Billionaire Confessional: David Rubenstein on Wealth and Privilege

“Growing up in a family where your father’s pretty wealthy is much more complicated than growing up in a family where your father is not wealthy.”

David Rubenstein grew up in a low-income home in Baltimore, the son of a Jewish mailman and a stay-at-home mom. Today he is one of the richest people in the world, worth some $3 billion. It’s an up-by-the-bootstraps story that informs his views on education, income inequality, taxes and more.

After attending Duke University and the University of Chicago Law School, he joined the white-shoe law firm Paul Weiss. He then worked as a lawyer in the Senate, and in the White House during the Carter administration. In 1987, Mr. Rubenstein co-founded the Carlyle Group, a leveraged-buyout shop that has grown into one of the largest private equity firms in the world.

He stepped down as co-chief executive of Carlyle years ago, and now stays busy giving speeches, hosting a show on Bloomberg TV and writing books. He is also giving away large sums of his money, including spending lavishly to preserve American history. He has bought copies of the Declaration of Independence and the Emancipation Proclamation, and donated to help repair the Washington Monument and the Lincoln Memorial. He calls it “patriotic philanthropy.”

This interview, which was condensed and edited for clarity, was conducted in New York.

Tell me about your parents.

David Rubenstein: My father dropped out of high school to go into World War II. He served in the Marines in the Pacific, came back, met my mother, married her not too long thereafter. She dropped out of high school to get married. We lived in northwest Baltimore, and my family was part of the schleppers, the blue-collar people, who all lived in these narrow little rowhouses. My father went to work in the post office, and spent his entire life there and retired when he was 55, and moved to Florida.

What did you want to be when you grew up?

David Rubenstein: When you’re growing up in the 1950s in a blue-collar family, you didn’t aspire to make a billion dollars the way they do today. If you went into business, you only went in from one of two ways. If you were not Jewish, you would go work for Morgan Stanley, Procter & Gamble, IBM, Standard Oil. If you were, let’s say, ethnic, to use a phrase like that, you would go into your family’s business, whatever it was. If you didn’t have a family business, you would go be a lawyer or doctor or a dentist if you were Jewish.

It was a big advantage in hindsight. Because when you grow up relatively poor — and I don’t want to make it sound like I was poverty stricken, I had parents, I wasn’t living in an orphanage — you have to learn to do things on your own and so forth.

How did the Carlyle Group come to be?

David Rubenstein:  Two things happened. I read that Bill Simon had done a leveraged buyout in the early 1980s where he bought Gibson Greeting Cards and made $80 million on a $1 million investment. I didn’t know what a leveraged buyout was, but it sounded more attractive than practicing law.

And then I read an entrepreneur will start his or her first company between the age of 28 and 37. And after 37, just like a woman’s biological time clock goes down, your chance of reproducing goes down, your chance of starting a company after 37 goes down. So I said, “Oh, if I’m going to do it, I better do it now.” Then obviously, as we built the firm, the money came along, and then you have to figure out what to do with the money.

Given that you grew up relatively poor but are now so rich, how do you talk to your own children about money?

David Rubenstein: Growing up in a family where your father’s pretty wealthy is much more complicated than growing up in a family where your father is not wealthy. When your family is not wealthy, you’ve got to really achieve something or you’re not going to get anywhere. You’re on your own.

Whereas my own children, and the children of families like mine, I think have a bit of a disadvantage. As a general rule of thumb, the people running the world are people from blue-collar families who are lower middle class. It’s rarely the case that somebody whose father was a billionaire turns out to be better than his father, becoming a multibillionaire or running the world.

With my own children, I wouldn’t say it’s perfect, but what I have done is send them to very good schools — Harvard, Stanford, Duke, that kind of thing. But they don’t have trust funds that they’re living off.

I don’t want us to arrive at the conclusion that somehow privilege doesn’t matter in securing a comfortable life.

David Rubenstein: If you come from a wealthy family, you will have a nice life. But the drive to really get to the top often comes from people who didn’t have all those privileges.

Outside Wall Street, private equity isn’t the most popular industry these days.

David Rubenstein: I like to say it’s the highest calling of mankind, but nobody agrees. Throughout the history of the world, it’s rarely been the case that people say, “You know, this person is really rich, and I really like him.” John D. Rockefeller’s image wasn’t so wonderful until he started giving away money. So it’s not surprising that hedge fund people, private equity people are not beloved. Particularly because the product that they create is often invisible to people. People say, “All you’re doing is shuffling paper around and you’re borrowing money, and you’re not paying enough taxes.” So, yeah, I can see why people don’t love us. You may be one of them.

“My own children, and the children of families like mine, I think have a bit of a disadvantage.” – David Rubenstein


I try to see the nuance. You said earlier that your father was able to retire on a postman’s salary when he was 55. I don’t know that postmen today can work until they’re 55 and then retire.

David Rubenstein: I don’t know. Maybe they make more.

This gets at the broader debate around capitalism that’s going on right now. To what extent do you believe that the financialization of so much of the economy has contributed to the anger people are feeling?

David Rubenstein: Well, there’s no doubt that the wealth gap today is greater than it’s ever been, at least since the 1920s. And the resentment factor is obviously very high. I am surprised that you don’t see more people marching in the streets.

Do you think anything should be done about it?

David Rubenstein: I believe that the system today is not as fair as it should be for people at the bottom. There’s income inequality, and there’s also a lack of social mobility. When I was at the bottom of the totem pole, I believed in the American dream. I believed that if you work hard, you can maybe get somewhere. Today, many people at the bottom do not see there’s any social mobility for them. They don’t think they can rise to the top.

There are many reasons for it. One is, I’d say, the education system hasn’t worked so wonderfully. You have one and a half million people a year dropping out of high school. Fourteen percent of our adult population is functionally illiterate. And if you have people at the bottom who can’t read, nothing you can do at the top is going to all of a sudden change that.

But I don’t have the answer. It’s very complicated. All I can do is do what I’m doing. I’m taking the money I have and recycling it by giving it away.

How do you approach your philanthropy?

David Rubenstein: Most people who have a lot of money give it away at death, and generally, throughout history, 95 percent of that is going, if not more, to their spouse or their children. The ancient pharaohs tried to take their wealth with them, but it doesn’t really work.

But most people who have staggering wealth realize that your family doesn’t need staggering amounts of money to be happy. If you give each of your children $1 billion or $2 billion, is that going to make them better? Probably not. So you then are reduced to giving it away to philanthropic causes during your life, or upon your death. I wanted to give it away while I was alive because I would see where it was going.

And what’s behind your “patriotic philanthropy”?

David Rubenstein: It’s honestly less than 10 percent of the money that I give away, but it gets 99 percent of the attention. By having these historic documents, people will spend more time learning about it, and maybe that’s a good thing. If you learn a little about history, you might avoid some mistakes. Also, it’s sad that so few Americans know so little about history. Ten percent of Americans said they thought Judge Judy was on the United States Supreme Court, which, I like to say, is not yet the case.

If I could cure cancer, I would rather do that. And I have created a pancreatic cancer center in Sloan Kettering. But cancer is going to be with us long after I’m gone. Everybody that gives something in philanthropy has to find some niche, and maybe they make a difference. I’m not saying I’m making the most important contribution in the history of the world, but it’s a little niche.

In the end, you have to say what is the purpose of life, and what are you doing here? Everybody has to ask themselves that question. What are you doing that makes your existence on the face of the earth justified? What am I doing? Well, maybe fixing up companies isn’t such a great thing. It does add to the economy, you could argue. But giving away the money, reminding people of history, is one thing that I’m now a little bit focused on.

Some people would say that one of the reasons the government doesn’t have enough ready capital is that …

David Rubenstein: We’re not paying enough taxes.

Right. You’re not paying enough taxes, and there’s the carried interest loophole.

David Rubenstein: The numbers are so low in what you’d pick up by taxing carried interest that it’s embarrassingly small. Sometimes the federal government will say it might pick up $18 billion over 10 years. It might make people feel good, but it’s not necessarily going to change the world. You have a deficit today of $1.3 trillion. If you add in a few billion more by taxing us, it’s not going to make a difference.

I understand that other people would say, “You guys already have so much money.” And the way I’ve structured my affairs at Carlyle, I currently get no carried interest. I get dividends off the stock and my own investments, but I don’t get carried interest. So it’s not relevant to me at this point.

Originally published on

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