 Thank you. Thank you, Andrea. Thank you for the introduction and thank you for inviting me to come and give this talk. I Wish we could be doing this in person you know talks by by the internet Okay, but it doesn't really it doesn't really match the experience of having a live audience and me You know being live with you so So we'll have to bear with that and hopefully one day in the future we can do this live Of course advantages that I don't need to leave my home and I can do it from here and you guys don't need to leave your homes and We can get an audience from all over Mexico and technically by video from all over the world So if you think about if you think about finance we think about bankers we think about Wall Street We think about you know capital markets financial markets in any respect These markets these financiers of always throughout history being viewed as the ultimate villains the bad guys the people who cause economic crises the people who exploit Others the so-called productive people out there that bankers are just paper shufflers financiers are just paper shufflers Really since Jesus threw them out of the temple 2000-plus years ago financiers have been the villains throughout if you've ever read Dante's Inferno in Where he describes kind of the different rungs of hell Then the money lender the financier of the time the bank of the time is on the seventh rung of hell With a bag of money tied around his neck a bag of gold and the gold is heavy So it's pushing him down towards the fire He's in hell. There's no way a banker Could be in heaven one of the great villains of Shakespeare a Shylock the money lender the money lender who dares to charge interest on the loans that he gives and by charging interest on the loans by definition is Bad evil Condemnable a despicable character that nobody wants to have anything to do with throughout history financiers money lenders bankers has been portrayed as evil villainous scheming right most conspiracy theories about taking over the world and controlling the world and and exploiting people place bankers at the center of those conspiracy theories and Of course today if you look in the United States at least and I'm sure this is true in Mexico because it's true everywhere in the world If we look at our markets If we look at our regulations There is no industry in the world out there More regulated more controlled more controlled by government than finance Every aspect of banks every aspect of banking is Controlled through regulations Right, you know it what banks can do and what they can do who they can give loans to and who they can give loans to Who can own the stock of a bank and who cannot own the stock of a bank? Banks are Regulated in every aspect the same is true of Wall Street of investment banks of stock exchanges People think that there's a Wild West free market in the financial sector But that's a fantasy The financial sector is heavily heavily regulated That doesn't matter to people though in spite of the fact that finance is And banking are probably the most regulated industries in the United States When we had a financial crisis not that long ago, you know 10 years ago, well, no 12 years ago Who was blamed for the financial crisis? I mean before anybody actually had any Evidence before anybody had done any research before anybody had any time to think about it as soon as the financial crisis happened Immediately the headlines were Wall Street to blame Wall Street its fault Wall Street speculation Wall Street greed bankers caused this financial crisis Bankers need to be punished for this financial crisis and of course not just bankers, but unregulated bankers free markets were at fault capitalism was at fault it was The system of supposedly unregulated Finance was at fault, but nobody stopped to think for a minute, but wait a minute banks are heavily heavily regulated Mortgages which were part of the financial crisis if you remember heavily heavily regulated housing heavily heavily regulated every one of the industries That actually caused the financial crisis 12 years ago Was heavily regulated then what happened was it was it bankers fault or was it the regulations fault Was it the incentives of a free market or was it caused by? The regulations the distortions the perversions that govern control over finance creates now I Don't have time here to prove it to you But if you want there is a YouTube course There's a course that I gave that's available on YouTube and on podcasting apps where I go for eight hours Go through all the causes of the financial crisis and let's be clear The financial crisis was not caused by free markets in banking the financial crisis was not caused by greed the financial crisis was not caused by finance financial crisis was caused by government policies by bad regulations by central banks screwing up and messing up The financial crisis was caused by State intervention in financial markets Now why do we have so many regulations? Why is finance more regulated than any other business? And by the way, just one more point on the financial crisis. What was the solution to financial crisis? It was more regulations more controls more of the same thing that if you actually do an analysis More of the same things that caused the crisis That was what was presented as the solution and the consequence of that is that we've had for the last 12 years slow economic growth Financial industry that's boring non-innovative not very productive Hooting the economy instead of helping the economy Now why are bankers regulated to the extent that they are? Well, because we associate every problem with them It's because we're afraid our bankers we view them as inherently deceptive evil scheming Greedy goes back to Dante and Shakespeare. I mean I used to teach a class A long time ago called finance and ethics and a lot of people would say immediately finance and ethics That's a contradiction in terms. You can't have finance and ethics But that's the problem if you have that point of view if you think that finance is inherently unethical Then what do you want to do to? financiers Well, you want to control them you want to regulate them you want to put a little regulator on the on the On the bank of shoulder to make sure that they don't behave in unethical Ways I used to ask my students in this class at the beginning of the semester. I said, okay Here's your sign an assignment by the end of the semester. I want you To come to me with one movie or novel Where finance here is presented as the good guy a Positive portrayal of a financier of a banker And it was the hardest assignment they had all semester because they're very very few It's almost impossible to find it But if I'd asked them to find a villain who is a banker or financier for that matter just a businessman It would have been easy. We would have found them just like that. So we have a strong cultural bias Against finance now a lot of us want to be in finance because they make a lot of money But I know a lot of bankers a lot of financiers that in spite of the fact that this is the work that they do They're not proud of it They apologize for it They can't explain why it's good. They can't explain what they actually do And they live in a sense with a sense of guilt and shame and this is tragic because my view is That there is no more productive No more valuable a Profession Than the profession of finance Finance is what makes the rest of the economy function Finance is what makes the rest of the economy function smoothly efficiently effectively Finance is responsible for the allocation of the one thing that the economy needs in order to grow in order to build in order to employ more people in order to create more wealth in order to raise people's standard of living and that is capital and Finance a free financial market is by far The only effective way of allocating capital across the economy Now we'll talk about why finance is productive in what sense, but I just want to note historically if we look at history That there's never been a successful economy in terms of standard of living quality of life That has not had at least semi free financial markets There is no example in all of human history Of central planning of finance working Of government a bureaucratic allocation of capital As creating wealth entrepreneurship innovation success Wealth creation the standard of living in the societies in which we live Depend on their ability of financial markets to allocate capital efficiently and productive to its best use And indeed not only that but to deny capital For those businesses and those Industries that are dying that are unsuccessful that in a sense need to die You say oh, I'm cool an industry needs to die How can an industry need to die? Well think about Think about the industry of typewriters. I don't know if you know what typewriters are we click on buttons and You know prints on a piece of paper Well, once you had word processing typewriters needed to die there was no use for them And indeed well before consumers understood the typewriters were going to die financial markets understood this So if somebody wanted to expand a typewriter factory And they went to the bank or they went to the stock market or they went to the bond market to try to raise capital To expand the typewriter company The financial markets would tell them No We're not giving you capital You are dead industry It would be a waste. It would be throwing money away. It would be destroying wealth to give you money We're investing in computers That indeed is the future There is no progress Without What shum teta the great economist called creative destruction Without some businesses going out of business without whole industries going out of business When they become obsolete When alternatives that are far more productive far more efficient far better Are created So financiers are responsible for this allocation of capital. I mean think in the most simple sense What a banker does A banker's takes in loan applications And decides who to give a loan to And who not to give a loan to Now that's a huge responsibility And what's the basis of which he makes the decision? Where he makes a decision about which business seems to be profitable sustainable Which business he thinks will actually survive? Exist in a few years In other words, which business is likely to create wealth Rather than destroy it Which business is likely to employ people Rather than lay them off Which business can actually pay back its debts And which business will never pay back their debts So the banker Is a crucial Crucial piece In determining what is successful and what fails And the fact that he is motivated by the profit motive The fact that he is motivated by making money Guarantees That he will already support businesses That will make money And why is that important? Because if you make money That's a sign that you're viable and sustainable If you make money That's a sign that you're creating wealth And you're creating value Value for whom? Well value for your customers Value for your employees Value for your suppliers Value for everybody in your supply chain If you weren't creating value for them They wouldn't deal with you And you wouldn't be a successful business What the profit motive What profit shows us Is the It's a sign It's a Measure Of value creation And what the banker is doing Is guaranteeing Because he's still taking risk He's trying to assess Who is going to be a value creator and who's not And therefore by doing this He is squeezing inefficiency Unproductiveness Wealth destruction out of the system And providing Those that are going to create Build, make Create real values Providing them with the resources To grow and flourish A banker does this every day By which loans he chooses To fund and which loans And business plans he chooses Not to fund He does this on a grander scale But does exactly the same thing Which stocks go to market Which companies can raise large capital Well Those You know Companies that the market Financiers within the market Believe will be profitable in the future They don't even have to be profitable right now It's interesting Like a company like Amazon For years and years and years was not profitable There's money, why? Because clearly was generating enough To pay off To pay back its debts And clearly There was a path to profitability That suggested that When they became profitable They would be hugely profitable And therefore worth the investment Amazon could never Show a profit If it projected into the future There was never going to be any profits Nobody would have provided it With capital By the way, that's what happened I know if you followed the story of WeWork WeWork was this company I'm sure you all know what WeWork is It's these office spaces And WeWork was about to go public A few months ago And when people actually looked With financiers Actually looked at the numbers What they discovered is But what they discovered And kind of shocked them all Was that WeWork had no Path to profitability There was no way For WeWork to become Profitable And as a consequence Nobody wanted to give them capital If they had given them capital That capital would have been wasted It would have been Destroyed It would have entailed wealth So the fact That the financiers Would draw their support of WeWork Was a good thing because WeWork was never going to be profitable That's what the numbers revealed Once they tried to take this To Wall Street and to take it public How I got that far Is beyond me Why did smart people keep giving them money In spite of the fact that they would never be profitable Is beyond me It is a failure of those people Who got in Actually got in Then it was clear to them That these guys should not get money On the other hand Think about Steve Jobs Everybody knows who Steve Jobs is I assume When Steve Jobs Was starting Apple He was a hippie I don't know if you've ever seen pictures Of Steve Jobs from back then He had long hair So he stunk Literally stunk He was this hippie looking kid Who'd never started a business And Had really bad hygiene And yet He had a brilliant idea And there was no question That he was brilliant But Think about the courage And the conviction And the rationality Of somebody being able to see Beyond the way Steve Jobs Looked And to identify the idea That he was pitching The idea that he was trying to raise money off of As important And good And profitable And writing the young Steve Jobs A check for half a million dollars Which was the first check Steve Jobs got And starting One of the most successful companies In history Apple All because Somebody could look beyond Just the looks And actually evaluate an idea That's great finance That's a great financier You look at the idea And you're willing to risk it Now for every 10 Ideas That somebody like a venture capitalist Invests in Two do okay And one is fantastic But that's the kind of risk A venture capitalist is willing to take That form of finance A banker takes a lot less risk Stock market Take other types of risk Financiers Financial markets Finance in general is this beautiful Beautiful System Of allocating capital to its most productive use Efficiently Productively By Matching Risk tolerance, really risky projects People with a high risk tolerance Invest in them, really really safe projects People with very low risk tolerance Invest in them They each earn a return Profit, if you will Based on how much risk They're willing to take And doing this You know, the allocation of capital That results from this The productivity gains that result from this The standard of living that results from this Are magical, are magnificent And you can see that In every advanced society in the world You know, Hong Kong Is a financial center No accident, Singapore Lots of banks, lots of Again, a financial center America has robust financial institutions Despite of all the regulations and controls You know, fairly free And very robust Northern Europe Really good banking London, a financial center Again, there's a high correlation Between the extent to which you have Robust finance And the quality and standard of living Within your society China, in order to advance economically Ultimately had to adopt Financial principles They had to start private banks Market, real financial institutions And free them up Let them make decisions Independent Politicians So the most important function of finance The thing that makes It crucial and essential For any kind of economy To be successful Is its allocation of capital But it's not just the allocation Of capital that finance is Contribute to all of our lives Contribute to an economy Contribute to a society It is also the fact That by Allocating the capital And by making money allocating the capital They are not only making money For themselves But they are making money For savers and investors So think about What you would have to do Let's say you had $10,000 I don't know You inherited it You saved it And you've gotten out $10,000 And you want to Get a return on it You want to get some kind of return on that money Well, I mean, you could now go And spend your time Interviewing 100 different businesses Trying to figure out which one To invest with Once you made that investment You wanted to get the investment back Good luck Somebody would have to buy it from you You would have to go and market it I mean, doing your own Direct investing like that To get a return, to get profit Is really, really hard And really, really, really risky But because we have Advanced financial markets and institutions If you don't want to take a lot of risk You can take your money and put it in the bank They will pay you a lower interest rates Or get something They will keep your money for you They will give you an efficient way In which to spend it and accumulate it And save it A debit card, a credit card Checks If you want to take on a little bit more risk You can buy some bonds in a bond market You can get an ETF And if you want your money back From a bank or from the bond market You just sell it immediately You don't have to shop it around For no investment But if you want to take on more risk And get potentially a higher return You can buy stocks You can buy single company stocks You can buy a diversified portfolio of stocks You can buy an ETF Again With liquidity guaranteed Let's say you don't value liquidity that much The ability to go in and out of it You could then go and buy Into a fund that does Private equity or venture capital And where you lock your money up for a certain period of time And you have All these choices and how you Want to invest your money Each one of them Providing you with different levels of risk Different levels of return Different levels of liquidity And you get to make a choice About how you want your money to be saved In the old days A long long time ago Before there was real finance If you had money You could have it in gold or something like that And you would stick it in the mattress and you would sleep on it It could be easily stolen Maybe you buried it somewhere And it never Never gave you a return It never made it possible for that Money in a sense to grow So you Were never able To In a sense Invest that money In order to create more money You could retire and maybe live on the interest That was unthinkable You worked until you dropped dead And if you saved all your saving With money you put aside Savings did not grow today You can invest the money Over many many years That money can grow dramatically And increase your amount of saving And by the way how does it grow dramatically The reason a bank can give you interest The reason the stock market Gives you a return Used for productive purpose That provides profit That grows the economy So you are gaining twice You're gaining once Because you're getting a return on your investment And you're getting a second time Because the economy is doing better There are more jobs There's more stuff Your standard of living goes up Because now there's Apple, now there's an iPhone Now there's the internet That the money you saved went into Creating And who sits at the center of all this At the center of all this Is Other financiers Who make all of that possible So what is finance Finance is that activity That makes it possible For you To save And to gain a return on your saving And it uses That saving To invest in the real economy To allocate that saving Across the real economy Selecting Those Companies, those industries Those investments That are likely to benefit investors The most On a risk return tradeoff basis There is no economic activity without this Indeed, again, if you go back in history When there was no finance When there were no real Sophisticated financial institutions There was no economic growth No economic growth And if you look at countries with no banks Stock markets, bond markets Financial institutions There is no economic growth So in my view, finance is the most Important profession in the world If you care about economic success If you care about economic growth If you care about rising standard of livings If you care about increased entrepreneurship Then you need a free Sophisticated Motivated Financial markets and institutions And it's no accident That people in finance make a lot of money They make a lot of money because they create a lot of value They create a lot of wealth They oil, they make possible The machinery of an economy Think about The economy as a body A human body Every cell in the body Needs oxygen Needs nutrients How do they get those nutrients? They get it through the blood Through the system of arteries And veins and hearts That is finance Finance is the heart of capitalism The heart of an economy The arteries, the veins All the different financial instruments And institutions that exist That allocate That provide the capital To those cells, the capital That every business out there needs In order to survive And without business there are no employees Without business there is no wealth Without business there are no products Without business there is no economic success Without business we die There are way too many people on the planet If we don't have business And we don't have finance So there is a question then Of why then If finance is so crucial Why then If finance is so important And so beneficial To human life Why have people Look down on it Why have they viewed finance as villains Why have they always treated finance As badly And I would say they are basically Two causes The first Is that people are ignorant Of economics They know very little about how Business works, how an economy works And they don't really understand What finance is due They view them as paper shufflers Because what they do is very abstract If you think about a regular businessman Let's say they produce a product People still resent them Because they make money and we'll get to that in a minute But generally People understand That this business creates these products And I need these products Therefore I need to at least Tolerate the business But with finance What is the product they create Well I would argue they make possible Every product But that's an abstraction That's hard for people to comprehend Financiers can't hide behind a product They can't hide behind Something that benefits you directly You have to actually think About how finance benefits your life Financiers could explain it That would be good If they did, if they tried But they don't But you would still have to think about it It requires thought And conceptualization It is hard It's not obvious Perceptually I can't see what financiers do I can see what manufacturers do I can see what a restaurant does What I can't see Is that the restaurant and the manufacturer plant Wouldn't exist without a financier Having funded them So reason number one is just straight ignorance But reason number two is That People resent the profit motive I know This is true in Mexico Where you are flirting With socialism But this is true all over the world Including in America We don't like profits We resent businessmen generally We think profits somehow Is him all We have a morality We have a morality That tells us Good, what's noble, what's virtuous Is not Making money It's not profit It's sacrifice It's living for others It's Being humble and Being Living a simple life That morality, virtue Nobility Is not about profit But about the rejection Of money and material goods It's about suffering And sacrifice Are moral ethical heroes Are not Steve Jobs and Jeff Bezos And Bill Gates Them are the Theresa Now, who Helped poor people more Bill Gates and Mother Theresa Well, it's not a competition Bill Gates helped billions of people Made their lives of billions of people better He created jobs For millions and millions and millions of people Created whole industries And even the aid That some very poor people get Is efficiently delivered To them Through supply chains that are running Computers that are possible Only because of Bill Gates and Microsoft So If the standard was Who has benefited humanity more Well, financiers and Businessmen should be our heroes Our moral heroes But it's not, that's not the standard The standard is not who benefited society the most Who benefited the world the most The standard is Who sacrificed the most Who didn't benefit the most Who was selfless The most That is a morality of death It's a morality of destruction And it's a morality That is going to be anti-capitalism Anti-markets, anti-business and anti-financiers It should be rejected Because I think it's anti-life A proper morality Is a morality that says That your life is yours To be enjoyed, to be lived Rationally In pursuit of your Rational long-term self-interest A morality that says that Profit is beautiful Profit is amazing because profit represents Value creation Value for whom? For yourself and for other people Why is profit Represent value for other people Well, think about the iPhone I paid a thousand dollars for the iPhone How much was that iPhone worth to me If I paid a thousand dollars for it Well, it's worth more than a thousand Dollars to me if I paid a thousand I wouldn't have bothered If it was worth less iPhone makes my life better By more than a thousand dollars Indeed, I think the iPhone is worth Tens of thousands of dollars to me Given the utility I get from it The value I get from it So am I better off or worse off For having paid a thousand dollars For the iPhone I'm much better off I got something more valuable For something less valuable Is Apple better off or less Apple is also better off With a win-win transaction And Apple's profit Symbolizes Symbolizes the value It has created for me Indeed It's just a fraction Of the value it created for me So when I see companies Making a lot of money I go, yes, in a free market They're not stealing, they're not lying They're not cheating, assume that I celebrate Because that's a sign they've created A lot of value for a lot of people The fact that Bill Gates is worth I don't know, 70 billion dollars Means he created Trillions of dollars of wealth Of Improved quality of life For billions of people You cannot become a billionaire In a free market Without improving the world Around you The lives of many, many, many people Better So to me profit is a virtue It's a sign Of productivity It's a sign of value creation It's a sign that somebody is working hard To make my and other people's lives Better That might not be their motivation Their motivation might be fun Their motivation might be money But the fact is That they're making my life better That's how I look at financiers Financiers in my view Are noble, it's a noble profession It's a virtuous profession It's a profession That is in many times heroic Given how much Financiers are attacked It is an activity that is Necessary for economic success For economic growth, for economic flourishing Entrepreneurs cannot build their businesses And their financiers fund them Business cannot grow Unless financiers fund those businesses And industries cannot die Unless financiers stop funding them And that's important too That's how progress is created So rather than being this profession That everybody looks down on That everybody condemns That everybody ridicules A proper approach to finance Is that it is a heroic, moral, Virtuous profession It requires individuals To use their mind In an effort To create a better world Around them To create value To produce Or to make it possible For other producers To produce So we should celebrate finance Finance indeed is noble It's productive And their pursuit of profit Is virtuous Thanks And I'll take questions I see we've got a bunch of questions In the Q&A already Thank you so much, Mr Group Would you like me to read the questions Or... Only if they're in Spanish then I'll need you to translate But these look like they're in English Oh yeah So why is Mexico financial Why in Mexico Financial education, financial regulation Financial goals etc Is just part of Conversations But educational system Being that important It's about fed system Or just our governed ways I'm not sure I understand the question Maybe we can rephrase it Yes I think you can write the question Please What do you mean? He will rewrite the question Okay, so let me go to the next one One moment's question Pretty interesting perspective That the financial sector Pretty interesting perspective About how the world sees bankers And the financial sector in general Thank you, glad it was interesting Considering the fact that the financial sector And the financial system They'll give money to Not depending on how viable they see it What professions Will disappear And which ones do you think will prosper In the next couple of years Wow, I mean In the next couple of years I mean I think that is going to Really depend on how people How people's behavior is going to change Coming out of this coronavirus Situation For example, I'd be very weary Of owning airline Stocks or hotel stocks Or restaurant stocks Because I think it's going to be a long time Before people are ready to go back To flying and go to restaurants And go to hotels and it's going to be difficult To own those stocks You want to look at industries Where Industries where people can work from home Are very viable industries In this new world we've created Right? It's compared to industries where You have to go to a physical location And work in a particular physical location Also, so Consumer demand Is going to shift because of the crisis And the challenge is going to be Predicting those shifts That's what's going to make you a good investor Versus a mediocre investor And I think financial markets are Already starting to do that First of all, you saw it Airplane stocks declined Hotel stocks declined But tech stocks Amazon, for example Stocks of companies where people worked At home, Zoom, which we're using Those stocks went through the roof Why? Because those companies are viable Those companies are going to grow Those companies should receive more capital Because they are Viable in this new world We are moving into where our Behavior is going to be limited By this virus So the market is always ahead I think before We all sat down and thought How is this virus going to affect people? The stock market was already doing it That is the financiers were already Thinking about it They were already implementing it And that was already reflected in the prices And this goes to my idea earlier That financiers are the first to know Which businesses are dead Which businesses should grow Even before Suddenly before politicians Or before intellectuals or professors Or even people like me People in the market Have their money at stake Are incentivized and motivated To do the best job That they can to figure all that out So, I think if you follow Markets, you'll be able to tell Which professions are going to disappear And which are not Which professions where the stock price Is going down Versus those that are going up Or what the market is predicting Are going to be successful versus not Successful in the future But that's true across the board Banks and so on But it's a really, to some extent It's a hard question right now Because we don't yet know completely How people's behaviors are going to change Post-crisis How can we rethink business And start doing valued centered entrepreneurship I think the main thing we need to do About rethinking business is finance Is get rid of the guilt associated with it And recognize the true virtue That it constitutes We need to start thinking of business People, entrepreneurs and financiers As the heroes of our society As the good guys And engage in policies That free them up The problem in all our economies In all our countries Is that there are too many controls Too much regulation Too many attempts by Government to centrally plan Too many attempts To control, regulate it And determine how Markets should work What we should really be doing Is deregulating Reducing controls Getting the government to stop Replanning and let markets And entrepreneurs and business People and financiers Actually work, let the profit motive Actually function Because when it does function Again, it leads to the Higher standard of living The best quality of life So I think capitalism Freedom Elimination of regulation Is the way we need to Start rethinking about this And to do that, we have to change our attitude Towards business, we have to stop thinking That self-interest is a bad thing That making money is a bad thing We need to view the profit motive As a sign of virtue Not of vice Okay Cesar asks I'm agreeing with, we hate capitalism More than we love socialism But acting in rational self-interest Would really lead to greatest global war Being under capitalist system Because we have so many times When selfish agents are motivated to produce Long-term harm for short-term gain Such as in the instance of climate change Could lead to green Swarm, swan A green swan I guess like a black swan I don't think That that is true That is, I don't think that Businessmen are focused on short-term gain And sacrificing the long-term Because the fact is that Businessmen are the most Long-term thinkers in the world In which we live If you think about who thinks long-term For example, who thinks About new medication And the 10, 20 years it'll take To develop new medication It's drug companies, it's biotech companies It's entrepreneurs, it's business Who thinks about Building new energy plants And creating new energy sources Over a long period of time It's businessmen Now, we don't let them Because we regulate that For example, if you're concerned about climate change And I am not particularly concerned About climate change I think it's a solvable problem So I'm not very concerned about it But if you're concerned about climate change Then you should be very pro-nuclear And what you should be doing Because nuclear is the cleanest Safest form of energy Known to us It's incredibly safe And it's no CO2 And it's incredibly clean There's no pollution Even the waste now With new nuclear power plants Is minimal and sometimes Infantissimo because the nuclear power plant Can actually recycle its own waste So just let entrepreneurs Build nuclear power plants But no, we don't trust them We don't believe in them So we regulate the hell out of it And cause it to be so expensive That they can't do it But if you actually provided The long-term incentive The long-term incentive is profit Then selfish agents Being selfish Properly selfish Caring about oneself It's not about a short term It's about the long term What's the point In the long term If I'm going to fail long term If you lie, steal a cheat Is that a good long-term strategy for life? No You're probably going to get caught But even if you don't get caught It's just Spiritually draining Exhausting and just bad It's not a good Way to live your life It's a rejection Of the one tool you have To live a good life Which is your mind So people who are properly selfish And business people Do not Put the short term above the long term And there's no evidence that they do In a free market And I see this all the time Government Places more emphasis on the short term Than the long term Because government is on a four-year election cycle All they care about Is doing okay for the next four years And then there's an election And then another four years And then they're gone in America Or if they're a member of parliament All they care about is the next election They don't care about the long term I don't know any politician Who cares about the long term I don't know any politician Partially because the quality of politicians That can think long term Businessmen are thinkers Politicians are not thinkers They're manipulators They're emotives So the only people in our culture Who properly think long term Are businessmen Self-interested businessmen It's you You're going to be the future businessman Why would you try to make short term profits If long term it's going to hurt your business Or if it's long term it's going to hurt The air that your children breathe The fact is that capitalist countries Are the cleanest countries Socialism creates filth More than anything else I've lived under socialism Israel was socialist when I lived there And of course when the Berlin Wall came down And people went into Eastern Europe Which had experienced communism It was filthy The environment was disgusting And actually when you go to West Berlin Versus East Berlin East Berlin was filthy West Berlin was clean It was your private property When something is yours You take care of it When something is not yours It's the public's Then you don't take care of it You don't care about it Humberto asks Do you usually invest in Mexican companies I do not I don't invest in things I don't understand And I don't know Mexico I mean I've been to Mexico obviously But I don't understand the business environment I don't understand the political environment I don't understand a lot about Mexican companies I wouldn't invest in them I do invest in kind of a global Portfolio And I'm sure like a diversified global portfolio And I'm sure as part of that Diversified global portfolio There's some Mexican companies in it But I do not try to make assessments About this is a good Mexican company This is a bad one Because it's not my every expertise It's not my every finance That is their every expertise Generally in investing I encourage you to invest in what you understand In what you know And what you're motivated to know I mean you can learn stuff I could immerse myself in Mexico And learn how to evaluate Mexican companies It's just Not where my interests lie I do other stuff Raman asks Mexico currently counts with two stock exchanges The Mexican stock exchange and BIVA After the Brazilian Stock exchange The Mexican stock exchange is the largest Stock exchange in Latin America And the fifth largest in America Nonetheless the Mexican stock exchange Is far from being as relevant As the largest stock exchange in the world My question is What does the Mexican stock exchange Do you think need In order to reach the level of importance And do you think it will ever reach That level of relevance in the future I mean I think it can But it's not just About what the Mexican stock exchange does It's about What the entire Mexican economy does So You know the United States The New York stock exchange Is the biggest in the world Because The American economy is the biggest in the world And because The American economy has been For a long time one of the If not the most vibrant economies In the world So what you need in Mexico Is to completely reform Your economy You need to make Mexico A vibrant economy An economy that needs And justifies A significant stock exchange Now Doing that is not that hard Economically But it's impossible Politically and culturally Because most people hate capitalism But that's what's needed So what the Mexican economy needs Is more capitalism What you need is greater respect For property rights What you need is property right reform Land reform, but property rights reform You need a rule of law In ways that you don't have in Mexico You need To get the government out Of every sector of your economy Starting with the energy sector There was some attempts With the previous administration To privatize your energy sector But you need a lot more The Mexican energy sector needs to be Completely 100% privatized And then Every sector needs to be privatized And as part of that The land in Mexico needs to be privatized All that land That today is owned by the government Which is the majority I think Of the land in Mexico Should be given to private People It's one way to deal with poverty Take all the poor people in Mexico And give them land For free That would give them capital That would change It would give them something they own It would change the dynamics So what you want to do Is change Mexico from A mixed economy An economy in which There's a lot of cronyism Where businessmen have a lot of pull With the government An economy that is moving Towards socialism An economy in which the government controls Business Where again the government Has it's businessmen And controls them and they control the government And it goes both ways What you need is to get rid of all of that What you need is true freedom What you need is true capitalism What you need is to get rid of the government Regulations, government control, government manipulation Of your economy and create a true Las Fe economy And if you did that And you deregulated your financial markets Yeah there's absolutely Zero reason why Mexico cannot have The biggest most thriving Stock exchange in the Americas Because America In many respects is on the decline It's on the decline Because it's become A place of fear It's afraid of trade It's afraid of immigrants It's afraid of viruses It's become a country Filled with fear And To address the fear People run to government for more help And more control and more regulation So the United States of America Slipping away from freedom Away from capitalism Away from wealth creation And somebody hopefully Will fill in the void of being a dynamic Exciting, free Capitalist economy in the world There's no reason I can't be in Mexico Other than Ideas, you're going to have to convince people You're going to have to make dramatic Revolutionary changes To your economy In order to take that leadership position away From the United States But the United States is In decline, there's no question about that How can we exchange this morality Of sacrifice and reject a profit Through a morality Of creating value in wealth Well first I would suggest Reading, I would suggest reading Ayn Rand, Atlas Shrugged Fountainhead She's got a book called The Virtue of Selfishness Capitalism, The Unknown Ideal And all of these books Every single one of them is available in Spanish So it's no excuse, you don't have it The language is an excuse In new modern translations So they're all available in good translations There's a ton of Ayn Rand Material online So the first change one has to make Is in yourself You have to understand why the morality Of sacrifice is wrong Bad for you And bad for the world And then you have to understand that there's An alternative, because you need morality We can't reject morality, you have to have A morality, but you need a morality Of creating value in wealth And for that you need to educate Yourself about morality and the Best way to do that is to read Ayn Rand Because she actually presents an alternative An alternative Consistent with wealth creation An alternative consistent with creating Values And consistent with finance Consistent with business and entrepreneurship Many Of the great entrepreneurs of the last 50 years in America Were inspired by Ayn Rand They didn't necessarily accept all of her ideas But they certainly were inspired by her So I would definitely recommend That the way we change the morality Is we adopt a new one And to adopt a new one One has to educate oneself In a new one And that means reading Ayn Rand Educating ourselves in Ayn Rand You know, really And then trying to influence your friends Your family Your professors Students around you So change comes from education We're not going to have any change Unless We change the way people think About morality What we need is a moral revolution But that can only happen That can only happen Through education, education, education, education And it asks I agree with you that business and investment Are crucial for economics and job creation But what would you say about Investing money When there is a worldwide tendency To socialism I'd say it's dangerous and risky I'd say we live in very risky times And this is And you're right, it's a worldwide Tendency toward socialism And what does socialism do? They nationalize, they take down money away They confiscate private property They socialize So There is an argument to be made That if the world is going toward socialism You should bury your money You should hide your money You should protect it rather than invest it I'm not That pessimistic yet I still think there are opportunities to invest I don't think we're heading To socialism tomorrow I also think We all need to fight the trend Against socialism And the other thing is we need to find Places in the world where there's still some freedom That might be in Singapore or Hong Kong It might be I don't know, I thought at some point Maybe Brazil was heading towards more freedom But This president, they have Bolsonaro Is such an idiot that I think he's gonna Completely blow it Screw it up completely But you gotta find those places in the world That are not heading toward socialism Those places in the world Where you could still make good investments And still create and still produce And invest over there It's becoming harder and harder But your generation's fight Is going to be How to eliminate This threat of socialism How to fight against it And change the tide of history Change the direction of where we're headed Diego asked Don't you think the last crisis in 2008 Had something to do with Everest I mean There even was some evidence of banks Being colliding With security Regulatory agencies colluding With security Rating agencies in order to create a sense Of false wellness in the market Which ended Creating a bubble I mean, there's a sense in which that's true However, that kind of environment Could never Have happened in a free market The only reason They could have so-called colluded Was because they were protected by Government and regulators I'll give you a few examples So big banks in America Before 2008 had something called Too big to fail So they knew That if they failed The government would bail them out That's called moral hazard It means That if they make a lot of money, they get to keep it And if they lose money The government will bail them out So that gives them an incentive A rational incentive To take on a lot of risk Which they did And when the risk turns bad Which risk does They walk away and the government Bails everything out And in the meantime They got a pocket of money Now whose fault is that? It's not the fault of the financier Who's just doing what the government Is incentivized him to do And if he doesn't do it, he's competitive as well It's the fault of the government For setting up, in a sense, the game Of the market, in capitalism There's no such thing as too big to fail If you take on too much risk And you fail, you lose everything You get crushed And that provides you with an incentive Not to take on stupid risk To moderate the risk To be responsible To be rational To think long term So the fault lies With government With regulations With controls Not with the financiers I'll give you one other example You mentioned rating agencies If you look at America's rating agencies There were only three of them And I grant you, the rating agencies were terrible They had these bonds rated a triple A Like weeks before They went To junk, to zero They were terrible All three of them You have to ask yourself Why are there only three rating agencies? And why If they're so bad that they continue to exist Because one thing we know about markets In capitalism is if you produce A bad product, you produce A bad service, you go out of business Why haven't the agencies gone out of business? They're still not out of business They still exist, even though they Completely screwed up in 2008 Well, it turns out That there were only three rating agencies Because the FCC The American regulatory agency Only allows three If you want to start a competitor You need to get approval from the FCC And the FCC has not approved Any competitors So we stuck with three So even though these rating agencies Have been Terrible At assigning ratings And I could go back to the early 90s When they were terrible So it's not new that they're terrible There's no other game in town Because the regulators won't allow it So there's no competitive market So why, you might ask Why does anybody pay attention to the rating agencies? If everybody knows what they do Is crap That would be a good question And that's because By law Certain institutions Can only buy securities That are raided by These three agencies Pension plans, insurance companies And certain other institutions Can only invest In Rated securities Rated by these three Which provides them a market Because governments said so Not because the market dictated this So none of the behavior That you saw before 2008 Could happen in a free market Would happen in a free market So you have to conclude That the reason that the crisis happened Is because the way Government set up the regulations Set up the incentives, set up the controls Of course None of it would have happened If not for central bank That manipulates interest rates Manipulates the money supply And has no clue what it's doing And what is going on And you're seeing that right now Right now with the Federal Reserve I'm sure with the Mexican central bank They're doing things that will jeopardize Economic growth in these countries For decades to come Although asks Which strategy should we take Such that people can trust On the financial system Financial institutions and financial activities Like investing Well who is we So my view is the best thing The government can do Or voters can do Is to get rid of regulations Get rid of controls And let markets work And I think And express The extent to which we have confidence In business, in finance, in financial activity Now That doesn't mean That people will only make money When they invest It doesn't mean That a bank doesn't go bankrupt once in a while They do Businesses make mistakes Businesses do badly But we have to accept that As part of the risk Of living in a free society So we have to educate people About finance About the system About how it functions About the value it creates For everybody We have to educate our politicians On how to get out of the way So that markets can work Function properly Effectively, efficiently So that all of us Can benefit to the maximum From efficient, productive Functioning financial markets Like everything in life Nothing's easy And changing the world is certainly not easy It's about Educating So educating people And convincing them Of the truth of your position There's no gimmick There's no one thing That will just make everything Change the way you want it to change Andrea, until what time Do you want us to keep going? I guess we've got four questions I can do these Yes, we have Like five, ten more minutes Okay, let me try To do these four questions So everybody, we answer all of them How virtual money And financial movements Through internet will affect regulations In countries' economies? That's a great question Because one of the things That regulators and governments Are afraid of Bitcoin and other cryptocurrencies And the internet Is that they lose control That they can't control it as easily Because it's encrypted Because it's secret, because it's anonymous But I think that's great That it's secret and anonymous Because it might force governments To realize that they cannot Control us Maybe they shouldn't control us And maybe it'll be an impetus For actually seeing A freeing up of financial markets A freeing up of our lives And the government stepping away From trying to control everything And regulate everything So we'll see, I think that is the one Potential about the internet That it Be convinced politicians They can't keep up with it They can't really control our lives Because Much of our lives cannot be moved Into an encrypted space That they can't see and can control What do you think about the perspective Of the actual president of Mexico Who blames the enterprises And the financial institutions For economic problems we have And also what do you think about economic support That the government gives to the people who need it Is it an investment or waste So I think you have a terrible president I think his views are wrong Fundamentally wrong In almost every aspect I think politicians Always blame financiers Because they know it's easy To blame financiers And the people usually support them When they blame financiers Of course I can tell you Without question The economic problems that Mexico has experienced Are all caused by the government Are all caused by bureaucrats Are all caused by politicians And primarily caused by the president himself And the fact that he is Maintaining and supporting the system That has existed today What Mexico needs is a complete Economic revolution So you have to flip it on him No, it's his fault It's not Businessmen and financial markets fault The only solution to poverty in Mexico Is free of financial markets And free of financial institutions Do I think welfare, support of poor people Is investment or waste I think at the end of the day it is a waste But you can't just eliminate it tomorrow You have to first create A thriving Active Job market Business environment So that people can find work First, you should privatize The land in Mexico And get poor people to own That piece of land First, you have to free up businesses To build and create And create those values and jobs So that people have an option to go to work Rather than accept the welfare check And if you create a vibrant economy In Mexico, then Start withdrawing the welfare Make it go to zero Get rid of the cronyism Get rid of the goodies The government gives businessmen Then free up the economy To real competition Then free up the economy To real property rights To real capitalism And then, only then Get rid of welfare If you will Mauro says Still money is king No, money is not king Ideas shape the world Ideas shape history The ideas you have will dictate Whether you can use money well Or use money badly The ideas you have will determine Whether you use money to support your life Or use money to destroy your life What is king is what's inside your head And if you cultivate your mind If you have good ideas You can make a lot of money But it's also an art to know how to spend the money How to invest the money A lot of rich people Who are unbelievably unhappy That have horrible lives It's not the money That makes you happy You need money to be happy But it's not the money that makes you happy We're letting all the financial agents Without any regulation lead to corruption Stealing fraud or something similar No, markets are much better at regulating Than our bureaucrats And I'll add to that Fraud stealing Always being illegal And should be illegal If you took the police If you took the regulatory agencies And told them no more regulations But the one thing You have to do Is catch the crooks Catch the fraudsters The people who steal, the people who destroy Just those people Forget everybody else Forget the regulations Just catch the fraudsters It would be much easier for them Much less for them to do And I think you'd have much, much cleaner I would argue the opposite The more regulations they have The more controls you have The more the market feels Safe because the politicians And the regulators are supervising The more corruption The more stealing The more fraud there is So it works actually in reverse Okay, last question Maybe U.S. economy is in decline Due to the economic system And the applying excess of capitalism No, the opposite, too little capitalism America has been moving away From capitalism for a hundred years The government spending grows Every single year More regulations, every single year It doesn't matter if Democrats are there Republicans are there The American economy Every economy that abandons capitalism Declines The privatized Healthcare system Doesn't provide health services for everyone Not true The American system is not a private healthcare system Over 50% of healthcare In the United States is provided by government And the private sector Is the best healthcare system in the world You get better service Better quality healthcare Than anywhere in the world No, the problem with the American healthcare system Is it's not private enough It's not capitalist enough You know, 70% of all healthcare innovation In the world Are produced by the United States Why? Because it still has a little bit of freedom Imagine if it had a lot So no The decline in America Is for too little capitalism Too much government involvement The problems of the American healthcare system Is too much government Too many regulations Too many controls And if you were sick You would much rather be sick in America Than in Mexico Or in Germany Or in Sweden Or in Israel where I come from The best healthcare in the world You will get here Now, you have to have insurance But insurance is not that expensive And it would be a lot cheaper Again It all boils down to capitalism Works It really does And any attempt of socialism Whether small or big Is wealth Destroying Freedom Works It always has Always will And you got to overcome the resistance to it If you want to be successful The reason Mexico is poorer than America Is only because Mexico has been less free than America Mexico has respected economic Rights Property rights Less than America has That's the reason Mexico is poorer than America Nothing else Alright Thank you everybody I think our time's up Is that right Andrea? Yes Good, I think we covered all the questions Thank you so much for sticking At our virtual financial summit We really appreciate For you taking the time and effort To share your thoughts And points of view with us And with no doubt, I am sure that your contribution Will help to the preparation of all the young talents Around here Thank you so much It's a pleasure and I hope to see you all In Mexico one day soon Thanks everybody