Former Secretary of Labor Robert Reich has criticized Ray DalioFounder and board member of Bridgewater Associatesand said the latter did not propose stopping giant hedge funds and private equity funds from forcing companies to squeeze out every ounce of profit, typically by suppressing wages and abandoning workers and communities.

In a substack post titled “Worse Than Hypocrisy: Ray Dalio and the Heart of Darkest Capitalism,” Reich noted that hedge fund managers classify much of their income as “capital gains,” which are taxed at a far lower rate than regular income.

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“Their wealth has given them so much political clout that this absurd carried-interest tax loophole remains in place, despite promises by the last four presidents to close it. So while school teachers and police officers face a 25 percent marginal tax rate, hedge fund managers like Dalio have been paying just 15 percent on their vast earnings for years.” Reich said in his post.

Reich quoted Dalio as saying “how the system doesn’t work well for the majority of Americans because it creates self-reinforcing spirals up for the haves and down for the have-nots”.

Dalio and his compatriots are part of this self-reinforcing spiral, Reich said, adding: “The rest of us are doing all the worse.”

pension funds: In a note to pension fund managers, Reich advised them to “get out of hedge funds.”

“You’re wasting the pension money of the workers you’re supposed to represent,” Reich said.

Reich also advised pension fund managers that if they absolutely must invest in hedge funds, they must make their voices heard on taming manager pay.

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photo Courtesy: World Economic Forum on Flickr