Philanthropists like Andrew Carnegie took profits from their firms made from the plunder of his workers, and generally channeled them toward funding public libraries and museums. The rich, in their view, idiosyncratically and undemocratically, gave to the poor.
Stephen Schwarzman, the private equity tycoon worth $6.5 billion and co-founder of the Blackstone Group, has developed a new kind of philanthropy. While claiming they’re doing the rest of us a favor,charitable ventures need no longer benefit the public at all; they just need to be marketed that way. Schwarzman has certainly proven himself to be an outstanding philanthropist when it comes to giving to himself, throwing a $3 million birthday party for himself in 2007. He has spent $125 million on five estates, and pays $3,000 per weekend on meals.
Schwarzman’s latest and largest philanthropic project is a postgraduate China scholarship titled the “Schwarzman Scholars” program. Based at Beijing’s Tsinghua University, the initiative will offer 10,000 students over the next 50 years the opportunity to enroll in an all-expenses-paid master’s program designed to “rival the Rhodes scholarship in prestige and influence.” At $300 million—including $100 million of Schwarzman’s own money—the program’s endowment is already slated to far outstrip the $203 million Rhodes fund. US Secretary John Kerry lauded the program as “a terrific one,” thanking Schwarzman for his “vision and commitment” . Boeing’s chairman, president and CEO W. James McNerney, Jr. threw in his company’s supportas a donor “because it will help develop future leaders with global sensibilities and further strengthen the ties between our two countries.” the ties and relationships they’re discussing here are business ones. The second-biggest donor for the program is BP. Other top donors include Caterpillar (China is the world’s top construction market), and an array of big banks seeking expanded access to China’s state-owned financial sector.
As the New York Times notes, Schwarzman’s personal role will “raise his political profile in China,” giving him and Blackstone “increased access to Chinese leaders.” Tsinghua University is one of China’s most prestigious institutions, and has educated many of the country’s political elite. President Xi Jinping, former president Hu Jintao, and Zhou Xiaochuan, head of the People’s Bank of China, are among its alumni, along with a number of other top Communist Party officials. Housing the program at Tsinghua is an obvious way to gain access to that country’s future leaders as well as its current ones.
This is disguising a profit-oriented power play as social development. The Schwarzman Scholars program is, in the long run, meant to create a new elite of Stephen Schwarzmans, grooming the brightest young people already at the world’s top universities. The curriculum will plainly be an education in how to disregard all social imperatives besides the economic ones. Privileging these young scholars above the rest of their peers and acculturating them into Schwarzman’s rarefied realm is just another way of keeping it in the family. Far more immediate motives complement this long-term investment strategy—namely, access to and favor from the leaders of the global economy’s newest superpower. Paralleling the university trustees that oversee personally enriching endowment investments, programs like the Schwarzman Scholars offer unique business opportunities in themselves, as BP, Boeing, Bank of America, GE, and other heavyweight corporations have recognized.
But Schwarzman and his Blackstone corporation are skilled “vulture capitalist" operators. A private equity firm like Blackstone first purchases a controlling stake in struggling companies they hope to “turn around,” usually borrowing 60-90% of the money from big banks. The firm then charges the client company steep annual “management costs” on top of the debt payments used to finance its own buyout. At this stage, many companies lay off a huge number of workers to balance budgets, opening themselves up to be profitably resold. Some simply go bankrupt in the process.
As Shirley Kimber, a laid-off factory worker explained “They just used us. That’s exactly what they did. And then they kicked us to the curb.” Kimber and 270 of her colleagues were fired when Blackstone took control of her food processing plant and promptly shut it down. A similar story played out during Blackstone’s $4 billion purchase of Travelport in 2006, which ultimately resulted in the firing of 2,300 workers, or nearly 30% of the company’s workforce. Blackstone made its money back in seven months.
Attempts to regulate leverage buy-outs were met by Schwarzman’s personal resistance. “It’s a war,” about efforts to close the tax loophole on carried interest that allows people like Schwarzman to pay a maximum rate of 15% instead of the 35% paid on regular income. “It’s like when Hitler invaded Poland in 1939.”
With only 56 Americans and 181 people richer than him Schwarzman is deluded enough to when say things like “I don’t feel like a wealthy person. Other people think of me as a wealthy person, but I don’t.”
See full article here
Stephen Schwarzman, the private equity tycoon worth $6.5 billion and co-founder of the Blackstone Group, has developed a new kind of philanthropy. While claiming they’re doing the rest of us a favor,charitable ventures need no longer benefit the public at all; they just need to be marketed that way. Schwarzman has certainly proven himself to be an outstanding philanthropist when it comes to giving to himself, throwing a $3 million birthday party for himself in 2007. He has spent $125 million on five estates, and pays $3,000 per weekend on meals.
Schwarzman’s latest and largest philanthropic project is a postgraduate China scholarship titled the “Schwarzman Scholars” program. Based at Beijing’s Tsinghua University, the initiative will offer 10,000 students over the next 50 years the opportunity to enroll in an all-expenses-paid master’s program designed to “rival the Rhodes scholarship in prestige and influence.” At $300 million—including $100 million of Schwarzman’s own money—the program’s endowment is already slated to far outstrip the $203 million Rhodes fund. US Secretary John Kerry lauded the program as “a terrific one,” thanking Schwarzman for his “vision and commitment” . Boeing’s chairman, president and CEO W. James McNerney, Jr. threw in his company’s supportas a donor “because it will help develop future leaders with global sensibilities and further strengthen the ties between our two countries.” the ties and relationships they’re discussing here are business ones. The second-biggest donor for the program is BP. Other top donors include Caterpillar (China is the world’s top construction market), and an array of big banks seeking expanded access to China’s state-owned financial sector.
As the New York Times notes, Schwarzman’s personal role will “raise his political profile in China,” giving him and Blackstone “increased access to Chinese leaders.” Tsinghua University is one of China’s most prestigious institutions, and has educated many of the country’s political elite. President Xi Jinping, former president Hu Jintao, and Zhou Xiaochuan, head of the People’s Bank of China, are among its alumni, along with a number of other top Communist Party officials. Housing the program at Tsinghua is an obvious way to gain access to that country’s future leaders as well as its current ones.
This is disguising a profit-oriented power play as social development. The Schwarzman Scholars program is, in the long run, meant to create a new elite of Stephen Schwarzmans, grooming the brightest young people already at the world’s top universities. The curriculum will plainly be an education in how to disregard all social imperatives besides the economic ones. Privileging these young scholars above the rest of their peers and acculturating them into Schwarzman’s rarefied realm is just another way of keeping it in the family. Far more immediate motives complement this long-term investment strategy—namely, access to and favor from the leaders of the global economy’s newest superpower. Paralleling the university trustees that oversee personally enriching endowment investments, programs like the Schwarzman Scholars offer unique business opportunities in themselves, as BP, Boeing, Bank of America, GE, and other heavyweight corporations have recognized.
But Schwarzman and his Blackstone corporation are skilled “vulture capitalist" operators. A private equity firm like Blackstone first purchases a controlling stake in struggling companies they hope to “turn around,” usually borrowing 60-90% of the money from big banks. The firm then charges the client company steep annual “management costs” on top of the debt payments used to finance its own buyout. At this stage, many companies lay off a huge number of workers to balance budgets, opening themselves up to be profitably resold. Some simply go bankrupt in the process.
As Shirley Kimber, a laid-off factory worker explained “They just used us. That’s exactly what they did. And then they kicked us to the curb.” Kimber and 270 of her colleagues were fired when Blackstone took control of her food processing plant and promptly shut it down. A similar story played out during Blackstone’s $4 billion purchase of Travelport in 2006, which ultimately resulted in the firing of 2,300 workers, or nearly 30% of the company’s workforce. Blackstone made its money back in seven months.
Attempts to regulate leverage buy-outs were met by Schwarzman’s personal resistance. “It’s a war,” about efforts to close the tax loophole on carried interest that allows people like Schwarzman to pay a maximum rate of 15% instead of the 35% paid on regular income. “It’s like when Hitler invaded Poland in 1939.”
With only 56 Americans and 181 people richer than him Schwarzman is deluded enough to when say things like “I don’t feel like a wealthy person. Other people think of me as a wealthy person, but I don’t.”
See full article here
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