The Register Citizen (Torrington, CT)
‘We want to help rather than leave’
Dalios double down on commitment to Connecticut
Two months apart, without knowing they were doing so, Ray and Barbara Dalio described how they helped each other understand poverty in Connecticut, the richest state, where they are comfortably the richest residents.
The questions the Greenwich couple asked each other go a long way toward explaining why they have not only stayed, but raised the Nutmeg flag ever-higher — at a time when other uber-wealthy state residents have exited for sunnier, lower-tax places.
Those questions also point to why the Dalios are stepping up their activities in Connecticut in the coronavirus crisis.
Barbara Dalio immigrated to New York from Madrid in her 20s, more than 40 years ago. She met Ray,
who had grown up in a middle-class neighborhood in Queens, son of a jazz musician. They married, moved to Connecticut, raised four sons and he built the world’s largest hedge fund, Bridgewater Associates in Westport.
“I would ask Ray, ‘What’s going on, why do we have this poverty?’” she said in a conversation she and I had on March 2, just before the pandemic gripped Connecticut and the nation.
That led her, a dozen years ago, after their youngest son was grown, to launch a long effort to boost engagement by students in the lowest-income, lowest-performing schools. She dove in, hoping to help educators make a difference.
“She would come home and describe it and I didn’t have any window into it,” Ray Dalio said in late April, when the three of us talked — over Zoom, not in person unfortunately — about her sense of place, his views on where the world is heading and why their values keep them in Connecticut.
He had that window growing up in New York. In recent times, Barbara was the conduit. She’s still at it, as the driving force behind the Partnership for Connecticut, with $100 million commitment from the Dalios over five years and an equal amount from the state, aimed at helping the 33 most challenged school systems.
And both of them have doubled down on Connecticut despite the state’s financial woes, or maybe because of that — all the more now that coronavirus has struck, now that we’re in a deep recession.
“Barbara and I share similar values and the most important things for us are meaningful relationships and our community,” Ray said, describing two topics central to his 2017 book, “Principles: Life and Work.”
‘Connecticut is our home’
In all, donations through Dalio Philanthropies in Connecticut, mostly for education led by Barbara Dalio, now push $45 million a year — and a lot of legwork to go along with those checks. They’ve stepped up their in-state giving but they and their consultants peg the total at $166 million since 2004, to many causes.
The long list includes $2.3 million to the Yale Center for Emotional Intelligence; $2.5 million to the Carver Foundation of Norwalk for middle school youth development; and $10.5 million for a project to strengthen youth organizations in Stamford and Hartford.
This year’s total includes their $20 million partnership installment, plus another $16 million for education programs not in the partnership, the Dalios told me.
For coronavirus, their giving includes $3 million for child care for firstresponders through a Hartford area agency; and $1 million to two food banks. And it includes Ray’s help — in money and connections — in bringing supplies from China to fight COVID-19.
Later this month, just in time for schools to not reopen, the first 17,000 Dell laptops bought by the partnership will land in the hands of some of the state’s neediest and at-risk high school students. Another 43,000 laptops, loaded with software, should arrive by summer.
Outside of the partnership, they’re looking for online learning programs, which they’ll pay for, to go along with the laptops — obviously a need with new urgency in the crisis.
This was the first time the Dalios have spoken in depth with a journalist about their roles in their financially troubled home state. Their message is that as global as Ray Dalio’s reach has been — and it has, from CNBC to China to Davos — Connecticut is the place they care the most about.
Giving in Connecticut represents nearly a third of the total amount they will donate worldwide this year.
“We just feel a sense that Connecticut is our home and I think it has been very good with us,” Barbara Dalio said in the recent conversation. “We raised our kids here and we always felt that it was a great state and great community and we really felt a sense of appreciation and obligations towards it.”
The machine and the community
In some ways of looking at it, conditions are in place for a couple of the Dalios’ age and means to move elsewhere.
Ray Dalio is transforming the ownership structure and management at Bridgewater, which he founded in 1975. He’s still co-chairman and co-chief investment officer but no longer holds the CEO title. That business has brought the Dalios a net worth of $18.7 billion as of last fall, according to a guess by Forbes.
He is 70, within a year of the age when two other Greenwich billionaires, Dean Metropoulos and Thomas Peterffy, both said farewell to Connecticut as residents four years ago, making their displeasure over the state of the state known to elected officials.
The Dalios aren’t weighing in publicly about Connecticut taxes, politics or debates such as tolls and public employee pension reform. They do talk about the state’s economic funk in a general way.
“To me if you’re part of a community with people you care about and they’re hurting, it’s important to help rather than leave,” Ray Dalio said. “When the conditions are worse for some in Connecticut, we want to step in and help rather than leave.”
He described an “esprit de corps” in the state’s struggles, and said, “I really believe that going through good and bad times together provides the greatest rewards . ... Relationships get tested by bad times.”
That, too, is part of the philosophy Dalio has articulated in his writings, which often appear first on LinkedIn, and which grow out of the management methods he installed at Bridgewater. That includes a belief that reality, such as financial conditions, operates as a machine that can be understood; Ray Dalio has described himself as a mechanic but has also talked about “humanity’s power ... to get to higher levels of well-being.”
Most famously, the business axioms include “radical transparency,” in which dissent is not just allowed but required. Every participant in a meeting evaluates all the others, and those metrics form a database that’s deployed to guide teams at Bridgewater.
Less transparent is whether the Dalios would accept and even welcome higher taxes on the highest income earners as a way of filling the state’s perpetual budget gaps, which were shrinking but now threaten to bounce back above the $2 billion-a-year level.
They signed The Giving Pledge, joining more than 200 super-rich, mostly billionaires, who promised to give away at least half their wealth in their lifetimes, or upon their deaths. And in making themselves leading philanthropists for in-state causes, and building up Bridgewater as an almost entirely Connecticut operation with 1,500 employees, many of them spectacularly paid, the Dalios have spoken.
“We have the resources, we consider ourselves blessed and we consider ourselves part of this community,” he said. “In a good community everybody brings what they can. When we look at the other people and what they’re bringing — the teachers that Barbara works with and so on — we respect them a lot…And we think it’s important to do what we can. Different people with different resources, so we bring what we have.”
A fork in the road
Connecticut, global in finance, insurance, education, health care and manufacturing, sits as a fulcrum of what Ray Dalio calls, as the title of his new book, “The Changing World Order.” He places American prosperity and influence in the context of great empires of the past, with the question of where we’re heading.
Coronavirus adds punctuation.
“I think we’re at a defining moment over the next three years, whether we’re going to have an attitude that we’re helping each other, pitching in and being understanding and empathetic with each other, or whether are going to fight each other for what we want or need,” Dalio said.
By distilling the core problem to a human question of understanding and empathy, he’s saying why he and Barbara have committed to their home state of four decades. At every level it’s about community and relationships.
Oh, and resources. He’s not predicting markets publicly but he is talking about the battles.
“There’s the virus and there is the economy and it’s important not to confuse the two. I view this as an economic tsunami, and then as the virus recedes, you have the economic damage. With that economic damage there will be income and balance sheet holes . ... The government will not be able to rectify the balance sheets and the income statements of everyone.”
The result: “What will happen will be a much slower recovery than people expect,” he said.
One reason: The established order of free-flowing goods and capital is breaking down.
“Now we’re in transition from being interconnected to being self-sufficient in a still interconnected world. That adjustment process is going to be very painful. It’s going to make everyone and everything less efficient,” he said.
If he sounds pessimistic, he’s not — at least when it comes to whether coronavirus makes us better or worse in the long run.
“I can’t tell you which fork in the road we’re going to take,” he said. “I’ve seen fabulous stuff. I’ve seen people contribute in all ways. I’ve seen people run to the fire and help, and I’ve seen enormous creativity and contributions by all different people. That has made me feel great . ... And then I’ve also seen resentments and anger and even distortions in the media that fuels anger, so I honestly don’t know.”
Restructuring of debt and of the whole system is inevitable. “My hope is that we do it in a bipartisan, mutually considerate way.”
‘I’m following Barbara’s lead’
The Dalio family came into my consciousness as a force of ideas in December 2007, when, as an editor, I asked a reporter to write about an odd advertisement they had produced in newspapers around the country.
The ad asked people to give gifts of charitable donations to friends and family, rather than more stuff that our loved ones might not want. The tagline: “Let’s redefine Christmas. By putting more Thanksgiving in it.”
One of Ray and Barbara Dalio’s four sons, then 23, spoke about the family’s commitment to charity. At that moment heading into the Great Recession, Bridgewater was already said to be the world’s largest hedge fund and his net worth was already in the billions, according to Forbes.
He anticipated the recession with warnings about the debt bubble. Bridgewater did well in the downturn, and Ray’s dispatches became Wall Street gospel in the way of an earlier Connecticut business titan, Harry J. Gray, who built United Technologies Corp. in the ’70s and wrote op-eds in the New York Times titled “Gray Matter.”
Cut to the present; with so much philosophy of life floating around, and with thousands of impressionable youths in the picture through the couple’s educational philanthropy, I asked whether he wants his principles to be part of the school and community programs. He rebuffed that suggestion.
“Barbara is the leader in most of these things in Connecticut, I’m following Barbara’s lead. People don’t need to be preached at as to how they live their lives,” he said. “I only put it out there if people want to take it . ... That’s true around the world and especially in Connecticut.”
That also applies to elections. They’ve made political donations in the past, but rarely and not recently. “I am totally out of politics in Connecticut,” he said.
“Or anywhere,” Barbara Dalio added.
Two state issues
The Dalios and the current and previous Connecticut governors have come under fire for two policy issues. The first was a 2016 state package of grants and loans for Bridgewater totaling $22 million under former Gov. Dannel P. Malloy, a Democrat, who made the hedge fund one of his “First Five” large employers with targeted aid.
The incentives were for hiring and training, and to support hundreds of millions of dollars in physical improvements at Bridgewater’s wooded campus in Westport and other offices. Republicans howled that spending millions on a business that was, in essence, printing money made little sense for a teetering state.
It was the best money Malloy ever spent, I argued at the time and still believe. No one knows publicly what Bridgewater and the Dalios are worth to the state in tax revenues but even a low estimate makes that $22 million look tiny.
New York and New Jersey, not to mention Florida, undoubtedly offered many times that amount, unsolicited, and if the Dalios have stepped up their commitment to Connecticut, maybe that gesture by Malloy helped seal it. They aren’t commenting.
As a reminder, General Electric at the time was busy moving its headquarters from Fairfield to Boston and dismantling its GE Capital division, costing Connecticut thousands of jobs.
The second issue was that the Partnership for Connecticut, the $200 million joint effort, was created as exempt under Freedom of Information and state ethics rules under Gov. Ned Lamont, a fellow Greenwicher. Lawmakers in both parties fought to change that right up until coronavirus shut down the debate two months ago.
Since then, the partnership has ordered those laptops at a speed that no government agency could, and has run its board meetings and finances transparently.
Barbara Dalio explained to me in March that the structure was key for reaching out to families confidentially. “When they come and we’re discussing the different issues they might have, it would be very difficult, especially when you’re dealing with mental issues,” she said, to operate under government rules.
The structure also makes outside fundraising possible. It certainly didn’t resonate with the public as an issue in town hall-style meetings Barbara Dalio started to convene before the coronavirus hit.
Some people in public education believe the answers should come from a purely public system. Education Commissioner Miguel Cardona isn’t one of them. “Connecticut’s glaring achievement disparities is a problem that we must confront boldly,” he said in a written statement, calling the Dalios’ support “critical as we look to equalize access and opportunity.”
He added, “I have seen firsthand how their contributions benefit students’ ability to thrive in school.”
‘Billionaires are no different’
No place in America highlights the divide between rich and poor as starkly as Connecticut. Barbara Dalio doesn’t have to drive far from Greenwich to reach some of the poorest neighborhoods in the country.
And Ray Dalio calls income inequality a dire emergency that threatens growth and stability.
Wait, don’t they exemplify the divide? His unimaginable wealth was made in financial transactions, not in, say, the invention of the smart phone or an online retail empire — so it’s harder to understand as a product or service.
He rejects the irony. “Most people that I know who are very wealthy became wealthy because they had a passion for something that they were good at and happened to pay well, so they ended up making a lot of money,” he said. “It’s not good to stereotype any group of people as being bad whether they are rich or poor, or are of any race, nationality or gender. Billionaires are no different.”
I ask Dalio, a Harvard Business School graduate, whether his complex thinking comes from his father’s jazz music on complex instruments. “He had a jazz-like personality, and I was around creative improv, and I loved that,” he said. “He tried to teach me to play the clarinet and that didn’t go well.”
In a sense, it did go well. And it has gone well for Connecticut. Ray Dalio says he can’t speak for Bridgewater anymore, but said, “I’m speaking for the majority of people at Bridgewater and saying that they love Connecticut and I’d expect Bridgewater to stay here as long as Connecticut remains a good place to be.”
What, for them, makes this a good place beyond proximity to New York and physical comfort?
“My goal is meaningful work and meaningful relationships. So for me and for Barbara we think meaningful relationships are the greatest rewards in life.”