Ray Dalio and the 60% — CEO Daily, Tuesday, 24th October

October 24, 2017, 11:42 AM UTC

Good morning.

Ray Dalio runs the world’s largest hedge fund and has accumulated $17 billion in personal wealth. But now, he’s focusing his analytical skills on the 60% of the U.S. population that has no wealth. In a post published yesterday on LinkedIn, Dalio painted a statistical portrait of the bottom 60%, and it’s a grim one. Some excerpts:

  • Real incomes for this group have been flat to down since 1980.
  • Only about a third of this group saves any of its income. Most would struggle to come up with $400 in an emergency.
  • Those in the top 40% have benefited disproportionately from changes in asset values. The bottom 60% have less liquid forms of wealth (cars, real estate) and more costly forms of debt (student loans, credit card debt).
  • As a result, the average person in the top 40% now has ten times the wealth of the average person in the bottom 60%. That’s up from six times in 1980.
  • The top 40% also spend four times more on education than the bottom 60%. This creates a self-perpetuating problem, as education increasingly defines the class divide.
  • Since 1980, divorce rates have more than doubled among middle-age whites without college degrees, from 11% to 23%.
  • Premature death rates for those in the bottom 60% are up by about 20% since 2000. The biggest contributors to that are drugs and poisoning (up 2x since 2000) and suicides (up 50% since 2000.)

In Dalio’s view, the rising inequality is contributing to increased political polarization and reduced trust in government, financial institutions, and the media, which are all at 35-year lows.

You can read the full post here. The kicker is this: Dalio says the divide will only get worse in the next 5 to 10 years, both because of a demographic squeeze that puts stress on pension, healthcare, and debt promises; and because of the effects of technological change on employment and wealth.

More news below.

Alan Murray

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Summaries by Geoffrey Smith; geoffrey.smith@fortune.com


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