US Warned Of Problem With 60% Of Workforce
The U.S. has become worryingly reliant on a small segment of its workforce, according to hedge fund billionaire Ray Dalio, particularly tech elites who, he argues, are propping up an “unproductive” majority.
Speaking at the Fortune Global Forum in Riyadh on Monday, the founder of Bridgewater Associates said that the U.S. economy could no longer be viewed “as a whole” and had become defined by the growing divides between its social and economic strata.
Taking the case of artificial intelligence, Dalio said the industry was led by around 3 million people, or 1 percent of the population, supported by another “5 or 10 percent” on whom the “whole world is dependent.”
He went on to say that the “bottom 60 percent of the population” is “almost becoming useless or unproductive” thanks to deepening educational inequalities, which have resulted in an “extreme dependency.”
Why It Matters
Dalio, worth around $15.4 billion per the latest Forbes estimate, has this year issued a number of worrying diagnoses of the contemporary economic and political situation in the U.S. Among other things, the hedge fund mogul has warned of an impending civil war driven by growing inequality, a breakdown of the international financial order, and a coming period of intense global strife.
What To Know
In making his argument for a growing “dependency,” Dalio noted that around 60 percent of the country reads at or below a sixth-grade level, and that this has restricted the ability of the majority of Americans to contribute meaningfully to the future economy. According to the National Literacy Institute, 54 percent of U.S. adults read below a sixth-grade level, while 20 percent read below a fifth-grade level.
However, Dalio described this growing dependency on a small section of individuals as “a world issue, not just in the United States,” and earlier said that this could be applied in a geopolitical analysis rather than solely to domestic economic affairs.
“The model that China exports to the United States—selling goods, earning money, and then using that money to buy U.S. bonds—has created an interdependency that is unsustainable,” he said. “There is a creditor-debtor relationship and so many intertwined dependencies that pose a significant threat.”
Regarding AI in particular, Dalio noted that the growing centralization of power and capital in the hands of a select few had aroused fears of a “bubble” forming.
In recent years, a growing share of the stock market’s growth has been driven by a handful of large tech companies that are making sizeable investments in AI. Nvidia, Microsoft and the other members of the “Magnificent Seven” together now account for over a third of the entire S&P 500 by market capitalization.
This concentration, combined with elevated levels of speculative investment in the technology, has led some economists to warn that a few critical shocks could be sufficient to trigger a major correction that would wipe out stock market gains in a manner reminiscent of the dot-com bubble.
What People Are Saying
Ray Dalio, speaking in Riyadh on Monday, said: “Consider this, 60 percent of the American population has below sixth-grade reading level. And that’s tough. And with that, you know, almost becoming useless or unproductive. And because of those things, you have a dependency, an extreme dependency.”
What Happens Next
Beyond longer-term risks of any “dependencies” within the U.S. economy, economists continue to issue warnings over more immediate threats—such as a slowdown in the labor market and weakening consumer confidence.