Income “insufficiency”, not inequality, is to blame for the widening gap between rich and poor, private equity titan Steve Schwarzman said on Thursday, becoming the latest billionaire to publicly worry about the issue.
The CEO of Blackstone and former Trump adviser outlined what he called a Marshall plan for the middle class on cable channel CNBC – referencing the US initiative that aided the rebuilding of western Europe after the second world war.
Schwarzman’s plan would eliminate taxes for teachers, introduce a higher minimum wage and more technical training for people who don’t go to college.
But Schwarzman, who Forbes estimates to be worth $13.7bn, seemed keen to avoid the term income inequality at a time when inequality, which has been growing markedly for more than 30 years, has become a hot political topic.
“What we have is less an issue of income inequality than income insufficiency for the bottom 50% of the society,” he said on CNBC’s Squawk Box.
“I look at this as a systemic problem. This is not anecdotal,” he said. “This is like, half of our society is severely disadvantaged. We can’t allow that to continue, so that means you need policy solutions.”
Schwarzman follows a bushel of other billionaires who have begun to publicly worry about the widening gap between rich and poor, often triggering widespread skepticism from figures less well off.
Last month Jamie Dimon, the head of JP Morgan, wrote: “It is absolutely obvious that a big chunk of [people] have been left behind. Forty percent of Americans make less than $15 an hour. Forty percent of Americans can’t afford a $400 bill, whether it’s medical or fixing their car. Fifteen percent of Americans make minimum wages, 70,000 die from opioids [annually].”
Dimon, estimated by Forbes to be worth $1.3bn, warned that socialism was not the answer, taking a swipe at Democrats including 2020 presidential candidate Bernie Sanders and New York congresswoman Alexandria Ocasio-Cortez, who have called for a socialist overhaul of the US, arguing it would lead to “stagnation, corruption and often worse”.
Schwarzman and Dimon’s worries have been echoed by other billionaires including investment guru Warren Buffet and hedge fund billionaire Ray Dalio, who has called income inequality a “national emergency”, pointing out that the percentage of children who grow up to earn more than their parents has fallen from 90% in 1970 to 50% today.