Ray Dalio Wants To Reform A Capitalism That Doesn't Exist
Capitalism created the greatest prosperity that the world had ever seen in early-America. But by the late 1800's, a litany of American presidents declared that the age of "laissez-faire" was over. Government would intervene into every corner of life. And..ever since...it has! The horrendous consequences of this are apparent to everyone. But there are now some people who are trying to shift the blame. They're trying to blame "Capitalism" for the consequences of an over-bearing government.
Hello, everybody, and thank you for tuning in to the Liberty Report.
Today it will be done by audio, and the co-host is Chris Rossini.
Chris, welcome to the program.
Great to be with you, Dr. Paul.
Thank you.
Very good.
You know, last week, Dalio, a very wealthy capitalist who made a lot of money in the financial markets, billionaire, wrote a long article that got a lot of attention.
And he was making a point that a lot of people have made.
There's something wrong with our capitalist system.
And he asked the question, is the American Dream lost?
And there is no doubt that we've complained about our system very frequently.
And he has proposed a solution, which didn't really satisfy us, so to speak.
But I think we were very interested in his concern because of the male distribution.
Everybody talks about it, and it has excited the socialists to talk about it and get a lot of attention, even gained some congressional seat and saying, well, it's not fair.
It's not fair.
But I think the thing that I want to talk about today, Chris, and I know you're immersed in this, is this whole idea of the casual reference to what we have.
Capitalism isn't working.
We have to do something about it.
Socialists said, get rid of this capitalism.
And Dalio said, oh, what we need is just to tinker with it.
We reform it.
And we know about what reforms are.
And one of my contentions is that we don't have capitalism.
But of course, my definition of capitalism may be different than theirs.
My understanding of capitalism, which is not a conventional understanding, is that when people work hard and spend what they need to live on, they have money left over.
They either save it or invest it.
And that's capital.
You have to earn it.
And that's where it comes from.
Today, that is not looked at.
A lot of people believe that we have capitalism, but it doesn't come from savings.
It comes from something called the Federal Reserve System, which causes all this distortion and causes this class warfare that's going on.
So I'm not always anxious to use the word capitalism without a definition.
I like to talk about free market and why the type of system we have today does deserve criticism, does deserve change, but it shouldn't be used as a whipping boy for us to get rid of free markets.
That is where I have my strong disagreement.
And Chris, I would think that you're not very anxious to perpetuate what we have and that you would have a question about so-called reforms.
That's correct, Dr. Paul.
And I really think it's an insult to the average American's intelligence for Ray Dalio to blame capitalism or the capitalism has failed because you would have to know zero American history to come to that conclusion.
The America's founding fathers created a constitution to chain down the government.
They wanted a small government and maximum freedom.
And that shook the world, that idea.
And the amount of wealth created in America reflected that.
But then around the late 1800s, everything changed.
The desire for a big government arose and was accepted by the American people and by the presidents.
And the time was over for laissez-faire, as they said.
They were going to get rid of economic freedoms.
From we could start at Lincoln all the way to FDR to our current day.
And they were very blunt about it.
They didn't hide behind euphemisms.
And today we have the biggest government to ever exist.
That's not what America's founders, the Constitution was for.
So to blame capitalism is a total cop-out, and it's not true at all.
Right.
And that's the goal of this program today is to try to expose that and get people thinking in the right direction.
Well, one of the early tip-offs in his articles appeared, I think, in the first part of his article.
And that was that the author explained that he had just donated $100 million to the public school system in Connecticut.
And I got to think, what is going on here?
Here's a guy that makes all this money.
And he thinks he needs to tinker it.
I think he has a little guilt complex because he's made money off a system that wasn't in a real free market.
So I'm going to help on education.
And I keep thinking, well, you know, that is the last thing we knew is to pump, we need is to pump $100 million in this public school system and not change it.
What if he donated 10% of that to private education where they're teaching real history and real economic policy and explain about monetary policy?
It would be a better investment.
Nevertheless, that tells you where he's coming from.
The other thing that he talks about is, well, if I were president, he says, I would declare a national emergency.
And that's all we need is another government national emergency to give more authority to the government to tinker and bring about these reforms.
We do need in a loose definition of reforms.
Yeah, we do need some reforms.
My idea of a reform is giving us more freedom.
And why don't we reform the whole system, not just the so-called catalyst?
Why don't we reform the whole system where the government feels compelled to follow the Constitution and have a society and an economic system that follows the Constitution and doing only the things that the Constitution authorizes.
Yes, and you mentioned education.
That was a big one.
And again, that was around the same time, late 1800s, 1900s.
You know, I think many Americans would be surprised if they looked at Karl Marx's 10 planks of the Communist Manifesto.
They'd be surprised at how much America has adopted from that Communist Manifesto.
Now, we're not a totally socialist nation, even though we have a lot of socialist programs that were introduced.
But the main idea that really took hold, not just here but around the world, is not to have government own outright, entitle, all property, but to have private property in name only, where you put your name on the property and the government is going to tell you what you can use it for, how everything will be used.
And the idea of a government plus business major corporation partnership, that idea is what took hold.
That is not capitalism.
That is, to be blunt, economic fascism.
And to blame capitalism is a very big mistake.
And it has to be cleared up before people buy an even worse idea from this.
Right.
Your points are well taken.
I keep thinking about the psychology of all this, why there's more than just Dalio coming up to very wealthy people and starting to announce that we have to be fairer.
He comes out for maybe raising taxes would be a better way.
He would like to see that there's a redistribution of opportunity.
And I don't know exactly what he means because it sounds to me like it's an authoritarian redistribution.
But, you know, I think that the system that we do have does curtail some opportunities because I think the middle class and the poor suffer the most from our system.
And one big issue there would be the monetary system.
What we need is more freedom and more liberty, more personal responsibility, and that provides the opportunity.
But the opportunity really has to come from the individual.
The system, you know, private property and contracts have to be available and equal justice under the law.
These things are the fundamentals, the general welfare.
That is what the founders refer to as the general welfare.
If that is available to us, then I think the opportunity becomes more diverse.
But some people, no matter how much freedom you have or government authoritarianism you have, it's not going to solve these problems because the system of perfect liberty is not flawless.
It's going to be problems.
But the one thing is, is when you resort to putting a couple aggressive politicians in charge of divvying up all the largesse and all the benefits of government, that means you're relying on the people who are making mistakes.
In a free society, yeah, people are going to make mistakes, but what really helps is people are responsible for what they do and they get rewarded for what they do.
So if they're doing a good job, they're rewarded.
But this whole idea that, yes, it's a mess and what we need is a national emergency.
We need to redistribute and define what opportunity is all about.
I don't think that is going to solve the problem.
But Chris, I'd like to talk a little bit now about how the Fed has contributed to this mess.
Right.
Well, the Fed is the heartbeat, I call it, of big government.
It's government's piggy bank.
Whatever government wants to pay for, the Fed is always there to create money and to finance it.
So the government doesn't have to come to us to ask us.
I mean, they do.
There's votes in which way to go.
But the way is always which way should government get bigger?
And that's basically the only choices we're given.
And the Fed is always there to finance it.
And when they do so, they destroy our savings, our purchasing power.
The value of our money is going down.
You could see it.
I see it all the time in the supermarket, how much things are costing.
It's the same food, same stuff, but the value of the money is now less.
And that is what's hurting people hard.
And they're trying to cop out by blaming free markets, capitalism, when it's nothing of the sort.
Yes, and right now they're talking about Fed changes, you know, the president on down, and everybody's goal is to get 2% inflation, prices going up at the rate of 2%, which makes absolutely no sense whatsoever.
As if you had 2%, maybe 3% would be better, and they have no control over.
So it's the silliest argument I think we've ever heard on monetary policy.
But some things that have especially helped the rich get richer under the system we have today is the money is free.
The people who have ready access to it before it loses any value are the banks and the rich corporations, the internationalists, and the people who receive our money overseas.
So in many ways, we export our inflation.
Individuals do it too.
Our consumers do it because there's a lot of debt out there.
Consumers borrow money a lot.
There's easy money and they buy stuff, run up their credit cards, and then they say, well, I'm going to buy the best price.
So they buy Chinese products.
So that money goes overseas and it doesn't immediately hit us, but it causes a problem.
The other thing that's really, I use this word cautiously, inflated is the debt.
That's what grows by leaps and bounds.
And even the average person doesn't mind that too much because it might make it a little easier for them to get a mortgage, but they never worry about the housing bust like we had and like we'll probably get again.
So they don't worry about the debt and the borrowing when they can get through college and just have student loans.
But people are recognizing now that they're never going to get paid back.
So this system is setting the stage for a reconciliation of this.
And corporations, I don't think Bezos has to worry about a tightened money supply.
I mean, he has so much and the wealthy has so much.
They're not worried about this at all.
So when the crunch comes, which it will, it is the average person that suffers.
You know, another point I want to make on how this system has been bad for the middle class is if you go back to 1971, the last time we had any linkage to any currency to gold, we severed the link to gold with the breakdown of the Bratton Woods Agreement.
And since that time, real wages essentially haven't gone up.
So yes, wages go up and they'll say, well, they're short money.
So that's a mandate that everybody gets a $15 minimum wage, whether they've increased productivity or not, and just interfere and declaring that governments know what wages should be.
But if you just look at what's happened to the market, and one of the reasons that people are clamoring for change and reform, you know, is real wages are weighed down.
And what a lot of people have, and a lot of what's operating on here, has been on debt.
But the money going into these corporations, this is fed into huge, huge bonuses.
There's a lot of buybacks.
The stock market is a reflection, they think, of the economy.
And they'll be, you know, this will help everybody in the economy.
And there's been a lot of mergers.
Wealth And Complacency00:03:26
And that's how the super wealthy keep getting richer and richer.
But manufacturing in this country has not kept up with all this activity.
So the numbers are good, superficial numbers on the economy are good right now, but that is not going to be permanent.
It will change because this is a non-viable system.
So I don't know what you're voting for, Chris, but I'm still voting for sound money and limiting the size of government and deal with this problem in a real way.
You know, the difference between the rich and the poor, because Dalio is right, this could lead to some trouble.
A lot of people are saying this, and I certainly agree with this.
The anger out there is going to get worse if we don't come up with a reasonable solution.
I agree, Dr. Paul.
We're doing our best here.
But I'll finish here with a silver lining.
My thoughts are that despite all this government that has been imposed on the American people, we still live better than the vast majority of people who have ever lived on this earth.
And that's a powerful testament to what America's founding created.
Even despite all that we have to put up with today, we're doing okay.
And that's because we are inherently free.
We always have imagination.
The government could put up a roadblock, and there's 10 ways around it.
So we always have that.
But we can deal with a lot less of this government.
And, you know, when their mistakes are exposed, it's important to point out that it's their mistakes.
It's not the mistake of freedom or capitalism.
And if that road is taken, then who knows how great the future could be for freedom.
Yes, and I think that point is well taken because the wealth has been outstanding in spite of all these shortcomings.
Even since 1971, a lot of wealth has been developed, a lot of development.
One of my beeps is there's tremendous technological development, but most of it goes in supports the constant wars that we're fighting.
But no, the standard of living, generally speaking, has gone up.
But one concern I have about this is people become totally enamored by materialistic issues.
How do I get more stuff, more stuff?
They don't say, how do I maintain my liberty?
They talk about how you get more stuff.
Well, you know, I've come up short, so I want the government to give me free this and free that.
And they demand it and they concentrate on stuff, whether it's Wall Street or Main Street, and free lunches and free school and free medicine, because they say this is it.
And it's something that we've been able to get away with because in a way, the great productivity of freedom almost has a two-edged source.
It's great the standard of living goes up, but it also makes people complacent, complacent about how did we get this wealth?
What part of the economy has provided this wealth to everybody?
Has it been because there's been a good bit of freedom still left in our country, or is it because we have good managers of the economy or because we have a super smart Federal Reserve?
Continuing the Freedom Road00:00:35
Well, that's the question that we have to settle.
And when we do that and settle that, then we have to continue to offer up what freedom offers and what Sound Money offers.
And quite frankly, I do think that there's an opportunity right now.
There's a better understanding on economic policy than ever before.
But we also have a bigger challenge than ever before with a less than friendly reception from the Internet and certainly the mainstream media.
But we'll continue along this road.
And Chris, I want to thank you very much for being with us today on this report.