Ray Dalio on how to rescue failing capitalism

The founder of Bridgewater Associates, Ray Dalio, fears that capitalism is so broken that it is abandoned or abandoned.

According to him, one or the other scenario would be detrimental to the country in the long run.

In a new LinkedIn article, Dalio badyzes how the US economy has let down the majority of its citizens and puts the current environment in a global perspective. He wrote that he had seen "capitalism evolve so that it does not work well for the majority of Americans, because it creates spirals that reinforce themselves for the haves and have-nots."

Even before he has access to the data, he says his American dream of moving from a middle-clbad education from Queens to the head of the world's largest hedge fund has been made possible by opportunities such as good schools. public loans and student loans. equal opportunities in education and employment.

"While most Americans think that the United States is a country with great mobility and economic prospects, its economic mobility rate is now one of the lowest in the developed world," he said. he writes. He explained that there are basically two Americas, the 40% the richest and the 60% the poorest. The first ones come out much better, and those at the highest level of wealth are as far apart as they have ever been.

Dalio listed why capitalism does not work as it should in the United States:

• There has been no real wage growth, adjusted for inflation, since 1980 for the majority of Americans.
• The income gap is virtually as high as it has ever been and the wealth gap is as high as in the late 1930s, before World War II World.
• Two-thirds of the remaining 60% have no economy and economic mobility has been declining for 40 years.
• About 17.5% of children live in poverty and, despite some outliers, the public education system in the United States is among the worst in the developed world.

Dalio said for two years that we risk repeating the biggest mistakes of the 1930s. He included including the rise of populism on both sides of the aisle as a threat to stability. "In addition to the negative social and economic consequences, the gap between incomes, wealth and opportunities leads to dangerous social and political divisions that threaten our fabric of cohesion and capitalism itself," he wrote in his report. last message.

He prescribed five steps to save the American capitalist system:

1. America needs leaders at the top who proclaim that the current state of inequality is nothing short of a national emergency.
2. A bipartite committee should work to develop new means of redistribution and community development.
3. These leaders must be held accountable for statistics that measure the progress of their reforms.
4. Resources must be redistributed in order to provide equal opportunities for the vast majority of Americans. This can be done by increasing taxes on the rich, taxing social nuisances such as pollution, and developing public-private partnerships that link business goals with societal goals.
5. Coordinate fiscal and monetary policy (that is, increase cooperation between the Federal Reserve, Congress and the White House).

"The problem is that capitalists generally do not know how to divide the pie and that the socialists do not know how to cultivate it well," wrote Dalio. He wants to avoid both the status quo and socialism, and he hopes that the elections in the United States and Europe that will take place over the next few years will lead to reformed capitalism.