Billionaire investor Ray Dalio on capitalism’s crisis: The world is going to change in shocking ways

davfor

Ray Dalio certainly is no radical idealist, but in his frequent writings and media appearances the veteran investor consistently calls for Americans to rewrite their longstanding contract with capitalism so that it is fairer and more generous to more people.

Otherwise, he predicts, life in the U.S. could become more difficult: mountainous debt that stunts economic growth; fewer opportunities for ordinary citizens to get ahead financially; and a worldwide lack of trust in the U.S. dollar that diminishes Americans’ purchasing power and could lower their standard of living.

https://marketwatch.com/story/billionaire-investor-ray-dalio-on-capitalisms-crisis-the-world-is-going-to-change-in-shocking-ways-in-the-next-five-years-2020-09-17?siteid=yhoof2&yptr=yahoo

Sven

You beat me to it. I read the article last night and still ponder on it.

Ray has money in the game unlike others. His argument is well supported, particularly with the debt US is facing today.

davfor

Just a little related background info regarding his thinking about MMT...

Bridgewater Associates founder Ray Dalio says the coming of Modern Monetary Theory is “inevitable” to address wealth disparity in the U.S.

https://cnbc.com/2019/05/02/ray-dalio-says-the-coming-of-modern-monetary-theory-favored-by-far-left-is-inevitable.html

rono

Howdy folks,

You beat me three it. Good article and much food for thought.

You cannot have viable capitalism without competition. Handicapping a percentage of your population with either inadequate health care or education is not competitive but is a rigged game. In addition, it makes us less competitive internationally to the extent we have to import educated workers. This isn't capitalism but a form of neo feudal economic slavery.

and so it goes,

peace and wear the damn mask,

rono

Crash

rono +1.

Old_Joe

Dalio nailed it.

davidrmoran

This partly speaks to that and would seem to entail EM effects:

https://www.imf.org/external/pubs/ft/fandd/2020/09/debt-pandemic-reinhart-rogoff-bulow-trebesch.htm

Gary1952

davfor said:

Ray Dalio certainly is no radical idealist, but in his frequent writings and media appearances the veteran investor consistently calls for Americans to rewrite their longstanding contract with capitalism so that it is fairer and more generous to more people.

Otherwise, he predicts, life in the U.S. could become more difficult: mountainous debt that stunts economic growth; fewer opportunities for ordinary citizens to get ahead financially; and a worldwide lack of trust in the U.S. dollar that diminishes Americans’ purchasing power and could lower their standard of living.

https://marketwatch.com/story/billionaire-investor-ray-dalio-on-capitalisms-crisis-the-world-is-going-to-change-in-shocking-ways-in-the-next-five-years-2020-09-17?siteid=yhoof2&yptr=yahoo

So exactly how is changing capitalism to be "fairer" going to control "mountainous debt that stunts economic growth? The government will always overspend. Think that can be wished away? It is always funny to see the rich, once they have made it, to get religion.

But thank goodness that we have a President doing something about "our competitive advantage" Dalio is so worried about.

FD1000

Dalio:What’s going on is an economic downturn together with a large wealth gap and the rising power of China challenging the existing power of the United States.

The world is more global which means efficiency. If you are educated in STEM you are likely to make more no matter what country. American capitalism always took it to the extreme and high tech founders got very rich. I agree but I don’t know how to solve it. In the 80” CEOs were making about 30 times their average employees and now they make 250-300 times. These top managers are part of the board of directors and help each other without shame. This is why Toyota upper managers make much less than GM,Ford,Chrysler while Toyota is a better and more profitable.
Raising taxes by a lot on the rich will not solve the big problems, see Europe.
China is the big offender stealing secrets from the west. Let me know if you have a great solution.
BTW Dalio, in order to close the gap why not send billions to the IRS, after all, government know how to spend money very wisely.

Dalio:It’s a fact that there has been a weakening of the competitive advantages of the United States over the last couple of decades. For example, the United States lost a lot of the education advantage relative to other countries, our share of world GDP is reduced, the wealth gap has increased which has contributed to our political and social polarization

The world got smarter and many learned it here in the US where you can find great Master and PHD degrees but our elementary+high school deteriorated. It's time to take the power from the teachers' union, pay better teachers more, fire the bad ones and open other competing schools and let the parents decide.
Another idea is to encourage technical skills such as welding, AC, mechanics where you can get paid pretty well without a university degree.
To encourage more technical skills universities should charge lower tuition for STEM.

Dalio:But we haven’t lost all of our competitive advantages. For example in innovation and technology, the United States is still the strongest, but China is coming on very strong and at existing rates will surpass the United States. Militarily, the U.S. is stronger but China also has come on very strong and is probably stronger in the waters close to China that include Taiwan and other disputed areas. Finances for both countries are challenging, but for the U.S. more so.
….If the U.S. loses that ability and it doesn’t force itself to be more productive, one day it will lose that ability to borrow and then will have to cut spending, which is painful.

Again Dalio, I’m looking for great solutions, we already know the problems. One example: US companies are very productive, the first thing companies do is cut their employees + move jobs overseas, that increase profits and their salary and bonus. Let me know the solution.