Rubenstein warned that, if the U.S. failed to prepare for the rise of China and other emerging markets, "our children are going to have and our grandchildren are going to have" a lower quality of life and a less affluent lifestyle than we enjoy today. He said the U.S. could prepare by fixing three problems: the national debt, unemployment, and income disparity. "Unless we solve some of these problems, the emerging markets are going to dominate the world's economy."
Ten years ago America had none of these problems, national debt, unemployment and historic income disparity. What happened over the last decade?
1. Emerging markets supplied cheap labor, which eventually turned into rising domestic demand. In addition, structural barriers discourage imports outside of China.
2. American branded multinationals sent jobs by the millions to China. This fueled corporate profits, while robbing the U.S. economic engine of jobs.
3. The U.S. national debt ballooned, which coincided with the rapid rise of private equity underwriters (PEU's). One PEU signature move is cutting jobs/sending production overseas.
4. Carried interest tax breaks saved PEU's billions in taxes. Bush capital gains and income tax cuts helped the wealthy even more.
5. Rubenstein paid Chinese officials for the right to do business in their country, while American governments gave Carlyle Group affiliates millions in economic development aid.
6. Carlyle invested in a Chinese company that produced toxic milk.
7. Affiliate Oriental Trading sold cadmium tainted, toxic children's jewelry in America.
8. Despite the financial crisis, Carlyle's 30% annual return record over a 23 year period remains intact.
9. Surprise, retroactive Chinese taxes didn't squelch Rubenstein's ardor for China.
David Rubenstein's profit-a-palooza helped create his dark vision. Let's hope he doesn't need quality Heparin for a heart by-pass procedure. China may not be capable of supplying it. Who would be heartless in such a case?
Underwriting the event is Carlyle's Booz Allen Hamilton. Greed is as greed does.
