3 Rules of Thumb for Policymakers

3 Rules of Thumb for Policymakers - Ray Dalio

1. Don't have debt rise faster than income
2. Don't have income rise faster than productivity
3. Do all that you can to raise your productivity

On wealth inequality

Why do people complain about wealth inequality so much? The rich earned their money, the poor shouldn't take it just because they can't get a job.

Gary Leverich writes:

There’s a really valid question that’s the cornerstone of the real argument.

What is the responsibility of a wage earner earning an income, regardless of income?

The next question is:

What is the responsibility of an individual earning money based on the efforts of others?

Here’s the thing. NOBODY has ever gotten rich without the efforts of others.

So, when you’re rich, what is your responsibility to those that helped you get there?

It’s a simple question with a complex answer. An answer that I’m not sure about myself.

The United States fought a war in the 1860’s over the concept that those that work for your benefit should have rights and freedoms just like you.

In the 1980’s, Ronald Reagan introduced the idea of “Trickle Down Economics”.

The idea supposed that if you allowed those with the capacity to get rich, the ability to get richer, that money would trickle back down into the economy. The economy would be boosted, and everybody would benefit, from the poor to the middle class, back to the rich.

It doesn’t work. Not even a piece of it. All that happened was the rich got richer and the poor got poorer. We have 35 years of evidence that it absolutely doesn’t work. So why are we still doing it?

Enter political rhetoric now. If we tax the rich higher, and give that money to the poor, the rich will just take jobs overseas and America will suffer. Yet, all these things the rich say they’ll do if a redistribution of wealth is enacted has already happened. They did it under Trickle Down Economics despite having incentives not to do it.

They can’t have their slave labor in the U.S. anymore so they happily move those jobs to countries that do. I guess the child below should be happy the American billionaire is willing to pay them 10 cents an hour. While the child is not dangling from a tree, do you really care if he does? Not if you buy any of the brands of clothing that utilize child labor in it’s production.

We have a responsibility to ALL people of the world. Not just the rich. And those that have 99% of the world’s wealth DO have a duty to all those that helped get them to that 1%. That money does NOTHING to help the economies of the world as it sits in bank accounts accumulating more wealth, propped up by fuzzy math/numbers and flaky inflated markets with no real sense of true worth.

That money needs to be reinvested into the global community. Not just reinvested for the sake of making more money on top of the money that already exists by inflating markets, creating economic bubbles and destroying livelihoods while you’re considered “Too big to fail”.

When bad decisions hold no consequences for a certain segment of society, you have a really big problem with that society. Bad decisions allow for social, and economic mobility. When you bail out those that make bad decisions, you eliminate the ability of those that make good decisions to take their place. Then you have those “Too big to fail” giants creating legislation that keeps those with good ideas and good decisions from being able to succeed and fully flesh out those ideas.

The system is broken. Really broken.

The problem is the rich make the rules. It’s the Golden Rule - He who has the gold makes the rules. Then when their actions are questioned they devolve the argument into “We’re being attacked by the poor.”

But, the poor by their definition is anybody that’s trying to find access to their hordes of wealth. This includes other millionaires and even billionaires.

So, the real problem isn’t the poor. It’s the hoarding of wealth for the sake of hoarding wealth and to just have it. It’s about not giving back to those that have allowed you to ascend to that place.

Just giving money to the poor is a bad idea. It doesn’t work. It’s why I’m against minimum wage hikes. Throwing money at poverty doesn’t work. But reinvesting into local communities and economies so businesses, infrastructures, and most importantly great ideas can grow does work, and letting the best ideas, practices and decisions win shouldn’t seem like such an outlandish idea.

Yet, that’s exactly what the current wealthy are claiming.

Can human civilization now do away with competition?

Haven’t we reached a stage where competition among humans is detrimental to our quality of life and even existence?
We, as in all humans in all countries of the world, should now cooperate on distributing our abundant wealth and resources, rather than having it end up mostly in the hands of a few.

Solution for a better world

How much money does one person need to live comfortably? Let's assume it's $10m.
Once a person's assets has reached that amount it should be capped.
Any additional income should be given to the company's shareholders or kept as its reserves.
The income to the person should be given just enough to maintain his net worth at the capped value.
By limiting eveybody's assets to $10m, wealth can be distributed more equally to society, thus benefiting everyone.
No one gets to hoard massive amounts of wealth. Improvement in productivity should benefit the whole society not just to make a few filthy rich.

A manifesto against all forms of war

War where lives are lost by physical aggression and armed conflict is denounced these days, so the world has generally been peaceful this century, except for acts of terrorism.
But doesn't everyone realize that there are other forms of war- trade war, currency war, cyber war. Even competition can be seen as a form of war. The casualties suffer from a loss of quality in life (e.g. end up poorer), and it is not undamaging either to the winners. When competition is stiff, what does it take to become the winner? Blood, sweat and tears. More time spent at work instead of with one's family. How can work life balance be achieved then?
Why don't more people denounce all these forms of war instead of just the physical kind?