Socialism is coming, leading to a violent world without the liberties enjoyed by capitalist societies due to income inequality, according to a number of speakers including money managers at the Milken Institute Global Conference in Beverly Hills, Calif.
The theme of the conference, "Driving Shared Prosperity," held April 27 to May 1, was income inequality. The income gap is growing and the disparity is driving people away from capitalism, the speakers said. A solution to income inequality repeated often at the conference is to tailor education to meet the challenges of an ever-changing industrial landscape.
"The main theme I would say is that America is a rich country but it is not prosperous," said David Hunt, president and CEO of PGIM Inc., Prudential Financial Inc.'s asset management unit, speaking on a panel on "Time of Transition ... The Investors' View."
"We need to get to why it feels that way to many of us. ... We need to get to the right diagnosis of the problem. I do think that income inequality, while important, is too narrow."
Income inequality is only one aspect. Over the past 30 years, the movement toward greater capitalism, relatively open trade and free capital has moved 2 billion people out of poverty around the planet, Mr. Hunt noted.
"From a full ... global perspective, inequality is getting better and better and better," as every year 165 million join the middle class and more people join the upper echelons, Mr. Hunt said. "But it doesn't feel that way in the developed markets," he added.
He attributed the malaise in the developed markets to a combination of income inequality and a loss of hope. People are losing hope because children will not be as well as off as their parents, the American economy has lost its dynamism with lower small business formation and there is an increase in the sense of vulnerability. He noted that 40% of adults in the U.S. cannot cover a $400 unexpected expense, quoting from the results of the Federal Reserve's Report on the Economic Well-Being of U.S. Households in 2017 released in May 2018.
Tom Finke, chairman and CEO of Charlotte-N.C.-based Barings LLC, who spoke on the same panel, said that industry, including financial services and health care, need to take the lead. "We have to be more aware of the inequity in incomes and the disruption that the secular changes in jobs and technology and training are occurring," he said. "In many respects, if we wait for the political systems to figure it out, we are going to only be falling further behind. Industries in financial services and health care and others need to lead this time, and we need to help society manage these changes."
Education is the key and there is a role for business to play in educating people with the skills such as data science that companies need, Mr. Finke said. Training can start at the primary school level to prepare youth "for the real world," he said. There is a need for companies to invest more money in education, he added.