Billionaire investor Ray Dalio has called on politicians to declare the growing wealth gap a national emergency and take urgent steps to address it or face the prospect of a violent revolution where “we are all going to try to kill each other”.
In a conversation with fellow hedge fund manager and billionaire Paul Tudor Jones at the Greenwich Economic Forum on Tuesday, the Bridgewater Associates founder echoed his previous comments and those of other billionaires who have expressed concerns about wealth disparity and a “broken” capitalist system.
“The world has gone mad and the system is broken,” said Mr Dalio, who was the highest earning hedge fund manager last year, pocketing $2bn in fees and returns on his personal stake in Bridgewater funds.
“The reason it is broken is because it is not an equal opportunity system. It needs to be reformed in a way that works better”.
Mr Jones shared Mr Dalio’s concerns about the demise of capitalism but said that fixing the problem is “easy” if public companies can be convinced to shift their focus to more than just shareholder returns.
“We have 6m employees of public companies that today do not make a living wage,” said the 65-year-old founder of Tudor Investment Corporation. “Fifty years ago, 6.5 per cent of corporate revenues went to shareholders. Today that number is 13 per cent”.
Mr Jones has set up an organisation called Just Capital that ranks companies on their treatment of employees.
His and Mr Dalio’s comments reflect an intensifying debate among hedge fund billionaires over how to characterise and respond to wealth disparity. Leon Cooperman, founder of Omega Advisors, penned a five-page open letter to Elizabeth Warren last week attacking the Democratic presidential candidate’s “soak-the-rich positions on taxes”.
In Greenwich, Mr Jones also sounded the alarm over the US budget deficit, calling Donald Trump “the greatest salesman in the history of this country” for convincing the Republican party that “a 5 per cent budget deficit adjusted for the economic strength we have right now is a reasonable proportion and one that is good government policy”.
If the deficit continues to grow at the current pace, the US will in 10 years have exceeded the threshold where Greece encountered its recent debt crisis, he warned.
An Elizabeth Warren presidency will scare the stock market, Mr Jones said. Tudor polled its investment staff, who said that if Ms Warren is elected, the S&P 500 would trade at about 2,500 compared to 3,600 if Mr Trump is re-elected. The index was 3,076 on Tuesday.
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