Inequality Poses Existential Threat, Revolution For U.S., Says Billionaire Hedge Fund Founder Ray Dalio

Inequality Poses Existential Threat, Revolution For U.S., Says Billionaire Hedge Fund Founder Ray Dalio

Ray Dalio
Ray Dalio attends the Forbes 100th Anniversary Gala at Pier Sixty on Tuesday, Sept. 19, 2017, in New York. (Photo by Andy Kropa/Invision/AP)

Ray Dalio thinks the leadership at the “top of the country” should be treating the wealth and income gap as a national emergency.

Outspoken in the past against the dangers of populism, Dalio published a new essay this week entitled “Why and How Capitalism Needs to Be Reformed.” In it, he warns, “…flaws in American capitalism have created destructive and self-reinforcing gaps in education, social mobility, assets and income — and the result could be another revolution.”

Dalio tackled health inequality, saying men from the lowest 20 percent of the income distribution can expect to live about 10 fewer years than men from the top 20 percent.

In addition to domestic conflict, the gap in income, wealth and opportunity threatens to undermine the U.S.’s strength relative to global competitors, Dalio said.

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He said he worries what will happen in the next economic downturn.

“Disparity in wealth, especially when accompanied by disparity in values, leads to increasing conflict and, in the government, that manifests itself in the form of populism of the left and populism of the right and often in revolutions of one sort or another,” he wrote. “For that reason, I am worried what the next economic downturn will be like, especially as central banks have limited ability to reverse it and we have so much political polarity and populism.”

The founder of Bridgewater Associates — the world’s biggest hedge fund firm, according to Forbes –Dalio has a net worth of $18.4 billion. He ranks as the No. 3 highest-earning hedge fund manager in 2019. He has given $768.9 million to philanthropic causes over his lifetime.

Here’s more on Dalio’s views of how populism could hasten revolution:

“I learned that populism arises when strong fighters/leaders of the right or of the left who are looking to fight and defeat the opposition come to power and escalate their conflict with the opposition, which typically galvanizes around comparably strong/fighting leaders … In the worst cases, this conflict causes economic problems (paralyzing strikes and demonstrations) and can even lead to moves from democratic leadership to autocratic leadership as happened in a number of countries in the 1930s … In the US, the ideological polarity is greater than it has ever been and the willingness to compromise is less than it’s ever been.”

Capitalism is producing outcomes that are so inconsistent with its goals, it needs to be reformed, Dalio said. He promised a Part 2 to his essay. Responses on Twitter ranged from humorous to scared, but mostly confirmed what Dalio said — about the polarity thing — including these:

  • Blame the “coddled cell phone generation … not capitalism”
  • Why trump is the president and you’re not.
  • #Blame the liberals