Billionaire Paul Tudor Jones said something on CNBC on Tuesday morning that marked a major turning point in the wealth debate.
The former cotton-trader-turned-hedge-funder told Andrew Ross Sorkin that income inequality in the U.S. had gone too far — and that it was the responsibility of companies to help fix it.
“In 1985, 35 percent of the wealth in this country was owned by the bottom 90 percent,” he said. “Today, 23 percent of the wealth is owned by the 90 percent and that 12 percent difference has gone to the top one-tenth of the 1 percent. Capitalism may need modernizing.”
Jones’ broader point was that companies have tilted too far toward shareholders and profits and they need to start paying more attention to how they pay and treat workers and customers. He said old definitions of corporate success, started with Milton Friedman in the 1970s, were outdated because inequality was “one-fifth of what it is today.”
The fact that Jones was suddenly sounding the alarm on inequality is news. This was not a left-leaning billionaire, like Warren Buffett or Bill Gates, once again espousing the party line. Jones has always considered himself an independent and has not been very active in politics. In fact, despite his charitable giving through the Robin Hood Foundation, his Greenwich, Connecticut, mansion was picketed by left-leaning protesters in 2015 who called him the face of hedge fund greed and influence. They held up a giant banner that read: “Paul Tudor Jones, Robbing Our Hood.”
So this marked an important statement from Jones. The question is why?
His main reason is that unless companies and investors step up and change their priorities — to put more emphasis on employees, customers and products — inequality will get worse and the government will be forced to step in to close the wealth gap. And that, he said, would be the worst path.
“I don’t think you can have this kind of income stratification without having government come in at some point,” he said. “And to me that is the worst of all outcomes because that is the worst way to redistribute income. So hopefully this is an organic way we can drive resources.”
A government solution, he said, could take the country back to the 1970s and “90 percent taxes” on the top earners.
So along with trying to create a more just and fair economy, Jones is also acting out of enlightened self-interest. Unless the wealthy — CEOs and investors like him — try to ease inequality, government will do it for them. And the government solution might be a lot more painful than corporate change.