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A big chunk of the US population should feel “scared” and “insecure,” according to Steve Schwarzman, CEO of alternatives giant The Blackstone Group.
As part of a “fireside chat” during the annual Knight-Bagehot Fellowship gala dinner on Thursday, Schwarzman was asked about the swell of populist sentiment in the US and around the world.
“I think we find ourselves in the midst of populism,” the billionaire said. “It makes complete sense because the middle class – whether it is in the US, Europe, or almost any democracy – has not had a good experience, particularly since the financial crisis. As a result of that, they’re unhappy. They’re angry.”
Schwarzman then highlighted a recent study from the Federal Reserve that showed that 46% of Americans wouldn’t be able to cover an unexpected $400 expense.
“When half the population can’t marshal $400, one paycheck, they should be scared,” said Schwarzman. “They should feel insecure. They should be unhappy with their government that has failed them – which is what they think – it is all logical.”
Schwarzman then said the causes of the low economic growth and financial instability in the country were poor policy decisions made by the G-20 body following the financial crisis. Instead of allowing banks and financial institutions to lend more and put capital into the system, the countries instead instituted tighter regulations, slowing an economic recovery.
“You can’t shrink yourself to happiness, unless, I guess, it is weight loss,” he said jokingly.
These policies have had consequences outside the financial system, the Blackstone CEO said, including in the political realm. Here’s his explanation:
“These people who are the victims are correctly articulating the problem. That anger moves around. Sometimes there are government officials who direct [the anger] for their benefit. It goes to financial people. It goes to income inequality. It goes in areas of race relations. It moves all over. It goes to trade. It goes to relationships with foreign companies, foreign countries. It needs to be solved. Each one of these issues seems to live on its own, but actually it doesn’t. It is part of the whole.”
Schwarzman then said the country would have been better off if the 2012 Republican nominee, Mitt Romney, had been elected instead of President Barack Obama.
He was asked whether a Trump presidency or Clinton presidency would be more advantageous for Blackstone. He paused, eliciting laughter from the audience.
“This is a really tough election,” he quipped. “I think certainly there would be an unpredictable outcome if Donald was in that seat. But, you know, it would somehow find its way. If Hillary was in that seat, it would be a bit more predictable, but the Democratic Party has really changed in terms of its center.”