What about Paul Tudor Jones himself? We don't hesitate to trash bankers and hedge funders, and there are plenty of them who deserve it. (See Robespierre of the Hedge Fund Revolution or any of our Jamie Dimon pieces.) But as hedge fund managers go, Jones seems to be one of the smarter ones.
As hedge fund managers go, that is ... Jones' apparent talent doesn't change the fact that, based on current incentives, today's hedge fund industry is unethical by design. We remain unconvinced that hedge funds as they're currently structured are anything except economically and socially destructive.
That said, Jones the Trader seems to be an intelligent and effective business person. Jones the Political Donor is straight GOP, all the way, but that's not surprising. And Jones the Philanthropist seems to be well-intentioned enough. He deserves a lot of praise for devoting so much time and energy to good works.
So far, so good.
You Are What You Measure
Even Pelley's misguided "hardnosed" comment has a kernel of truth to it. There are new and smart initiatives which seek to apply better metrics to philanthropy. They're sometimes called "SROI" (for "Social Return on Investment"). But, as in business, the value of your measurements is determined by what you choose to measure. Those are the decisions which reflect your values. "Applying business metrics" is a meaningless notion in philanthropy, since profit - the proverbial "bottom line" -- is always paramount in business.
Profits are relatively easy to measure, compared to questions like: How many kids did we feed this year? Would they have eaten otherwise? Could we have fed more kids, and more needy kids, with different foods? Different advertising? A different location? There are thousands of questions like these for each charitable venture.
60 Minutes told us that Jones and his Board like to do a lot of measuring, but they didn't tell us how. The entire issue was glossed over after Jones said "we probably de-fund 5 percent to 10 percent of our grantees." There's nothing wrong with that percentage -- it's reasonable and, if anything, on the low side -- but the important question was, "How do you decide?" Instead we're treated to the sight of a starry-eyed Pelley repeating with slack-jawed admiration: "You do that to 5 percent to 10 percent of your projects every year?"
We weren't told which projects are de-funded or why. Instead the very idea is treated as a novel concept, as if the ordinary concept of withdrawing support for less effective programs is some new visionary breakthrough from the "hardnosed geniuses" of Wall Street.
Government measures its results, and so do independent economists and researchers. Did Paul Tudor Jones and his people find better ways to measure social services? There's no way to know, because 60 Minutes didn't tell us. Apparently it was too dazzled to even ask.
The Unasked Question
About the question we asked earlier: Why would New York City need to rely on the generosity of billionaires? Pelley poses it in typically breathless fashion:
"Paul Tudor Jones wonders that if billionaires, like him, are such geniuses, then why do nearly two million people live in poverty [2] in New York City alone?"[3]
We'll skip lightly over the "geniuses" remark [4] to offer a better answer to that question than Jones and Pelley provide: One of the reasons is because hedge fund billionaires like Paul Tudor Jones don't pay enough in taxes.
Paul Tudor Jones, Charity Recipient
When it comes to taxation, Paul Tudor Jones isn't a philanthropist. He's their beneficiary of everyone else's generosity. Let's do the math. Rather than a invade Jones' privacy, we'll run some rough estimates instead [5] for illustrative purposes: What if there had been no hedge fund loophole for people like Paul Tudor Jones and he had paid Obama's top tax rate of 39.5 percent? Our hypothetical Jones would have paid an additional $1 billion in taxes. That's nearly as much as all the donors to the "Robin Hood Foundation," including Jones, have given in its entire history.
If the top rate were raised to 70 percent, as it was when Ronald Reagan took over, our presumptive Jones would have paid roughly $2.3 billion in additional taxes, nearly doubling the "Robin Hood" figure.
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