- With income inequality skyrocketing over the past 30 years, even the people that have benefitted most from the system are calling out its flaws.
- Billionaires like JPMorgan Chase CEO Jamie Dimon and Bridgewater Associates founder Ray Dalio have sounded the alarm on the threat the rising levels of inequality will pose for the country while Salesforce founder Marc Benioff recently pumped millions into studying the causes of homelessness.
- At the prestigious Milken conference, where billionaires and multi-millionaires trade ideas in Beverly Hills, several panelists warned of the dangers of ignoring the threat of the growing wealth divide.
- “If you have no capital, why be a capitalist?”
- Read more stories like this on the Business Insider homepage.
Billionaire Marc Benioff recently put his vast wealth to work on a cause that is plaguing his hometown of San Francisco, donating $US30 million to the University of California-San Francisco to study the causes of homelessness.
The city has experienced a boom in wealth thanks to the massive tech companies that are headquartered there yet homelessness has skyrocketed as rents continue to climb, leaving an estimated 7,500 people in the city without a home.
While Benioff said in a statement that he hopes to find “a North Star for truth on homelessness,” the underlying question is what if billionaires, and the system that allowed Benioff and his peers to accumulate this wealth, are the true reason for the US’s staggering levels of wealth inequality.
With income inequality rising to the same levels as the Gilded Age of the 1920s, which was of course followed by the Great Depression, even billionaires are sounding the alarm on the possible side effects coming from when so few people control so much wealth. According to a recent paper by University of California-Berkeley professor Gabriel Zucman, the top 1% in the country own 40% of the country’s wealth.
“I think the American dream is lost,” said Bridgewater Associates founder and billionaire Ray Dalio on a recent CBS broadcast. Dalio, who was the highest-grossing hedge fund manager in 2018, pulling in $US2 billion in total compensation, and JPMorgan Chase CEO Jamie Dimon have said populism and a trend toward more extreme political stances are inevitable results of this inequality.
At the star-studded Milken Conference in Beverly Hills, there was a growing sense of concern over the rise of populist politicians pushing agendas on the left.
“If you have no capital, why be a capitalist?” asked Sir Micheal Hintze, a billionaire and founder of London-based hedge fund CQS, during the conference.
One attendee, Guggenheim Partners’ Alan Schwartz, said “what’s really coming is class warfare.”
The rise of Democratic Socialism is marked by the popularity of freshman congresswoman Alexandra Ocasio-Cortez from New York, who unseated long-time incumbent Joe Crawley in a primary with a message of changing the system entirely. She has made waves pushing for a Green New Deal in Congress, and several candidates running for the Democratic nomination for President have pitched wealth taxes to soak the super-rich.
“I don’t want to be a tone deaf CEO; while the company is doing fine, it is absolutely obvious that a big chunk of [people] have been left behind,” Dimon said at an event in March unveiling a new $US350 million program by the bank to help people in underserved communities get jobs.
While President Donald Trump rode the support of people struggling to make ends meet to the White House, his policies have only been exacerbated the divide between the haves and the have-nots, experts say, with his tax reform being the primary point of contention. Major corporations like Dimon’s have used the savings they have gotten from the tax bill not to pay workers’ higher salaries or create new branches, but to buy back stock, boosting their share prices and helping the minority of the American population that is invested in the stock market.
No billionaire is calling for a regime change yet. The biggest cheers at Milken reportedly came when a video of former British prime minister Margaret Thatcher played, where she said “to be free, you must be a capitalist.”
In fact, the 44% of millennials that would prefer to live in a socialist country are “people who don’t know history,” according to Citadel founder and billionaire Ken Griffin, who purchased the most expensive apartment sold in American history earlier this year.
His comment led to some on Twitter to question Griffin’s selective knowledge of history, put succinctly by New York Times contributor and best-selling author Diana Henriques.
“Plutocrats who sputter about class warfare without addressing inequality need to brush up on the 1920s.”
And plutocrats who sputter about class warfare without addressing inequality need to brush up on the 1920s. https://t.co/HgC6nelR4v
— Diana B. Henriques (@dianabhenriques) May 3, 2019
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