May 3, 2007
Das Happy Kapital
Web extra: Greed is good!
"Oh," I said to the senator, at a loss. "Hi."
"Hi," he said, and turned back to his phone.
The doors to the hotel slid open. Former Secretary of Education William Bennett moved past me. We exchanged nods. I turned and ran into Paul Gigot, editorial page editor of the Wall Street Journal. Three steps behind him, Eli Broad whizzed by.
Just another 30 seconds at the Milken Institute Global Conference, the annual gathering that attracts everybody you've ever seen on CSPAN, the MacNeil/Lehrer NewsHour and FOX, including the owner of FOX, Rupert Murdoch -- I bumped into him coming out of the men's room.
The annual conference marked its 10th anniversary last week, with three days of lectures, keynotes and seminars on the topics and trends that organizers at the Milken Institute believe will shape our global future.
The Los Angeles Times compared the gathering to the World Economic Forum in Davos, Switzerland or the Clinton Global Initiative Conference. But what makes this high-powered global conference different from all others is the audience: not mainly policy wonks and NGO do-gooders, not politicos and journos (though plenty of all of the above), but investors, corporate types, men and women who collect and distribute private and public capital.
"We run the number one high-yield bond fund in the country!" I heard a conference-goer bark into his cell phone. Many people I met told me they ran hedge funds, though I never did quite figure out what a hedge fund is.
It's a three-day return to university, if your university hired mostly Nobel laureates and your fellow students were all much richer than you. At about $1,000 per day, it's just a bit pricier than an Ivy League college.
On Wednesday I attended one of the general sessions in the hotel's ballroom, at which most of the conference's 3,000 participants heard the conference's founder, Michael Milken, in discussion first with Gov. Arnold Schwarzenegger, then with a panel of Nobel laureates. The subject was global warming and energy independence.
The governor laid out how California would lead the way in reducing the gases that cause global warming and developing green technologies. He threatened to sue the federal government if it prevents California from implementing a law reducing greenhouse gases from vehicles within six months. Then, under Milken's questioning, he switched gears and spoke of "great economic opportunities for green technology."
Schwarzenegger challenged his audience to invest in California and in alternative energy technologies.
"Everyone needs to look at this as a huge opportunity," he said.
In Milken's conversation with the Nobel laureates in science and physics, he prodded them on where future energy investment opportunities lie.
"People are not sitting still on the assumption that we'll have an energy system based on carbon-based energy," he said.
But the panelists and Milken seemed to agree that opportunities need government to help out by passing stronger regulations on fuel emissions.
That's what consistently surprised me at a gathering birthed by a man who has, despite a lifetime in groundbreaking philanthropy, been interred in popular imagination as a poster boy for avarice. For one thing, you end up hearing a lot about alternative energy, the end of oil, the most effective means of Third World development, curing the world's worst diseases, universal health care, and environmental rescue. And every other chance he gets, Mike Milken himself goes on about healthier eating through soy.
Strip away the power suits and you're back in a freshman dorm, circa 1978, hearing the campus lefties talk about saving the world.
In fact, idealism infuses this conference. It is at root about doing well and doing good; and often, in the case of investment in energy alternatives and emerging markets, in doing well while doing good. "I'd like to think [government] can tilt the playing field so the private sector is rewarded for doing the right thing rather than the wrong thing," the Nobel laureate Burton Richter of Stanford University, told Milken. But it was Milken who provided the graph that showed that in the past stronger government regulation has improved energy efficiency while allowing the economy to grow at unprecedented levels.
Clearly, this is not your grandfather's capitalism.
As I wandered in and out of conference sessions, I discovered not the slash-and-burn mentality of go-go capitalism at work, but something actually closer to the earliest form of capitalism in the Middle Ages. Back then, private capital was a kind of new technology that enabled a nascent middle-class to use its funds to attain wealth previously accessible only to aristocrats. Back then, money in the hands of merchants and guilds challenged the feudal autocracy and funded invention, discovery and social development.
At the Milken Conference, investment was presented as just that kind of engine of human ingenuity, and human capital as a foundation of wealth. The ultimate smart money, Milken and his conference presenters seemed to be saying, is on health and education: there's no limit as to how much wealth a nation of smart healthy people can generate. At one luncheon, Milken flashed a chart -- the man likes his statistics -- showing the cost of early deaths caused by heart attacks and cancer.
Invest millions of dollars into finding cures, said Milken -- founder of FasterCures, a nonprofit that does just that -- and free up trillions in lost wealth.
Nowhere was this noble capital more apparent than in the Conference's treatment of Israel.
At a time when much of the world makes a special point of singling Israel out for disparagement -- just witness the British National Union of Journalists, which last week called for a boycott of Israel after one of their own members was kidnapped by Palestinian terrorists -- the Milken Global Conference holds Israel up as an exemplar of how a developing country can combine smart economic policies with investments in education and innovation to unleash enormous economic potential. Milken economist Glenn Yago hosted a nearly two-hour session titled, "Israel: Confessions of an Economic Growth Engine," which dissected the country's progress and problems.