David Rubenstein, CEO of The Carlyle Group LP (NASDAQ:CG), joined Bloomberg Television’s Stephanie Ruhle and Erik Schatzker today live from Davos to discuss philanthropy, income inequality and the state of private equity.

david rubenstein

Rubenstein told Bloomberg TV he sees plenty of opportunity for private equity, having only “touched the surface in the emerging markets.”

Rubenstein: Plenty of PE Investing Opportunities

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Rubenstein on billionaires that are not so philanthropic:

“Well, I don’t think I can control what other people do with their money, but I do think it’s important that people who have a fair amount of money do something useful with it other than just buying, you know, homes or yachts or things like that.  At some point in life, people realize they need to do something, I think, to give back to society, so there is a lunch here that Bill Gates and I are hosting for people who have signed the giving pledge, but also for people who might sign the giving pledge, and we had that last year, and it worked quite well, and I hope we’ll be successful this year.”

Rubenstein On the giving pledge: 

“The giving pledge — the giving pledge is something that Bill Gates and Melinda Gates put together with Warren Buffett.  It’s designed to get certain people to give away, during their lifetime or at death, at least half of their net worth.  And it has now about 120 people who’ve signed up to do so around the world, but most of them are in the United States.  We’re increasingly working to get people outside the United States to do so.  Philanthropy is more of a United States preoccupation that probably people outside the United States, so it takes a little more work to convince people outside the United States to give away half of their net worth.  But we’re making progress.”

Rubenstein on how to get the next generation to make a real philanthropic commitment:

“Well, for one, if you are doing something as a leader of a firm, and maybe you can set an example for other people, so if you can be a role model, other people who might want to follow your example, see somebody that they might want to emulate, that’s one thing.  Secondly, if you talk about this and explain what you’re doing, you might have some impact on people who work for you. Well, there are people in our firm who are quite philanthropic, who are quite, you know, junior, relatively speaking, but also we have a program in our firm where we match what people give away, so for a young employee in our firm wants to give away X dollars, we will match that up to a certain amount.”

Rubenstein on whether philanthropy is the answer to inequality:

“Well, for one, if you are doing something as a leader of a firm, and maybe you can set an example for other people, so if you can be a role model, other people who might want to follow your example, see somebody that they might want to emulate, that’s one thing.  Secondly, if you talk about this and explain what you’re doing, you might have some impact on people who work for you. Well, there are people in our firm who are quite philanthropic, who are quite, you know, junior, relatively speaking, but also we have a program in our firm where we match what people give away, so for a young employee in our firm wants to give away X dollars, we will match that up to a certain amount.”

Rubenstein on whether philanthropy is the answer to inequality:

“No. Philanthropy is — we have to remember, philanthropy isn’t going to solve all the world’s problems.  Right now, philanthropy in the United States, people give away roughly — about 2 percent of GDP, so it’s a small percentage of GDP that’s involved in philanthropy.  It’s important, but a small percentage. To solve income inequality, we need to educate people better.  When you have 25 percent of the people who enter high school in many urban areas not completing high school, you’re now creating people who are not going to get better jobs.  They might often wind up in doing things that are not socially acceptable.  And a higher percentage of people graduate — do not graduate from high school wind up in our prison system, which is the largest in the world.  So I think income inequality cannot be solved overnight.  We have to commit to do it over a period of time, but education is probably the key.”

Rubenstein on whether our capitalist system allows people to make too much and accumulate too much wealth:

“Well, our capitalist system isn’t perfect.  No system of capitalism — there are different types — is perfect, but our system has enabled the United States to build, I think, the greatest economy in the world and the greatest country in the world.  So there are some imperfections. When Adam Smith more or less invented capitalism, he didn’t say it was a perfect system.  I think it’s a better system than any other system, but every system has imperfections.  I think our country now allows a lot of people to make a great deal of money, but many of them are quite philanthropic and they are giving it back to society.  You can’t be buried with the wealth, and many people recognize that.”

“But what we need to do is make sure that the R&D in our country, the education in our country, the other things that make people come up from the bottom, as I did — I came from very modest circumstances — and people come up from the bottom, eventually people see the merits of our system.  It’s possible to rise up in our system.”

Rubenstein on income inequality and whether it’s fair that talent move from Wall Street banks to Carlyle because of higher compensation, when that money could go to those who have important jobs, like teachers, but get paid less:

“You can always cite examples of how the world would be better off if teachers got paid more money, and teachers should get paid more money.  Probably teachers deserve more money than private equity deserve money, but the system is what it is.  I can’t overnight change the system.  Probably the highest paid people should be interviewers on Bloomberg. But I can’t change that system overnight.  So I think I have to work through this very slowly with you and others trying to convince people that people who do public service and teachers do deserve higher salaries, but I don’t think overnight we should say the whole system is bad because there are a lot of people who do make a lot of money.”

Rubenstein on whether a private equity firm can afford to define success in terms that are not purely financial:

“There’s no doubt that early on our investors only cared about the rates of return, but I think our investors now care a fair bit about whether we’re creating jobs, whether we’re paying our share of taxes, whether we’re shipping jobs offshore, in the case of U.S.

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