Principles For Dealing With the Changing World Order, Ray Dalio (8/10)

An analysis of the economic and political forces that drove the last 500 years of international power cycles

Principles For Dealing With the Changing World Order, Ray Dalio (8/10)

Rating: 8/10

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🤔 Pre Read Exercise: What Do I Know About This Topic/Book?

  • I’ve read Ray’s previous book, Principles, watched a number of his videos on YouTube, including his famous 30-minute animated video “How the Economic Machine Works,” and read many of his newsletters. I’ve also watched/listened to lots of his podcast appearances – most recently, on the Knowledge Project and Lex Fridman.
  • Overall, I have a pretty intuitive feeling about how Dalio thinks and the narrative this book will take. Looking forward to it, but also clenching my jaw because I know he’s very verbose!

🚀 The Book in 3 Sentences

  1. An analysis of the cycles that drive the rise and fall of empires.
  2. An analysis of the economic and political forces that drove the last 500 years of international power cycles.
  3. An analysis of the current state of the world and its current empires: the falling one (the U.S.) and the rising one (China).

🎨 Impressions

I like this book because it’s quite thought-provoking and insightful.

Dalio studies the past 500 years and distills the archetypical 150-year cycles behind the rises and declines of empires, as well as the sub-cycles within each empire (debt cycles, business cycles).

This is really cool and helped increase my understanding of the cause-and-effect relationships within these cycles and ask more informed and smarter questions about specific trends and the relative importance of an empire’s characteristics (e.g. internal and external conflict, education, technology, etc).

With these cycles in mind, one of my favorite quotes from the book is:

"Hard times create strong men.
Strong men create good times.
Good times create weak men.
And, weak men create hard times."

It's used to illustrate the rises and falls of past empires (the Netherlands and the U.K.), the rise and current decline of the U.S., and China's previous fall and current rise.

I also like this book because it dispels some of the common narratives around China, for example, that “China copies stuff from the west and is run by an inferior top-down governance system with the communist way of resource allocation”, and generally illuminates some cool stuff about China.

On that note, another reason I like the book (despite being super repetitive) is that Dalio is very straightforward in his analysis. He isn’t too diplomatic. He isn’t an alarmist. He’s pragmatic and cool-headed. He doesn’t demonize China or celebrate the U.S.

I don’t like this book because it’s very repetitive. There are many unnecessary references to earlier and later chapters, disclaimers, and verbosities. This is because his chapters begin as general explanations of a topic and often start from scratch, explaining the topic again in more detail. Despite adding more volume, the detailed explanations are not very unique or valuable and are often filled with texts from his old books or newsletters.

I also don’t like the book because I would have liked Dalio to spend more time on a more decentralized future of the world, which is what Balaji touches on in his book, as well as discuss crypto more.

I’d also like to see Dalio discuss what the U.S. can/should do strategically to maintain its dominance and do the same for China – e.g. outline some future scenarios and paths with more practicality.

🔍 How I Discovered It

  • It’s all over social media.

🥰 Who Would Like It?

  • Anyone interested in historical trends, economics, politics, and power struggles.

☘️ How the Book Changed Me

  • Helps me zoom out and distill trends using a more macro and big-picture lens.