It is not everyday when a member of the ruling class comes out in the public limelight to sound the alarm over serious economic issues. Even more of a rarity is seeing a member of the upper crust interacting with and discussing policy initiatives among the common folk.
But that is what Ray Dalio, the billionaire hedge fund executive and richest resident of my state of Connecticut, recently made headlines for.
An otherwise private individual most known for the immense fortune he made through his Bridgewater Associates firm located in the exclusive Fairfield County town of Westport, Dalio is both a notable example of the traditional American Dream story and a diamond-in-the-rough-kind-of-guy with a heart for the “little people.”
At least that’s the impression I had of him after watching an interesting interview aired by 60 Minutes.
During the segment Dalio pointed out many of the damaging aspects of our current economic system where, increasingly, according to him, the chasm between the rich and poor only continues to grow. His most memorable statement – what no mainstream politician or news outlet seems to want to seriously talk about – was that, if elected president, he would declare income inequality a “national emergency.”
Below follow some excerpts from this interview along with some of my commentary on the things that were not stated and/or that require some more consideration.
“Over the span of a decade America’s Lowest paid workers had just a 14% chance of rising to the middle class”: Per the narrator, among other humbling stats, Dalio wrestles with the reality that the middle class is simply no longer rising in America. Even for those in the middle class, staying there or rising for that matter is another thing entirely. Other studies have been done showing how 6 out of 10 people don’t have $500.00 in their savings accounts. Homelessness is becoming more common, with so-called tent cities sprouting up, among other things. I got the impression that Dalio’s middle class background – his dad was a Jazz musician, his mother a homemaker – is what motivates him to explore and comment on these issues. Perhaps he still can’t believe that he has made such a fortune. But while I appreciate his candid and spot-on analysis of the problem, I am not too sure about his ability to confront and challenge the underlying causes of the economic inequality he so decries.
“If you look at history if you have– a group of people who have very different economic conditions — and you have an economic downturn, you have conflict….I’m saying that right now – it’s a huge issue it’s unfair and, at the same time, it’s unproductive, and at the same time it’s– threatens to split us:”: Is this a prophetic foretelling of what is to come to a country whose leadership class has largely abandoned working class people? Both political parties have essentially merged into one dominant elite class that mostly maintains the political, economic, and educational status quo. Just what may happen when the economic structure of our country shifts permanently into the digital global tech age, when corporate mergers and takeovers increasingly becomes the norm among the Big Boys, and when the less equipped non-connected regular American Joes get of working age and find themselves in a world without the skills and competencies to compete in such a drastically different era?
In true apocalyptic fashion, sometimes I honestly wonder: are we on the verge of another economic meltdown? Now, granted, this is a worst-case scenario. I am tempted to believe that if there is going to be any “split” it will be among the increasingly tribe-like makeup of America’s social groupings, the seemingly endless “us vs. them” political cultural war where nobody seems to be able to get along or agree on anything. Either way, it is dire times for everyone involved, economically well-off or not.
“Capitalism needs to be reformed. It doesn’t need to be abandoned”: Yes, it does need to be reformed, not abandoned. I’m not sure what Dalio meant when he talked about opportunity not being distributed but what I get out of it is ACCESS needs to be created. Capitalism to me is synonymous with freedom, without which no society can function effectively. In matters of economics, too much or too little freedom results in abuse one way or the other. That is why I am a big believer in local small independent business owners and the historic apprenticeship model for economic opportunity and expansion. The government should incentivize such an economic arrangement, encouraging local business owners to employ and mentor the next generation of young men and women, especially in economically depressed areas. While much of the minimum wage argument is framed in moral terms (strangely enough, among NONWAGE WORKERS), what good is to get a higher wage for the impersonal mostly dead end corporation which asks for one repetitive skill when landing a gig with far more potential and promise is what, in the long term, opens up more doors of opportunity? Just my opinion.
Speaking of which…
No Talk on Wages and Stagnation is Worrisome Given Both His Wage Background and Present Rich Investment Standing: For a gentleman – and he definitely came off as one, more the kind-hearted grandpa type, less the ruthless Wolf of Wall Street type – accustomed to the world of big money hedge funds, high-stakes investments in the billions, for him to not give any insight into the nature of money-making seems a bit insincere. Think about it: if his humble economic origins are any indication, he likely didn’t grow up with the proverbial silver spoon in a gated community. His dad labored as a musician and, correspondingly, earned his fair wage. Just how Dalio catapulted into billionaire hedge fund executive status without being introduced, let along groomed, for such a world is an interesting phenomenon worth exploring.
How does one undergo such a radical economic and social transformation? For now, though, the question remains: why would he not comment on the increasingly smaller number of Americans capable of making a solid living as wage laborers? Has he not noticed that his “new money,” including his own fortune, was the product of stock market speculation and high stakes deals.
The epitome of the high-powered investment, dividend, and capital gains self-made man – has he not come to terms with the reality that there has been for the past several decades a fundamental reshaping of the American economic order from largely wage-earning to the aforementioned investment-business-corporate monopolization? He ought to read the classic Money and Class in America by Lewis Lapham, himself from a moneyed family.
As an aside: it is interesting to note that Dalio’s wife, Barbara, is a descendant of Gertrude Vanderbilt Whitney. Gertrude, belonging to the prominent Vanderbilt family, married into another rich and prominent family, the Whitneys. Nothing new there, I guess. Old money marries into old money. As Dalio’s life apparently proves, new money can marry into old money. Even “no money” can marry into new money. Think of the many wealthy athletes that marry their hometown girlfriends. However, as any rigid class system will no doubt demonstrate, it still seems to be the case that “no money” cannot marry into old money.
One more aside: when looking into the historical origins of the modern industrial-based schooling system one finds that the major architects of it were the moneyed industrialists of the time – the Vanderbilts among them. I think it’s interesting that Dalio’s wife is a big proponent of reforming the Connecticut public school system, of which Dalio is a product (in NY). The Dalio’s, under their Dalio Foundation, recently pledged to donate $100 million to Connecticut public schools. No specific policies have been mentioned. In fact, his ambitious pledge apparently will fall under the broader new Partnership for Connecticut which involves legislative leaders and a 13-member board of directors and, which, according to a recent Hartford Courant article, “will not be subject to the state’s freedom of information and ethics laws.”
Legend has it Dalio purchased his first stock at 12, with money he earned as a golf caddy. This is a perfect illustration of real-world education at work. While Dalio has middle class roots he must have been getting “schooled” on how money works from an early age and I would imagine outside of the classroom. Even as a graduate of the elite Harvard business school, I would argue that the vast majority of his business success was forged out of the classroom – as any self-taught, self-made entrepreneur can attest to. Dalio buying his first stock at 12 is the athletic equivalent of Lebron James picking up a basketball to play as a young boy, the Williams sisters playing tennis as teens at the direction of their self-taught father (he reportedly learned the game through reading books).
Indeed, what was true for Dalio and remains true for many brilliant young athletes should be true for young students everywhere: young people need access to unique opportunities, caring mentor figures, and character-forming life experiences. None of these require complicated bureaucratized top-down school systems with yearly expenditures in the millions. It starts with recognizing the knowledge and socialization gap currently depriving many of the same types of students that Dalio is now looking to help. While his public involvement is admirable, I hope he knows this and acts accordingly.
While several billionaires – among them Bezos and Branson – have their sights set on conquering outer space, Dalio is bucking that trend and blazing a new trail through deep sea discovery. Ocean exploration is his thing – and, so far, he has had some interesting successes (watch the interview to know what I am talking about). During the interview, Dalio travels deeper and deeper into the sea floor eventually arriving to more empty and barren surroundings. As the interview makes clear for the viewer, the lifeless, colorless environment becomes a living metaphor for what’s happened to economic opportunity and mobility: little to none seems to exist. Dalio acknowledges that something is “out of balance.” So far his public appearances, bold assertions, and philanthropic giving have proven this to be true. This national emergency is no easy thing to combat.