Bridgewater’s CEO on Inequality, Uncertainty, and Polarization



David McCormick, the chief executive officer ofBridgewater Associates, isn’t a typical hedge fund honcho. He’s a former Army Ranger who cleared minefields in the first Gulf War and a Princeton Ph.D. who served as President George W. Bush’s undersecretary of the Treasury. He now runs the company Ray Dalio founded, which manages $140 billion, much of that for pension funds.

How do you reconcile the political situation with the state of financial markets?

We’re in a unique moment, a paradigm shift that has been accelerated by the pandemic. There’s an enormous amount of uncertainty, more polarization than at any point in my lifetime, and growing tensions between the U.S. and China. How that’s managed and how that plays out has huge implications for markets and for the economy.

What are the most critical considerations in the U.S.-China relationship?

Artificial intelligence, quantum science, 5G—those are winner-take-all technologies. They have geopolitical and military significance. Having leadership in those areas really matters.

Does it feel to you like a time to be taking risks?

You could imagine aJapan-like recession/depression for the next 20 years or a 1970s stagflation [low growth with high inflation], and those very divergent outcomes have implications for how different assets perform.

This is one of the most challenging times ever for policymakers. Should we be thinking about unintended consequences?

Absolutely. That was one of the lessons of 2007 to 2009, when I left the government. With all that stimulus, assets were the beneficiaries of liquidity, and in the decade that followed, that was one of the contributing factors to growing inequality.

Is corporate America doing a good enough job responding to the challenges facing the country?

There are times when silence just isn’t an option—I believe this is one of those times. CEOs have to speak out on what’s right. But when CEOs speak on all things, it minimizes the message. On what issues are they most credible? Are they speaking because of their economic interest or on behalf of the country? It has to be done with caution and humility.

What do you worry about the most?

The opportunity gap. We need to ensure that people in the bottom quartile of the economy have as much opportunity to achieve their dreams—through education, through health care. What we saw in the pandemic is those who were most disadvantaged were hurt the most. That’s contributing to the polarization.

If you could refocus the national conversation on one thing, what would it be?

That sense of common purpose. I grew up in a small town in Pennsylvania, all White kids in my high school. When I got to the Army, it was a melting pot of different backgrounds. Your prejudices, your preconceived notions, they just fade away. I think some form of national service, where rich kids and poor kids, urban kids and rural kids come together, would be an important step. It doesn’t have to be the military.

Do you feel optimistic about the future?

As crazy as it sounds after watching TV over the past few weeks, I do. I’m a guy who went to West Point and who thinks about duty to country. I’m horrified by the violence in our Capitol. But I think the steps needed to get our country on the right path are clear. It’s not about politics, it’s more about leadership.

This interview has been edited for clarity and length.

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