The Global Hedge Fund company is developing software to replace the 1%
The so-called 1% may soon find their livelihoods challenged by automation as well. A new project by the global hedge fund Bridgewater Associates LP, for example, is developing management software that will take the place of some of the firm’s six- and seven-figure managers.
Blue-collar workers have, so far, shouldered a disproportionate number of layoffs due to the automation of their work, as compared to white-collar workers. Machinated harvesters and livestock monitors, for example, have eliminated a number of farming jobs in the United Kingdom and other developed countries. All this has left many rural workers wondering where they fit in to the new economy. For better or for worse, they soon won’t be the only questioning their job security.
Bridgewater Associates, which manages $160 billion in wealth, is the largest hedge-fund firm in the world.The firm has made a name for itself by consistently earning clients above-average returns on investments. According to industry researcher LCH Investments NV, Bridgewater earns twice as much total profit as any of its rivalfirms. The firm’s success is due largely to the dynamism of its billionaire founder, Ray Dalio.
Daliois also the brains behind the Bridgewater project that seeks to automate the firm’s high-level decision-making. By automating most management positions, the firm hopes to save time and
to eliminate the emotional volatility that leads to poor decisions.Dalio, who earned a reputationin the ‘70s for his uncanny ability to predict macroeconomic trends, has long held that humans work like machines. Why, then, can’t machines work like humans?
Bridgewater has long usedcomplex algorithms to predict changes in stock and money markets. Its flagship fund, Pure Alpha, uses big data to determine when to buy and sell assets like stocks, bonds, and currencies. Bridgewater’s new project, known as the “Principles Operating System” or PriOS for short, applies principles fromits investing process to the management of the firm itself.
The firm has already begun applying some of PriOS’s features to the firm’s day-to-day operations. A
company app called “The Contract,” for example, tests employee reliability by having them input goals and deadlines and trackingwhetheror not they follow through on them.Another app, called “The Coach,” automatically answersemployee’s questionsby crawling relevant passages in the Bridgewater employee handbook.
While, right now, PriOS doesn’t have the comprehensive features needed to replace a human manager, the firm plans to expand the software until it does.The firm hopes, for example, to program The Coach to use artificial intelligencethat willhelpemployees make the right decisions for the firm every time. The firm also hopes to introduce a human resource program for PriOS. The program will compile information on employees’ performances and personalities and, when a vacancy opens up, match an employee with the position based on that data.
Daliohopes that, by 2022, PriOSwill make three-quarters ofmanagement decisions for the Bridgewater.Like
Predicting decisive outcome of meetings based on data
the firm’s Pure Alpha algorithm, Dalio hopes that PriOS willhave the predictive power – like guessing the outcome of a meeting ahead of time based on data – to be a more proactive manager than a human could be.
If Bridgewater’s experiment is a success, the software could replace hundreds of management jobs at the firm and hundreds-of-thousands of similar jobs at other organizations. The software even has the potential to replace seven-figure chief executive officer positions with machines that make better decisions for much lower pay.
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