691. Is This What a “Good Billionaire” Looks Like?

Stephen Dubner (0:01)

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For half a century, David Rubenstein has been part of the Washington establishment. He started out as a lawyer on Capitol Hill, then he worked on domestic policy in the Carter White House. But what made him famous and very rich was the Carlyle Group, a private equity firm he co-founded in 1987 and where he's still co-chairman. Carlyle did not invent the Washington revolving door between government service and high-end finance, but it certainly capitalized on it and Rubenstein thrived. He came to epitomize a Washington that was relatively moderate and bipartisan. He spent many millions of dollars on what he calls patriotic philanthropy, helping restore the Lincoln Memorial in Washington Monument, for instance. He's bought rare copies of America's founding documents to put on public display, and he's given millions more to a vast array of educational, cultural, and civic causes, like the Kennedy Center for the Performing Arts, where he was chairman for more than a decade until recently, when that came to an abrupt end.

David Rubenstein (3:22)

I'm the only person to ever be fired by a president and succeeded by him at the same time.

Stephen Dubner (3:26)

But even that doesn't seem to have shaken Rubenstein's faith in the American experiment. Today, on Freakonomics Radio, is this what a good billionaire looks like?

SPEAKER_3 (3:52)

This is Freakonomics Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubner.

Stephen Dubner (4:10)

I like to think of myself as a fairly industrious person. I've written books, I make this show every week, and sometimes other shows. I run a little production company, I have a family, friends, stuff like that.

But when I look at how David Rubenstein spends his time, I feel like a world-class slacker. Here is a partial list of the institutions where he serves as board chair, trustee, or director. The Council on Foreign Relations, the National Gallery of Art, the Economic Club of Washington, the University of Chicago, Johns Hopkins Medicine, Memorial Sloan Kettering Cancer Center, the Institute for Advanced Study, the Brookings Institution, the World Economic Forum, the American Academy of Arts and Sciences.

Appointments like these often go to people who can write very large checks or persuade other people to write them. Rubenstein can do both. His Carlyle Group was at one point among the world's largest private equity firms, and it's still a heavyweight. Private equity has made a lot of money for its investors and its operators. It has also attracted a lot of criticism, including from this very show. It can be exploitative and extractive, and it takes full advantage of that cozy relationship between government and finance. For instance, the famous carried interest loophole that lowers the tax burden on private equity profits. I asked Rubenstein what he would do about that loophole if he could unilaterally change it.

David Rubenstein (5:36)