Paul Tudor Jones rolls out “JUST” ETF with Goldman Sachs in effort to ‘modernize capitalism’

Today, June 12, 2018, legendary macro investor Paul Tudor Jones did a commercial free interview on CNBC to promote tomorrow’s rollout of the new ETF “JUST”. Jones is someone I have followed for decades and is someone worthy of respect as he has built a multi-billion dollar fortune while privately preserving thousands of acres of land around the globe. Jones has long had the confidence of life and business strategist Tony Robbins and recently opened offices on Palm Beach, Florida.

“JUST” is based on backtesting the performance of socially responsible companies based on a nationwide poll of Americans to their definition of what it means for a company to be socially responsible. Based on that backtesting it is projected to outperform the Russell 1000 and the S&P 500. As one can imagine, there is a wide array of opinions about social investing and conscious capitalism.

First and foremost, there is nothing wrong with conscious capitalism and I personally would subscribe to many of its standards. Conscious capitalism is completely in tune with the base term of capitalism though some try and twist its true meaning. Before going further, I welcome JUST to the ETF stage so this is simply a brief examination of Jones’ interview and whether we need to “modernize capitalism.”

During the interview, Jones took issue with the Milton Friedman philosophy that the responsibility of a corporation is to return profits to its shareholders. Jones said, “When Milton Friedman said, that tax rates had just come from 91 percent to 70 and income inequality was one-fifth of what it is today. You can see how it was relevant at the time but fast forward to where we are today, it’s a different deal.”

I would argue that trying to redefine “capitalism” or “modernize” the word is an unneeded exercise. People need to understand what capitalism actually is as opposed to the distortions made by many. Capitalism is only the free voluntary exchange of value from one to another. That is it. There is no other valid definition. Where we run into the weeds is when we confuse cronyism and government force with capitalism. When a company uses government force or taxpayer money in the name of “economic development” to advance itself over its competition then that is NOT capitalism. When are corporate uses fraud and other deviant means to profit, then that is NOT capitalism.

An interesting fact not asked of Jones during the interview is that arguably the best investor alive today is Warren Buffett and he has long held through his Berkshire Hathaway (BRK) the same opinion of Friedman. Buffett holds that it is the duty of the corporation to profit well, compensate employees & stockholders, and through an employee’s personal income and investor’s profits of stock to donate to their preferred charity. It is not the corporation’s responsibility to be charitable, but to maximize profits. BRK and Buffett do not believe corporations should give charity directly but it is expected of their employees and shareholders to perform charity on their own terms.  So, while Buffett is personally the single most charitable man in America, one would be hard-pressed to find any meaningful charity from BRK. It is because BRK has grown to such a level that Buffett is able to personally be as charitable as he is.

It is important to bring up Buffett because he is mostly an equities investor as JUST will be as well, while Jones is more of a macro investor which extends far beyond equities. It will be interesting to see how JUST develops and performs over the coming years in its returns to investors and society as a whole. And by the way, although I hold Buffett in high esteem, he is not without his own flagrant crony capitalistic exploits.

Jones and Buffett do agree that the government is a horrible redistributor of capital and it is best to leave it to private business through voluntary exchange rather than forced government takings. Buffett has said, “The free market’s the best mechanism ever devised to put resources to their most efficient and productive use. … The government isn’t particularly good at that. But the market isn’t so good at making sure that the wealth that’s produced is being distributed fairly or wisely.” On the same issue of government redistribution, Jones said during the interview, “THAT’S THE WORST OF ALL OUTCOMES BECAUSE THAT’S THE WORST WAY TO REDISTRIBUTE INCOME.” Through JUST and his other causes, Jones is looking to redistribute wealth organically, outside the inefficiencies and force of government.

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Barack Obama furthers his efforts to divide American society by calling hard working Americans “lottery winners”

“And if we can’t ask from society’s lottery winners to just make that modest investment, then really this conversation is for show.” This is the statement from Barack Obama earlier this week (see below) when he furthered his attempt to divide the wealthy and the poor. Specifically, Obama was speaking about the wealthiest Americans; however, he fails to credit the hard work, integrity, risk and sacrifice many of those individuals endured to get where they are – whether hedge fund managers, real estate investors, business owners or technology company founders. Obama was not describing silver spooned inheritance driven Americans, he was describing America’s financiers — and his statement completely dismisses and discredits their hard work. The statement comes from forcing more wealthy Americans to pay more to subsidize the failing government school system.

Obama states in his comments, that he does not find the wealthy “evil” but does want the top 5 percent of Americans to pay more than the 50%+ in taxes than they are now. Utilizing government doublespeak he said about hedge fund managers, “I’m saying, that you’re a lower rate than a lot of folks who are making $300,000 per year. You pretty much have more than you will ever be able to use and more than your family will ever be able to use; there’s a fairness issue involved here.”

Obama’s statement implies the wealthiest Americans don’t work for the money they have earned Obama also should have mentioned that, from a global perspective, all Americans are lottery winners simply due to the country we were fortunate enough to be born — a capitalistic society that rewards hard work. Big time Obama supporter, Warren Buffett himself, has said, “I won the lottery the day I emerged from the womb by being in the United States instead of in some other country where my chances would have been way different.” Buffett also astutely states that being born in America will get you so far on its own — it is what you do with it that matters. He is a strong believer in hard work, integrity, hiring quality people and a strong sense of economics is what makes businesses successful. He does leave out a cozy relationship with the right people in Washington, D.C. as Buffett utilizes a healthy dose of crony capitalism for profit.

I wonder if Obama would call hedge fund manager Paul Tudor Jones a “lottery winner?” Jones is a major philanthropist and is the founder of  the Robin Hood Foundation. It does work the government will not do or better yet, cannot do. I do not need to wonder if Obama would call the Koch Brothers “lottery winners.” I believe he would, even though, through hard work, the brothers have transformed their father’s business into the second largest private corporation in America while donating hundreds of millions of their own money to quality charities. Would Obama call Wayne Huizenga a “lottery winner?”

The simple point is when Barack Obama makes statements like these, he ignores and trivializes the heroic efforts of the American business person. He ignores the tremendous number of hours people put into their businesses and the sacrifices they endure to succeed. The result of their success is job production, more money for taxes and more money for charities. Belittling these Americans is shameful as their contributions they have made to America has brought this country to be the leading financial center of the world.

Perhaps, a change to the tax system is in order to make it fairer for everyone. Perhaps the FairTax may be the best option for America and it would eliminate the tax argument of the rich versus the poor.

Barack Obama furthers his efforts to divide American society by calling hard working Americans "lottery winners"

“And if we can’t ask from society’s lottery winners to just make that modest investment, then really this conversation is for show.” This is the statement from Barack Obama earlier this week (see below) when he furthered his attempt to divide the wealthy and the poor. Specifically, Obama was speaking about the wealthiest Americans; however, he fails to credit the hard work, integrity, risk and sacrifice many of those individuals endured to get where they are – whether hedge fund managers, real estate investors, business owners or technology company founders. Obama was not describing silver spooned inheritance driven Americans, he was describing America’s financiers — and his statement completely dismisses and discredits their hard work. The statement comes from forcing more wealthy Americans to pay more to subsidize the failing government school system.

Obama states in his comments, that he does not find the wealthy “evil” but does want the top 5 percent of Americans to pay more than the 50%+ in taxes than they are now. Utilizing government doublespeak he said about hedge fund managers, “I’m saying, that you’re a lower rate than a lot of folks who are making $300,000 per year. You pretty much have more than you will ever be able to use and more than your family will ever be able to use; there’s a fairness issue involved here.”

Obama’s statement implies the wealthiest Americans don’t work for the money they have earned Obama also should have mentioned that, from a global perspective, all Americans are lottery winners simply due to the country we were fortunate enough to be born — a capitalistic society that rewards hard work. Big time Obama supporter, Warren Buffett himself, has said, “I won the lottery the day I emerged from the womb by being in the United States instead of in some other country where my chances would have been way different.” Buffett also astutely states that being born in America will get you so far on its own — it is what you do with it that matters. He is a strong believer in hard work, integrity, hiring quality people and a strong sense of economics is what makes businesses successful. He does leave out a cozy relationship with the right people in Washington, D.C. as Buffett utilizes a healthy dose of crony capitalism for profit.

I wonder if Obama would call hedge fund manager Paul Tudor Jones a “lottery winner?” Jones is a major philanthropist and is the founder of  the Robin Hood Foundation. It does work the government will not do or better yet, cannot do. I do not need to wonder if Obama would call the Koch Brothers “lottery winners.” I believe he would, even though, through hard work, the brothers have transformed their father’s business into the second largest private corporation in America while donating hundreds of millions of their own money to quality charities. Would Obama call Wayne Huizenga a “lottery winner?”

The simple point is when Barack Obama makes statements like these, he ignores and trivializes the heroic efforts of the American business person. He ignores the tremendous number of hours people put into their businesses and the sacrifices they endure to succeed. The result of their success is job production, more money for taxes and more money for charities. Belittling these Americans is shameful as their contributions they have made to America has brought this country to be the leading financial center of the world.

Perhaps, a change to the tax system is in order to make it fairer for everyone. Perhaps the FairTax may be the best option for America and it would eliminate the tax argument of the rich versus the poor.