Ray Dalio: evaluation

Transcript context

…Just to be clear on your first statement, it’s not Chinese or American as is described in the book. I took all powers that existed over the last 500 years, 11 of those powers, the empires, the rising, and I looked at them all. And then, because the patterns existed in China and I feel I need to understand China well, I also took the dynasties back to 600. I saw these patterns over and over again, and they’re not Chinese, they’re not American. They’re universal because human nature is universal. When I look at a Chinese dynasty or a great European power and so on, the parts of them — they all have risen, and they have all declined. When we say that we like a dynasty, I like the things that make it rise and be healthy, and I don’t like the things that make it decline and be unhealthy. I don’t feel there’s a dynasty or an empire that I admire in totality. It’s those things that I admire, and what those things are across is, they’re measured in the book. I gave 18 measures of them, but there are certain basic things that they come down to a lot. One, it starts partially with leaders who make things work well. There’s a cycle. There’s a new order. A new order means that after some conflict, the new power takes over. They win. There’s a leader or leaders who then, at that point, have to consolidate their power from those who are in opposition to them, and so on. Then they have to build a direction, and that direction comes down to basic things, such as, first and foremost, education. When I say education, I mean both education of facts like, “Do you know these facts? Can you read, write, and do arithmetic?” kind of thing, but also education in civility — how to behave well with others and your personal responsibility, which is usually, traditionally has been guided by the family, or could be guided by religion. It could be in the schools, but to know how to be a person of good character and relate well to others. The dynasties that did that, and you could look at the beginning of all of those dynasties — the Tang Dynasty, the Song Dynasty, the Ming Dynasty — just as you can look at it in terms of the early stages of many, many empires, including our own, the American empire after World War II particularly. Education, and then converting that education and that civility to productivity, to be able to work well in a harmonious way with each other, a competitive harmonious way, to raise the living standards so that you are earning more than you are spending. This is a fundamental thing — productivity and earn more than you’re spending, so you don’t depend on the building up of debt that eventually you can’t pay back, and that rise. Then I see in all these dynasties and all these empires that there becomes, then, more debt creation, sometimes more speculation, and there become greater gaps — greater wealth and opportunity gaps. Wealth gaps because the cycle produces these different opportunities. ecomes, then, more debt creation, sometimes more speculation, and there become greater gaps — greater wealth and opportunity gaps. Wealth gaps because the cycle produces these different opportunities. Some people make a lot of money and others don’t, so naturally it produces a wealth gap. But that wealth gap can be self-reinforcing because the parents who have more money give their kids better advantages, and they have more power than those who are born into families that don’t have much. So there becomes that wealth gap. Then there become higher and higher levels of indebtedness. I’ve seen this all across countries, all across empires. Then sometimes, because they have borrowing capacity, like having a reserve currency, they can borrow a lot of money. They do that, so they produce larger wealth gaps, more speculation, and larger and larger wealth gaps. Then something comes along, and they can’t do that. They can’t live on the debt anymore, and there are various reasons. Then you see deterioration. You can see deteriorations in even the notion of what people are going after. Some poor family having to struggle, or a poor society having to struggle, develops different values than one that is born rich and is operating — it can be, in fact, decadent in terms of the way that they’re operating, and so on. That’s an ingredient to decline. All of the dynasties or all of the societies that I’ve seen have had that. In some cases, acts of nature came along, too, and there’s an internal conflict over the things I just mentioned — all of them — not having enough money, printing a lot of money, being in a situation where they’re at odds with each other, and then, often, the rising power challenging that. You see the decline of the Ming Dynasty for that reason. You see the decline of the Qing Dynasty, you see the decline of France, you see the decline of others for the same reasons. There are also these foreign powers that there’s a conflict with, and everything. Then sometimes, there are these acts of nature, like the big drought or the big flood or something that causes a famine or a pandemic, and then that happens and throws everything off-kilter, too. I see those patterns happening over and over everywhere. There’s no one dynasty. I like those that do it well, and I don’t admire those who don’t. How does transcendental meditation improve your work relationships? Why choose that kind of meditation rather than some other?…

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