Billionaire hedge fund extraordinaire Ray Dalio believes the wealth gap in America will lead to “conflict” between the rich and poor if the system isn’t reformed.
“We’re at a juncture. We can do it together, or we will do it in conflict, that there will be a conflict between the rich and the poor.”
“Capitalism needs to be reformed. It doesn’t need to be abandoned. So, like anything, like a car, like anything, a plane, a school system, anything, it needs to be reformed in order to work better,” Dalio said on CBS’s “60 Minutes” on Sunday.
Dalio added that because the U.S. economy isn’t “redistributing opportunity” that the “American dream is lost.”
He went on to argue that the current economic situation isn’t sustainable, and that as the wealth gap grows, conflict between rich and poor will be triggered by an economic downturn.
“We’re at a juncture. We can do it together, or we will do it in conflict, that there will be a conflict between the rich and the poor,” Dalio told CNBC. “If you look at history, if you have a group of people who have very different economic conditions and you have an economic downturn, you have conflict. I’m not saying we’re going to go there. I’m saying that right now — it’s a huge issue, it’s unfair … it’s unproductive. And at the same time, it threatens to split us.”
Dalio, whose personal wealth is valued by Forbes at more that $19 billion, said that if he were running the country he would declare income inequality a “national emergency,” and he believes that reforming capitalism is one way to tackle the issue.
“I play probabilities. And I would say it’s probably 60-40, 65-35 that (reforming capitalism) will probably be done badly and that it would be a bad path. But I’m saying it doesn’t have to be that way,” Dalio said. “By realizing that it is a juncture, maybe we can nudge just a little bit the probabilities so that we can have a better outcome.”
Dalio, along with some of his super-rich compatriots in Berkshire Hathaway’s Warren Buffett and Microsoft co-founder Bill Gates, argues that a wealth tax would help balance things out, but it has to be done right.
“The important thing is to take those tax dollars and make them productive,” Dalio said.