Hedge fund billionaire Ray Dalio says in a lengthy LinkedIn report published April 4 that widening income/wealth/opportunity gaps pose existential threats to the United States and capitalism. Dalio, argues that lackluster public education investment and wealthy inequality risk triggering another revolution in the country.
“There has been little or no real income growth for most people for decades,” he says. “Prime-age workers in the bottom 60% have had no real (i.e., inflation-adjusted) income growth since 1980. That was at a time when incomes for the top 10% have doubled and those of the top 1% have tripled.”
The 69-year-old investor says the U.S. now has one of the worst economic mobility rates among first world countries, in spite of the fact that a majority of Americans think otherwise.” The percentage of children who grow up to earn more than their parents has fallen from 90% in 1970 to 50% today. That’s for the population as a whole. For most of those in the lower 60%, the prospects are worse,” Dalio says.
He mentions that childhood poverty rate in the U.S. is presently stands at 17.5% and has not improved for years. He also says that the country has one of the worst public education system in the developed world.
In his post, Dalio warns that the impact of rising health costs, lack of education funding, and poverty weakens America economically: “These conditions threaten to bring about painful and counterproductive domestic conflict, and undermine the United States’ strength relative to that of its global competitors.”
Mr. Dalio is a renowned investor and founder of the richest hedge fund in the world – Bridgewater Associates. With an estimated fortune of $18.4 billion, Forbes currently ranks him as the 57th-richest person in the world.
He founded Bridgewater Associates in 1975 at his two-bedroom apartment in New York. According to him, “leaving so many children in poverty and not educating them well is the equivalent of child abuse, and it is economically stupid.”
To save U.S. capitalist system, Dalio believes that resources will have to be redistributed in order to equal opportunity to most Americans. That can be done by raising taxes on the wealthiest individuals, developing public-private partnerships aimed at linking societal goals with business goals, and imposing additional taxes on harmful things such as carbon emissions.
Dalio also calls on Americans to elect leaders who will declare wealth inequality a national emergency. He believes that it is the high time a bipartisan committee was created to develop new means of community development and wealth redistribution.