with Burt Wolf is brought to you by Swiss International Airlines, flying to over 70 worldwide locations.

Truly Swiss-made, Swiss International Airlines.

And by the BMW European Delivery Program, a way to experience the roads that BMW was made to drive.

BMW European Delivery Program.

And by the Cygnet Foundation, raising funds for those in need through art-related initiatives, contributions to UNICEF, and animal welfare organizations.

The Cygnet Foundation.

(pleasant symphony music) "Travels and Traditions" with Burt Wolf is a classic travel journal, a record of Burt's search for information about our world and how we fit into it.

Burt travels to the source of each story trying to find the connections between our history and what is happening today.

What he discovers can improve our lives and our understanding of the world around us.

(pleasant symphony music continues) - When I lived in New York, I lived on top of a 100-year-old building, and I only had one neighbor, the actor Joel Grey, who got an Academy Award for his performance in "Cabaret."

In "Cabaret," his character offered an extraordinary piece of very valuable information.

♪ Money makes the world go around ♪ ♪ The world go around, the world go around ♪ ♪ Money makes the world go around ♪ ♪ It makes the world go round - True, money does make the world go around, and as the writer and producer of the programs that we present on the PBS stations, I am constantly confronted with issues relating to money.

(pleasant piano music) Traveling with a film crew is expensive.

If you shoot a shot from a helicopter, the expense is enormous.

A similar shot with a drone costs thousands of dollars less, but the effect is not as interesting.

If we're shooting in a foreign country, should we rent the equipment there, or bring our own?

Renting on location is cheaper, but sometimes the equipment that's available is not the quality we need.

And every time we start to produce a program, the world has changed since our last project.

I needed to learn more about dealing with the changing world and how that affects our lives.

So, I went to see a man named Ray Dalio.

- I think that basically life exists in three phases.

You start off.

You phase one is you're dependent on others, and you're learning.

Phase two is that you're working, and others become dependent on you, and you're trying to be successful.

Then, you can go to stage three, which is, you know, you're sort of free of obligations and so on.

- [Burt] Ray is the founder of Bridgewater Associates.

He grew it from a two-bedroom apartment to the largest investment fund of its kind in the world.

Its clients include pension funds, foundations, and sovereign wealth funds.

- My objective has been to have meaningful work and meaningful relationships with the people I work with.

And I've learned that I couldn't have that unless I had that radical transparency and that algorithmic decision-making.

- [Burt] Ray is considered to be one of the world's most influential and successful people, and he credits his success to a unique approach to business and life.

- Well, I was lucky enough to have two parents who loved me.

My dad was a jazz musician so he had this kind of improvisation, looseness, fun sense of life, but he was also a very responsible man.

He went, fought in the World War II, and my mom was a stay at home homemaker.

In early years, I did jobs, odd jobs.

I would, had a paper route, and I caddied.

And I would take my caddying money, and I'd put it in.

I remember the first stock I bought, stock by the name of Northeast Airlines.

The only reason I bought it was it was the only company I ever heard of that was selling for less than $5 a share.

And I thought, oh, okay, I could buy more shares.

So if it went up, I'd make more money, which was a dumb idea, but it was about to go broke.

And some other company acquired it, and it tripled, and I was hooked.

- [Burt] A while ago, Ray wrote a book titled "Principles for Dealing With the Changing World Order."

- Well, one of the things that I learned along the way was that things that surprised me were often things that never happened in my lifetime but happened many times in history.

And so, in terms of let's say what's happening now, three big things are happening in our lifetime that never happened before in our lifetimes but happened many times through history.

And those three things are the creation of an enormous amount of debt that is being paid for by the Central Bank printing money and buying that debt.

The second is the amount of internal conflicts, populace of the left and populace of the right at each other's throats, threatening democracy.

And also, being in a position where there are the largest wealth gaps that exist since 1900.

And so, big battles over wealth and values, that internal conflict, that's the second.

And number three is the external conflict.

We in our lifetimes never had a rival power in the world.

So, we had this world order, which was the American world order that began in 1945 and has evolved, but now we have a bet, a great power conflict.

I wanted to go back over 500 years.

I wanted to see the rise and decline of the Dutch and the major empires.

So I did that, and I saw that the exact same things pretty much happened over those periods of time.

I'm at the stage in my life where the most important thing I could do is pass along the things that I learned that I think are of value.

So, I put it out as a book.

(pleasant symphony music) - [Burt] The first example in Ray's book are the Dutch during the 16 and 1700s.

- So, for example, the Dutch invented ships that could, were the best and could go all over the world.

And they put the guns and their people on the ships, and they go collect all this money all around the world.

And then they use their money to buy, because, okay, it becomes a world currency.

And so, over a period of time they became stronger.

So, the Dutch accounted for 25% of all inventions in the world, and they counted most of world trade and so on.

And then they rise.

- When I was in Holland, I went to visit the offices of the Dutch East India Company, the original offices, and they said they were the first company that allowed shareholders.

- That's right.

They invented capitalism as we know it, and that's a good invention.

The first stock, the first public stock, and that was also the Dutch had the first public stock market.

And that changed how we perceived wealth.

I'll tell you why.

Up until then, we perceived wealth as being the wealth we have.

You have your house.

You have your whatever, the stuff you have, and that was wealth.

And then, they began to be able to sell dreams.

In other words, they'll be able to sell a piece of an income that hasn't yet been made.

So, that created this wealth that was inconceivable before, and that wealth then enabled things to happen.

But of course, whoever's making that had then have to deliver the money back.

And then what happened, of course, is that creates these cycles.

And then, of course, as they get richer, they get less, they become a little more decadent.

They get into debt.

They first create a financial center.

All one of these, all these countries create a financial center.

So, Amsterdam used to be the world's financial center when they were in power.

London, when the British were in power.

New York, when the Americans are in power and so on.

It evolves.

So, they have the financial center.

They're dealing with it.

They have a bank.

The bank gets over-leveraged.

You know, banking is basically, you have a certain amount of money, whatever you call real money.

And then, they leverage up, and they make commitments that are multiples of that real money.

And then, when somebody really wants to go get the real money, or they do a lot of it, then they come get the money.

There's not enough money, and then the system breaks down.

Then, big wealth gaps develop internally, and as the big wealth gaps develop internally, and then there are these conflicts over wealth, and there's slipping of power.

Then, those conflicts become worse.

The internal conflict becomes worse.

It weakens the country more.

The financial problems become worse.

It weakens the country more.

The external vulnerabilities become greater because there's an external power.

The British then become good ship builders.

They hire the Dutch ship builders.

- [Burt] Dutch to make the boats.

- Right, and they build the better boats, more inexpensively.

They come up economically.

They become competitive, you know, and then they have a war.

The war changes, and you do it again.

And you do it again and again and again, and the cycle goes on.

(pleasant symphony music) - [Burt] In 1707, the Act of Union was passed, which joined England and Scotland, forming Great Britain.

It was great for the next 150 years.

It had surpassed the power of the Dutch and was the strongest nation in the world.

Its navy ruled the seas, but in 1776, it's 13 American colonies decided to go it alone.

No more belonging to Great Britain.

No more kings telling us what to do.

- How do you do?

- How do you do, good lady.

I'm Arthur, King of the Britains.

Whose castle is that?

- King of the who?

- The Britains.

- Who are the Britains?

- Well, we all are.

We are all Britains, and I am your king.

- Didn't know we had a king.

- [Burt] By the mid 1800s, the United States of America was on its way to becoming the most powerful nation in the world.

(pleasant symphony music) The English went down, and the Americans came up.

Is there any way we can change this arc, and the United States can be in better shape?

- It's all basics, you know.

Do you earn more than you spend?

And do you have a strong income statement of balance sheet?

So, are you productive?

Are you well-educated?

These fundamentals.

And then, do you work well with each other to row in the same direction, with competition, but to be effective internally?

So, do you have internal order that's productive?

And do you, are you strong internationally?

Okay, those are the basic fundamentals.

And so, when we look at those things, we can say, oh, we should easily do those things, but it's not easy.

(pleasant symphony music) Education is the most important leading indicator of the rise and declines of societies.

You can plot it, and it is plotted in my book.

You'll see it, educational measures, in one country in relationship to the other country.

And you will see that cycle, and you'll see the big lead time that it has.

And it's not complicated.

Why is that even controversial?

Because smarter people can be more productive people, and they can make the society work well.

And because of that, that leads.

And I think it's a great tragedy that in our country we don't consider that one of the best investments that we can make.

Now, it's a problem because the rich people, not me, I can make sure that my children or my grandchildren can get the best education.

That's an important thing to me.

That's an important thing to parents.

Well, not all can.

That's a loss.

And if you go back through civilizations, I'm not just talking today.

I went back, and I studied the Chinese dynasties since 221 B.C., which was the first time the unification of China.

If you look at the same patterns there, it was, you wanna know, it's education.

It's a meritocracy.

If you want to look at, well, you don't know where the talent's gonna come from.

It could come from any place.

You pull it from any place.

You create the broadest opportunity, the broadest basis of education, and you create that equal opportunity.

They did it through the testing systems and other things, and you bring those people up, you have the greatest chance of investing your society.

- [Burt] Ray's developed a theory that describes six stages of how nations succeed and eventually fail.

- There's a progression of events, and there's like six stages in the progression of an internal order that goes from, you know, a conflict through a prosperity to like another conflict, a civil war.

In other words, a change in an order, a change in how things work.

(pleasant symphony music) - Tell me about stage one.

- Well, stage one is there's a fight for power because of all the stuff that's happened before, and one side wins.

(men shouting and horse hooves clomping) - [Burt] There's a civil war or a peaceful revolution, but in both cases there was a great conflict in which one side wins and the other loses.

This is when the new order begins, and the leadership consolidates power.

- These wars are hellacious, and you get past them, and nobody's, everybody's sick of war.

And plus, there's a power that's now in power that nobody wants to fight.

And then, they usually then internally, they will fight for power.

And so, you begin a period of peace, prosperity, rebuilding that begins the cycle again.

(gate crashing) (dramatic music) (guns firing) - [Burt] These periods have produced some of the most brutal times in q country's history.

The Reign of Terror in the period after the French Revolution in 1789.

(cannon firing) The time of the Red Terror that took place after the Russian Revolution in 1917.

The Anti-Rightist Campaign after the 1949 Chinese War and China's cultural revolution.

If there's a respect for a nation's basic systems, you have periods like the one after the U.S. Civil War or during the peaceful Roosevelt Revolution of the 1930s.

- And that new order is the new way of doing things.

That means that you have to build it out.

What are the new rules?

What is the new system?

There's a harmony, and that's what stage one looks like and then moves on.

(pleasant symphony music) - [Burt] Stage two is the period when resources are allocated, and government bureaucracies are built and refined.

The leaders, or those who work for them, need to create a system where people are rowing in the same direction in pursuit of similar goals and with respect for rules and laws.

The system needs to quickly improve productivity that benefits most people, especially a large middle class.

- And so, you begin a period of peace, prosperity, rebuilding that begins the cycle again.

And then, that cycle, that peace and prosperity, leads to a period of a boom, of economic boom.

Like after the Civil War, we had the Industrial Revolution.

You had lots of, and then that advances, and living standards rise and capitalism flourishes.

It's like when my parents came back, and I suppose it's probably similar to your parents come back.

They come back from World War II.

They're sick of fighting, and we come together.

And there's peace, and there's an opportunity, and then there's a new way of doing things that's built.

And with that peace, and there's a period of peace and prosperity that occurs as we build that order and then have that prosperity and building.

And then, the psychology starts to change.

(inspirational symphony music) - Tell me about stage three, the sweet spot.

- It's a period of, it's like a renaissance period.

It's a period where there's peace.

There's working well together.

There's creativity.

There's productivity improvements.

So, living standards rise.

That capitalism is working well in terms of creating opportunities, education, and it flourishes because also that country is flourishing.

Brings the talent together.

And then you, there's investment.

I as a 12-year-old get to invest in the stock market, invest in capitalism, and then things go up, and you feel good together.

You go to the moon.

- [NASA Controller] Five, four, three, two, one, zero.

All engine running, lift off.

We have a lift off.

32 minutes past the hour, lift off on Apollo 11.

- [Burt] The United States was in stage three during the 1960s when the Moonshot Project was a shared mission in which the entire country cheered during the lunar landing.

- [Neil Armstrong] Okay, engine stop.

- [NASA Controller] We copy you down, Eagle.

- [Neil Armstrong] Tranquility base here.

The Eagle has landed.

- [NASA Controller] Roger, Tranquility, we copy you on the ground.

You got a bunch of guys about to turn blue.

We're breathin' again.

Thanks a lot.

- This is the time for an inspirational visionary, who can present a picture of an exciting future, actually build that future, and include most of the citizens in the prosperity.

- [Neil Armstrong] Okay, I'm gonna step off the ladder now.

That's one small step for man, one giant leap for mankind.

Beautiful, beautiful.

(people cheering and chattering) - [Burt] John F. Kennedy, in his short presidency of 34 months, did a good job of trying to build stage three.

- It is that man in his quest for knowledge and progress is determined and cannot be deterred.

We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard.

Because that goal will serve to organize and measure the best of our energies and skills because that challenge is one that we're willing to accept, one we are unwilling to postpone.

And, therefore, as we set sail, we ask God's blessing on the most hazardous and dangerous and greatest adventure on which man has ever embarked.

(inspirational music) - So, that stage three can, you know, last a longer time or a shorter time depending on, you know, the basics.

How long you can sustain that desire of people to be that way, to be educated, be productive, how excited they get, how into that whole, and then do things the right way.

And it ends as there's greater and greater levels of indebtedness, also a change in psychology.

You know, that generation that went through the war and then as you come to another generation that didn't go through the war and the fighting and so on, and then that starts to have issues because you overspend.

You over-speculate.

You're wrong on the speculations and so on, and we move on to the next stage.

(inspirational symphony music) The lessons that we learn from these patterns of history are to, you know, they're fundamental to take care of the basics.

To educate your population well, to be civil with each other so that you can be productive, to earn more than you spend, and to build that financial well-being and to be good with each other so that you have a harmonious, albeit competitive, environment to be as best as you can be productively and socially.

And to have win-win relationships rather than lose-lose relationships, where the common good is more important than the selfishness that leads you to fight.

- [Burt] Well, that's part one of our talk with Ray Dalio on dealing with the changing world.

We saw the first three stages of the six stages that the most powerful nations of the world follow, a clear pattern of growth, power, and decline.

In part two, we take a look at the additional three stages that each nation goes through, plus a section on how money works.

Please join us right here on your local public broadcasting station For "Travels and Traditions," I'm Burt Wolf.

(pleasant symphony music) My conversation with Ray ran about two hours.

If you'd like to see our entire talk, go to BurtWolf.com.

- Man in his quest for knowledge and progress is determined and cannot be deterred.

We choose to go to the moon.

We choose to go to the moon.

We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard.

Because that goal will serve to organize and measure the best of our energies and skills because that challenge is one that we're willing to accept, one we are unwilling to postpone.

And therefore, as we set sail, we ask God's blessing on the most hazardous and dangerous and greatest adventure on which man has ever embarked.

(inspirational music) - [Announcer] "Travels and Traditions" with Burt Wolf is brought to you by Swiss International Airlines, flying to over 70 worldwide locations.

Truly Swiss-made, Swiss International Airlines.

And by the BMW European Delivery Program, a way to experience the roads that BMW was made to drive.

BMW European Delivery Program.

And by the Cygnet Foundation, raising funds for those in need through art-related initiatives, contributions to UNICEF, and animal welfare organizations, the Cygnet Foundation.

(gentle acoustic guitar music)