Bipartisan leadership and a focus on the common good will be the keys to a new world order according to Bridgewater Associates co-CIO and co-chair Ray Dalio, who said he believed divisiveness and conflict are taking the world down a dangerous path.

“The biggest issue that we face is being at each other’s throats,” said Dalio, who founded Bridgewater in 1975 and has seen it grow into the largest hedge fund manager in the world with about $USD160 billion under management. In 2020 Forbes magazine listed the investor as the 69th wealthiest person in the world with USD$18.6 billion.

While the twin forces of globalisation and capitalism have been beneficial, they’ve also exacerbated the difference between the haves and the have-nots, Dalio explained during an hour long interview broadcast on Tuesday evening as part of the Top1000funds.com 2020 Global Sustainability Conference. You can watch the full interview here.

“Capitalists know how to increase the pie, but they don’t know how to divide the pie very well,” he lamented.

“Capitalism is generally an efficient system of allocating resources. It creates incentive and if the value of what you produce is greater than the cost of that production you prosper,” he said. “But when it grows it creates the wealth gap and the opportunity gap.”

The spread of globalisation, too, has played its part in widening the wealth gap.

“Globalisation is good for the world because you produce in the most effective place. But you have to also realise that as it raises living standards in places that benefit from it –  let’s say China – it takes a job and moves it from somebody else,” Dalio said.

This wealth disparity has led to populism’s resurgence and a rise in conflict at all levels. “It’s been shown over and over again; when you have a large wealth gap it becomes increasingly unfair and it becomes a problem about sustainability,” he said. “It’s just mechanistic.”

Populism is flourishing, Dalio warned, because people are suffering and view the world as unfair. In this atmosphere of discontent, animosity spirals and people splinter into their own groups. This is evident in the tone of the US election campaigns, he believes, which pit “one extreme against the other”. It can also be seen in the degradation of the US education system, racial disharmony and societal unrest.

 

To get past this, he believes, we need to put aside the allegiances and do what is right for the common good.

“The thing that is most important is to design a system that is bipartisan,” Dalio said. “What we need is more so asking what the goal is, and how do we get that in a bipartisan, reasonable way so that we can engineer prosperity and do the things that are right?”

‘Fear and revulsion’

Dalio’s belief is that fairness and the notion of equal opportunity should be the goal when searching for a new world order. This desire isn’t a moralistic one, he explains, but more of a pragmatic vision aimed at a better society.