Dissecting a fanatical version of the American dream

Bridgewater chief Ray Dalio's 'Principles' is no mere staff manual: it is a smug, deluded philosophy of life, writes LUCY KELLAWAY

RAY DALIO is deluded, insensitive, emotionally illiterate, simplistic, breathtakingly smug, weird and plain wrong.

Harsh words, but I know the founder of one the world’s most successful hedge funds will welcome them. The Bridgewater chief has just made a list of his top 300 rules for life and number 31 is to write down the weaknesses of others.

Number 11 is never to say anything about a person you would not say to them directly, while number 22 is to “get over” fretting about whether comments are positive or negative. All that matters in Dalioland is whether they are accurate or inaccurate.

These rules are contained in the most curious management document I have ever come across. Simply entitled Principles, it is being handed out to staff at Bridgewater to help them be as successful as their boss. It is also being passed gleefully from pillar to post on the internet.

But this is no mere staff manual. In it, Dalio spends the first three chapters expounding on his general philosophy of life, which he says is a bit like skiing. So long as you do what the instructor tells you, all will go well. There is no ego in the exercise, he assures us: “With increased usage [the principles] will evolve from ‘Ray’s principles’ to ‘our principles’ and Ray will fade out of the picture.”

But for the time being Ray is rather firmly in the picture, writing a work that in its ambition reminds me of Aristotle's Nicomachean Ethics. Both writers are pretty confident and both believe in principles that are not a priori, but discovered by doing.

The main difference is that the Greek philosopher had less of an appetite for words such as “leverage” and “drilldown” than the modern hedge fund chief. And he avoided bogus equations such as Pain + Reflection = Progress.

Dalio’s philosophy turns out to be a fanatical, fundamentalist version of the American dream. “People get what they deserve in life,” he states – a comforting view when you have made a fortune of about $4 billion (€3.18 billion).

He also thinks that “how much money people have earned is a rough measure of how much they gave society what it wanted” – again, a reassuring thought for Dalio, though if I were a teacher I might not agree.

Having thus sorted society, Dalio muses on the nature of good and evil, arguing that anything in tune with reality is good. Therefore it is good for the wildebeest to be eaten by the hyena, he explains, because that fosters evolution.

The trouble with this reasoning is that it leaves one wondering not only if Dalio has ever met a wildebeest but whether he has met a human being. Most of the evolved humans I know hate being metaphorically ripped limb from limb by public criticism just as the wildebeest surely hates it in reality.

Equally, the evolved human loves things that are illegal in Dalio’s world. Talking behind people’s backs – which he says is second-worst thing to having your hand in the till – is vital in any organisation, both for recreational and diplomatic purposes. If Dalio thinks his underlings never bad-mouth him behind his back, he is dangerously deluded.

If only one could take out the philosophical claptrap from Principles, some of the rules might make refreshing reading. There is no wishy-washy crud about “talent” and the power of “we”. Instead, in Dalio’s world, you hire super-bright people and manage them actively – which partly explains why his business is a success.

Yet just as I was feeling vaguely invigorated, I came upon a rule that tells managers to think of their underlings like baseball cards. This, more than any of the others, explains why Principlesis such a dud. Dalio might be a brilliant investor, but he is still a little boy in emotional terms. For grown-ups, managing is not like collecting baseball cards. People cannot be swapped in playgrounds, graded exactly according to batting averages and errors. They are complicated mixtures of rationality, irrationality, emotion, ambition, laziness, goodness and spite.

As if fearing that Ray’s World might be seen as lacking in human warmth, principle 114 instructs managers to “sincerely care about the people who work for you. Try to be there for weddings, births and funerals”, he orders.

This is the most chilling principle of all. I’m putting this on the record right now: anyone who tells me I’m rubbish to my face and views me like a baseball card is not invited to my funeral. – (Copyright The Financial Times Limited 2010)