Ray Dalio Commentary: How Is the US Doing? The Big Dichotomies

How is the U.S. doing? It depends on what and who you look at because there are huge dichotomies.

Wow! Did you see what the new ChatGPT can do? And did you see how the stocks of those technology companies and the people who started them and built them are doing? Unicorns are popping up like spring wildflowers in a fertile field. The opportunities for smart, capable people to make money have rarely been greater. It's amazing.

And wow! Did you see homelessness out of control, lower and declining average education scores, deteriorating infrastructure, pervasive drug and gun problems, and dysfunctional and out-of-control politicians and government? It's shocking.

This is the great and terrible of what U.S. exceptionalism looks like.

U.S. exceptionalism exists because the U.S. has 1) an exceptionally well-developed capitalist system that fosters entrepreneurship and companies building out and efficiently delivering products, which creates big wealth and opportunity gaps, 2) exceptionally well-developed rule of law so that disputes can be resolved and agreements can be enforced, though the fairness of rule of law is increasingly being challenged, and 3) exceptional immigrants who come to the U.S., usually via exceptional American universities, both of which are increasingly under siege. If you look at those companies that have produced ~95% of the innovations that in recent years have produced most of the U.S. stock market and economic outperformance relative to other countries, it comes down to something like a million people, roughly half of whom are immigrants (out of a U.S. population of 333 million people). As a corollary of this, the top 10% of Americans have 48% of the income, 71% of the wealth and pay 76%, of the taxes, while the bottom 50% have 10% of the income, 1.5% of the wealth and receive more money than they pay in taxes.

Why are people so discontented and angry at each other when society, as a whole, has more than it has ever had? It's because of these dichotomies.

As AI and machines do jobs more cost-effectively than people at an accelerating pace, people will increasingly be less important and excluded from the system, and the dichotomies will naturally increase.

It appears to me that unless our leaders wisely decide how to bring us together in a way that increases broad-based productivity and prosperity, we could have the worst possible outcomes while having the most ever resources and potential opportunities.

Can we trust our leaders to work this out well?

While we need smart strong bipartisan leaders who will bring the country together and make big smart reforms so that we will have a system in which most people are well-educated, civil and productive, we know that we won't get that. Yet we are in a democracy that allows us to choose our leaders.

What is the problem?

Our biggest problem is how we deal with each other and our environment.

In other words, the problems are with us. While we need a lot more empathy, logic and civility, it looks like we will have more selfishness, emotion and discord. If that doesn't improve, both the rich and the poor should feel threatened.

I am a hyper-realist with idealistic aspirations so what I am telling you is what I believe is happening, what needs to happen and what is likely to happen.