As the U.S. votes to elect the next president, hedge fund luminary Ray Dalio cites political polarization as the "greatest problem of our time"— worsened by people being "passionately attached to their opinions" and unable to disagree thoughtfully.
Amid a still-unfolding and highly divisive election cycle, the founder of the $138 billion Bridgewater Associates hedge fund — the world’s largest — explained why he isn't confident the country can return to civility.
"I'm not optimistic that we can get there, but I do know that we can get there if people are fearful of the consequences of not getting there," Dalio told Yahoo Finance in an extended interview.
The billionaire investor, who has spoken forcefully about how wealth inequality is fracturing society, delivered a grim assessment about the political status quo.
"I believe that if you study history...and you realize that you could have a civil war ... and you see that when people put winning and getting their way, above all else, so that they will distort truth, that they will cheat rules, and that they will be violent with each other because that winning is of paramount importance, that the whole suffers greatly, and it affects everybody adversely,” he said.
At Yahoo Finance’s All Markets Summit last week, Dalio shared the thesis for his upcoming book, "The Changing World Order." In it, the investor connected the dots between debt, low interest rates, monetary policy and widening wealth gaps. All of the former are helping to accelerate the U.S.’s decline, while amplifying China’s ascent, he said.
According to Dalio, the "most important thing" for the U.S. is "to do the fundamentals things" and "to come together."
"I'm most concerned about one side trying to beat the other side, and doing damage. Because history has shown that when you get those gaps, those wealth gaps, and the values gaps and anger, you do get demonstrations, you get violence, and you can move to the point that the respect for the system is not good," Dalio added.
‘The system is in jeopardy’
Dalio, the best-selling author of "Principles: Life and Work," told Yahoo Finance that "when the causes that people are behind are more important to them than the system; the system is in jeopardy."
That's why coming together is so paramount, he added. The key to that is nailing the economic fundamentals, such as curbing runaway spending and taming soaring debt loads, he said.
"That's important for every individual, for every company, for every organization, and every government. You can judge the financial health by those things," the investor noted.
The fundamentals that create those financial outcomes start with education, particularly a "broad-based good public education and civility” that includes “a common mission, like an American Dream,” Dalio added.
The investor, who is worth an estimated $16.9 billion, grew up in a middle-class family that taught him values and attended public school. When he was coming of age, the American Dream he benefitted from was "the idea of equal opportunity," he said.
The hedge fund manager also called for reforming the country's capitalist system, especially with respect to fixing the education system's disparities.
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.