Ray Dalio, Founder, Co-Chief Investment Officer & Co-Chairman, Bridgewater Associates on the Forum Stage during day two of Web Summit 2018 at the Altice Arena on November 7, 2018 in Lisbon, Portugal.

Ray Dalio, Founder, Co-Chief Investment Officer & Co-Chairman, Bridgewater Associates on the Forum Stage during day two of Web Summit 2018 at the Altice Arena on November 7, 2018 in Lisbon, Portugal.(Eoin Noonan /Web Summit via Getty Images/TNS)

Two hedge fund founders on Tuesday called for the reform of capitalism to combat economic inequality and stem political upheaval.

Before a crowd of about 200 at the Greenwich Economic Forum, a two-day alternative investment industry conference, Ray Dalio, founder of Bridgewater Associates, and Paul Tudor Jones, founder of Tudor Investment Corp., debated what ails the U.S. and how to fix it.

Dalio's blunt argument is that capitalism is no longer working. Jones says that part of the problem is that millions of people don't earn a living wage.

"We have not made capitalism work for the average person," Dalio said. "Capital stays where they like capitalism. And capitalism needs to be fixed. And if you don't fix it, you're going to have a revolution. And then you're also going to chase the capitalists awa y."

Unlike most hedge fund operators, Dalio has recently taken on a more public role. Gov. Ned Lamont, a Greenwich businessman, enlisted Dalio Philanthropies to pledge $100 million in a collaboration with the state to raise $300 million for youth and poor communities in Connecticut.

Lamont, speaking briefly at the forum, steered clear of the debate over the future of capitalism. He instead boosted the state, calling it the "hedge fund capital of America."

Connecticut is home to more than 400 private investment funds, managing more than $750 billion in assets, according to the Connecticut Hedge Fund Association.

The industry has had an occasionally testy relationship with the General Assembly's majority Democrats who have looked at high net worth hedge fund owners as a source of revenue as the state struggles to close budget deficits. In 2017, liberals proposed a 19% tax on hedge funds, drawing opposition from then-Gov. Dannel P. Malloy, a Democrat, and legislative Republicans. The proposal died.

Jones criticized evolving corporate practice that increasingly rewards shareholders over others, such as workers, communities and the environment. The percentage of corporate revenue earmarked for shareholders has increased markedly over the past decade or more in what he called "shareholder primacy."

"But now, it goes increasingly to the 1%," the result of a "natural unchecked movement" stemming from the belief that business is where one makes money, Jones said.

"We're never going to fix the social problems that address us today if we do not start in the workplace. And the easiest place to start is we have 6 million employees of public companies that today do not make a living wage, that live under the poverty line," Jones said.

Jones also said that an internal poll of his investment firm employees found that the stock market would plunge by 25% if Sen. Elizabeth Warren were elected president. Warren has made the growing economic equality a centerpiece of her campaign for president.

Jones' firm lists offices in Connecticut, New York, Florida, London, Singapore and Sydney. In 2017, Bloomberg reported that his investment firm had sold its Greenwich headquarters. Jones reportedly changed his residency to Florida.

The relocation bolstered the argument of businesses and Republicans who criticized Connecticut's economic development policy of the administration of then-Gov. Dannel P. Malloy, a Democrat.

Income and wealth inequality have become potent political issues, firing up the liberal base of the Democratic Party that's responded with populist and socialist proposals that would more directly involved the government in the economy. On the right, the Great Recession and slow recovery that followed helped fuel Donald Trump's 2016 presidential campaign, appealing to millions of Americans who lost their homes and well-paid jobs.

Jones, whose worth is set by Forbes as $5.1 billion, questioned corporate practice that pays dividends and buys back shares, which boosts the price of stock, benefiting investors.

"Is that really the American way? Is that fair?" he asked.

"How many employees do we have not making a living wage relative to what I am paying the CEO?" Jones said. "It's a legitimate, cultural, social, moral, ethical question to ask. And hopefully, we're going to start asking that in every damn boardroom."

Dalio said he doesn't think that will happen. "I think everybody has their own particular way of dealing with it. And so everybody sort of says, 'Do it this way, do it that way.'"

The wealth gap must be treated as a national emergency requiring a political solution that "increases the size of the pie and also divides the pie well," he said.

But Dalio said he doesn't believe that will happen.

"I think we're going to try to kill each other," he said.

Stephen Singer can be reached at ssinger@courant.com.

Visit The Hartford Courant (Hartford, Conn.) at www.courant.com

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