I have respect for successful managers like Dalio and Soros because you can’t reach their level of success while deluding yourself about how the world economy works. And anyone who has invested/speculated with a lot of their own money knows how emotionally hard it is to make the right decisions day in and day out. For that reason, when Dalio talks about the economy, it’s worth considering what he’s saying. Moreso than politicians or economists.
Another way to look at it... With thousands of people playing the game, some are bound to be the luckiest. It doesn't necessarily mean they have more insight.
I have stumbled upon a number of these types of texts recently and while I think it is generally a good thing I can't help noticing that they are quite... basic. Most of his concerns have been solved by mixed market economies, that overall deliver superior results. But even that discussion is probably a couple of decades too late.
The corporate tax cuts in the US led to a temporary stock market boom, while changing absolutely nothing in terms of underlying economic fundamentals. Those who benefited were those who already have money in a portfolio, which eliminates the majority of Americans.
Companies like Bridgewater gain when policy changes like this happen. Regular people lose because tax cuts are paid for by cutting public services, and pushing part of the cost on to the next generation.
What's Mr. Dalio doing to remedy that imbalance, aside from writing a self-serving Buffet-style "I should be taxed more" essay?
At least he's saying something. You can be cynical and argue he's just trying to get out ahead before the poor decide to eat the rich. But either way, the US needs more people with a platform to be saying this kind of stuff, whatever their motives are.
EDIT: I would also like to point out that he's calling for a national state of emergency to be declared and for the government to step in and try and do something about the worsening inequality problem. A person with massive personal wealth who is able to enact things with their own resources calling for the problem to be tackled in the public sphere is a good thing too, I think.
People who have already made their money love to call for this sort of thing. They're rich enough to be insulated from it; it hits those who might actually try to get rich in the future.
If you flip it around, it I think it's also entirely reasonable that many of these people only feel like they can criticize things after they've made their money. Or they know we wouldn't listen to them beforehand.
I'm not sure what you're criticizing but Dalio's post is explicitly about economic mobility, i.e. reducing barriers preventing more people from getting rich in the future.
What do you mean people who have already made their money love to call for this thing? The author is a billionaire who is is proposing for the wealthy to be taxed more, how is he insulated by paying more taxes? Those who want to get rich in the future might be helped by measures to create more income equality thus creating more social mobility. Equality doesn't mean everybody makes a same amount of money, but more like the ability for everyone to make more. When the mega rich own everything this is not possible.
Or perhaps, you dream of being mega rich yourself and want things to stay the way they are now so you can make it?
This is solved by taxing very high wealth, not just very high income.
> it hits those who might actually try to get rich in the future.
Not those who try, just those who actually get very rich. None of the current tax increase proposals target the wealth or income of even slightly rich people (low millions of net worth or low 100ks of income), just the very rich (> 50mil net worth).
That still leaves a ton of room for incentivizing getting rich below that number.
> it hits those who might actually try to get rich in the future.
How does it do that? These are just words. Dalio and his hand-wringing clique have no issue speaking platitudes about economic justice, and turning right around and lobbying politicians for more tax cuts, less regulation and fewer consumer protections.
How are you going to get rich in the future when real wages for consumers haven't budged in 4 decades? Do you plan on delivering a product people can actually afford, or simply engage in the financial chicanery that made the 2008 recession possible?
If we're going to err, we should err on the side of taking the guy at his word. He wants to raise taxes on himself to provide for better distribution of income and educational opportunity. Where's the problem with that?
Who was it that said no one in America is poor, they're just "temporarily embarrassed millionaires"? This comment is a pretty good representation of that sentiment.
People who are very rich usually want to be clubby with other people who are very rich. The super rich who talk in concrete ways about how to tackle the failures of capitalism are relatively rare.
So, if you're poor and criticise capitalism (or some particular implementation of it), you're just a sore loser, and if you're rich and criticise it, you're a hypocrite?
His fund's political donations don't align with what he's proposing[0]. His firm's largest 2018 donations were to Tom Cotton(R-AR) of AR and Tim Kane(R-OH), neither of whom would dare support these ideas.
He can stand up and talk like a leader, but until he's willing to financially back candidates who are genuinely interested in solving these problems (which likely means backing a candidate against his own financial interests), this is all hot air.
To be clear, what you are saying is incredibly disingenuous. The link you give shows that individuals and PACs associated with Bridgewater Associates gave $5,400 to Tom Cotton. That's not in millions or thousands. That's literally $5,400. Tom Cotton raised $17,454,785 in that election cycle.
And keep in mind that isn't even his firm giving the money. Also, giving more than $2,700 to a candidate is illegal anyway, so "financially backing a candidate" is kind of a nonsense standard to hold a person to.
Money in politics is a problem, to be sure, but one that is commonly overstated in this sort of light, and what you are saying here is that he should be giving more money, which is kind of the opposite of what we should be thinking of things.
The data you cite are rather misleading. Those are not contributions from his firm, Bridgewater. They are contributions from employees of Bridgewater. For Tom Cotton, from 2007 to present, the only donations were from two Bridgewater employees:
I think things are more complicated than what you've said. There may be good reasons to donate to a candidate who wouldn't support these ideas if that donation could nevertheless help sway their views on the issue. Opposition isn't the only strategy in politics. Sometimes you need to donate a nominal amount just to keep your foot in the door and the conversation open.
I actually think it would be great if people started donating to people on the other side of the political spectrum. Can you imagine if a large percentage of climate change interested donors flooded republican climate deniers with donations, became a large share of their campaign funds and sought to influence them rather than people that already agree?
I like to think of capitalism we have today like a football game where you can deflate the ball, punch the opponent, have 20 men on the field, etc. with a ref that turns a blind eye.
It's odd that we as a society get so riled up over the smallest allegation of cheating in a sports game or get upset when a ref does not see the smallest thing that should be flagged, thus potentially changing the outcome of the game, but we live in a society where cheating, gaming, deflating, etc. happens all day every day and we don't bat an eye.
This is structural. I'm reminded of what Matt Levine often says about insider trading rules: they are not about fairness, they are about theft. Apparently our legal system is better at protecting property than at fairness (which isn't even well defined).
Dalio seems to be aiming for the political center. Howard Schultz is doing the same thing. I wonder if Dalio is hoping for some sort of poltical appointment.
Dalio is now out with Part 2 ("My Diagnosis of Why Capitalism Is Now Not Working Well for the Majority of People", "What I Think Should Be Done", "Looking Ahead")
Crony Capitalism is failing America. Capitalism is succeeding the Globe.
It is responsible for the most prosperity, the lifting up of poverty, and improvement in living conditions and life expectancy in the history of literal history.
I hate how capitalism has become a political boogeyman now. Fortunately, it has actually served to unite some of the left-wing and right-wing thinkers and forge some unlikely alliances.
Probably completely off-topic, but having listened to many of his interviews, it's also one of the main reasons why Howard Schultz chose to run as an independent instead of a democrat.
My best interpretation is in impoverished nations, a key economic bottleneck is lack of sufficient capital to improve their economy. Capitalism works pretty well in that stage to improve everybody's lot. Economic growth in this stage is great, double digit growth or high single digits is common.
In more advanced nations, access to capital isn't an overall issue. However, economic growth is low single digits in a "good" year. And if you shift to other measures of people's security, as shown in Dalio's collection of data, the improvements are slowing or even reversing.
This isn't making capitalism a boogeyman. It's a serious criticism of a phenomena that we need to understand, or, as Dalio points out, we're in for a lot of serious chaos ahead.
Crony capitalism is capitalism. And capitalism hits poor countries harder then the U.S. doesn't it? I'd say people working in sweatshops have it worse then most poor Americans.
Regardless of your political opinion on Andrew Yang and his proposed policies, I think it is worth hearing him out on his (and many other's) perspective on modern capitalism.
The way our society define and value ourselves primarily on a couple of economic metrics seems misguided. These metrics are not representative of people's well being in our modern, more technological advanced society.
I think our definition of capitalism needs to evolve (like Andrew Yang says).
"The problem is that capitalists typically don't know how to divide the pie well and socialists typically don't know how to grow it well," Dalio wrote. He wants to avoid both the status quo and socialism, and he's hoping that the elections in both the US and Europe that happen over the next few years result in a reformed capitalism."
.
I really don't see how this could happen, but even if there's some kind of accommodation, it's simply a band-aid to the underlying problem.
Which is that the 'means of production' needs to be OWNED by the people producing. Not a corporate owner (or even an 'entrepreneur'), and not 'the state', but the collective that actually does the work, commensurate with their overall contribution.
There's also a huge issue around land ownership, and the rents that derive from it. Currently, simply owning land in a fast-developing city gives you a share in the bounty that others are creating, and also taxes those generating it.
Land itself is a common inheritance. Should air or water also be subject to such 'ownership'?
>Which is that the 'means of production' needs to be OWNED by the people producing. Not a corporate owner (or even an 'entrepreneur'), and not 'the state', but the collective that actually does the work, commensurate with their overall contribution.
You sound similar to an anarcho-syndicalist, which is a position I've never understood well. Let me ask a question in the form of example.
Bob, Ted, and Jim want to start a pin factory. All three want to work for it. So they pool their capital, contributing $250k, 300k, and 350k respectively, receiving proportional equity, invest in equipment, and all three go to work making pins after 2 months. They hire other workers. The contract for all workers gives a vesting schedule that gives them equity over time as well.
The fact that CAPEX has to be provided by employees is not a good feature of this. Should shareholders that have never held a job with the firm not be allowed to invest in it? That is exceedingly restrictive.
All complex organisms have some level of resource-intensive, executive control - civilizations are no different. Most people wouldn’t even know what to do with the means of production, other than in aggregate by buying stuff in a semi-free market with healthy regulations.
I would agree though that right now the brain is eating the fingers as it puts food in the mouth. But shooting the brain doesn’t fix the problem.
> Which is that the 'means of production' needs to be OWNED by the people producing
I would tend to agree except that it's an awful way to diversify risk and a comically bad way to allocate capital. Even if you were to exploit resources to their maximum, I'd give you at most two generations before you'd need to use force to keep the system working.
And this isn't a defence of capitalism, especially not modern US capitalism. That's pretty shitty too but it does scale and is mostly stable.
And while we're here. So water is a common inheritance and can't be owned. Water treatment is owned by the water treaters. There's no state or corporations to sub them. How do you get clean water given no-one is going to be stupid enough to starve to death as a water treater?
[+] [-] kaycebasques|7 years ago|reply
[+] [-] drjesusphd|7 years ago|reply
[+] [-] njepa|7 years ago|reply
[+] [-] JohnWilcox|7 years ago|reply
[deleted]
[+] [-] rchaud|7 years ago|reply
Companies like Bridgewater gain when policy changes like this happen. Regular people lose because tax cuts are paid for by cutting public services, and pushing part of the cost on to the next generation.
What's Mr. Dalio doing to remedy that imbalance, aside from writing a self-serving Buffet-style "I should be taxed more" essay?
[+] [-] samcday|7 years ago|reply
EDIT: I would also like to point out that he's calling for a national state of emergency to be declared and for the government to step in and try and do something about the worsening inequality problem. A person with massive personal wealth who is able to enact things with their own resources calling for the problem to be tackled in the public sphere is a good thing too, I think.
[+] [-] wefarrell|7 years ago|reply
[+] [-] mises|7 years ago|reply
[+] [-] iskippedlegday0|7 years ago|reply
I'm not sure what you're criticizing but Dalio's post is explicitly about economic mobility, i.e. reducing barriers preventing more people from getting rich in the future.
[+] [-] onemoresoop|7 years ago|reply
Or perhaps, you dream of being mega rich yourself and want things to stay the way they are now so you can make it?
[+] [-] i_am_proteus|7 years ago|reply
Does anyone know if there is a term for this? It's a bit reminiscent of 'regulatory capture' but that doesn't seem quite right.
[+] [-] danans|7 years ago|reply
This is solved by taxing very high wealth, not just very high income.
> it hits those who might actually try to get rich in the future.
Not those who try, just those who actually get very rich. None of the current tax increase proposals target the wealth or income of even slightly rich people (low millions of net worth or low 100ks of income), just the very rich (> 50mil net worth).
That still leaves a ton of room for incentivizing getting rich below that number.
[+] [-] brycesbeard|7 years ago|reply
IMO, calling for higher taxes is the same thing to do, rather than performing some sort of empty virtue signaling.
[+] [-] rchaud|7 years ago|reply
How does it do that? These are just words. Dalio and his hand-wringing clique have no issue speaking platitudes about economic justice, and turning right around and lobbying politicians for more tax cuts, less regulation and fewer consumer protections.
How are you going to get rich in the future when real wages for consumers haven't budged in 4 decades? Do you plan on delivering a product people can actually afford, or simply engage in the financial chicanery that made the 2008 recession possible?
[+] [-] bwanab|7 years ago|reply
[+] [-] empath75|7 years ago|reply
[+] [-] nategri|7 years ago|reply
[+] [-] chalst|7 years ago|reply
[+] [-] vkou|7 years ago|reply
[+] [-] chungleong|7 years ago|reply
[+] [-] almost_usual|7 years ago|reply
[+] [-] save_ferris|7 years ago|reply
He can stand up and talk like a leader, but until he's willing to financially back candidates who are genuinely interested in solving these problems (which likely means backing a candidate against his own financial interests), this is all hot air.
[0]: https://www.opensecrets.org/orgs/toprecips.php?id=D000032123...
[+] [-] andrewla|7 years ago|reply
And keep in mind that isn't even his firm giving the money. Also, giving more than $2,700 to a candidate is illegal anyway, so "financially backing a candidate" is kind of a nonsense standard to hold a person to.
Money in politics is a problem, to be sure, but one that is commonly overstated in this sort of light, and what you are saying here is that he should be giving more money, which is kind of the opposite of what we should be thinking of things.
[+] [-] greeneggs|7 years ago|reply
Mccormick, David Mr $13780
Halvey, John K Mr $7458
https://search.maplight.org/contributions/?candidate_name=Th...
Over the same time period, Dalio himself has given to:
John McCain $10200 Mitt Romney $2300 Rudolph Giuliani $2300
https://search.maplight.org/contributions/?donor_organizatio...
[+] [-] maxkwallace|7 years ago|reply
I think things are more complicated than what you've said. There may be good reasons to donate to a candidate who wouldn't support these ideas if that donation could nevertheless help sway their views on the issue. Opposition isn't the only strategy in politics. Sometimes you need to donate a nominal amount just to keep your foot in the door and the conversation open.
[+] [-] digitaltrees|7 years ago|reply
[+] [-] JohnWilcox|7 years ago|reply
[deleted]
[+] [-] carusooneliner|7 years ago|reply
[+] [-] onemoresoop|7 years ago|reply
[+] [-] temsk|7 years ago|reply
It's odd that we as a society get so riled up over the smallest allegation of cheating in a sports game or get upset when a ref does not see the smallest thing that should be flagged, thus potentially changing the outcome of the game, but we live in a society where cheating, gaming, deflating, etc. happens all day every day and we don't bat an eye.
[+] [-] skybrian|7 years ago|reply
[+] [-] StreamBright|7 years ago|reply
https://www.cambridge.org/core/journals/perspectives-on-poli...
[+] [-] RickJWagner|7 years ago|reply
[+] [-] kjw|7 years ago|reply
Here is the new LinkedIn post -- https://www.linkedin.com/pulse/why-how-capitalism-needs-refo...
And here is a link to PDF -- https://www.economicprinciples.org/downloads/Why-and-How-Cap...
[+] [-] jimmy1|7 years ago|reply
It is responsible for the most prosperity, the lifting up of poverty, and improvement in living conditions and life expectancy in the history of literal history.
I hate how capitalism has become a political boogeyman now. Fortunately, it has actually served to unite some of the left-wing and right-wing thinkers and forge some unlikely alliances.
Probably completely off-topic, but having listened to many of his interviews, it's also one of the main reasons why Howard Schultz chose to run as an independent instead of a democrat.
[+] [-] npongratz|7 years ago|reply
[+] [-] dv_dt|7 years ago|reply
In more advanced nations, access to capital isn't an overall issue. However, economic growth is low single digits in a "good" year. And if you shift to other measures of people's security, as shown in Dalio's collection of data, the improvements are slowing or even reversing.
This isn't making capitalism a boogeyman. It's a serious criticism of a phenomena that we need to understand, or, as Dalio points out, we're in for a lot of serious chaos ahead.
[+] [-] itsthewrongway|7 years ago|reply
[deleted]
[+] [-] chadwittman|7 years ago|reply
[+] [-] Miner49er|7 years ago|reply
[+] [-] daemonk|7 years ago|reply
The way our society define and value ourselves primarily on a couple of economic metrics seems misguided. These metrics are not representative of people's well being in our modern, more technological advanced society.
I think our definition of capitalism needs to evolve (like Andrew Yang says).
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] williesleg|7 years ago|reply
[deleted]
[+] [-] jacknews|7 years ago|reply
.
I really don't see how this could happen, but even if there's some kind of accommodation, it's simply a band-aid to the underlying problem.
Which is that the 'means of production' needs to be OWNED by the people producing. Not a corporate owner (or even an 'entrepreneur'), and not 'the state', but the collective that actually does the work, commensurate with their overall contribution.
There's also a huge issue around land ownership, and the rents that derive from it. Currently, simply owning land in a fast-developing city gives you a share in the bounty that others are creating, and also taxes those generating it.
Land itself is a common inheritance. Should air or water also be subject to such 'ownership'?
[+] [-] CompelTechnic|7 years ago|reply
You sound similar to an anarcho-syndicalist, which is a position I've never understood well. Let me ask a question in the form of example.
Bob, Ted, and Jim want to start a pin factory. All three want to work for it. So they pool their capital, contributing $250k, 300k, and 350k respectively, receiving proportional equity, invest in equipment, and all three go to work making pins after 2 months. They hire other workers. The contract for all workers gives a vesting schedule that gives them equity over time as well.
The fact that CAPEX has to be provided by employees is not a good feature of this. Should shareholders that have never held a job with the firm not be allowed to invest in it? That is exceedingly restrictive.
[+] [-] pesmhey|7 years ago|reply
I would agree though that right now the brain is eating the fingers as it puts food in the mouth. But shooting the brain doesn’t fix the problem.
[+] [-] squish78|7 years ago|reply
[+] [-] lucozade|7 years ago|reply
I would tend to agree except that it's an awful way to diversify risk and a comically bad way to allocate capital. Even if you were to exploit resources to their maximum, I'd give you at most two generations before you'd need to use force to keep the system working.
And this isn't a defence of capitalism, especially not modern US capitalism. That's pretty shitty too but it does scale and is mostly stable.
And while we're here. So water is a common inheritance and can't be owned. Water treatment is owned by the water treaters. There's no state or corporations to sub them. How do you get clean water given no-one is going to be stupid enough to starve to death as a water treater?