Capitalism Deserves More Respect From Millennials

Netflix, cellphones, and iPads are all products of a profit-driven economy, says Stephens Inc.'s Warren Stephens.

In this video, Warren and editor Jack Otter discuss the free market, business and innovation in relation to millennial perceptions. The transcript of the video is below.

Jack Otter: It might surprise you to know that American millennials are less apt to support capitalism than anyone in developing nations. I’m Jack Otter, editor of, and I’m here with Warren Stephens, who is the CEO of merchant bank Stephens Inc. You’ve been a longtime friend of Barrons. You’ve been quoted frequently. So, you wrote a recent, interesting op-ed in The Wall Street Journal where you cited the fact that fewer than half of, I think it was, ages 20 to 29 Americans supported the institution of capitalism. It made me think, and Joni Mitchell would kill me for quoting her in this context, “don’t it always seem to go, that you don’t know what you’ve got until it’s gone,” and maybe the benefits are invisible to that age group, while the problems are visible. But, what’s your thoughts?

Warren Stephens: Well, I do think there are two problems with their distrust of capitalism. One is, I don’t think they really understand capitalism, and I don’t think they understand the alternative, socialism. They are too young to remember that, in my lifetime, I have seen dozens of failed socialist / communist states. And, at the same time, the benefits of capitalism that millennials use every day in their life, they don’t associate with capitalism.

Jack Otter: What are a few?

Warren Stephens: Well, I mean, the phones that they all live with, that we all live with now. And the apps that they use wouldn’t be possible without a capitalistic system. So….

Jack Otter: It incentivizes the makers, the developers to produce them.

Warren Stephens: Right. And you know, I don’t think… you know, you go into a store, and you buy what you want. Well, how did that come to be there? Or you order it online, you know, how did it come to be there? Well, somebody in a logistical chain is supplying that product and delivering it to you, or delivering it to the store, and they are doing it for a profit. They are not doing it as an altruistic exercise. So, you know, the whole system is based on a profit motive for everybody in the chain and that’s a good thing.

Jack Otter: So, defend capitalism against it’s critics who say, “Yeah, Warren, but look at the inequality. You know, since the 1980s, the top 1% is now 38x the salary of the bottom 90%. Why does the system allow that?”

Warren Stephens: Well, people have had the opportunity and, in our system, to accumulate an enormous amount of wealth, and to earn an enormous amount of wealth, and the top 1, 5, 10% do. But, I think, it’s true for ever other quintile of income in this country, with the exception of the last few years, which is a real problem, but, that every level of income in this country has grown. Certainly, every level of material things that all people have at all the various income levels in this country has grown enormously since the 1970s and 1980s. It’s remarkable, really. I mean, things we didn’t even know existed, everyone has, today. Computers, laptops, tablets, you know, on-demand television, Netflix.

Jack Otter: Another thing I hear is, the evil banks. Right? So, they socialize the losses and privatize the gains. Why does the system allow this?

Warren Stephens: Well, I can’t really defend that one quite as well as I can defend capitalism. But, I think it is safe to say that we, particularly in ’08 and ’09, experienced an enormous crisis that without the help to make sure our banks survived, the economic crisis would have been much, much worse. They didn’t really have a lot of good alternatives. And I don’t think it’s going to continue, that you are able to socialize the losses, and the shareholders get to keep the gains. I think there is going to be a day of reckoning that comes around in rationalizing that system. At least I hope there is and there is discussion about it now with regulators and people in Washington and I think it’s healthy, but you know, in the short term they just really didn’t have a lot of choice. I mean, you could not let the financial system in the US crack under the pressure that was taking place at that time.

Jack Otter: And it would have been enormously painful on main street, you know, forget the bankers in suits but it would have hurt everybody all along the chain.

Warren Stephens: Oh yeah, it absolutely would have hurt everyone. I mean, if you have the collapse of our major financial institutions that’s going to hurt the small financial institutions, and you’re right, it’s going to impact retailers on main street and people that are running internet stores out of their bedroom. It’s absolutely going to affect them.

Jack Otter: So just one more question. Is there anything, if you were King, in either the private sector or the government level to  address the concerns of these Millennials. Or, is it just communication, that you just want this word to get out.

Warren Stephens: Well, I think it is communication. I do want the word to get out. But I also think that, if I could do any one thing, it would be to blow up the notion that crony capitalism is really the norm. I’m not saying it doesn’t exist, because it does, but the reality is, for 99% of the business people in this country, it does not exist. They are successful on their own and they get to keep the fruits of their labor and try to grow their businesses. That’s a great thing for this country.

Jack Otter: Thanks so much, Warren.