At Greenwich forum, hedge fund founders Ray Dalio and Paul Tudor Jones call for reform of capitalism

Matt Bird  |

Two hedge fund founders on Tuesday called for the reform of capitalism to combat economic inequality and stem political upheaval.

Before a crowd of about 200 at the Greenwich Economic Forum, a two-day alternative investment industry conference, Ray Dalio, founder of Bridgewater Associates, and Paul Tudor Jones, founder of Tudor Investment Corp., debated what ails the U.S. and how to fix it.

Dalio’s blunt argument is that capitalism is no longer working. Jones says part of the problem is that millions of people don’t earn a living wage.

“We have not made capitalism work for the average person,” Dalio said. “Capital stays where they like capitalism. And capitalism needs to be fixed. And if you don’t fix it, you’re going to have a revolution. And then you’re also going to chase the capitalists away.”

Unlike most hedge fund operators, Dalio has recently taken on a public role. Gov. Ned Lamont, a Greenwich businessman, enlisted Dalio Philanthropies to pledge $100 million in a collaboration with the state to raise $300 million for youth and poor communities in Connecticut.

Lamont, speaking briefly at the forum, steered clear of the debate over the future of capitalism. He instead boosted the state, calling it the “hedge fund capital of America.”

Connecticut is home to more than 400 private investment funds, managing more than $750 billion in assets, according to the Connecticut Hedge Fund Association.

The industry has had an occasionally testy relationship with the General Assembly’s majority Democrats who have looked at high net worth hedge fund owners as a source of revenue as the state struggles to close budget deficits. In 2017, liberals proposed a 19% tax on hedge funds, drawing opposition from then-Gov. Dannel P. Malloy, a Democrat, and legislative Republicans. The proposal died.

Jones criticized evolving corporate practice that increasingly rewards shareholders over others, such as workers, communities and the environment. The percentage of corporate revenue earmarked for shareholders has increased markedly over the past decade or more in what he called “shareholder primacy.”

“But now, it goes increasingly to the 1%,” the result of a “natural unchecked movement” stemming from the belief that business is where one makes money, Jones said.

“We’re never going to fix the social problems that address us today if we do not start in the workplace. And the easiest place to start is we have 6 million employees of public companies that today do not make a living wage, that live under the poverty line,” Jones said.

Jones also said that an internal poll at his investment firm found that Standard & Poor’s 500 index would plunge by more than 25% if Sen. Elizabeth Warren were elected president. The Massachusetts Democrat has made growing economic inequality a centerpiece of her campaign for president.

Tudor Investment Corp. lists offices in Connecticut, New York, Florida, London, Singapore and Sydney. In 2017, Bloomberg reported that his investment firm had sold its Greenwich headquarters. Jones reportedly changed his residency to Florida.

The relocation bolstered the argument of businesses and Republicans who criticized Connecticut’s economic development policy of the administration of then-Gov. Dannel P. Malloy, a Democrat.

Income and wealth inequality have become potent political issues, firing up the liberal base of the Democratic Party that’s responded with populist and socialist proposals that would more directly involve the government in the economy. On the right, the Great Recession and slow recovery that followed helped fuel Donald Trump’s 2016 presidential campaign, appealing to millions of Americans who lost their homes and well-paid jobs.

Jones, whose worth is set by Forbes as $5.1 billion, questioned corporate practice that pays dividends and buys back shares, which boosts the price of stock, benefiting investors.

“Is that really the American way? Is that fair?” he asked.

“How many employees do we have not making a living wage relative to what I am paying the CEO?" Jones said. “It’s a legitimate, cultural, social, moral, ethical question to ask. And hopefully, we’re going to start asking that in every damn boardroom.”

Dalio said he doesn’t think that will happen. “I think everybody has their own particular way of dealing with it. And so everybody sort of says, ‘Do it this way, do it that way.’”

The wealth gap must be treated as a national emergency requiring a political solution that “increases the size of the pie and also divides the pie well,” he said.

Dalio isn’t optimistic about the prospects.

“I think we’re going to try to kill each other,” he said.

Contributor (s): Matt Bird - Republished by Equities News in-house editorial desk

Source (s): Stephen Singer, Hartford Courant

"Matt Bird" is the Network President of Equities News (Equities.com), Executive Producer and co-host of the Traders Network Show. 2019 Matt Bird was appointed to the advisory board and committee of Humanity 2.0, a Vatican City based non-profit focused on solving human impediments. Matt Bird also serves as chairman (Co-Founder) of Communication Marketing agency 1-800-PublicRelations (1800PR). In 2015 Matt Bird was ranked 3rd "Top 10 Most Influential Communications and Media Executives for Impact by the United Nation and PVBLIC - and was the acting director of communications for the U.N. SDG Media Zone. Matt Bird has lead ESG, social impact, sustainability and Public-Private Partnership initiatives for the United Nations, UN SDGs, UNCTAD, EU Parliament, NGOs and the U.S. Department of Commerce (International Trade Administration- trade.gov). Prior, Matt Bird was CEO of MUNCmedia, a (PaaS) news content distribution platform and network spanning 1400 publishers, reaching more than 110 million retail and institutional investors worldwide. In 2009 NASDAQ acquired the platform for integration into NASDAQ Financial Services group. The core technology and IP powers news targeting algorithms and content monitoring systems used by nearly all stock exchanges and newswires services today. On Sept, 21 2009 Matt Bird rang the NASDAQ Closing Bell in honor of his partnership the NASDAQ OMX and Globe Newswire for accomplishment to further the FinTech and financial communications industry. Matt Bird has severed as EVP and director rolls at BBDO, MarketWatch (formally ScreamingMedia), IGM. Mr. Bird current sits on numerous NGO, Public-Private partnership and reneging growth organization boards focus on economic development for social change.

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