The Big Strengths of India in a Changing World Order: Ray Dalio
Ray Dalio, the founder of one of the world’s largest and most successful hedge funds Bridgewater Associates, believes the cheap cost of an educated workforce is one of India’s many strengths in the changing world order.
In a conversation with Pulitzer Prize-winning American journalist Thomas L. Friedman at the New York Historical Society in May, Dalio explained the reasons India can be a ‘winner’ in the backdrop of an increasing rivalry between China and the US. Interestingly, Dalio listed the ‘low costs’ of educated Indians as one of the country’s key strengths.
“Education is very important. In many places, an educated person can be very expensive, but in India, they have very low costs for an educated person. That’s powerful,” Dalio said. Among other indicators that reflect India’s strength, he also mentioned the low level of indebtedness. “If you have high levels of indebtedness, you are probably going to have a problem. They [India] have a very low level of indebtedness,” he said.
The billionaire investor also flagged the innovation and technological advancement taking shape in India, especially given the country is “incredibly poor”. “We are seeing big leaps forward in terms of how this incredibly poor country that doesn’t have toilets is going to technology development,” he said.
Dalio added that he could list “many more things” about India but specifically pointed out the ability of the middle class to rise. “Within this country, they have wonderful education, wonderful family, they have, you know, they have more millionaires in India than there are in the United States,” Dalio said.
He further spoke about the benefit of staying neutral for a country such as India in the backdrop of the Russia-Ukraine war. “If you look at the history of the wars: there are the winners, the losers and the neutral countries. The neutral countries by all measures – their markets, their investments – do better than even the winners. If you are the loser, you are wiped out. So, when we look at these types of things, we are seeing prosperity happening at these places,” Dalio added.
During the interaction, Dalio also spoke at length about the growth of China. Dalio shared his own up-close experience having visited China on multiple occasions. “I’ve been going to China for 39 years. I started in 1984 soon after Deng Xiaoping came to power. I’ve been very lucky. I didn’t have any money and I didn’t go for money. I went for curiosity and then I really got to be part of helping them build the system,” he said.
“Since I started to go, per capita income has increased by 28 times, life expectancy has increased by 10 years, the poverty rate (the hungry poverty) has gone down from 88 to less than 1 per cent,” Dalio said. He explained how China economically steered itself after remaining a strictly closed economy for a very long time.
“What they got right was the reforms and they did it in a symbiotic relationship with the United States, in which essentially, they sold us inexpensive good value goods that we preferred the prices of, and they lent us the money to do it. It’s a difficult relationship,” Dalio added.
He described the Chinese as “intelligent, hardworking people”. “They are orderly, disciplined, hardworking, they can be very creative. There are different cultures within China. The Southern is more business community and so on.”
He further explained the nature of China’s foreign policy. “One of the things that is not understood is how the Confucian way of thinking affects their foreign policy. Confucianism is an idea of how a family should operate. That within your family, you are controlling your family, you have the right to be good. You have these rules. Then you interact with others, so it’s an extension of that. They view that within China, that is their family. The word country in China has two characters, which is ‘state family’. That’s also why it’s so autocratic. Because it’s very much top down, like strict parents operating that way,” he explained.
Dalio also recollected how former Chinese vice president Wang Qishan described the country’s foreign policy to him. “He [Wang Qishan] said that this idea of taking over and proselytizing other countries just doesn’t work. If you are going to occupy and take away their basic rights – that Vietnam doesn’t work, Afghanistan doesn’t work. And he said that was the development of the Mediterranean culture. He described that up really to be ‘Peace of Westphalia’ when they had 30 years of war, and then we came up with the idea that we would make a country and we would make borders,” Dalio said.
