Hedge fund manager Ray Dalio entered the mainstream recently when he granted an interview to CBS’s 60 Minutes. Before that, he and his shop, Bridgewater, were only common names among financial people who both revered their ability to make money and were a bit skeptical of the way the shop operates.

Among other things, Dalio requires radical truth from his employees. You can say anything, as long as it’s true and on point. Talking about employees to other employees will get you fired. Meeting participants review each other in real time.

Dalio believes capitalism needs to be reformed. He thinks the current system doesn’t afford people the same opportunities for growth. That starting at the bottom of the income ladder means only a slight chance of getting ahead.

In short, he said the American Dream doesn’t exist today as it did when he was a kid.

I don’t know Ray Dalio, but his approach reminds me in name of President Trump’s “disciplined realism.”

Disciplined realism…

Trump seemingly will say anything to anyone, secure that he won’t suffer personally or professionally because he’s rich. He moved the U.S. embassy in Israel from Tel Aviv to Jerusalem, the capital of Israel, because that’s where embassies belong. Calls out problems on the U.S. southern border. Chides China for abusive trade practices.

It’s refreshing to hear these things from a politician… to a certain point.

Along the way, his principle loses its discipline. Trump regularly skips from the truth to hyperbole to fantasy. The border issues don’t constitute a national emergency that imperils the nation. And I think George Washington and Harry S. Truman can claim greater successes than Trump in their first two years in office, something he boasts of regularly.

Trump is like Sheldon Cooper from the Big Bang Theory, with wealth instead of math skills. Confident in his abilities, speaking truth even though it makes others uncomfortable, unapologetically self-interested, and a bit delusional about his personal grandeur and importance.

But he still attracts people.

The Trump Appeal

Part of Trump’s appeal rests in what he isn’t. He hates big government. He doesn’t think Washington can solve society’s ills. And he doesn’t begrudge people who’ve done well for themselves.

As the 2020 election cycle gets under way, it will be interesting to see how Trump’s potential rivals build their case for unseating him.

It would be great to inject a little radical truth into the debate…

Income flows unequally in the U.S. That’s obvious. Taxing some of it away takes it from those who earned it, but it doesn’t necessarily deliver the goods to the rest of the nation.

The funds sit at a weigh station called The Government, where the political class do what they think is best.

That’s the devilish detail…

What makes elected politicians, especially federally, the best arbiters of what’s right?

Opportunities don’t always present themselves to all Americans. But shutting the doors to those who have figured out how to find them isn’t the same as showing everyone the path and letting them determine their futures.

There are many Asian kids applying to Harvard and other highly competitive schools that have a lot to say about this. They work hard and excel at the tests necessary for entry, but are then denied admission due to someone else’s notion of fairness.

But again, so far, government help has been a hindrance.

And health care is expensive. Medicare pays less to health care providers than the cost of the service, and is going broke to boot.

Adding more people won’t make that better. To bend the health care curve requires eliminating the idea of “insurance,” and instead essentially moving to a payment-for-service model where costs are shared across users.

It wouldn’t seem popular, but if we start with the notion that everyone has a right to health care, well, this way would work.

Of course, we might not like it…

We’d need to cut payments to doctors, specifically to those in specialties. It would be painful within the industry, take years to implement, and reduce our level of care most likely through wait time rationing.

If the VA is the government’s shining example of how such a system would run, count me out.

I expect these three topics to be among the top ideas discussed between now and next November, with a little bit of time reserved for Trump’s tax returns, the Mueller investigation, collusion (no, it won’t go away), and a host of other grievances. But unless we get more compelling answers than “elect me and make the government bigger,” chances are we can expect another four years of Trump, even as his approval rating sits near 40%.

Sounds like Capitalism to Me

As for reforming capitalism, I’m not sure what that means…

Our market-based system allows buyers and sellers to make the most of their situation. When both walk away happy, the system has worked. Since no one is compelled to buy or sell (in theory), they can hold out for a deal that seems fair.

What appears to be missing is the idea of stakeholder capitalism, where companies view their employees, clients, and community as part of the business. Instead we have shareholder capitalism, where the overarching goal is to maximize profits and share price. The way to encourage stakeholder capitalism is to publicize corporate behavior. Then allowing consumers to patronize those that they believe are good citizens.

This would include people eating at Chick-fil-A because the company makes a darn good sandwich, treats its employees really well, and closes on Sunday to allow employees to rest and attend church as they see fit. And it would also include Patagonia, which just announced it would only allow customized fleece vests for companies that fall within its guidelines of good actors, which cuts out most financial firms.

That sure sounds like capitalism to me.

Now it’s up to us as consumers to do our part. Directing business not to the lowest offer, but to the firm we think provides the best deal all around.


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Rodney Johnson
Rodney works closely with Harry to study the purchasing power of people as they move through predictable stages of life, how that purchasing power drives our economy and how readers can use this information to invest successfully in the markets. Each month Rodney Johnson works with Harry Dent to uncover the next profitable investment based on demographic and cyclical trends in their flagship newsletter Boom & Bust. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. Along with Boom & Bust, Rodney is also the executive editor of our new service, Fortune Hunter and our Dent Cornerstone Portfolio.