Bob Garfield sits down with private equity tycoon and author David Rubenstein to discuss his latest book, The American Experiment: Dialogues on a Dream, consisting of interviews with scholars and other notable Americans.
TEDDY ROOSEVELT: Surely, there never was a fight better worth making than the one which we are in.
BOB GARFIELD: Welcome to Bully Pulpit. That was Teddy Roosevelt, I’m Bob Garfield, with Episode 23… “The Botched Experiment.”
In his day job, David Rubenstein is a private equity tycoon who made his fortune buying undervalued companies, restructuring them into profitability for his investors and earning huge management fees as a steward of their stakes. The Carlyle Group, which he founded, has enriched him to the tune of $4.5 billion.
Rubenstein also has many side hustles, from philanthropy to amateur historian to T.V. interviewer of the rich and powerful. In these excerpts from Bloomberg T.V. we hear George W. Bush and Oprah Winfrey.
RUBENSTEIN: Over much of the past three decades I’ve been an investor, the highest calling of mankind, I’ve often thought, was private equity, and then I started interviewing.
GEORGE W. BUSH: (laughs)
RUBENSTEIN: When I watch your interviews I know how to do some interviewing.
OPRAH: (laughs)
His conversations with cultural, political and business icons have been edited into two books, the latest being The American Experiment: Dialogues on a Dream. Collected within are conversations with the likes of Madeline Albright, Ken Burns, Henry Louis Gates Jr. Wynton Marsalis and Billie Jean King.
While acknowledging inequities and fault lines in our society, these conversations are in all a celebration of the so-called “American experiment,” which Rubenstein compares to the unique assortment of genes that determine the nature of the societal organism. Had they not converged, he says, “we would not be who we are, we would not be who we are. Rubenstein joins me now. David, welcome to Bully Pulpit.
RUBENSTEIN: My pleasure to be here. Thank you for having me.
GARFIELD: Your book takes these 13 genes and kind of divides them up among various scholars and cultural icons. What's on the list?
RUBENSTEIN:Well, the genes are ones like the belief in the democracy, the belief in the importance of voting rights, the importance of of things like the military should not be in control of the civilian government, the civilians should control the military, the belief in the importance of diversity and importance of the belief in and then having elections and the right to vote. Those are the kind of things I think are parts of our culture; now, increasingly, the belief in diversity is a very important part of our culture, and the belief in the American dream is an important part of our culture.
GARFIELD: I want to begin, as you do in the book with the Democracy Gene and your conversation with Harvard professor Harvard Professor Jill Lepore, author of the staggering 900 page survey of American democracy, titled These Truths. She has two insights which blew me away. One was the democratizing role of permitting personal bankruptcies, non-corporate bankruptcies — which was unknown to the world — and which played out as a safety net for entrepreneurial risk. Right in your wheelhouse, that one.
RUBENSTEIN:Yes, her point is that when individuals couldn't pay their debts before they were put in jail as opposed to be allowed to be bankrupt, and that the fact that that was changed was an incentive for people to try to take greater risks than they might have taken before. So, yes, it's a very good point that she made.
GARFIELD: Yeah, freedom of religion it ain't, but has taken an outsized role in the development of the democracy, but also the American form of capitalism.
RUBENSTEIN: That's correct. You know, remember in our country we started, which started for religious freedom, but only to make sure that people could worship the way that those people wanted to worship. The Puritans and pilgrims didn't really want people to worship any way other than theirs. Now we have a system where people can worship the way they want it. But our Founding Fathers honestly didn't believe so much in the idea that you could worship any religion you wanted.
GARFIELD: Yeah. Hold that thought because we will return to it. Lepore’s second poignant observation was the grotesque collateral damage of the victorious American Revolution and that damage being the perpetuation of slavery, which the British had vowed to abolish. Instead, slavery and its associated injustices have been with us now for 400 years. You used the term original sin. Now, at least in Catholic doctrine, that is something inherent that permanently corrupts our nature, and it has sure done that, slavery has. Now you are in the valuation racket. Was the independence from Britain worth the incalculable human cost?
RUBENSTEIN: Well, counterfactuals and history are always difficult to come up with and give definitive answers. I think they — if we had not won the Revolutionary War, I suspect we would have become like Canada, a member of the Commonwealth of Britain, and basically had pretty much the country we've had. But I think that the British probably would have ended slavery quicker than we did, though, because Britain had ended slavery in its country before. But I don't know that it was going to be that easy to end slavery that quickly in the 1700s; the economy of the South increasingly depended on it.
GARFIELD All right. So if the slave trade was, as you put it, our original sin, after 150 years came the the bloodbath of the Civil War and after that, the reconstruction of the South, brief, as it was. You spoke to Harvard scholar Henry Louis Gates, Jr., about the ruinous backlash to reconstruction from the infamous compromise of 1877 that effectively obliterated reconstruction and laid the foundation for Jim Crow and white supremacy to the retrograde Plessy v. Ferguson “separate but equal” decision. Gates also told you something I'd never heard of that, the newly restored white power structure called itself “Redemption” — that was how they described the the end of reconstruction. It occurs to me that maybe this foreshadows today's Christian Right using biblical text to whitewash what to my eyes are obscene ideas. With redemption like that, who needs sin?
RUBENSTEIN: Well, the redemption that he was referring to was basically the belief that they had restored the white order that had existed before the Civil War. Their so-called lost cause of those in the South was what they believed in, that they had a cause — not to preserve slavery, that was what they were saying they weren't fighting for as much as preserving the southern way of life. But in the end, it was really to preserve slavery. But they believed that they were restoring the original sin or restoring the Southern Order was what redemption was all about.
GARFIELD: Now, since the end of World War Two, there have been acts of legislation and judicial decisions now enshrined in law — the principles of the founding documents codified: women's suffrage, desegregation, the Miranda decision about the rights of the accused criminals, removing prayer from public schools, marriage equality and so on, as the United States followed a general Western path towards liberal democracy. These very advances have infuriated conservatives for 60, 70 years, because they believe that their values and their hegemony are under attack. Make America Great Again seems to share a viewpoint with Redemption. Which country are we, do you think? Are we open hearts or are we closed minds?
RUBENSTEIN: Well, that's a difficult question to answer. I would say that the beginning, the rhetoric, of the Founding Fathers was wonderful: all men are created equal. But as we all know, we had slavery; we didn't allow women to have certain rights, including the right to vote; so we've been trying to live up to the rhetoric over the 250 years, and we still have a long way to go. Many people in this country, as you suggest, are not happy with the idea that minorities have the same rights that majorities have, that women have the same rights as men have, that people of different skin color are to be treated the same as whites. There are many people who think that that's not necessarily the way the country should be. In my view, that's a mistake, but that's the way that many people look at the situation.
GARFIELD: A mistake? I would say a nightmare — an ongoing nightmare. To what extent do you believe that what we haven't done as a nation to fulfill our founding promises has corrupted the American experiment?
RUBENSTEIN: The American experiment has been evolving over 250 years. It still has a long way to go. We still are a country that more people want to come to than any other country. Forty-seven million people in this country are immigrants. Very few people leave this country voluntarily, so it's still the best country on the face of the Earth. But we have these challenges that are just endemic. One of the challenges is income inequality, racial discrimination, also homelessness and illiteracy. We have an enormous amount of illiteracy in this country. It's hard to believe that such a wealthy country can have 14 percent of its population being functionally illiterate. But anyway, that's the case. So I would say that we are a country of — it’s a tale of two cities, as Charles Dickens might say. We have the wealthy people, the internet-connected people, the people that are well-educated, and then we have the underclass. And I think the gap between those two is getting wider and wider.
GARFIELD: Well, we shall return to this. And in fact, let's turn now to the subject of capitalism, which you discussed with author Bhu Srinivasan. He says that the notion, and we discussed this earlier, the notion of religious pilgrims fleeing persecution and putting down roots in the new world is at best exaggerated, such as in this educational video.
NARRATOR: About 400 years ago, 13 years after the first English settlement in America called Jamestown, there was another group of travelers who came to America in search of religious freedom. They wanted to worship God in their own way and separate from the Church of England.
That America was a capitalist endeavor, an explicitly capitalist endeavor from the get-go, supercharged by the industrial revolution, the invention of the cotton gin, the Louisiana purchase and, of course, slavery. And we know it has all yielded a superpower of unimaginable wealth and influence in the world. Yet you have these regrets about inequity and you regret those who, in your terms, have been left behind. How so?
RUBENSTEIN: Well, many people in this country have believed in the American dream and have lived the American dream. I feel I have lived the American Dream coming from very modest roots and to be more successful in life than my parents ever dreamed possible. But many people have given up on the American dream, and they think that they can't catch up to where they should be or where they'd like to be. And therefore, we have lots of poverty, lots of inequities, and it's a real challenge.
GARFIELD: Yeah, Kristin Lems’s song comes to mind.
LEM: (singing) It’s $1200 a month before the SSI and tax, the take-home pay is 900 and a half, and the rent takes half of that leaving $475, and a hundred for the groceries to keep us all alive…
RUBENSTEIN: Overall, I think the American experiment has worked reasonably well, but not perfectly well. And I think right now the country is assessing whether we can move forward together or whether we're just going to move forward in a divided way if move forward is the right verb. Because right now the Congress is divided. We have a very difficult time getting anything through Congress, and social progress is made very, very sparingly right now and it's been hurt a lot by COVID because a lot of people have been left further and further behind than they were before COVID.
GARFIELD: [00:11:48] Yeah, well, more details on the collateral damage: In the past 50 years, as the inflation-adjusted GDP has grown 400 percent, real wages have grown 10 percent. Now, you've just enumerated some of the reasons that society has failed its citizens. You say “regrettable,” I'd say “shit show.” But turning it to you, not as an author or interviewer or a businessman, but to you as a citizen: I've gone through your writings and I don't see you advocating for more regulation of banks, or high marginal tax rates or higher minimum wages, or a far more robust social welfare system to provide for working parents or universal preschool or free higher education or other entitlements such as Europe largely provides. I mean, if we were to accept your DNA analogy — and it's a pretty good one — must we not also recognize the fact of genetic mutations, changes or errors in the DNA that can make the organism adapt or just go completely haywire? As a video from HealthTree University explains:
MAN: Every once in a while a mistake occurs in a gene, in which one of those bases, one of those coding segments, gets altered and if it gets altered in a gene that causes more cells to more rapidly divide, that’s a mutation we want to know about.”
GARFIELD: Such as: campaign finance, systemic racism, gerrymandering, deregulation, vilification of the free press, stripped away voting rights and what I see as the broken founding promise to promote the general welfare. In short, David, you've achieved the American dream, but what the hell has happened to so many others?
RUBENSTEIN: Well, obviously, the American dream hasn't worked for everybody, and we have lots of social challenges here. We are not likely to go to the European style of social capitalism or socialism that many European countries take great pride in; it's just not endemic to our American system. Capitalism has been ingrained in our system, and capitalism leaves a lot of people behind. So I just don't think we're going to change it dramatically. I haven't written on all these issues because that's not my role in life, probably, to address every social issue as possible. And I, you know, my basic mission in life has been to kind of move forward my career. I'm now giving away all my money, but giving away all my money is not going to solve our social problems, I don't have enough money to solve those problems. So I'm trying to point out some of the challenges, but I don't claim to be a great reformer and I don't claim to be a politician. If I had the answers to all these problems, I would have been in Iowa and New Hampshire a long time ago.
GARFIELD: All right. We will continue momentarily, but please let me remind you what we are trying to achieve here with Bully Pulpit and the other BooksmartStudios.org podcasts. We are here to coalesce a community of listeners who value complexity over glibness, argument over doctrine, curiosity over certainty. It’s a community, in other words, built around both skepticism and intellectual honesty. But as our friends in public broadcasting also incessantly remind you, it is a costly enterprise. Our content is largely free of charge, but our future hinges on your willingness to pitch in. Please consider a paid subscription, which gets you not only our basic offerings, but bonus content from all three shows and my weekly column, which is a really, really good MRI of my tortured soul. Eighty-four bucks a year — less than a preowned 1985 Cabbage Patch doll on eBay. Please consider investing in BooksmartStudios.org, and please, please rate us on iTunes. Those ratings and reviews really matter. Now then, I was about to ask David Rubenstein my next question.
You say that you don't see us going towards the European model of —
RUBENSTEIN: That's correct.
GARFIELD: — socialist capitalism or capitalist socialism, where there's greater entitlements, the welfare state is much more robust. Now, apart from our particular political problems of the moment, why do you think we’ll not veer in that direction?
RUBENSTEIN: Because I think the country is not, in its DNA, a socialist country. We’ve experimented with things that are maybe not as capitalist-oriented as we currently have and during the Great Depression, there was a view that maybe socialism would be the better system, but we've rejected that in the country by and large and I would say right now, it's hard to see any interest in the kind of socialist capitalist system that they have in Europe. If anything, we're probably retrogressing and providing fewer social benefits in some ways than we provided in the past.
GARFIELD: Although, It was never great. Here’s an excerpt from the Phil Donahue Show in 1979, where an audience member challenged economist Milton Friedman — the high priest of trickle-down economics. I’m cutting off his answer; it’s the questions that still resonate:
WOMAN: Why is it we have so many millionaires and everything in the United States and we still have so many impoverished people who try to get up into the world. Why is it we have this lack of money where people who can’t support themselves decently and get a decent job, where all these big men are up on top making oodles and oodles of money — they don’t need it, they can only eat that much.
FRIEDMAN: And what do you suppose they do, if they don’t need it and don’t use it —
WOMAN: They hoard it.
GARFIELD: And what about business regulation and soaking the rich? Well, at least at the highest marginal tax rates.
RUBENSTEIN: Congress clearly reflects the fact that it doesn't want to do that. All the efforts to increase marginal tax rates don't seem to be getting very far. And I suspect that Congress is just not going to get there. Remember, the Congress is dividing pretty much 50-50 between Democrats and Republicans, and it's generally thought that the Republicans will win Congress for the midterm elections, so I don't see any of those kinds of changes that you're talking about likely to happen.
GARFIELD: This conversation on Bully Pulpit will follow a two-part series with Anne Nelson, who has written about the Council for National Policy, which I guess is an anodyne-sounding name for the great right-wing conspiracy. They have stuck to their knitting and put their shoulders to the wheel for 60 years to kind of hack the democratic system, to take advantage of gerrymandering and the Electoral College to create a kind of permanent majority in legislatures for what is, by the numbers, clearly a minority party. Does it concern you that these archaic structures of democracy are subverting democracy?
RUBENSTEIN: Well, it's interesting. We believe in democracy, but actually, when the Founding Fathers created it, they didn't let American citizens vote for senators; the state legislatures did that. And we created the Electoral College, which is anti-democratic, you could argue. In fact, I think of the last seven presidential elections the person who got the most majority — the most votes — didn't necessarily become President. George W. Bush didn't get the majority of popular votes when he was elected President, and obviously Donald Trump didn't get the majority of popular votes when he was elected President. And so we've got a system where people who are minority, in terms of popular vote, often get elected President. It's not a perfect system, but it's not going to change. To change the system of electing presidents requires a constitutional amendment which requires two thirds of each house and three quarters of the states. And it's inconceivable that you're going to do that.
GARFIELD: Such as in this educational video:
MAN: “Of the nearly 7000 amendments proposed in the centuries since, only 27 have succeeded.”
GARFIELD: There's a chapter in your book that is particularly dear to my heart: your conversation with Supreme Court Justice Sonia Sotomayor on the subject of civics education.
RUBENSTEIN: Right.
GARFIELD: I myself am a co-founder of an organization called the Purple Project for Democracy, which seeks to address the plummeting faith and trust in American democracy and an accompanying appetite for extreme politics, including violence. It's my belief, and Sotomayor's, that a big problem is that Americans have lots and lots of opinions about government, but vanishingly little knowledge of even the most basic facts of how it all is meant to work and how it does work. Is that fixable?
RUBENSTEIN: It's fixable, but we have to remember a couple of things. One, it has been a problem for some time. It's not like all of a sudden people don't know much about government. If you go back to surveys 50 years ago, it was a similar problem. Secondly, you're pointing out the reality that ninety one percent of people who take the citizenship test to become citizens who are foreigners pass, whereas a majority of Americans cannot pass these tests, whereas given by an organization recently in 49 out of 50 states, a majority of Americans couldn't pass the basic citizenship test that foreigners have to pass. So it's a sad situation. We don't teach civics very much anymore, as you know, in school and people know very little about the way our government works and operates.
GARFIELD: And so there's ignorance; I don't mean that pejoratively, there's just a lack of basic knowledge. And there is the tidal wave of misinformation and disinformation, which competes very well against no information. Any thoughts about —
RUBENSTEIN:Well, yes. Yes, look, I'm involved with a lot of civic education efforts and will announce some more projects that I'm going to support to do that. But right now, we have not only misinformation and disinformation, but we have I-don't-care information, which is to say some people put information out, they don't really care whether it's true or not, they just think it's politically helpful to them. And so we have another factor where a lot of people aren't really checking whether these facts are true when they say something and people are being misled, in my view, dramatically.
GARFIELD: All of what we've discussed has made me look at America's future with a sense of doom. You don't see it that way.
RUBENSTEIN: I don't think doom; I would say we've always had challenges. The Civil War was a big challenge, we got through that; the World War II was a big challenge, in many ways, we got through that. But clearly, the most recent stress-test of the election and the January 6th event is not a cause for optimism. So I think we have to address it, but I think we can't put our head in the sand and just say, “woe is me, the country is falling apart”; we have to try to do the best we can as you're doing and others are doing to educate Americans and basically inform them on the theory that the best informed democracy will be a better democracy. So we want to make our citizens well-informed. But it's not going to happen overnight.
GARFIELD: Would you go long in American democracy? Would you short it? What?
RUBENSTEIN: It depends on what period of time, of course, but I think generally nobody betting against American democracy has generally made a lot of money. America is going to be a strong country and a very powerful country for quite some time. Our democracy is not quite as beautiful as many people would like it to be, and many people around the world question whether our democracy is as good as we say it is. We say to people around the world, “Follow our system,” but many people say, “Well, your system isn't working so well, look what's going on in your country.”
GARFIELD: One last thing, David. Over Thanksgiving, you hosted the President and the First Lady for a few days at your bungalow, is it Martha's Vineyard? I don't remember where your summer place is. But before they left, did they strip the beds? I mean, were there wet towels all over the place? Was Biden blasting his Motown playlist all night?
RUBENSTEIN: Well, actually they used the place that I owned. They used it before, when he was vice-president. I was not there, so I can't talk about the issues that you're asking me about. But, you know, I did see him since then. I saw him at the Kennedy Center Honors over the weekend, he said he had a very good time. And he does listen to Motown a lot, as he said in his remarks at the White House recently.
GARFIELD: Uh huh… So you don't know if he's a good houseguest. He didn't burn it down.
RUBENSTEIN: I never heard any complaints from any of the people that have been working there. So I think he's a very good houseguest and I'm sure you know you'll be enjoying having him as your house guest at some point if you invited him.
GARFIELD: Uh, well, it's a thought. It's a thought. Let's see. What can I say that would be even remotely funny? (Mumbles in Bob.) You know, I don't think it's possible. I don't think — I use 2% milk and I don’t; I think he's a whole milk kind of guy. David, I want to thank you so much.
RUBENSTEIN: My pleasure. Thank you very much.
GARFIELD: Private equity billionaire David Rubenstein is author of The American Experiment: Dialogues on a Dream.
All right, we’re done here. Bully Pulpit is produced by Matthew Schwartz and Mike Vuolo. Our theme was composed by Julie Miller and the team at Harvest Creative Services in Lansing, Michigan. Bully Pulpit is a production of BooksmartStudios.org. I’m Bob Garfield.
The Botched Experiment