This week, a couple of American billionaires captured headlines, including hedge fund manager Ray Dalio, when they stated in an interview that they believed a violent revolution in America is a realistic scenario for the near future, during which “we are all going to try to kill each other.” Many dismissed Dalio’s claims as headline-grabbing sensationalism to proffer up more publicity for himself and his hedge fund. However, Dalio has history on his side, as history offers up dozens of instances in which massive wealth inequality was one of the primary causes of violent revolution, including a French uprising of the poor and middle class against the bourgeoisie in 18th-century France that culminated in the execution of King Louis XVI and the beheading of French Queen Marie Antoinette the following year in 1793, and a great wealth divide between rich and poor in Mexico that led to war between 1910 and 1920. In modern times, the Yellow Vests movement in France is now entering its fourteenth consecutive month, and though all-out war has not yet broken out, it certainly has been triggered by a rapidly growing divide between rich and poor. However, in comparison to the United States, the significant wealth inequality in France pales in comparison. In the United States, the top three wealthiest individuals possess the same wealth as the wealth possessed by the bottom half of the nation, and Mr. Dalio’s research shows that the top 0.1% of wealthiest Americans will soon own the same wealth as owned by 90% of all Americans, the type of massive wealth inequality that has often triggered violent class wars throughout history.
So, what are the causes of the greatest wealth inequality, by far, of any developed nation in the entire world, that exists in the United States? Dalio stated, “These unacceptable outcomes aren’t due to either a) evil rich people doing bad things to poor people or b) lazy poor people and bureaucratic inefficiencies, as much as they are due to how the capitalist system is now working.” Dalio continued, “The reason it [the global economic system] is broken is because it is not an equal opportunity system. It needs to be reformed in a way that works better.” Fellow US billionaire Paul Tudor Jones stated that fixing the problem of massive wealth inequality is easy. Jones stated, “We have 6m employees of public companies that today do not make a living wage. Fifty years ago, 6.5 per cent of corporate revenues went to shareholders. Today that number is 13 per cent.” The chart below displays the GINI co-efficient, a measure of wealth inequality on the x-axis, charted against GDP per citizen on the Y-axis. The further one proceeds to the right on the x-axis, the greater the wealth inequality that exists in that nation. It is ironic that while the GDP per citizen of the US is on par with Norway and Switzerland, the wealth inequality is so great between rich and poor in America that America’s wealth divide is as great as the massive wealth divide that exists inside the borders of its two greatest political enemies, Russia and China.
Furthermore, because Norway and Switzerland are far to the left of the US on the GINI co-efficient axis, this indicates the existence of a far more egalitarian economic situation in these nations in which wealth is more evenly distributed, but a wealth distribution pattern in the US in which the über wealthy have captured nearly all of the nation’s cumulative wealth, making averaged GDP per citizen a poor indicator of how the average American is faring from an economic perspective.
Finally, if we look at the above statements by billionaires Dalio and Jones, while some have lauded them for bringing attention to the situation of massive wealth inequality in the United States that is now at the greatest level since the Great Depression, I find their statements far more deceitful than transparent. For example, Dalio correctly states that the system is “broken” because it does not provide “equal opportunity” for rich, middle class and poor while favoring the rich, but then says that the rich are not part of the problem at all but the problem is “the capitalist system.” Consequently, Dalio, though he is certainly intelligent enough to understand the solution, instead chooses to cover up the problem by merely blaming everything on a broken capitalism system, which is not even true. In any nation perceived to be “free”, as is the case for the United States, one should advocate for a free market capitalism system and be very vigilant in defining capitalism only in terms of a free market capitalism system. Instead, we constantly hear billionaires reference a “broken” or “corrupt” capitalism system, an assertion that I find ludicrous because one should never continue to label something by a name if the main principles of that concept has been stripped away for decades.
For example, most everyone among us understands the very basic rules of fútbol as played internationally around the world. However, if someone changed the rules of the game and allowed one to pick up the fútbol and run with it and throw it into the goal as well as kick it into the goal, and this is the version of fútbol that was played around the world for the last one hundred years, no one in the entire world would still refer to the game they watched as a “broken” fútbol game. They would merely state the simple truth – that the game, as it had been changed, was no longer fútbol at all. Consequently, because the economic system that exists in developed nations has not resembled or incorporated the rules of free market capitalism for over a century, it is not only completely ignorant, but it is deliberately duplicitous to state that the economic system we use is “broken” capitalism.
To the contrary, Dalio should choose to be transparent and tell the truth by stating that ever since the US Central Bank rose to power in the US and centralized the dollar creation process and seized control over the power to deflate and inflate the US dollar, free markets have not existed. Thus, the solution to return America to the land of the free and equal economic opportunity to all would be to return the US economic system to free market capitalism, which would necessitate the abolition of Central Banking. Instead, because Dalio understands that speaking truth to power will put him out of favor with those in power that run the economics of the country, and that doing so will negatively impact his multi-billion dollar profit making business, because his soundbites always cover up the fraudulent nature of the system from which he benefits the most from its built-in inequity, I must deduce that Dalio’s statements are all for show in a big smoke and mirrors game. Without personally knowing Dalio, of course, I can’t be positive that he is being two-faced and presenting one face to the public for empathy votes while holding a completely different private position, but I am 100% certain that were he really sincere about solving the problem of massive wealth inequality in America that he would need to be transparent and explain why free markets do not exist in America. Furthermore, if the social structure of America breaks down and devolves into chaos, in which people are killing each other to survive as Dalio predicted, Dalio will likely not give a second thought about hopping on board his private jet and promptly abandoning the US for a luxury home abroad, perhaps stashed in an isolated island or island nation like Hawaii or New Zealand. Likewise, Tudor, though I’m quite certain he also understands that the real solution to wealth inequality is to fight for the reinstatement of free markets not only in America, but in all nations worldwide, only offers a solution that at best, would serve as a stop-gap measure and would never be self-sustaining towards the achievement of a long-term objective of equal economic opportunity for. Tudor’s solution would instead ensure the continuity of the same broken system that exists, from which he will continue to benefit, at the detriment of 99% of all other US and international citizens.
