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Why and How Capitalism Needs to Be Reformed (II)

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Dalio's Diagnosis of Why Capitalism Is Now Not Working Well for the Majority of People +++


I believe that reality works like a machine with cause/effect relationships that produce outcomes, and that when the outcomes fall short of the goals one needs to diagnose why the machine is working inadequately and then reform it. I also believe that most everything happens over and over again through history, and by observing and thinking through these patterns one can better understand how reality works and acquire timeless and universal principles for dealing with it better. I believe that the previously shown outcomes are unacceptable, so that we first need to look at how the economic machine is producing these outcomes and then think about how to reform it.


Contrary to what populists of the left and populists of the right are saying, these unacceptable outcomes aren't due to either a) evil rich people doing bad things to poor people or b) lazy poor people and bureaucratic inefficiencies, as much as they are due to how the capitalist system is now working.


I believe that all good things taken to an extreme become self-destructive and everything must evolve or die, and that these principles now apply to capitalism. While the pursuit of profit is usually an effective motivator and resource allocator for creating productivity and for providing those who are productive with buying power, it is now producing a self-reinforcing feedback loop that widens the income/wealth/opportunity gap to the point that capitalism and the American Dream are in jeopardy. That is because capitalism is now working in a way in which people and companies find it profitable to have policies and make technologies that lessen their people costs, which lessens a large percentage of the population's share of society's resources. Those companies and people who are richer have greater buying power, which motivates those who seek profit to shift their resources to produce what the haves want relative to what the have-nots want, which includes fundamentally required things like good care and education for the have-not children. We just saw this exemplified in the college admissions cheating scandal.


As a result of this dynamic, the system is producing self-reinforcing spirals up for the haves and down for the have-nots, which are leading to harmful excesses at the top and harmful deprivations at the bottom. More specifically, I believe that:



  1. The pursuit of profit and greater efficiencies has led to the invention of new technologies that replace people, which has made companies run more efficiently, rewarded those who invented these technologies, and hurt those who were replaced by them. This force will accelerate over the next several years, and there is no plan to deal with it well.

  2. The pursuit of greater profits and greater company efficiencies has also led companies to produce in other countries and to replace American workers with cost-effective foreign workers, which was good for these companies' profits and efficiencies but bad for the American workers' incomes.  Of course, this globalization also allowed less expensive and perhaps better quality foreign goods to come into the US, which has been good for both the foreign sellers and the American buyers of them and bad for the American companies and workers who compete with them. 


Because of these two forces, the share of revenue that has gone to profits has increased relative to the share that has gone to the worker. The charts below show the percentage of corporate revenue that has gone to profits and the percentage that has gone to employee compensation since 1929.  




3. Central banks' printing of money and buying of financial assets (which were necessary to deal with the 2008 debt crisis and to stimulate economic growth) drove up the prices of financial assets, which helped make people who own financial assets richer relative to those who don't own them. When the Federal Reserve (and most other central banks) buys financial assets to put money in the economy in order to stimulate the economy, the sellers of those financial assets (who are rich enough to have financial assets) a) get richer because the financial asset prices rise and b) are more likely to buy financial assets than to buy goods and services, which makes the rich richer and flush with money and credit while the majority of people who are poor don't get money and credit because they are less creditworthy. From being in the investment business, I see that there is a glut of investment money chasing investments at the same time as there is an extreme shortage of money among most people. In other words, money is clogged at the top because if you're one of those who has money or good ideas of how to make money you can have more money than you need because lenders will freely lend it to you and investors will compete to give it to you. On the other hand, if you're not in financially good shape nobody will lend to you or invest in you and the government doesn't help materially because the government doesn't do that. 


4. Policy makers pay too much attention to budgets relative to returns on investments. For example, not spending money on educating our children well might be good from a budget perspective, but it's really stupid from an investment perspective.  Looking at the funding through a budget lens doesn't lead one to take into consideration the all-in economic picture—e.g., it doesn't take into consideration the all-in costs to the society of having poorly educated people. While focusing on the budget is what fiscal conservatives typically do, fiscal liberals have typically shown themselves to borrow too much money and fail to spend it wisely to produce the economic returns that are required to service the debts they have taken on, so they often end up with debt crises. The budget hawk conservatives and the pro-spending/borrowing liberals have trouble focusing on, working together for, and achieving good "double bottom line" return on investments (i.e., investments that produce both good social returns and good economic returns). 


What I Think Should Be Done


For the previously explained reasons, I believe that capitalism is a fundamentally sound system that is now not working well for the majority of people, so it must be reformed to provide many more equal opportunities and to be more productive. To make the changes, I believe something like the following is needed. 



  1. Leadership from the top. I have a principle that you will not effect change unless you affect the people who have their hands on the levers of power so that they move them to change things the way you want them to change. So there need to be powerful forces from the top of the country that proclaim the income/wealth/opportunity gap to be a national emergency and take on the responsibility for reengineering the system so that it works better.

  2. Bipartisan and skilled shapers of policy working together to redesign the system so it works better. I believe that we will do this in a bipartisan and skilled way or we will hurt each other. So I believe the leadership should create a bipartisan commission to bring together skilled people from different communities to come up with a plan to reengineer the system to simultaneously divide and increase the economic pie better. That plan will show how to raise money and spend/invest it well to produce good double bottom line returns.

  3. Clear metrics that can be used to judge success and hold the people in charge accountable for achieving it. In running the things I run, I like to have clear metrics that show how those who are responsible for things are doing and have rewards and punishments that are based on how these metrics change. Having these would produce the accountability and feedback loop that are required to achieve success. To the extent possible, I'd bring that sort of accountability down to the individual level to encourage an accountability culture in which individuals are aware of whether they are net contributors or net detractors to the society, and the individuals and the society make attempts to make them net contributors.  

  4. Redistribution of resources that will improve both the well-beings and the productivities of the vast majority of people. As an economic engineer, naturally I think about how money might be obtained from taxes, borrowing, businesses, and philanthropy, and how it would flow to affect prices and economies. For example, I think about how a change in personal tax rates might occur and how changes in them relative to corporate tax rates would affect how money would flow, and how changes in tax rates in one location relative to another location would drive flows and outcomes in them. I also think a lot about how the money raised will be spent—e.g., how much will be spent on programs that will improve both social and economic outcomes, and how much will be redistributive. Such decisions would of course be up to the people on the bipartisan commission and the leadership to decide and are way too complicated an engineering exercise for me to opine on here. I can, however, give my big picture inclinations. Above all else, I'd want to achieve good double bottom line results. To do that I'd:


a. Create private-public partnerships (including governments, philanthropists, and companies) that would jointly vet and invest in double bottom line projects that would be judged on the basis of their social and economic performance results relative to clear metrics. That would both increase the funding for and the quality of projects because people who have to put their own money on the line would be responsible for them. (For examples, see the Appendix.)


b. Raise money in ways that both improve conditions and improve the economy's productivity by taking into consideration the all-in costs for the society (e.g., I'd tax pollution and various causes of bad health that have sizable economic costs for the society).


c. Raise more from the top via taxes that would be engineered to not have disruptive effects on productivity and that would be earmarked to help those in the middle and the bottom primarily in ways that also improve the economy's overall level of productivity, so that the spending on these programs is largely paid for by the cost savings and income improvements that they create. Having said that, I also believe that the society has to establish minimum standards of healthcare and education that are provided to those who are unable to take care of themselves.


5. Coordination of monetary and fiscal policies.  Because money is clogged at the top and because the capacity of central banks to ease enough to reverse the next economic downturn is limited, fiscal policy will have to be more coordinated with monetary policy, which can happen while maintaining the Federal Reserve's independence. If done well, this will both stimulate economic growth and reduce the effects that quantitative easing has on increasing the wealth gap by shifting money and credit into the hands of those who have a higher propensity to spend from those who have a higher propensity to save and from those who need it less to those who need it more.  


Looking Ahead


In assessing the position we are in, we can look at both cause-effect relationships and historical comparisons. The most relevant causes that are leading to the effects we are seeing are: 



  1. The high debt levels that led to the 2008 debt crisis (and have since increased) led to…

  2. Central banks printing a lot of money and buying financial assets, which pushed asset prices up and pushed interest rates down. This has benefited those with financial assets (i.e., the haves) and has left central banks with less power to stimulate the economy.

  3. These factors and new technologies created very wide income/wealth/opportunity and values gaps, which are expected to increase and are leading to…

  4. Increased populism of the left and populism of the right that are causing greater domestic and international conflicts at the same time as…

  5. There is a rising power (China) to compete with the existing dominant world power (the United States), which will lead to competitions that will be economic, ideological, and military and will be determined by the two powers' relative skills and technological abilities. This competition will establish what the new world order will be like via-à-vis the rest of the world. 


The last time that this configuration of influences existed was in the late 1930s when there were great conflicts and economic and political systems were overturned. For the fundamental reasons explained earlier, I believe that we are at the sort of critical juncture in which the biggest issue will be how we deal with each other rather than any other constraints.


There are enough resources to go around to deal with the risky issues and produce much more equal opportunity plus improved productivity that will grow the pie. My big worry is that the sides will be intransigent in their positions so that capitalism will either a) be abandoned or b) not be reformed because those on the right will fight for keeping it as it is and those on the left will fight against it. So to me, the biggest questions are a) whether populists of the right or populists of the left will gain control and/or have conflicts that will adversely affect the operations of government, the economy, and international relations or b) whether sensible and skilled people from all sides can work together to reform the system so it works well for the majority of people.


We will soon know a lot more about which paths are most likely because over the next two years there will be defining elections in the US, the UK, Italy, Spain, France, Germany, and the European Parliament. How they turn out will have significant effects on how the conflicts raised in this report will be dealt with, which will influence how money will flow between people, markets, states, and countries and will determine the relative strengths of most people and countries. I will be paying close attention to all this and will keep you informed.


Appendix: My Perspective On Double Bottom Line Investing


I felt that I should give some examples of good double bottom line investing so that's what this appendix is about. From doing my philanthropic work, I see great double bottom line investments all the time, and I only see a small percentage of them so I know that there are vastly more. Since my wife and I focus especially in education and microfinance, my window is more in these areas than elsewhere though we have been exposed to many in other areas such as healthcare, the reform of the criminal justice system, environmental protection, etc. For example, a few of the good double bottom line investments that I came across are:



  • Early childhood education programs that produce returns of about 10-15% annualized in the form of cost savings for the government when one accounts for the lifetime benefits for the students and society. That is because they lead to better school performance, higher earnings, and lower odds of committing crimes, all of which have direct economic benefits for society.[liii]

  • Relatively inexpensive interventions that lead to lower high school dropout rates in grades 8 and 9 can pay for themselves many times over. Moving these young students into practical higher education or trade jobs when done well is highly cost-effective. For example, the lifetime earnings of a college graduate are over $1 million higher than those of a high school dropout.[liv]

  • School finance reforms show that a 10% increase in per-pupil spending can have a meaningful impact on educational outcomes for low-income students, producing a higher ROI than spending on higher-income students. Overall, researchers have found that additional school spending has an IRR of roughly 10%.[lv]

  • Microfinance. For every dollar donated/invested in this, approximately $12 is lent, paid back, and lent again over the next 10 years to disadvantaged people to start and build their businesses.[lvi]

  • Numerous infrastructure spending plans that can facilitate trade and improve productivity/efficiency. From 33 studies that looked at the ROI of infrastructure investment, it is estimated that smart infrastructure programs have a 10-20% rate of return in terms of increased economic activity, making it a good trade for the government to borrow money and invest in infrastructure.[lvii]

  • Public health/preventative healthcare interventions also can have very positive ROIs. From 52 studies that looked at the ROI of preventative health programs (covering a variety of program types, including vaccines, home blood pressure monitoring, smoking cessation, etc.), on average the programs created $14 of benefit for every $1 of cost.[lviii]


Since these areas are great double bottom line investments for the country, it would be great if they were brought to scale with government support. I believe that partnerships between philanthropy, government, and business for these types of investments are powerful because they would both increase the amount of funding and result in better vetting of the projects and programs. I know that I see plenty of good deals that I'd love to maximize the funding for that would be cost-effective for governments, other philanthropists, and businesses to support. For example, my wife and our philanthropy team are now working on an agreement in which the Dalio Philanthropies will donate $100 million to programs for the most underfunded school districts and for microfinance in Connecticut if the state donates $100 million and if other philanthropists and businesses in Connecticut also donate another $100 million. That will bring more money, better due diligence, more partnership to our Connecticut community, and positive expected net financial returns (after considering the costs of not educating and supporting our children well) for the benefit of the state. 


 


FOOTNOTES PART I & II:


[1] Actually, we broke it into many other subcategories and then aggregated them into these two groups for simplicity in presenting the results.


[i] https://wir2018.wid.world/part-2.html


[ii] Based on data from the Current Population Survey. https://cps.ipums.org/cps/


[iii] http://www.equality-of-opportunity.org/papers/abs_mobility_paper.pdf, 34.


[iv] As of 2016; based on data from Survey of Consumer Finances.


[v] Income chart (on left) shows fiscal income shares. Data from World Inequality Database. (https://wid.world/country/usa/)


[vi] Data from Census Bureau


[vii] As of 2016; based on data from Survey of Consumer Finances.


[viii] Survey of Consumer Finances (https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf)


[ix] https://www.minneapolisfed.org/institute/working-papers/17-06.pdf 


[x] https://www.oecd.org/social/soc/Social-mobility-2018-Overview-MainFindings.pdf; estimates for China based on Kelly Labar, "Intergenerational Mobility in China", (https://halshs.archives-ouvertes.fr/halshs-00556982/document). Note that methodologies varied between countries in the OECD study.


[xi] US Census Bureau, Current Population Survey, 1960 to 2018 Annual Social and Economic Supplements, History Poverty Tables, Table 3.(https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-people.html)


[xii] https://www.ers.usda.gov/webdocs/publications/90023/err-256.pdf, 10.


[xiii] https://www.weforum.org/agenda/2017/06/these-rich-countries-have-high-levels-of-child-poverty/


[xiv] http://www.oecd.org/pisa/data/


[xv] http://www.oecd.org/pisa/data/


[xvi] OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education, PISA, OECD Publishing, Paris, 231.


[xvii] OECD (2017), Educational Opportunity for All: Overcoming Inequality throughout the Life Course, OECD Publishing, Paris, 46.


http://dx.doi.org/10.1787/9789264287457-en


[xviii] OECD (2017), Educational Opportunity for All: Overcoming Inequality throughout the Life Course, OECD Publishing, Paris, 60.


[xx] http://new.every1graduates.org/wp-content/uploads/2018/09/Data-Matters_083118_FINAL-2.pdf


[xxi] http://cdn.ey.com/parthenon/pdf/perspectives/Parthenon-EY_Untapped-Potential_Dalio-Report_final_092016_web.pdf, 11.


[xxiii] Poverty data from Census Bureau SAIPE School District Estimates (https://www.census.gov/data/datasets/2013/demo/saipe/2013-school-districts.html); graduation rates from Hechinger Report (https://hechingerreport.org/the-gradation-rates-from-every-school-district-in-one-map/)


[xxiv] Note: Spending data is from the US Census Bureau and is current as of 2016. Test scores and proficiency data are from "National Report Card" assessments and are meant to be comparable across states. Data is from 2013. Only a limited sample of states have data for this Grade 12 assessment.


[xxiv] https://www.cbpp.org/research/food-assistance/snap-is-linked-with-improved-nutritional-outcomes-and-lower-health-care


[xxv] https://blogs.wsj.com/economics/2014/10/07/sat-scores-and-income-inequality-how-wealthier-kids-rank-higher/


[xxvi] https://cepa.stanford.edu/sites/default/files/reardon%20whither%20opportunity%20-%20chapter%205.pdf , 8.


[xxvii] https://edtrust.org/wp-content/uploads/2014/09/FundingGapReport_2018_FINAL.pdf, 4.


[xxviii] https://edtrust.org/wp-content/uploads/2014/09/FundingGapReport_2018_FINAL.pdf, 7.


[xxix] https://www.usatoday.com/story/money/personalfinance/2018/05/15/nearly-all-teachers-spend-own-money-school-needs-study/610542002/


[xxx] OECD (2017), "D3.2a. Teachers' actual salaries relative to wages of tertiary-educated workers (2015)", in The Learning Environment and Organisation of Schools, OECD Publishing, Paris, https://doi.org/10.1787/eag-2017-table196-en.


[xxxi] https://www.epi.org/publication/teacher-pay-gap-2018/


[xxxii] https://nces.ed.gov/programs/coe/indicator_cma.asp


[xxxiii] Data based on Consumer Expenditure Survey


[xxxiv] http://www.oecd.org/pisa/data/


[xxxv] Private school spending data from: https://www.nais.org/statistics/pages/nais-independent-school-facts-at-a-glance/ ; Public school spending data from: https://www.statista.com/statistics/203118/expenditures-per-pupil-in-public-schools-in-the-us-since-1990/


[xxxvi] http://www.oecd.org/pisa/data/


[xxxvii] https://news.gallup.com/poll/1612/education.aspx


[2] The remaining 14% lived with two parents in remarriages.


[xxxviii] http://www.pewsocialtrends.org/2015/12/17/1-the-american-family-today/


[xxxix] https://www.brookings.edu/research/twelve-facts-about-incarceration-and-prisoner-reentry/, 10


[xl] https://www.sentencingproject.org/wp-content/uploads/2016/01/Incarcerated-Parents-and-Their-Children-Trends-1991-2007.pdf, 4.


[xli] The Pew Charitable Trusts, Collateral Costs: Incarceration's Effect on Economic Mobility, https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2010/collateralcosts1pdf.pdf, 4.


[xlii] Calculations based on data from "World Prison Brief Database." (http://www.prisonstudies.org/highest-to-lowest/prison_population_rate?field_region_taxonomy_tid=All)


[xliii] https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2010/collateralcosts1pdf.pdf, 2.


[xliv] https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2010/collateralcosts1pdf.pdf, 4.


[xlv] As of 2015; Bridgewater analysis, based on data from the CDC (https://www.cdc.gov/nchs/data_access/VitalStatsOnline.htm#Mortality_Multiple)


[xlvi] Chetty, Raj, et al., "The Association Between Income and Life Expectancy in the United States, 2001-2014", Journal of the American Medical Association, 2016.


[xlvii] As of 2015; Bridgewater analysis, based on data from the CDC (https://www.cdc.gov/nchs/data_access/VitalStatsOnline.htm#Mortality_Multiple)


[xlviii] https://news.gallup.com/poll/4708/healthcare-system.aspx


[xlix] https://ftp.cdc.gov/pub/Health_Statistics/NCHS/NHIS/SHS/2014_SHS_Table_A-11.pdf


[l] https://www.americanprogress.org/issues/poverty/reports/2007/01/24/2450/the-economic-costs-of-poverty/


[li] https://voteview.com/data


[lii] Based on data from the Bureau of Economic Analysis


[liii] https://heckmanequation.org/resource/research-summary-lifecycle-benefits-influential-early-childhood-program/


[liv] http://cdn.ey.com/parthenon/pdf/perspectives/Parthenon-EY_Untapped-Potential_Dalio-Report_final_092016_web.pdf


[lv] For the purposes of this study, "low-income" students were defined as students whose family income was below 2x the poverty line at any point during their childhood. The study's projections are based on comparing the life outcomes of children that were impacted by major school finance reforms in 28 states between 1971 and 2010 with those of similar children who were unaffected by the reforms. See https://academic.oup.com/qje/article/131/1/157/2461148


[lvi] Sourced from Grameen America standard 26-week loan amortization schedule, assuming full reinvestment of principal repayments over 5 years


[lvii] https://www.epi.org/publication/the-potential-macroeconomic-benefits-from-increasing-infrastructure-investment/


[lviii] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5537512/

Discussion 12 Comments

  • Irie Zen 10th Apr 2019

    Maurice Marwood
    Director and CEO at ReStimCo Limited

    "Capitalism is not functioning well because it has never been allowed to function without govt intrusion. Fundamentally, capitalism is the philosophical system and economic system where people are FREE. When govt is deeply embedded in the economy, as they have been for the last 100 years or so, people are not free. Rules and regulations and taxation distort the system and result in the distortions mentioned. We live in a mixed economy, at best, and a Socialist economy at worst. It is not a capitalist economy. Read "Capitalism, The Unknown Ideal." The govt subsidizes failures and penalizes success. That's the direct opposite of Capitalism."

  • Irie Zen 10th Apr 2019

    Troy Heindel
    Technology and Operations Executive

    "Capitalism does not look out for the common good, because it is not required to consider societal costs, and the risk of failure is simple bankruptcy. There are many examples of businesses that if left unchecked by govt intervention would have continued to rack up societal costs (e.g. cigarettes=>people dying of lung cancer, CDOs=>great recession, etc.). Capitalism is great for capital allocation, but it is not a moral system, so there must be some form of oversight that has concern for the common good over the long haul."

  • Irie Zen 10th Apr 2019

    Nelson Choi
    Strategist, change agent, dealmaker & investor with global perspective and deep knowledge of Asia and China

    "I think that the title is probably misleading. It is not about capitalism as a concept. It is more about how capitalism is implemented and the underlying political system. I am also not convinced that US could represent capitalism at its best. In fact, my observation is that China despite being a ‘communism’ country, in many areas, it is more capitalistic thank US. To that end, while I appreciate the solutions proposed, I dont see how and who will adopt these ideas in the current political system. The current politicians will not do it. Skilled people do not have incentives and the will to get involved"

  • Irie Zen 10th Apr 2019

    Eric Nies
    Building with the Channel

    "bit.ly/OntheCrushedAmericanDream Ray correctly suggests that Capitalism is broken and it takes revamping Education (among other things) to regain our footing. That's right, but not just educational instruction, we need to regain our moral footing and apply, at the individual level, the BRAVE Principals which formed the character of previous generations which made a nation great!" As a Baby Boomer, Ray Dallio and "The Lucky Few" of the generation before him experience greatest period of economic expansion in history, founded on strong moral fiber. GenX is the first generation to fail to experience the America Dream and also got slapped with moral decay starting in the 60's. Now, with help of influences who can change policy at the macro-level, it is our responsibility through application of the BRAVE Principals at the individual level.

  • Irie Zen 10th Apr 2019

    Belinda-Jane Carreira
    Managing Director at WELL

    "It looks to me like the elite produce no goods and services whatsoever. It looks to me like all the goods and services are produced by those in the lower 90%, the ones who are struggling so much. It looks to me like playing with air or ‘money’ or ‘financial instruments’ is pure greed and not proper work at all. It looks to me like financial instruments are a pile of shit and what have caused all our problems in the world today as they have produced nothing. Many sit and play with these things all day and make loads of money but yet have contributed nothing of real value to society at all while they live in their mansions and fly around in their private jets destroying the climate. It fascinates me how general people are made to feel guilty for plastic pollution when the elite are responsible for it. The ‘sins’ revolting behavior of the elite towards the majority of humanity are so many it’s disgusting and yes it’s time reform and reallocation took place and a proper look at who is really producing what for the good of society - this is what each individual should actually be measured on - what are they contributing to their wellbeing and the wellbeing of society as a connected whole?"

  • Irie Zen 10th Apr 2019

    Ravi kant
    Columnist at Asia Times Online

    "Captalism is not an ideology; it is not imposed on the society, it is a natural growth. That's why there is no capital philosopher, no capitalist party. it is the first system which creates wealth. It needs intelligence to create wealth. But when you allow too much government and certain forces intervations, then it becomes fedualism. But fedualism never create wealth. it only exploit people. the current world order is certainly not based on real capitalism but modern fedualism. we need to protect this capitalism from modern fedualist like tech giants, deep states and powerful institutional heads, who have monopoly over overthings even on ideas. I couldn't agree more to you (Ray Dalio)."

  • Irie Zen 10th Apr 2019

    Issam Jallad
    Financial Management Program Intern at Texas A&M University - College of Nursing & Human Science

    "BS. Let Dalio's give up his millions as we speaks! Its only a"60 minutes interview" on Sunday's evening. Another one bite the dust. IJ."

  • Irie Zen 10th Apr 2019

    David Capezzuto Jr.
    AVP at PNC Real Estate

    "Leveraging education technology would be my top priority here. What does it cost The Great Courses Plus to add additional subscribers? Probably close to nothing. My point is, once these platforms are developed, they scale well and cheaply, and could easily be rolled out those who need it most. We need to work together to absorb the upfront costs of useful educational platforms that can be scaled to the less fortunate. Then we need to remind ourselves that great Americans like Ben Franklin were self-taught. Andrew Carnegie understood this, and that’s why he built libraries across Pittsburgh. You have to give people access to the resources they need to succeed!"

  • Irie Zen 10th Apr 2019

    Gary Hunt
    Business and market strategy professional with dry bulk transport supply chain development expertise.

    "An enjoyable lunch time read....so here's my contribution; Capitalism has a couple of fundamental flaws shaped in Nietzsche's nihilism: a) it relies on always having to secure a lower cost of production; which has lead to off-shoring and automation at an unprecedented rate, which is also delivering lower robustness and durability of goods and lower standards of service in the domestic market; and b) it relies on a robust domestic market of size to leverage/compete in the export markets, and if you employ less folk domestically, or insist they work for less income (due to 'a' above) they contribute less tax and consume less (there's that downward spiral for the 'have nots'). The fundamental reasons why it needs an overhaul is because: 1. when it first 'kicked-off' there were no enterprises with revenues deeper than most country's GDP. No one envisaged that singular businesses could be so influential on national economies; and 2. a communist economy is giving it a run for its money and Scandinavian and Euro 'socialist' economies are delivering better holistic results for their people..."

  • Irie Zen 10th Apr 2019

    Christopher Horner
    Owner, European Television Co. and Broadcast Media Consultant

    "Mr. Dalio, despite the many merits of both the above essay and the 60 Minutes piece re how to 'fix' capitalism, I was so surprised that neither made mention of environmental protection/innovation and the serious need to adjust our ways in that arena. The evidence is now undeniable that if business and capitalism itself do not address planet-wide environmental health with far greater attention/intention than we are presently doing by taking a TRIPLE BOTTOM LINE approach, we are likely on a path to destroying Earth's ability to support much of the life upon it. I was further surprised that, while I only read less than 100 of the 677 comments as of this writing, I found only 1 which even mentioned the environment in any substantive way. How is it that so many of the best and most highly educated minds continue to minimize or even ignore the environmental big picture? Further, the education, training and jobs that could be created to grow the myriad existing and future ways to address and move toward solving our most serious environmental challenges could also go a long way toward addressing some of the very income/education disparity issues you bring up, Mr Dalio. The transition from our current highly extractive/ destructive petro-capitalism to a more humane, environmentally healthy and regenerative version of capitalism surely adds greater complexity to the discussion. But without equal consideration of this 3rd leg of a triple bottom line, we seriously risk creating solutions that will increasingly deprive so many humans and other life-forms of clean, healthy air, water, food and life-supporting consumer goods -- an entirely new kind of divide between rich and poor.We should address this now...while we still can."

  • Irie Zen 10th Apr 2019

    Lucira Jane Nebelung
    Spiritual Mentor and Partner to Leaders. Founder of Leading as Love.

    "I've been calling this capitalist-socialism or socialist-capitalism (or if you prefer, conservative-liberalism or liberal-conservatism) for years. Billionaires that decry economic inequity and wealth extraction (including Dalio) are just diverting attention from the exact policies they lobbied into place. Our dehumanizing, predatory, parasitic capitalism that manipulates and exploits in the name of profits and wealth accumulation is in an accelerated process of collapse."

  • Irie Zen 10th Apr 2019

    Aleksandar Ristic
    Head of Day Hospital and Video EEG Unit at Neurology clinic, Clinical Center of Serbia

    "This is easy reading article with the aim to target contemporary discourse of the capitalism. It relies on well established and precise data and their consequent analysis produces quit precise diagnosis. However, seems to me it came to late (in case that real objective of it is revitalization and repair of the capitalism as a dying system), and it is without any doubt most convincing in the text body given below the subtitle “What I Think Should Be Done” (in which the author offers treatment). Since the historic (“cycling”) narrative is kept as a main fundament for the claims given at the part two I would refer author to Michel Foucault’s philosophical judgement who extensively elaborated historical nature of events (through the power, punishment, medicine etc.). Foucault investigated history as a scene behind the logic (“History has a more important task than to be a handmaiden to philosophy, to recount the necessary birth of truth and values; it should become a differential knowledge of energies and failings, heights and degenerations, poisons and antidotes. Its task is to become a curative science”. (Foucault 1971)). Despite the very well formed texture and main argument for Dalio’s article (convincingly elaborated in his earlier great readings especially in books Principles and Big Debt) which is described as “believe that most everything happens over and over again through history”, I believe it neglected a fact of substantial accumulation of the previous knowledge which directs further processes (which may direct well beyond the progress as a simple term). I will continue partially in Dalio’s manner: I was lucky enough to grow up in a middle-class family raised by parents who cared for me, to be educated in a good public school. I was tased in Socialist Federal Republic of Yugoslavia, a country where the best results come when there was more rather than less of: a) equal opportunity in education and in work, b) good family or family-like upbringing through the high school years, c) civilized behavior within a system that most people believe is fair, and NOT d) free and well-regulated markets for goods, services, labor, and capital that provide incentives, savings, and financing opportunities to most people”). Despite containing 3/4 major principles for prosperity my country “decomposed” at the highest point of economy blossom (far best economic parameters in all European socialistic countries at the beginning of 1990). It collapsed at the time of the flourishing and aggressive capitalism (following fall of the Iron Curtain). Great country with huge potential to transform to highly active capitalistic country with potential to become one of the leading countries in Europe disintegrated to several small banana states and easy booty conquered by aggressive multinational capitalism. From that point till now I witness a process which I observed in 2009/10 in US (a sa neurologist I spent those two years as a subspecialty in one of the most prestigious American clinics). I believe it is irreversible and one-way direction mechanism (taken as a whole and with alluded minor inner cycles within it). That’s why intellectual and very accurate Dalio’s analysis ends with suggested naive medication such as leading from the top (China’s model) or bipartisan policy makers working together (sounds very Soviet especially when incorporated with “redistribution of resources”). Capitalism already broadened significantly the alliances between knowledge and power and finally reached its end stage evolving to aggressive self sustained machine that couldn’t be an object oh inner control any more. In my point at least three dynamic constituents reshaped the authoritarianism of capitalism: a) the continued withdrawal of the state from promotion and investment in social care, b) the exponential growth of the technology, and c) the ‘responsibilization’ of individuals who are increasingly unequally entitled to be poor as one wishes and as is necessary (depending on their capacity to provide for their poverty). Anyway I congratulate Ray Dalio for this brave and sincere analysis."