Billionaire Ray Dalio says there's a national emergency no one is talking about during the pandemic: America's jarring inequality

• Billionaire Ray Dalio, founder of the hedge fund Bridgewater Associates, recently spoke with the founder of Khan Academy, an education nonprofit that offers free courses on a range of topics.
• In the online video interview, Dalio said the American dream is "lost" and "doesn't exist" in today's world.
• Inequality in education, as well as low incomes for many in the US, produces economic disparity, he said.
• Corporate leaders need to declare wealth inequality a national crisis, and policy makers and business leaders need to come together to find solutions, the billionaire said.
• This post is part of Business Insider's ongoing series on Better Capitalism.

The billionaire hedge fund manager Ray Dalio says the American dream is "lost" or "doesn't exist" right now and if leaders don't act, the whole economic system of capitalism could collapse.

In an online video chat with Sal Khan, the founder of the education nonprofit Khan Academy, Dalio said that policymakers need to take steps to increase access to education and boost incomes for low-income Americans, who are being disproportionately impacted by the coronavirus pandemic.

"If you don't have a situation where people have opportunity, you're not only failing to tap all the potential that exists, which is uneconomic, you're threatening the existence of the system and I think that's coming to home very clearly with the downturn in the economy with this virus," he said.

Dalio himself comes from a lower middle class background, he said. The billionaire's father was a jazz musician, and Dalio explained how it was, in part, a good public education in the 60s that allowed for his own personal success.

"That notion of what was fair, equal opportunity on a broad basis, was what the American dream was," he said on the video call on Thursday.

Today, that ability to rise from a lower middle class background through public education is lost, the founder of hedge fund Bridgewater Associates said.

"The American dream, it's become lost or it certainly does not exist when we take education, for example," he said.

Income as a predictor of success in education is a big economic problem, Dalio said.

Dalio went cite on to research he published on LinkedIn that shows that the top 40% of wealthy Americans spends, on average, five times more on their child's education than the bottom 60%.

And spending money on one's education has a big impact on a student's success. In a LinkedIn blog post, Dalio cited research that found students who come from families earning less than $20,000 score on average 260 points worse on the SAT (out of 1600) than students from families earning more than $200,000.

"And the gap is increasing," he wrote.

Getting a college education has a significant impact on one's earning potential. A bachelor's degree is worth $2.8 million on average over a lifetime, according to Georgetown University's Center on Education and the Workforce. Georgetown research also found that bachelor's degree holders earn 31% more than those with an associate's degree and 84% more than those with just a high school diploma.

"We can see there is not just a wealth gap, there's an opportunity gap, and a productivity gap. And it's a problem," he said. "Something's wrong."

Government and business leaders must declare inequality a national emergency and come together to form a plan, the billionaire said.

Education is a part of the problem, but it's not the whole problem, the billionaire wrote. In addition to calling for more federal funding of public schools, Dalio is asking lawmakers and corporate leaders to address low incomes in the US.

"The pursuit of greater profits and greater company efficiencies has also led companies to produce in other countries and to replace American workers with cost-effective foreign workers, which was good for these companies' profits and efficiencies but bad for the American workers' incomes," he wrote.

Change, according to Dalio, requires a shift in thinking on the part of corporate leaders, as well as government leaders.

"There need to be powerful forces from the top of the country that proclaim the income/wealth/opportunity gap to be a national emergency and take on the responsibility for reengineering the system so that it works better," he wrote.

Currently, policy makers pay too much attention to budgets relative to returns on investment, Dalio wrote. In other words, there's too much short-term thinking and not enough long-term planning going on.

"So I believe the leadership should create a bipartisan commission to bring together skilled people from different communities to come up with a plan to reengineer the system to simultaneously divide and increase the economic pie better," he wrote.