Carlyligarchy

The Guardian ran a piece on oligarchy.  It illuminated how a small number of greedy, power seekers can distort a democracy in their favor.  The story used ancient Greece but their practices brought to mind The Carlyle Group, a politically connected private equity underwriter (PEU).

At its core, oligarchy involves concentrating economic power and using it for political purposes. Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality.

Flashback to October 2001 in a piece titled "the Ex- Presidents' Club":

But what sets The Carlyle Group apart is the way it has exploited its political contacts. When Carlucci arrived there in 1989, he brought with him a phalanx of former subordinates from the CIA and the Pentagon, and an awareness of the scale of business a company like Carlyle could do in the corridors and steak-houses of Washington. In a decade and a half, the firm has been able to realise a 34% rate of return on its investments, and now claims to be the largest private equity firm in the world.

Carlyle managed $5 billion in assets in early 2001.  It manages over $170 billion today, a thirty four fold increase..

The next characteristic also brought Carlyle to mind:

They build a legal system that is skewed to work in their favor, so that their illegal behavior rarely gets punished. 

Carlyle settled a New York pay to play investigation for $20 million.

And they sustain all of this through a campaign finance and lobbying system that gives them undue influence over policy.

Private equity's preferred carried interest taxation is a perfect indicator of this undue influence. There has been no public will for billionaires to pay a lesser tax rate than a secretary, but that's been the case for over a decade.

On June 8, 2010 Rubenstein’s cell phone rang as he was speaking to supporters of the Economic Club, at the Phillips Collection. He left the stage to take the call. Among those in the audience was Gary Shapiro, the consumer-electronics lobbyist who was Rubenstein’s travel companion to Japan in the ’80s. After a few minutes, Shapiro recalls, Rubenstein returned and said, “That was a senator. That one call just saved us on carried interest.”

Oligarchs remain in power by maximizing their public image.

"Instead of public works projects, dedicated in the name of the people, they relied on what we can think of as philanthropy to sustain their power. Oligarchs would fund the creation of a new building or the beautification of a public space. The result: the people would appreciate elite spending on those projects and the upper class would get their names memorialized for all time. After all, who could be against oligarchs who show such generosity?"

And that's exactly what Carlyle co-founder David Rubenstein did.  Alaskan journalist Craig Medred reported on one Rubenstein relationship, that with his wife Alice Rogoff Rubenstein:

Some friends and former friends of Rogoff are angry at Rubenstein, who they believe could have cleaned up his long-estranged wife’s Alaska mess but refused to do so. Rubenstein is worth an estimated $2.5 billion. He spent $21.3 million to buy the Magna Carta in 2007.

In 2016, Rubenstein gave the National Park Service $18.5 million to help restore the Lincoln Memorial. In private, Rogoff has described those acts as publicity grabs and claimed all her financier husband really cares about is making money.

Mrs. Rubenstein's revelation fits with Greek oligarchic practices.

"the key to oligarchy is that a set of elites have enough material resources to spend on securing their status and interests. He calls this “wealth defense,” and divides it into two categories. “Property defense” involves protecting existing property – in the old days, this meant building castles and walls, today it involves the rule of law. “Income defense” is about protecting earnings; these days, that means advocating for low taxes"

President Trump's cabinet is chock full of PEUs.  They are in a unique position to protect their brethren.

The question is whether democracy will emerge from oligarchic breakdown – or whether the oligarchs will just strengthen their grasp on the levers of government.

The Federal Reserve board already has two board members from The Carlyle Group.  One is Vice Chair for Regulatory Affairs and other could be the next Fed President.  Carlyle co-founders dined regularly with Presidents from both the Red and Blue Team.  They have free access to Capital Hill and show up when their pocketbook dictates.

Former Vice President Joe Biden's recent defense of rich people suggest the billionaire grasp on government will strengthen with each crisis.  Politicians Red and Blue love PEU.