David Rubenstein, co-founder of the global private equity firm The Carlyle Group, spoke at IU’s 2018 winter commencement ceremony, last month. With a net worth of $2.7 billion, Rubenstein has caught our attention because he is so different from most of the previous commencement speakers IU has had.
Normally, commencement speakers have been IU alumni as well as artists, advocates, politicians and scholars, but Rubenstein is not really any of these. He has made his wealth off of his private equity firm. This type of company buys up other companies, raises funds to invest in them and increase their value, and then sells off at a profit.
There are some reasonable possibilities of why the university chose him. In his previous talks, he often has used a humorously self-deprecating tale of his life’s failures to illustrate how you should ultimately do what is meaningful to you, rather than what will make you rich.
As he puts it, his life is “a lesson in persistence,” your typical rags to riches success story — he bounced between law firms, government positions and joblessness until he struck gold in private equity. “Don’t think that you’re gonna know what you want to do with your life at the age that you are now,” he said in a speech to the Academy of Achievement. “You should do as many different things as you can.”
In addition, IU probably looked at Rubenstein’s philanthropy. He has given mountains of money to the preservation of historical sites and to the exhibition of important documents like the Magna Carta and the Gettysburg Address. He’s also donated extensively to improve medicine, education and literacy rates.
Based on his previous speeches and philanthropy, Rubenstein might have seemed like a decent choice. However, you have do have to ask, why him, specifically? The ideas in his talks — do what you love, give to a good cause, etc. — are motivational but are not particularly special to him. Other well-known, less wealthy individuals have similar ideas. Why should the graduating students be able to relate to someone as nebulous as a private equity giant?
If you look at some of the history of The Carlyle Group, it is hard to see what Rubenstein’s work here is supposed to mean to us.
For example, during the 1990s, Carlyle acquired a significant number of defense companies. In the largest of these investments, Carlyle bought United Defense for $850 million in 1997.
According to an investigation by the Center for Public Integrity, after the attacks of September 11, the value of United Defense rose as the U.S. began pouring money into defense contracts. When Carlyle sold most of its assets in United Defense that December, the firm made a profit of $1 billion. In other words, for a significant part of its history, defense businesses have been an important part of Carlyle’s earnings.
More recently, the Washington Post has reported that five years after Carlyle acquired the nursing home company HCR ManorCare, that company filed for bankruptcy due to enormous debts. As those debts climbed during this period, executives cut costs, which led to a 29 percent rise in HCR ManorCare’s health-code violations.
Again, one has to ask, with all of this baggage, what did IU believe he represents?
It is not far-fetched to say that IU might only be hosting him not because of his career or his philanthropy, but because it wanted a donation from him. After all, he has made large gifts to the University of Chicago, Duke University and Harvard. An opportunity to be a commencement speaker might be just the way to woo Rubenstein to send some of that money to us. If that is the case, that is not a proper reason to choose him to speak.
There is nothing particularly hopeful or inspiring about private equity in itself. Rubenstein can offer a good success story, but other people can, too. In 2018, many of us college students are feeling hopeless about the future, and so we need a strong, prominent figure who can remind us of our own power to improve the country and the world. Does David Rubenstein really satisfy that role, or is he just a potential source of income?
IU’s future commencement speakers should be chosen based solely on how they embody the university’s core values and how they can motivate us to persevere in the world. They should not be chosen based on how much money they could give us.