Marketplace Morning Report

Econ Extra Credit with David Brancaccio

If the secret to success is introductory economics, let’s get successful together.

Below is a copy of this week’s issue of Econ Extra Credit. Sign up to receive Econ Extra Credit in your inbox weekly.


Hello!

The man who created what’s regarded as one of the world’s largest and most successful hedge fund says if three things happen at the same time, the world could implode. Bridgewater Associates founder Ray Dalio is someone on the inside calling for change to capitalism. You see, Dalio’s aforementioned scenario is playing out in real time.

First, Dalio says when interest rates get so low that central banks no longer have room to lower them to stimulate economies in an emergency, he gets worried. Rates are that low now. When great powers vie for influence, he also gets worried. (China vs. the United States and Europe, now).  And thirdly, Dalio worries about deepening of wealth inequality in economic downturn (look around you). These three factors came together in the 1930s, Dalio points out and, well, you know what happened then. He’s arguing for reform to capitalism with a focus on return on investment and a view to making our economy and our society more fair. 

— David

P.S. Dalio has also been sharing his thoughts on the reforms necessary during the COVID-19 pandemic in his essay series “The Changing World Order,” which is online here.

Inside this week’s theme: Equality of opportunity

“When we think of the American dream, I think it’s equal opportunity.” 
— Ray Dalio

One of the reforms so urgently needed in our capitalist system, Dalio argues, is to bring greater opportunity to more people. Investing in education provides positive financial returns to society, he says, whereas the cost of not educating our citizens can produce “a terrible economic burden.”

This week, we invite you to explore recent research from Harvard University’s Opportunity Insights project. The researchers found, among other things, that “in 99% of neighborhoods in the United States, black boys earn less in adulthood than white boys who grow up in families with comparable income.” 

Elsewhere, ProPublica has built a database laying out racial disparities in education and school discipline, available here. The tool shows, for example, that in Los Angeles and Chicago public school districts, Black students are, on average, about three grades behind white students. 

Next week, we speak with Felicia Wong, president and CEO of the Roosevelt Institute, and Pavlina Tcherneva, associate professor of economics at Bard College, about funding public sector jobs.

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Kimberly White/Getty Images for TechCrunch
Ray Dalio says we need to reform capitalism to make it work for everyone
Drawing from history, he’s calling for structural change to our current capitalist system in a way that expands opportunities and access to resources —  like prioritizing education. (Listening time, 13:40)
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