
Hedge-fund billionaire Ray Dalio says capitalism is failing America - howard941
https://www.businessinsider.com/ray-dalio-on-how-to-save-failing-capitalism-2019-4
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kaycebasques
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.

~~~
drjesusphd
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.

~~~
objektif
If you are in the industry you will realize that it is extremely difficult to
be consistently right. His success is not attributable to pure luck only.

~~~
sdenton4
If you have enough people guessing coin flips, one of them will be
consistently right... and then claim credit for how difficult it was. Just
look at all the people who failed!

Taleb is big on this idea applying widely in the finance sphere.

~~~
Chetane
For what it's worth, Taleb called Ray Dalio a "legendary investor" in his book
antifragile.

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rchaud
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?

~~~
samcday
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.

~~~
rchaud
When you're Ray Dalio, the standard for "doing something" is much higher than
writing a pithy blog post. We have seen many examples of rich people penning
mea culpas after profiting off of the same economic system they now claim as
being rigged against the commoners. Buffet does it at least once every couple
of years.

Because he's rich and influential, Dalio will get a few column inches, but
after that, the levers of power, pulled by the rich and influential, go about
their daily business.

~~~
ilaksh
He said he would donate $100 million to Connecticut schools. That might be
only 0.5% of his supposed net worth , but at least it something.

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mises
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.

~~~
onemoresoop
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?

~~~
mrfredward
There's an important nuance between income and wealth here. Income tax takes
money from the people who are still going to work to build their fortunes (and
those who are just getting by). The ones who have already made a fortune are
only worried about the capital gains rate.

Billionaires who advocate for higher income tax, but not a higher capital
gains rate, are just pulling up the ladder behind them. The article isn't
explicit with what Dalio is advocating for here.

~~~
dondawest
You’re adding an incredibly relevant layer of nuance. Dallio’s plan is vague
so his true intentions are illegible. People ascribing positive AND negative
sentiments to him need to actually understand the policy changes he’s
proposing (I.e. higher income rate vs capital gains rate) before passing
judgement — and since he specifically has left it vague, I don’t see how
anyone can judge his plan either positively or negatively: _he has not even
presented a specific plan!_

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save_ferris
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.

[0]:
[https://www.opensecrets.org/orgs/toprecips.php?id=D000032123...](https://www.opensecrets.org/orgs/toprecips.php?id=D000032123&cycle=A)

~~~
andrewla
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.

~~~
dmix
Plus people rarely back a candidate for single issues.

It's entirely possible that Ray Dalio has some views on the tax code reform
that may not align with mainstream republicans, but that doesn't mean the
other 90% of policies the _other politician_ supports align with his views. Or
even that the other camp has the same tax reform policies in mind as he does.

I've seen many people who want to reform the tax code, which would involve a
greater relative share of taxes for the top end, who wouldn't identify as
democrats.

~~~
dsfyu404ed
>Plus people rarely back a candidate for single issues.

Tell that to all the black gun owners who vote R because they don't want wake
up one day and find out they're felons or all the fiscal conservatives who
vote D because they believe healthcare and the climate are bigger short term
issues.

I generally agree with you that people back whoever pushes policy they like
most but people also have deal-breakers that will cause them to back the other
guy even if they don't like his platform.

~~~
heromal
You do realize that black people don't have to be democrats yet?

~~~
everdev
I think the point was that any cohort with a strong voting record for one
party will still have members that vote for another party based on a single
issue.

It's not unreasonable to think that someone might agree with the bulk of a
party's platform, but disagree on a single issue that's most important to them
and can't bring themselves to vote for anyone in that party because of it.

I can imagine guns, abortion, the military, taxes, etc. might fit that bill as
someone's single most important issue.

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carusooneliner
Recommend skipping the article with the clickbait title and instead read the
Dalio essay on which the article is based:
[https://www.linkedin.com/pulse/why-how-capitalism-needs-
refo...](https://www.linkedin.com/pulse/why-how-capitalism-needs-reformed-ray-
dalio)

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onemoresoop
here's the outline for Dalio article:
[https://outline.com/GHeFsV](https://outline.com/GHeFsV)

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temsk
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.

~~~
skybrian
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).

~~~
ineedasername
There's a great book on pretty much this topic in political philosophy, called
_Justice as Fairness_ by John Rawls. [0]

In the vein of this conversation, he does not argue against inequality, and
breaks out of the capitalism/communist spectrum. Instead he proposed the
strictures under which inequality should be allowed to persist in what he
calls the Difference Principle:

 _Social and economic inequalities should be arranged so that they are both
(a) to the greatest benefit of the least advantaged persons, and (b) attached
to offices and positions open to all under conditions of equality of
opportunity._

[0]
[https://en.wikipedia.org/wiki/Justice_as_Fairness:_A_Restate...](https://en.wikipedia.org/wiki/Justice_as_Fairness:_A_Restatement)

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StreamBright
More like, it is the US flavor of corporate controlled warmongering crony
capitalism that is failing.

[https://www.cambridge.org/core/journals/perspectives-on-
poli...](https://www.cambridge.org/core/journals/perspectives-on-
politics/article/testing-theories-of-american-politics-elites-interest-groups-
and-average-citizens/62327F513959D0A304D4893B382B992B)

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RickJWagner
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.

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kjw
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")

Here is the new LinkedIn post -- [https://www.linkedin.com/pulse/why-how-
capitalism-needs-refo...](https://www.linkedin.com/pulse/why-how-capitalism-
needs-reformed-parts-1-2-ray-dalio/)

And here is a link to PDF --
[https://www.economicprinciples.org/downloads/Why-and-How-
Cap...](https://www.economicprinciples.org/downloads/Why-and-How-Capitalism-
Needs-To-Be-Reformed.pdf)

------
jimmy1
_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.

~~~
Miner49er
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.

~~~
pitaj
What a terrible comparison. Why don't you compare how those people were doing
before and after enterprise entered their countries? Their standards of living
are drastically better with sweatshop work than without it, and continues to
increase.

~~~
Miner49er
Their standards of living are better due to improvements in technology, not
capitalism. Unless you think that the technological improvements we have today
are only due to capitalism, but I'm not so sure that's the case.

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daemonk
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).

------
jacknews
"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'?

~~~
CompelTechnic
>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.

~~~
Miner49er
Outside investors can be allowed I would think, but not given shares. For
example, a credit union could give a loan and collect their interest. The
credit union wouldn't get any equity.

~~~
nybble41
That sounds like a pretty good deal—for the credit union. They get paid their
fixed share no matter how poorly the firm performs (short of bankruptcy). The
firm and its employees are taking almost all of the risk.

Selling equity would allow the firm to raise capital while splitting the risk
with the investor(s). It makes the investor a partner in the firm's success or
failure.

