Robert Johnson Says America’s Income Inequality Calls Nation Into Question

Out of the box thinking from a finance legend
Valentin Schmid

On the face of it, Robert Johnson’s career looks like the stereotypical case of somebody who has made it in finance.

Having been educated at the country’s elite schools of Harvard and MIT, having worked as a managing director at George Soros’s Quantum Fund in the 1990s, and having held a prominent role in Washington, his résumé could not be more established.

However, Johnson never took his achievements for granted and always kept pushing further, looking for the real reasons behind the facades of modern finance and politics. 

As a result, he has produced an Oscar-winning documentary exposing torture practices within the U.S. military (”Taxi to the Dark Side“). He also founded and heads the nonprofit organization Institute for New Economic Thinking (INET), with which he managed to step outside the box of partisan politics and economic theory to find some pragmatic solutions for our future problems.

Epoch Times spoke to Johnson about China’s new role in the world as well as domestic challenges and America’s income inequality. Expect the unexpected.   

Robert Johnson, president of the Institute of New Economic Thinking (INET).
Robert Johnson, president of the Institute of New Economic Thinking (INET).

Epoch Times: We just recently talked about China in depth. How do you see the United States economically and politically?

Robert Johnson: It sputters a bit but we are seeing steady employment growth, moving back toward a more fully employed economy. It’s been a long time since 2008 though.

I think whenever you have many people working and you want to make structural change if you can always get a job in a new area, the transitions become less painful. To make transitions in a slump it’s very stressful, so I think the United States is moving towards a healthier place in that regard.

Epoch Times: What problems are we facing today?

Mr. Johnson:  Where I think America is very troubled is that the extreme concentration of wealth and income inequality are calling into question whether we are a nation.

I saw a poster the other day ... and I don’t know if it’s true. But it says that eight people (six people from the Walton family and the two Koch brothers) have the same net worth as 44 percent of the American population. I can’t vouch for the accuracy of the numbers.

But if it is really that concentrated, how can our politics be representative of the people unless we can make marked reforms in reducing the role of money in electoral politics—at the state and local level, at the federal level, and at the level of the executive, meaning the presidency.

This billion dollars you need to run for president is almost a mockery of the notion of votes. Concentrated wealth being spent is making voter participation much more difficult. This is contrary to the principles of democracy. This is eating at the soul of many American people.

Epoch Times: Tell us about your perception of the wealthy people in America today.

Mr. Johnson: When I was in Davos [World Economic Forum] this year I made a comment that was quite inflammatory. It was on Twitter and everything. I was watching the wealthy hedge fund managers—many of whom are my friends and former colleagues—and neighbors buying things like farmland in New Zealand and building airstrips so they can have an escape.

Wealthy people know how to escape the clutches of the government. They can move their company offshore; they can move their money offshore. They can protect themselves through lobbying and paying congressmen to stop legislation that would impose a burden on them. But almost nobody who is wealthy thinks that they can get the government to adopt a design that we can all subscribe to.

So there is a feeling we are all out of control. We are all trying to get the money and the food into our lifeboat to get off a ship. That’s a dangerous notion. What we need is our business leaders and our wealthy individuals to become stewards; to make a better society for everyone. I think America is facing a very big challenge related to this concentration of income and wealth.

Epoch Times: What can be done?

Mr. Johnson: School systems have to be strengthened. The quality of education cannot become a private decision. You or I as investors in our own economic future, we have to be educated beyond that. We have to be educated to be citizens for this republic to gain strength. Wealthy people have to take the initiative or we will wither and other people will surpass us.

It’s almost like a systemic ideology that legitimized the concentration of wealth. And the corruption of institutions, money, and politics sits at the center of control but it’s a dysfunctional control.

It’s a control of outcomes that’s incapable of controlling and putting us on a new trajectory. Fear of social violence will lead to migration outward, or it will lead to wealthy people embracing the stewardship again and acting in a way that is more holistic. I see signs of both.

Epoch Times: Regarding stewardship, you have been very active regarding this matter with the Institute of New Economic Thinking.

Mr. Johnson: The institute started as a concept right in the aftermath of the TARP legislation [the $700 billion bank bailout of 2008]. People referred to financiers who had said, “You can’t afford more health care; you can’t afford more for your schools; you can’t afford more infrastructure.”

And then the financiers snapped a finger and said: “Give us $700 billion, we made a mistake” and they got it in two-weeks’ time. When you get to that place and the ideology of finance, pre-eminence disintegrates and the resentment ensues, there is a void.

The institute was formed to fill that void with sober, realistic, and humanistic alternatives to this mechanistic notion of finance that had preceded it. It’s a lot of work, it’s a lot of changing habits, it’s a lot of examining the structures that led to a false god; and it’s looking again at history and re-examining what people really need.

Models of radical uncertainty, meaning that the future is full of what Donald Rumsfeld called unknown unknowns, these financial dynamics are much more challenging to construct in a social system on. We are doing a lot of work in that area.

Epoch Times: What can the people in power do?

Mr. Johnson: When I speak to people in Washington, they all say the system isn’t producing the wanted results. Approval ratings of our Legislature and our president are relatively low. Washington is viewed as dysfunctional both within and by the American people.

I don’t think they are happy with it. I'd have to be somewhat more compassionate by saying that everyone would like to do well by doing good in life.

And if you have a family to feed and if you can’t do well then there is a problem. If you can do well without doing good, at least you are satisfying your family but something eats at you inside because you wish you could align doing well with doing good.

Many people in Washington are suffering this divided state. I think so are many people in lots of walks of life. A lot of financiers who I know had a very confident feeling 15 years ago. They now ask: Is this what I really was meant to do? Is this what I want my grandchildren to think about?

Epoch Times: What about you?

Mr. Johnson: I was involved in the British pound devaluation in 1992 as a partner of George Soros. Shortly thereafter, my father said to me, ‘Rob, when you visit Saint Peter, do you think he’ll care?’

I’m on the right path for what I need to do, but I never feel I can do enough. I feel an internal sense of frustration at the same time a desire to keep going.

Robert Johnson is the president of the Institute for New Economic Thinking and a senior fellow and director of the Global Finance Project for the Franklin and Eleanor Roosevelt Institute in New York. He had previously worked with George Soros as a managing director at the Quantum fund and chief economist of the U.S. Senate Banking Committee.  

The interview has been edited for brevity and clarity.


Valentin Schmid is a former business editor for the Epoch Times. His areas of expertise include global macroeconomic trends and financial markets, China, and Bitcoin. Before joining the paper in 2012, he worked as a portfolio manager for BNP Paribas in Amsterdam, London, Paris, and Hong Kong.
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