Traditionally, there are three ways to change income inequality, “by revolution, taxes or wars”, Paul Tudor Jones II recently told a TED audience. He thinks there is now a fourth, his new Just Capital index that will rate companies on how “justly” they treat employees, society and the environment.
Of course, Mr. Jones must realize that indexing companies based on their corporate social responsibility/sustainability performance is already a well-trod path for assessing corporate reputations; and socially responsible investing is a growing movement, with performance reportedly now on a par with conventional funds. But he comes at this with an original mission and point of departure. He told The New York Times that, “The wealth gap, that’s the single most important issue in this country … [Just Capital] could not only impact investors, it could impact consumers, it might impact the way companies hire, the way people go and work with companies; it will impact boardrooms, everything.”
Mr. Jones, according to The Times, “argues that income inequality is being driven by what he calls ‘shareholder hegemony’, the principle that companies first and foremost should satisfy investors. The solution is for companies to make social responsibility as important as profits and share price.”
Cynics may say, “good luck with that”.
But with Just Capital, Mr. Jones is allying with a few — but a growing number — of America’s top earners who are inveighing against the wealth gap and even endorsing reversal of tax loopholes that contribute to it. “Billionaires see a backlash coming”, says economist Sam Wilkin, author of “Wealth Secrets of the One Percent”, but he also opines that inequality is driven by a complex set of current macro economic forces.
In 2016, Mr. Jones’ new foundation will publish the results of a survey of 43,000 Americans to determine what people most valued in a company. It will rank the top 1,000 publicly traded companies. In that connection, “Americans want a seat at the table”, Mr. Jones said at his recent TED presentation.