The gap between rich and poor is getting larger, triggering more and more protests in the US. It could lead to a revolution, argues Paul Tudor Jones. Miriam Braun reports from New York.
Paul Tudor Jones is a popular hedge fund manager in the US. He rarely permits media interviews, but recently, he was one of the speakers at a TED conference. He had drastic words, comparing US society to an addict.
"The first step is to acknowledge we have a problem," he said. "This profits mania that we are in is so deeply entrenched, that we don't even realize how we are harming society."
'Revolution, higher taxes or war'
He is concerned about the gap between the wealthiest and the poorest. In the US - 1 percent of the population still accounts for 20 percent of overall income. By the end of the 1970s, it was just half as much. "That gap between the wealthiest and poorest, it will get closed," Jones said, adding that history always took care of it, "either through revolution, higher taxes or wars."
Jones himself is part of the 1 percent, his wealth adds up to $4.6 billion (4.07 billion euros) - most of it he was able to make because of a capitalist free-market system. But over the last few years, he showed himself often as being altruistic and willing to give. Either through his own foundations or other charities.
And,indeed, there have been more protest movements over the last few years in the US. It started in 2011 with "Occupy Wall Street," followed by the movement against student debt. Workers in the service industry are still fighting for a better minimum wage in many states, and even the riots and protests against racism and police brutality seem the most intense in low-income communities.
Decades of economic disinvestment
"Rioting gives the idea that it somehow lacks political sense or direction," says David Huyssen, professor for US history at Yale University in New Haven. But that is misleading in his view. "They are often times the result of decades of economic disinvestment and discrimination. And, more immediately, police brutality."
Martin Luther King once said "riots are the voice of the unheard." Throughout history, riots and protests often led to a revolution or political reshaping. Huyssen points out that the labor movement in the late 19th and early 20th century began with many of the same tactics.
"Destroying property, dynamiting mines, blowing up railroad tracks, for instance, in New York City. Famously in a set of strikes in 1916." Huyssen studied and wrote a book about the labor movements of that time. People forget, he claims, that that kind of violence was elementary to the labor movement back then. People were fighting for better wages and working conditions. "And, ultimately, they made their voices heard."
But since violence played a much more important role 100 years ago, David Huyssen does not believe that the US today is on the brink of another revolution. "Whether it is the living wage movement, the$15-an-hour minimum [wage] movement, Wal-Mart workers unionization movements, student anti-debt movements or the 'Black Lives Matter' campaigns," he says.
"There is a long way to go before those campaigns actually recognize their collective self-interest in opposition to a system that is actually at the back of almost all of their experiences of oppression and discrimination."
Hedge fund billionaire Jones wants companies to take over more responsibility and engage in charity. He founded a non-profit organization to figure out via polls on how that could be done.
At the same time, Jones has always been a financial supporter of the Republican Party, which is fighting against a substantial rise in the federal minimum wage. Even that belief looks familiar, having history in mind, Huyssen points out, calling it Philanthro-capitalism.
The idea was, he says, that men of great wealth or businesses of great wealth, should be empowered to make decisions about how money is redistributed in order to anesthetize political movements that could otherwise became chaotic or unruly.
"And when you think about it, this is a fundamentally anti-democratic idea of how to address the problem of income inequality," Huyssen says. Matched on the other side by a resistance to the idea of paying higher wages.
Philanthropy and charity won't cut it
The US has a long history of cultural and educational institutions being founded and financed by wealthy industrialists and other rich families, today as well as back in the 19th century.
"Throughout this whole period, which encompassed a period of quite significant generosity and charity, creating some great culture and artistic institutions of the United States which have survived to this day," Huyssen says, such as Carnegie Hall, the University of Chicago or Stanford University.
But the historian adds that throughout that period the wealthy continued getting wealthier than the working class. "If the ultimate end goal is to reduce income inequality, philanthropy and charity is not going to cut it," he says.
At least there is one other option Paul Tudor Jones quoted as one of the more unpleasant solutions to overcoming income inequality - higher taxes. The idea of taxing the rich more significantly has a number of supporters among economists, but not so many among lobbyists in Washington.
"There was this incredibly vicious, back-and-forth argument between Republicans and Democrats over the question of whether or not the top marginal tax rate should be raised by something like 3 percentage points, to 39 percent or thereabouts," Huyssen recalls.
"The kind of vitriol that comes out of this argument seems sort of absurd" he says, given that the top federal tax rate in the 1960s was much higher, at around 90 percent.