the hottest buildings

anyone's ever seen, it's

just selling like hotcakes.

Manhattan itself is becoming

a place of the rich period.

- Where are your limits, Mr. Trump?

- Well, I don't what my

limits are but I know

that when I reach my

limits I hope I'm gonna

be able to know at that point.

- [Narrator] The genie

was out of the bottle.

The brave new world of

financial capitalism

could no longer be constrained.

And great efforts were made to sell

it as a controllable and secure system.

- The whole industry

is based around a kind

of illusion and the illusion of certainty.

There is a vested interest if

you like inside of the system

as it is to project knowledge

and extra knowledge.

And that's not to say

that the people who are

in it are telling lies,

it's that they're doing

their best with what

they have but they really

don't have any more knowledge

than probably you do.

- [Narrator] The Bloomberg

Company from New York

plays a central role in

the financial system.

Since the 1980s, Bloomberg

has provided stock traders

and bankers with lightning

fast price fluctuations

and finance data from around

the globe making it one

of the world's most

influential media companies.

Around the clock, Bloomberg's

news agency and stock market

channel broadcast the glad

tidings of the free market.

- Our role in financial markets

is as a provider of transparency.

We provide a huge amount

of data, a huge amount

of numbers on markets, on

economies, on companies,

all the things that investors

and companies themselves

need to operate to make money

can be discovered through

the Bloomberg be it

through the data we provide

or be it in the form of breaking news

from our journalists

from around the world.

It's a one stop shop for

the financial markets.

We're trying to inform the

markets, we're certainly

not trying to drive them

providing a chronicle

of capitalism, telling the

story of money is vitally

important at Bloomberg and

central to what Bloomberg does.

We're trying to make a

real world feel for people

so that they understand

what's happened and why

it's happened and what might happen next.

Economic growth data is one of the most

important numbers we look for, it provides

a football score on the

state of an economy.

Steady, solid growth in financial markets

is usually reflected in solid sustainable

growth in economics, in

demand, in jobs markets.

The reason is that people feel wealthier.

- These are the yields in Spain, Italy,

Ireland, they're all falling today.

Bond insurance is falling

across Europe today

and those are the commodities,

the far right hand side

of your screen after Greece

of course received a deal.

- [Simon Kennedy] If you look

at the textbooks there should

be no limits to growth but if

you look in the newspapers at

the moment you get the feeling

there is a break on growth.

The central question now is

whether we're in a cyclical

slump or whether something

structural is going on.

- Nine percent lower,

biggest drop since 2008.

- [Interviewer] And do you have

a personal opinion on that?

- I don't have a personal

opinion, I'm a journalist.

I do but I'm not going to share it.

So the history of the world

would suggest that man

actually usually gets it

right quite a lot of the time.

That when backs are put against the wall

those entrepreneurs, those investors have

smart ideas can actually flourish.

If you look back 20 years, the

idea of Facebook or Twitter,

of Apple computers, of all

those things that we almost take

for granted these days,

are new sources of growth.

Yes, the world can reinvent itself.

It has done so multiple times in history.

You can usually bet on the human

being to find a better future.

- I used Bloomberg for,

throughout my 28 year career.

Every single day.

Empires are based upon

people's remaining to have

confidence in the information

that they're giving out

and the promotion of the

ideology and the narrative which

finance is based around which

has increasingly become this

kind of game show approach to

things in order to get people

to invest, be interested,

see the possibilities in it.

The capitalist message if you like.

For a period of time, everybody

wins, that's the thing.

And it's stable.

Mathematically it's stable

for a certain period of time.

And then as you know a

number of economists,

Marx, Keynes, have

pointed out, is eventually

all these manias go up a lot

and then they crash down.

- So there was heavy lobbying

by the financial sector on

the government to ensure actually

that this financial sector

growth could continue and

governments believed that it was

in the interest of the economy

because everyone told them,

monetarism told them, if you

had all this liquidity in

the system then you must be

growing your real economy.

But actually what was happening

within that system rather

was that you'd freed up all

this money which was then used

to bet on the increases in

the value of certain companies

and certain shares and of

money itself in the system.

And the people who were

doing that betting were

not only profiting from

it but they were also

the only people who were

regulating the system.

So, it created a huge unstable and

an incredibly unequal system in which

the rich got very much

richer really very fast.

- [Narrator] For decades, society has been

transformed into an

enormous market to which

there's allegedly no alternative.

The huge sums earned by

a few in the financial

markets scream for high returns and have

penetrated every corner of the globe.

New ways are constantly sought to expand

profits already in the trillions.

The world seems to be getting

too small for all the capital.

(gentle music)

- When I was a kid, I

couldn't afford to fly

in an aeroplane, I actually

joined the air transport

industry before I ever

flew in an aeroplane.

Today, people take flying for granted.

It shaped the way we buy goods, it shaped

the places people go to,

it shaped the meetings

between people and different cultures.

Over the next 20 years we expect the world

to need 32,000 new civil aircraft,

passenger aircraft and freighter aircraft.

And we expect to sell a

significant share of those 32,000.

At the moment, around

one billion of the people

who live on our planet

fly by air regularly.

The remaining six billion

don't yet fly by air

and it's these people who

will be tomorrow's passengers

and tomorrow's customers

in addition for those of us

in developed countries who

take flying for granted.

Clearly this means that the biggest scope

for growth is where the

people are and where

the economic wealth is,

the disposable incomes are.

So, top of the list come

Asia Pacific, China, India,

Indonesia, southeast Asia

followed quickly by Latin

America where we see strong

growth and a little further

behind but growing strongly

from a small base is Africa.

(mumbles)

You have to go to China to appreciate

how strongly China has been growing.

Beijing capital airport has become just

recently the busiest airport in the world.

And that growth will

be continued with a new

Beijing airport as well as

the growth in the major hubs.

A lot of growth in China.

(gentle music)

- We have delivered over

the last six years more

than 100 brand new airplanes

to the allies in China.

Ever year more than, in other terms,

around one airplane every

three days to China.

The change is spectacular.

I can't imagine that

when I came here in 1994.

On the street and you can see everywhere

full of bicycles today and if you look at

the street and very limited

number of the bicycles.

That has changed very strongly.

- [Interviewer] You have

more traffic jams today?

- Traffic jam is a real

headache in Beijing.

A huge city like Beijing,

there are too much cars.

Yes, it's another headache.

- Currently we have slightly more

than 200 airports in China.

And every year in the range of 10

or 15 new airports will be built.

The market is huge and we are

optimistic because with

1.4 billion population.

Imagine if everybody can

afford the travel expenses

even a peasant with low

cost business model,

a worker is willing to travel by air.

The market is fantastic.

You can't imagine and I

already seen the sign of that.

That's why when I look

at it, every time I'm

asked about the prospective of the market,

I cannot imagine the

dimension of this market.

When I have the reference

of 1.4 billion which

is even more important

than the whole of Europe.

Every 15 years the world

fleet will be doubled again.

In China, you don't need to wait 15 years,

seven, eight years, you

get the fleet doubled.

It's quicker than in

other parts of the world.

- [Interviewer] But more air

traffic means more pollution.

What do you do about that?

- We made every single effort

to try to reduce emissions

but if we look at the

social benefits and to

the economic benefits that

the aviation industry brings

to humanity, and then people

may think differently.

We are trying to make the

world smaller and smaller.

To make it a real village.

(gentle music)

(mumbles)

- [Woman] Copy that.

- [Narrator] For decades, growth was kept

on life support with debt.

Only a few had the courage

to say that the party

couldn't go on forever but

no one listened to them.

In September 2008, the time had come.

The house of cards collapsed.

- [Reporter] It's a black Monday

for the American capital market.

Despite dramatic rescue

efforts over the weekend,

all efforts to keep the

world's fourth largest

investment bank alive have failed.

Lehman Brothers is shutting

its doors for good.

- It's also, I think, a necessary

part of the cleanup process.

Lehman we knew was weak,

we expected it to go.

It's not going in the way that people

expected it to but it's gone.

- In the long run I'm confident

that our capital markets are

flexible and resilient and can

deal with these adjustments.

- [Interviewer] Just tell

us how you're feeling,

it's awful I know but.

- It sucks.

- [Interviewer] Did you

see it coming at all?

- No, I didn't.

- There was a deep shock

in the system, there was

a sense of, my goodness, we

can't let this happen again

governments have to have

a better handle on this

system and for a while there

were attempts to do that.

It lasted probably a

matter of a few months.

In fact, by the end of 2009 and into 2010,

the very same companies

that had been responsible

for some of that disaster

were still engaging in those

same kinds of risky

trading procedures that for

a while had been stopped

in the wake of the crisis.

And we learned the lesson

but then we forgot it again.

- [Narrator] The financial

crisis was a huge

opportunity for governments

to free the world from its

dependency on financial markets

and to change the system.

But they wasted it.

Instead they did all they

could to revive the old system,

spending trillions of

dollars to save the banks.

Then something incredible happened.

The banking crisis

miraculously became a sovereign

debt crisis, private

debt became public debt.

Governments and their citizens

were subjected to austerity

policies under which millions

of people suffer to this day.

Banks and stock markets,

however, were keen to demonstrate

a sense of normalcy as soon as possible.

In reality, nothing is as it seems.

Capitalism survived the crisis but no

longer functions like it once did.

- Even though it's not

as busy as it used to be,

this is still the center of capitalism.

You can look at all the tourists who are

outside the building taking pictures.

They all still believe this

is the center of capitalism.

It may not be as busy as

before but it's a symbol

of something, it means something to them.

Here we have visits

like when President Bush

came on to the floor and visited.

That's John Thain, the former CEO

of the New York Stock Exchange.

You're looking for growth, that's what all

of these people are looking

for, how to grow their

companies, how to grow the

economy, how to make more money,

how to employ more people, how

to get people wages growing.

The whole game here is how to get growth,

how to employ people, how to

keep the global economy going.

That's what it's all about.

Come on.

I'm sort of like the weatherman

for the stock market.

I come in every day and

try to figure out what's

going on in the stock market,

I talk to trading desks,

I talk to analysts, I

talk to people who know

a lot about the stock

market, and I go on the air

and on the internet and

explain what's going on.

So, every day I come in

and try to figure out

which way the wind is

blowing on Wall Street.

- Opening at $60.12.

- Congratulations, a

big day for all of you.

Congratulations and,

again, happy to have you.

Thank you very much.

This is my favorite part of my job.

- Watching IPOs.

- Watching people make money.

Watching capitalism at work.

Congratulations.

- Thanks Bob.

- So, remember the S&P 500,

though, is now 1.5% this month.

We have very clear market leaders and

the reason we've had it is because better

prospects for earnings

in the fourth quarter.

Remember what the market

leaders have been?

Energy, tech, and banks.

Lagging today, energy tech,

and banks, that's interesting.

Thanks guys.

- Hey, Bob, let me just change your.

- You can't come up and

say, well, the markets

are just drifting around,

there is no real meeting

of anything that's happening

today, back to you Sue.

That won't make any sense,

nobody's gonna be interested in that.

Human beings want stories,

they don't want an endless list

of numbers, nobody's impressed

with a list of numbers.

They want to know what's going on.

Tell us in plain English

what the markets are

doing and that's the real

skillset and often that's

not easy because things

are very complicated.

Hey, so what do you think's going on here?

Yeah.

Azure Power opened at

16.12, now trading at 15.29,

that's kind of a disappointment.

- Yeah, down 15%.

- They were very nice, though,

they were such wonderful people.

They all came from India to do

the whole solar power thing.

- Oh yeah.

- They were all excited.

It was just a great

moment to talk to them.

And they've been, they said they've

been watching CNBC for 20 years.

People have always claimed that capitalism

can be evil and capitalism

doesn't help people.

I completely disagree.

What I see in the last

150 years is millions

of people have been lifted out of poverty.

I personally am a true

believer and still believe that

the system works well and

I'm committed to that system.

- Here's the news for the day.

Everybody love each other and

quit screwing each other over.

Be a friend to everybody.

And don't forget just

'cause we're homeless

don't mean we're bad people.

- I think what we've seen

over the last few years

is cracks in the shiny

surface of capitalism.

And at first that's what

they look like, you know,

they just look as though

something not quite right

on the way the light reflects off it.

And as you look more and

more closely, you see

that these cracks go right

to the heart of the model.

They go right to the heart of

the basic ideas of capitalism.

- [Narrator] Does capitalism still work?

Can the system deliver what it promises,

providing growth, jobs,

and prosperity for all?

- [Narrator] Ever since

the Industrial Revolution,

machines have been replacing human labor.

Thereby causing great societal upheavals.

But until recently, they have only

replaced the physical labor of humans.

Now machines are capable of doing what

makes us humans unique,

they are able to think.

It's a completely new chapter

in human history which

will have massive consequences

on how we live and work.

- [Woman] Can technology think?

Watson can.

IBM Watson is a technology

unlike any that's come before.

Because rather than force

humans to think like a computer,

Watson interacts with

humans on human terms.

You don't program Watson,

you work with Watson.

And through your interactions with it,

it learns just like we do.

- Are you interested in talking about

how I express and understand emotions?

I can express emotions

with my voice, gestures,

as well as becoming

(mumbles) on my shoulders.

As you can see I'm a

humanoid robot created by.

I am a sophisticated combination

of hardware and software

designed to interact with

humans and bring them joy.

- Thank you.

- [Narrator] In the future,

algorithms and robots

will be able to carry

out nearly every routine

task previously performed by humans.

Millions of jobs will vanish.

These new technologies do provide economic

growth but not much in the way of jobs.

And that could endanger capitalism itself.

Who will be able to purchase all the nice

things mass produced every

day when there are not

enough people who can pay

for them with their wages?

(gentle music)

Are we all passengers on a plane

whose navigation system is broken?

Are we still in control of the system?

Or is it controlling us?

(gentle music)

In financial markets, algorithms have

long since been running the show.

Computers interact with other computers

in fractions of a second

without any human input.

And sometimes they do things

that were not planned.

Like in the flash crash of May 2010.

- [Man] Wow, almost 1,000 points.

We call this a capitulation.

They're gonna probably halt trading.

We can't stop the selling.

- The flash crash was an

incident in which markets

essentially disappeared for a few seconds.

The whole event took

maybe 40 minutes but there

was a moment during this

massive stock market decline

which was not triggered

by any particular event.

There was no news, there

was no dramatic change

in economic conditions or

corporate fundamentals.

It was simply a positive

feedback loop kicked off

within a complex system that

fed upon itself and suddenly

all of the computer systems

that were looking at

the same signals in the

same ways all reacted at

the same time and withdrew

their orders from the market.

As the market continued to

drop and risk limits were

being hit and programs were

reacting in unexpected ways,

you could see them getting

more and more frantic until

at some point the head of a

firm came running out onto

the trading floor shouting

shut it off, shut it all off!

And we just started hitting

control C and killing

programs left and right and

any keyboard you could find

you killed the program that

was running and you know as

you watched the market you

could see the exact same

thing was happening on

every other trading floor

because orders were just

disappearing out of the market.

It was that moment where

you're sort of staring

into the abyss and you're

saying to yourself,

what's gonna happen now?

It doesn't make any sense that

there's nothing economically

that would explain why a

market would just be gone.

The modern financial market, it has become

what would be called a

complex adaptive system.

Humans cannot control complex systems.

That's the fallacy of how

we approach regulation

and oversight of a complex system.

It can't be done because

we can't understand them.

There's too much going on.

- [Interviewer] Do you think we have

lost control of the system?

- I don't know.

Have we lost control of the system?

Maybe control is overrated.

Maybe it's okay to not

necessarily be in control

provided the economy is

working for everyone.

Now I don't think it's

working for everyone.

The economic system is not functioning as

it should and the

benefits are not accruing

to as many people as they could be.

- [Narrator] The flash crash also came

and went without consequences.

In fact, the capital turnover rate

has accelerated since then.

Today, computers interact in nanoseconds.

A nanosecond is a billionth of a second.

- In this room, that's what we do here.

We have an on off switch, right?

There's really no human intervention.

I really don't believe in leaving the room

and letting something trade unattended.

It's about being there with the creation

that you've worked on.

Even if I don't, you don't

control it, but you watch it.

Is it doing everything

that you designed it to do?

I really don't interact with economists

and policy makers so I'm gonna have to say

there's really not much of a connection.

I mean if there was a strong

connection between the two,

you'd think that firms in

my space would have need

for people with that kind

of economic background.

As I said, you now, who do we hire?

We hire scientists,

technologists, and lawyers.

We don't hire MBAs, we

don't hire economists.

There are many mathematical

models that come out of fields

such as horse betting that

are used in our business

as kind of fundamental pieces

of algorithmic trading.

We somehow project in

our capitalist society

this idea that this is a safe environment

for people to build up

their retirement on.

It's actually a hyper

competitive environment

and you know depending

on the product there's,

sometimes I feel safer going into a casino

than trading certain

products in our space.

I mean, you know, so

this idea that markets

are somehow going to

support a very, very large

base of the population and

kind of produce returns

for them when in our

space all we do is try

to eliminate those returns,

I mean that's the job.

It is a very different world than the way

it's advertised to the general public.

- [Narrator] Financial

markets are out of control

and no longer have any

connections to reality.

While algorithms and

robots produce growth,

they only provide work

and prosperity for a few.

And it's this growth that's destroying

our future on the planet.

The signs that something

has gone wrong with

our system have become

impossible to overlook.

So why do we consistently ignore them?

- Even though ordinary

people actually don't

have so much trouble with

the idea that you can't

go on growing on a finite

planet, actually most

people get that because

it's very, very basic.

There is nonetheless a political consensus

and an institutional consensus

for which that vision

is incredibly important, it's

incredibly deeply embedded.

And so what you have is

it's almost like a kind

of collective schizophrenia

that on the one hand

we can see the blindingly

obvious, it's staring

us in the face and it is at one level

something that even my

kids, schoolkids, can get.

You just don't go on growing and growing

forever when you're in a finite place.

And the only mechanisms from

biology or from nature that

we see that do that end up

basically killing their host.

- This is for TV right, I

got to go the debate in Las

Vegas and I have to do my show

from out there so this is,

the network puts all this

stuff together for me.

I'm dressing a lot better

now than I was before I did

television because they

even hire you a stylist.

You know what I mean?

You guys look like shit so you obviously

don't know what I'm talking about.

This is some really nice clothing.

Alright come on, come on in.

- [Man] The most powerful

name in financial

television Wall Street week is back.

- You have some news?

- Skybridge actually purchased

the rights to Wall Street week.

- [Man] Skybridge Capital and

its managing partner Anthony

Scaramucci are reviving the

iconic Wall Street week program.

It's a show about money developed

by people who work in money.

- I view myself as a capital artist.

This company that I've

created is my canvas.

I know you guys in the media

don't like capitalism but you

know someone's had to pay for

the camera and the microphone

so I mean at the end of the

day the capitalist system is

the only system that we've

been able to design that works.

Wall Street is still whether

people like it or not, it's

part of the participatory

engine to financial growth.

Let me just give you a perfect example,

the American fracking

process, the technological

solutions created, you

then need to mobilize

capital into that solution

to create the energy.

Now some of the

environmentalists don't like it

and okay we can have a

huge debate about that

but at the end of the day

this was an innovative

idea that's unleashed a

tremendous amount of surplus

energy that the world didn't

expect 15 or 20 years ago.

Let's talk about growth okay.

There is a perception

right now in these elitist

academic salons that we're

not gonna grow anymore.

Well, that's just flat out wrong.

If you study 5,500 years of human history,

we know that human beings

are designed to have

great intellectual

curiosity and to innovate.

There are so many things

that we're gonna do

over the next 50 years

that's gonna shock everybody

in terms of our capability.

We're gonna pull asteroids

down from the asteroid

belt that are loaded

with platinum that will

probably be where the first

trillionaire comes from.

We're gonna unlock the

ability to stop aging

or to destroy cancerous

cells in our bodies.

All of this innovation is ahead of us

and there's tremendous

opportunity for growth.

You're gonna grow as long

as you get the tax policy

and you get the economic

regulations right and you

create the incentive to

grow and you send a message

from Washington that

we're open for business.

You want to see three percent

growth, four percent growth,

you gotta change the academic

view of this stuff and talk

to real time practitioners

that understand how to grow

businesses and create

innovation in the economy.

There will always be growth on the planet,

there will always be a jagged line upward

for human beings because

that's been the case

for 5,500 years and as

long as we don't blow each

other up with nuclear

weapons it will be the case

for the next 5,500 years.

- There's a sense of

desperation to this strategy.

There's a sense of having,

you know, for a decade

or so recognized there

might be some limits

to our ability to

continually grow this system.

And now, you know, we're

tired of that idea.

We don't want to be so

realistic in the world.

We would much rather have

a total fantasy for our

guiding star, we would like

to have this vision that no,

we don't have to think about

curtailing growth, we have

to think about making growth

even stronger, we have

to go harder for it, we have

to make America great again.

We can all be billionaires,

we can all have property empires.

And of course it's an illusion.

And it goes back to exactly that same

simple basic fact, we

live on a finite planet.

There isn't the space for the dream

of this reinvigorated growth fetish.

- [Reporter] This is a

round trip for Donald Trump.

- [Narrator] We live

in extraordinary times.

Our world is becoming increasingly complex

and many are disappointed

to find that they

are worse off than they used to be.

But instead of doubting

the economic system,

they turn to those who have

profited from it the most,

those who continually promise new growth.

For these empty promises,

more and more people

are apparently willing

to sacrifice democracy,

peace, and the environment.

Capitalism has reached a

new level of escalation.

But it's no longer suited

to the world we live in.

It's end is closer than we think.

(gentle music)

- [Interviewer] Are you an optimistic

or a pessimistic person?

- I don't know that I've

ever reflected on it.

You can't do this to me at

this point in an interview.

Am I an optimist?

Yes.

Optimism is an act of will.

Optimism is what a football

team has to hold to the very

last minute even if it's a

goal behind if it wants to win.

And I think Gramsci

once said it's pessimism

of the intellect, it's

optimism of the will

and this is not just

a snappy thing to say,

it's actually the most

constructive thing to say.

We gain nothing really

from pessimism and we

gain everything from being

optimistic about the future.

(up tempo music)