It starts with education: A conversation with Ken Griffin and Steve Schwarzman
What are the biggest problems facing the United States and how do we solve them? Michael Milken and Global Conference veterans Kenneth Griffin and Stephen Schwarzman, attempted to tackle this weighty topic in a 60-minute conversation, and found lots of areas of agreement.
The state of American education troubled all three men. A Global Conference slide showed that the U.S. is 16th in the world in reading, 21st in math and 17th in problem solving. Schwarzman said that a generation ago, the U.S. would have been No. 1 in those categories. He likened the lack of job opportunities for recent college graduates to a time bomb that threatens an explosion of social problems if not disarmed. He also blamed what he characterized as schools’ inability to fire teachers for the shortcomings of public education.
“From my perspective, this is not as complex a problem as it seems; it’s about hire, fire and pay,” he said. “In public schools, you can hire, but you can’t fire. In our businesses, if you can’t fire people, we would not be able to do what we do because you need large groups of people to work with you. We’re sort of eating our young.”
Griffin, the founder and CEO of Citadel Capital, and Schwarzman, who is chairman and cofounder of the Blackstone Group, discussed their philanthropic efforts to improve access to education. In February 2014, Griffin donated $150 million to Harvard, the largest single contribution in the school’s history, to increase financial aid opportunities for all applicants, whether they come from rural Arizona or the inner city of Chicago.
“I really do hope that I can change the lives of thousands of students over the course of a lifetime,” he said.
Schwarzman, meanwhile, has started a master’s degree fellowship program for 200 international students annually at Beijing’s Tsinghua University. He hopes the “Schwarzman Scholars” will help Westerners learn more about China and current Chinese thinking. He has raised $275 million of the $350 million needed for the program, which is scheduled to begin in 2016.
For those not lucky enough to win a scholarship to China or gain admission to Harvard, a small business can be the first big break, Griffin said. “Small companies are the great job creation engines of America,” he said, noting that big companies like IBM, or even his own Citadel Capital, don’t take chances on unproven commodities. But small businesses, he said, are “happy to have somebody quasi-qualified walk in the door and say, ‘I will work here.’ ”
Griffin said the most important factor in escaping poverty is a first job. “When we reduce the ability for companies to form, to create jobs, we’re taking away the ability for everyone to get ahead. “
In addition to increasing access to education, Schwarzman’s keys to job growth included making it easier and faster to start new businesses. “You have to de-bottleneck the system; you have to have capital flow,” he said. “We have the innovation capability, but we’ve basically handicapped ourselves” with regulation.