May 9, 2012
It’s May. The grunions are running and so are the members of Occupy L.A. They wriggle up from the cold and dark, plant their tushies on the warm ground and squirm about frantically, desperate to get something accomplished, until a massive tide sweeps them away.
And I’m not talking about the fish.
Grunions, at least, mate during their annual appearance. The Occupy movement, if it follows the same course as before, is destined just to beach itself and die.
Last year, when protesters camped from Wall Street to the lawn of Los Angeles’ City Hall, they made headlines and accomplished one significant feat: They focused national attention on the growing gap between the country’s rich and poor.
Why, some of our wealthier readers may ask, is that anyone’s problem? Because stable communities, and resilient nations, are built on a strong middle class. That’s a truism economists of all stripes and parties agree upon — though our political class, of all stripes, seems incapable of acting on it.
So the Occupy L.A. people put “We are the 99%” on poster boards and waved them in our faces, and for a while it worked. At least until they trashed the lawn outside City Hall and caused public safety employees to rack up endless hours of overtime, costing us middle-class taxpayers hundreds of thousands of dollars.
But that was all so 2011. When the Occupiers reappeared on May 1, the news media yawned, and the organizers themselves seemed, literally, directionless.
A West Los Angeles contingent set out to join the May Day protesters downtown. They rode their bicycles down Santa Monica Boulevard, past the Beverly Hilton Hotel, and stopped to regroup in the parkway along Little Santa Monica. A small contingent threw an impromptu protest in front of the Prada store on Rodeo Drive — no doubt confusing the Chinese and Russians who could actually afford the stuff inside.
Meanwhile, back at the Beverly Hilton Hotel, I was inside standing among a dozen men in suits shaking their heads in utter dismay as Occupiers rode past.
“They really are clueless,” one said. “There’s billions of dollars of capital in this hotel, and they’re going to Prada.”
That’s right, the men and women fighting for the 99 percent bypassed what may be the largest and most influential annual gathering of the 1 percent in the United States.
How large? The annual Milken Global Conference brings together 3,000 attendees over four days to discuss finance, politics and the state of the world. The cost of entry starts at $6,000. How influential? One year, I ran into Warren Buffett, Rupert Murdoch and Alvin Toffler all in the same moment — in the men’s room. Those Occupiers need to fire their research department.
The Global Conference combines graduate-level seminars on everything from equity formation to international policy with upstairs deal making and ferocious hallway networking. The attendees tend to be asset managers, investors, venture capitalists, corporate chieftains. They’re mostly men, in suits, clutching iPhones and BlackBerries. While people shake your hand, their eyes never leave the nametag on your chest. After a while I knew how Dolly Parton must feel.
But here’s a greater irony: If the Occupy movement was clueless about what was happening inside the Hilton, the conference itself dedicated substantial time and attention to exploring the concerns of the 99 percent. This isn’t new or surprising: investor and philanthropist Michael Milken, who created the Global Conference in 1998, is driven by the idea that capital creates innovation and social change; that wealth, used in creative and aggressive ways, spreads wealth.
So the vast majority of the sessions focused on how investments in innovative medicine, food, technology, education and communication can help solve the challenges the world faces in those fields, even as they increase returns. One entire track looked at how free-market innovations in Israel and the Arab world can increase political stability throughout the Middle East (more on that next week).
At a luncheon debate titled, “What’s Happened to the American Dream?” historian Niall Ferguson and investor (and “car czar”) Steven Rattner agreed that rising wealth disparity and economic immobility hampers growth. They also disagreed loudly and brilliantly over what to do about it. Ferguson said we must focus on cutting back entitlement programs to prevent the growth of a motivation-sucking “transfer state,” where wealth is just given to those who don’t work. Rattner argued that the issue has to be tackled along with greater public investment and fairer tax codes.
Not surprisingly, the one-percenters sided more with Ferguson, but at another panel titled, “Easy Money: Consequences of the Global Liquidity Glut,” it became clear that in Milken’s world, it’s just as big a shanda for capital as for people to be lying around doing nothing.
The day the bike riders blithely rode past, I attended a morning session called, “Community Development: Investing in the 99 Percent.” Panelists examined innovative ways for investors, NGOs and government to work together to solve poverty.
“There are 100 different interventions that work to prevent poverty,” said John Belluomini, founder and CEO of the Center for the Greater Good. “The number one killer in the country is poverty.”
One possible approach is the Social Impact Bond, an experiment promoted by the “father of venture capitalism,” Sir Ronald Cohen — he was at the conference, too — to allow private business to invest in solutions to prison recidivism and chronic homelessness.
“For a mainstream conference like Milken to focus on social impact investment underscores its importance in the marketplace,” panelist Sean Greene of the Small Business Administration said.
Yet another discussion, “New Strategies for Financing Social Innovation,” featured Jonathan Greenblatt, director of Social Innovation in the Obama White House. The discussion focused on the need to change current regulations to allow foundations to count program-related investments as part of their disbursements — in one fell swoop this could free up billions of dollars.
“You can go negative or go positive,” said Greenblatt, a co-founder of Ethos Water. “The fact that this conversation has infiltrated the mainstream shows the worthiness of these ideas. Capital holds promise to create the kind of communities we care about.”
The Occupy movement may have served a purpose, but it appears to be out of ideas. The good ones were at the Beverly Hilton.