Warren Buffett isn’t the only billionaire who thinks Americans wealthiest don’t pay enough taxes.
Bill Gross, the famed Newport Beach billionaire bond investor who just retired from money management, agrees with the legendary stock investor that recent federal income tax cuts were a mistake.
“It’s just a giveaway to the rich,” said Gross in his trademark blunt style.
Bond traders, by their nature, are worry warts. The federal government and its ability to balance its own budget is a perpetual worry for bond traders who are concerned about how they’ll get paid back. And while the possibility of the U.S. government failing to pay off its bonds is incredibly remote, Gross doesn’t buy the logic that cutting taxes on the wealthy stimulates the economy enough to make it a “free” tax break.
” ‘Let them eat cake’ logic,” he says, referring to words of indifference to societal gaps that led to the French Revolution three centuries ago. “How’d that turn out?”
To Gross, the tax-cut debate is more than just figuring out how to pay the nation’s growing deficit. It’s an issue of fairness.
The growing gap between the nation’s wealthiest and everybody else is a huge problem for Gross. And he thinks the chasm will grow as employment is “out-teched” in many fields by innovation, including his own. Bond and stock management is financially challenged these days by investors’ willingness to accept the “average “returns of computer-powered investment funds that simply own the securities comprising key market indexes.
Gross, who’s joked he had to re-join the Republican Party to be in the good graces of his country club pals, sounds more like members of the Democratic Party’s progressive wing. He suggests some sort of guaranteed “permanent income” may be needed to provide for the masses if projections of the harsh job-cutting impacts of artificial intelligence and robotics come true.
“You’ve go to take care of these people,” he says. “It’s common sense.”
Gross says the challenge isn’t simply financial. What about people’s self-worth in a largely automated world? He imagines a life in which some giant company — say, an Amazon — would provide most basic needs.
“Would people be happy? I don’t think so,” he says.
Yes, technology will help with a major economic challenge — shrinking rates of global population growth that will prune the workforce. But innovation won’t cure a key long-term concern to Gross: falling demand for goods and services that demographic challenges will produce. Older folks don’t spend heavily, except on medical care. And when they die, they’re not being replaced.
“Capitalism thrives on growth and hope,” he says. “How does capitalism function in a world where the population is going down?”
Source: Orange County Register