US Elections: Rising Polarization in Politics

In this discussion, our Founder & Director – Paul Quaglia, Regional Director – Bhargav Reddy, and Manager – Ragyeshri Sudaroli, discuss insights from Ray Dalio’s recent article, “Pick A Side and Fight for It, Keep Your Head Down, Or Flee” where he explores growing political tensions in the US and what it could mean for the future of America. As we approach the upcoming election, the stark contrast between incumbent President Joe Biden and former President Donald Trump underscores not just political differences but societal fractures.

Ray Dalio is an American investor and hedge fund manager. He is the founder of the world’s biggest hedge fund firm, Bridgewater Associates, which manages USD 124 billion. Dalio stepped down as CEO in 2017 and retired as co-chief Information Officer in 2022, completing a transition that transferred majority control to the hedge fund’s board.

“I believe we now have to face the fact that fighting for democracy as we know it—with thoughtful disagreement and compromises governed by the rule of law—is unlikely to work. People like me who had a long shot hope for the emergence of a strong middle that fights against the extremists to bring the country together and makes major reforms to improve the system must recognize that the differences are becoming too irreconcilable for this to happen. 

Based on the lessons I learned from studying history about how things typically transpire under similar circumstances, I believe that what we are now seeing is the parties increasingly moving to greater extremism and a fight-to-win-at-all-cost mode. This is threatening the rule of law as we know it and is bringing us closer to some form of civil war.”

Ray Dalio, Pick a Side and Fight for It, Keep Your Head Down, or Flee

In the upcoming November 5th election, Americans will choose between incumbent president Joe Biden and former president Donald Trump. Biden’s presidency challenges were marked by concerns over inflation, significant industrial-policy legislation, and international challenges, compounded by age-related issues. Trump faces federal charges related to efforts to overturn the 2020 election and a previous felony conviction tied to his 2016 campaign.

Following the recent presidential debate, President Joe Biden’s performance was seen as vulnerable and weak compared to Donald Trump. The Democratic Party has allegedly begun talks about an alternate candidate to replace Biden.

The US vote base is increasingly moving towards political polarization, evident with a vanishing middle ground between the Democrats and Republicans. There appears to be a narrative on a move toward civil unrest, civil war, and extremism.

Recent surveys highlight significant contrasts in voter concerns: Republicans prioritize immigration as their top issue, driven by concerns over border security and cultural identity. Over 33% of the Republicans rate these as their higher concerns. Only 5% of Democrats see immigration as their primary concern, instead focusing more on issues like abortion rights and healthcare access, particularly following state-level actions on abortion laws post-Roe v. Wade.

We are in a stage where both political sides are becoming more extreme, referred to as “hardening.” This stage typically features large gaps in wealth and values, along with a loss of faith in the system’s ability to meet people’s needs and desires.

If Biden wins, Trump and the hard right may not accept his leadership or the Democratic Party’s authority. If Trump wins, the hard left may not accept his leadership or tactics.

There is a higher than 50% chance that democracy will not run smoothly through the election and beyond. Individuals will face choices– pick a side and fight, keep their head down, or flee.