Ray Dalio explained in his LinkedIn about the four big threats that should create worry and the one big force that should create optimism. The four big threats are the financial/economic threat, the internal conflict threat inside the US, the external conflict threat, and the acts of nature threats (drought, floods, pandemics, etc.) and the one big force that provides reasons for optimism is man’s capacity to adapt and invent ways of improving things.
While these threats exist, the world is in the best position in history judging by most measures of well-being such as life-expectancy, real incomes, and real wealth, so if we handle these big worries well, things should be better than ever. Of course, averages hide the differences which are enormous, but the capacity to deal with these extreme differences exists, so the potential to have the best times ever exists if we can deal with the four big threats well.
To have better times than ever we need to:
- Get our finances in order through a mix of a) being more productive by investing in those things that make us more productive and benefit most people (such as education), and b) engineering a “beautiful deleveraging” that spreads out and reduces the real debt liabilities and assets relative to real incomes. (If you want an explanation of how to engineer a beautiful deleveraging, see his book Principles for Navigating Big Debt Crises).
- Develop a strong and smart political middle that represents the majority of people and can defeat the extreme populist minority so that we can work and live well together. Because the policies that the majority of people want are both most acceptable and more sensible than the policies that the extremists are fighting for, it should not be all that difficult to put together a platform that represents what the majority in the middle wants.
How would such bipartisanship work? For elections it can occur in a variety of ways. As for governing, it can occur in a number of ways if leaders want it, such as the next president of the US choosing to have a bipartisan Cabinet of smart people and to initiate a bipartisan “Manhattan Project” type initiative to make economic reforms that would both significantly improve productivity and benefit the majority of people.
- Have rival countries develop agreements and protocols that would minimize the chances of military wars. This could involve having each leader delegate teams to look at the existential threats posed by other nations and negotiate paths for minimizing the risk of fighting over them. If parties could work on minimizing the existential risks of the other parties, that would go a long way to avoiding wars.
- As for acts of nature, Ray Dalio will defer to others more knowledgeable than he is to suggest ways to cost-effectively deal with them.
- As for man’s ability to adapt and invent, he thinks that is naturally happening in the greatest way ever. That’s because of the development of technologies that help people think about how to make such improvements and because of the development of venture capital markets to finance entrepreneurs with good ideas in numbers and amounts that are unprecedented.
While we might think that the odds of doing these things are improbable, they are certainly possible and could even become probable if most people demanded that their leaders and political parties move in directions like these.
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