'Zillionaires' warned: wake up, it won't last

Earlier this month, when the billionaire merchandising mogul Johann Rupert gave a speech at The Financial Times' "luxury summit" in Monaco, he sounded more like a Marxist theoretician than someone who made his fortune selling Cartier diamonds and Montblanc pens.

Appearing before a crowd of executives from Fendi and Ferrari, Rupert argued that it wasn't right – or even good business – for "the 0.1 per cent of the 0.1 per cent" to raid the world's spoils. "It's unfair, and it is not sustainable," he said.

I have a message for my fellow filthy rich ... Wake up, people. It won't last.

Nick Hanauer

For several years now, populist politicians and liberal intellectuals have been inveighing against income inequality, an issue that is gaining traction among the broader body politic, as shown by a recent New York Times/CBS News poll that found that nearly 60 per cent of US voters want their government to do more to reduce the gap between the rich and the poor. But in the last several months, this topic has been taken up by a different and unlikely group of advocates: a small but vocal band of billionaires.

Capital ideas

In March, for instance, Paul Tudor Jones II, the private-equity investor, gave a TED talk in which he proclaimed that the divide between the top 1 per cent in the United States and the remainder of the country "cannot and will not persist".

Jones, who is thought to be worth nearly $US5 billion, added that such divides have historically been resolved in one of three ways: taxes, wars or revolution.

A few months earlier, Jeff Greene, a billionaire real estate entrepreneur, suggested on CNBC that the super-rich should pay higher taxes in order to restore what he called "the inclusive economy that I grew up in".

And in June, Nick Hanauer, a tech billionaire from Seattle, wrote a blog post laying out the capitalist's case for a $US15 minimum wage. The post echoed sentiments that Hanauer made in a separate polemic he wrote last summer for Politico, in which he addressed himself directly to the planet's "zillionaires" and said: "I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won't last."

Who wants to be a billionaire?

What's going on here? Are all these anxious magnates really interested in leveling the playing field or are they simply paying lip service to a shift in the political winds? Or perhaps it's just a statistical blip, given that most of the world's 1800 billionaires are not exactly out at the barricades lifting pitchforks for economic change.

According to Chrystia Freeland, author of the 2012 book Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else, the phenomenon of the socially conscious billionaire is significant and good. "It is absolutely happening," Freeland said. "After my book came out, a few billionaires quietly got in touch with me to say that they agreed that the current system isn't working. It makes sense that the people who have benefited most from the economy have the greatest interest in making it sustainable."


Freeland, who is also a Liberal Party member of the Canadian Parliament, pointed to the so-called Conference on Inclusive Capitalism, organised in London last year by Lynn Forester de Rothschild, a member of the storied Rothschild banking clan. While the one-day event was derided by some as a nervous hedge against the threat of insurrection, the ostensible purpose of the gathering was to reorient the 1 per cent toward public-minded goods like long-term investing, environmental stewardship and the fate of the global working class.

Changing the conversation

Financiers like George Soros and Warren E. Buffett have trod this ground before to great attention, but now that other billionaires have been moved to join them, it has helped to change the conversation, said Darrell M. West, a scholar at the Brookings Institution and the author of Billionaires: Reflections on the Upper Crust.

"The messenger matters," West said. "When people of modest means complain about inequality, it usually gets written off as class warfare, but when billionaires complain, the problem is redefined" – in a helpful way, he added – "as basic fairness and economic sustainability."

This is not to say that the current crop of concerned tycoons is working purely out of altruistic motives. "There's been a major backlash against inequality," West said. "And some wealthy individuals have felt a pressure to address it."

Given the political groundswell for decreasing wealth disparity, West added, "There's a realization among the billionaire class that it's actually in their own self-interest to at least spread some of the wealth around."

Of course, it may be that some of these outspoken billionaires are not responding to politics so much as playing it themselves. "I'm not surprised to hear the wealthy saying these things, but talk is cheap," said Dennis Kelleher, the president of Better Markets, which advocates financial reform. "These people know exactly how to move the levers of power and, until that happens, whatever they say is nothing but empty words."

The haves and the have-nots

According to William D. Cohan, a former Wall Street banker who has written frequently about billionaires, if the investor class were truly interested in targeting unfairness, its members would try to alter the policies of the Federal Reserve, which tend to help the rich, or do away with inequity-inducing programs like tax incentives for hedge funds.

Cohan said that proposals like increasing the minimum wage, a popular rallying cry among those decrying income inequality, would have, at best, a minimal effect on reducing the rift between ordinary people and the 1 percent.

Most billionaires, he added, are apt to address inequality by donating portions of their fortunes, not by seeking systemic economic change. "Charity? Yes," Cohan said. "But leveling the playing field? No."

And yet the extremely wealthy do face an abiding risk from festering inequity: The have-nots might finally lose patience and turn upon the haves.

"That's the real danger," Cohan said. "This little thing called the French Revolution."