Ray Dalio, capitalism and white man's fault

Ray Dalio, a billionaire market promoter and founder of the strangest investment company I have ever met, Bridgewater Associates, has made the rounds of cable news and even "60 minutes" feed the liberal media what it most loves: A big, helping aid the bull — the capitalism's misfortune and his solution to fix things by, of course, taxing the rich.

Not that this matters to most business journalists who cover and love Dalio's weird roadshow because they are not very capitalist ones. Tells most business reporter that "the American dream is lost" or "capitalism needs to be reformed" and we must make the "rich" payment their fair share is like offering President Trump three crosses of ice cream for dessert instead of two; You will never hear a word of protest.


This is a shame because Dalio is a particularly strange guy who calls balls and strikes on capitalism. Yes, Wall Street guys like Dalio know a lot about markets, but they are especially tone deaf in economics. They know how to make a quick buck on a trade, but they know a lot less about how to get something to work for a long time.

Dalio fits well with this profile. He is a billionaire many times over, not from perceiving anything special but as a market speculator. Now some of my best friends and sources are very good at speculating on the market, but that doesn't mean they are incredibly deep-minded, and those who say they are, like Dalio, should be judged with some degree of skepticism.

First, see Dalio's book, "Principles: Life and Work", a strange personal manifesto on what he thinks are ways to succeed in business and life. Some of his principles are cringe-worthy obvious (PAIN + REFLECTION = PROGRESS), others just cringe worthy of pedantry as in the one who warns: "Major planners who do not execute their plans do not go anywhere."

Complete disclosure: I I have not read "Principles", but I bet I can probably get more practical self-help from a Tony Robbins video.

Then listen to the problems he says he is worried about and how he plans to fix them.

Education, or lack of it in poor communities, is high on its list. He wants to raise taxes to ensure that children in poor school districts receive better education. It sounds good until you dig a little deeper and realize that the money he raises goes right into the pockets of the teacher associations and the educational institution that has spent the last two decades opposite school choices and other reforms that have proven to benefit poor children. 1[ads1]9659002] Dalio has talked a lot about the gap between rich and poor, which he says stays disturbingly loud and will see the seeds of violent conflict. Okay, but many anecdotal evidence points to the fact that a combination of the Trump tax cuts and a decline in immigration have increased wages at the low end of the scale.

Meanwhile, many other quantitative evidence of wealth shows the gap grew alarmingly wide in the Obama years, and well after the ravages of the Great Recession, when the Fed printed money that made lay speculators such as Dalio's rich, and expanded social programs that did little for the working class.

Finally, some research on the security fund he runs, Bridgewater Associates.

Yes it is large (160 billion in assets) and successful most of the time, but it also runs like a police state version of a hedge fund. All meetings are lost and registered. Secret is crucial and the firm is notorious for its strictly enforced non-disclosure agreements. Everything that makes sense because we work a lot of money here, but also because the place is so strange to work with, as I tell the Wall Street sources who have a first hand knowledge of that weirdness.

In an almost cool fashion, employees need to read and almost remember a short version of Dalio's mind-numbing "Principles" book. But that's just the beginning. Dalio proclaims something called "radical transparency", where employees gather and evaluate investment ideas in one of the world's most hostile work environments, which comes with the famous Mexican standoff scene in "Reservoir Dogs" without weapons. People who stumble upon one of Dalio's "principles" are exposed to what is known as a "public hanging" of ridicule.

No wonder the turnover on Bridgewater is around 25 percent over about a year.

Anyone who would not have been so bad about Dalio and his crew did something special in the world. They are not. They charge big money to invest money. In fact, they do nothing special as far as the investment goes. Since its inception, Bridgewater's flagship "Pure Alpha Strategy" funds have had a total annual return of around 12 percent, making it just a little better than the S&P 500 index I can buy from Vanguard.

OK, Dalio must be doing something right, or he wouldn't be worth nearly $ 17 billion, right? Yes, it is true that Dalio built his company from scratch, and is smart at convincing people to give him their money, but that doesn't mean his criticism of capitalism, and his solutions are so clever. Dalio is credited with predicting the financial crisis in 2008 (he was far from alone on this). But he also recently provided Connecticut Gov. Down Lamont $ 100 million to improve public education and fund a number of other good things like making poor communities a better place to live.

Dalio is going to be good at numbers, so it's weird that he thinks his $ 100 million filtered through one of the most wasteful governments in the country will do a lot of everything.

It is also strange that Dalio believes that higher taxes are the solution to capitalism's diseases. Dalio told "60 minutes" that people like him (ie, the rich) should pay more to make the economy fairer as long as the money goes to something "productive" as an education. "Do I say something that is controversial?" He asked the correspondent Bill Whitaker, who replied, "It's just strange to hear that it comes from a billionaire's mouth."


It's also absurd. The government is one of the least productive organizations on the Earth's surface. We have a pension crisis, we have a housing crisis, and we have a loan credit for student loans, not to mention a threatening social security crisis, a lot of debt and a fiscal deficit, because the government is large and wasteful and inefficient. [19659002] And who are people like Dalio who are going to pay even more taxes? Does he mean that we have to raise taxes on dudes that have $ 17 billion in the bank? Or people with just a few million?

Try to fund the Utopia Dalio assumptions by taxing billionaires, and most will leave the country. Even though they lived there, there would not be enough money to pay for all education and poverty eradication in Dalio's utopia. That's why people who earn around $ 250,000 a year, not $ 250 million, are being hammered by the taxpayer: there are more of them.

My guess is that Dalio's small capitalist bashing media tour is a manifestation of rich, white man's guilt, and a need for a great liberal media clamp as he approaches 70 years on this earth. Now that he got his hug, he might just go away.

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