Bel Air Webinar Series: Insights from David Rubenstein on Globalization, Elections, and the Future of Investing

Bel Air Investment Advisors was proud to continue its webinar series in October with David Rubenstein, the Co-Founder of The Carlyle Group, accomplished author, philanthropist, and deputy domestic policy advisor to President Jimmy Carter. 

During the webinar, “Elections, Politics, and Markets,” Rubenstein discussed several influential topics, such as the state of U.S. markets, globalization, Federal Reserve policies, and investing in sustainability and AI. His participation in the webinar offered a well-rounded, impactful, and thoughtful perspective for investors looking to steer through this dynamic economic environment. 

Sitting Down with U.S. Politicians

Rubenstein shared his previous experience interviewing U.S. political leaders for his book, The Highest Calling, including former President Donald Trump, President Joe Biden, and Vice President Kamala Harris. His conversations with these political figures provided key insights into their leadership styles and economic strategies. Rubenstein claimed that while all presidential candidates make economic promises, once they’re sworn into office, their policies often reflect party priorities.

He noted that if former President Trump is re-elected, he would increase defense spending, implement substantial tax cuts for corporations and high-income earners, and impose numerous tariffs. If Vice President Harris were elected, her administration would focus on imposing higher taxes on wealthy individuals and corporations to improve income redistribution. However, these decisions are ultimately made by the Ways and Means Committee and the Senate Finance Committee because “the devil is in the details of tax legislation.” 

Philanthropic Endeavors 

Rubenstein emphasized the importance of pursuing philanthropic endeavors, especially for those who have the financial means to do so. His way of doing so is “patriotic philanthropy,” preserving American history and culture for future generations to learn. Rubenstein commented that he is committed to giving away his wealth towards projects such as repairing the Lincoln Memorial, Washington Memorial, and Jefferson Memorial. He has invested in preserving vital documents like the Magna Carta, the Declaration of Independence, the Emancipation Proclamation, the Constitution, and so forth.

He also underscored the value of contributing to scholarships to help individuals to improve their economic circumstances, which allowed him to pay for law school and jumpstart his historic career.

The Impact of Globalization

Rubenstein addressed the current backlash against globalization, providing insights into its growing unpopularity amongst parts of the American workforce. While globalization once represented progress and economic expansion 30 years ago, he acknowledged the growing resistance in regions like the American Midwest and South, where many constituents blame globalization for job losses and the disappearance of union-backed jobs. 

Currently, the United States manufactures fewer products on American soil because items are manufactured, produced, and shipped to the U.S. at lower rates than America can manufacture them. This has positively impacted inflation throughout the years, but growing discontent in some parts of the country has raised concerns about the sustainability of traditional employment structures. As a result, globalization has been somewhat frozen because of the political obstacles businesses face when attempting to pursue an offshore plant.

Explaining Recession Fears

Rubenstein emphasized that the Fed Chair has made solid decisions to avoid a “hard landing” with decreasing interest rates. He suggested that fears about an economic downturn could be premature, noting that the Federal Reserve’s aggressive interest rate hikes in 2022 aimed to bring the economy back to a state of normalization rather than triggering a recession. 

He also highlighted the U.S. post-COVID economic recovery, which has outpaced Europe’s by 20% to 25%. He explained that this is largely due to the rapid supply chain functionality post-pandemic and strong employment numbers. The booming U.S. economy, paired with strong employment numbers, does not suggest an imminent economic downturn.

Is Sustainability Investing “Sustainable”?

Rubenstein conveyed the fact that for years, many investors veered away from sustainability investments because many renewable energy deals relied on feed-in tariffs and government assistance. He acknowledged the importance of sustainable practices for the planet and its investing potential in the future. Still, he highlighted a key issue: while some investors may care about sustainability, it does not correspond well with the ongoing Artificial Intelligence (AI) boom. 

AI requires a great deal of data, which depends on electricity. A large sum of the electricity used for AI derives from conventional energy sources such as oil and gas. This requires enormous amounts of carbon energy production and purchasing. His overarching message is that, in time, more people will care about sustainability and buy products from sustainable companies. As of right now, it may not be a great thing for investors who are focused on their daily and yearly returns. 

Rubenstein provided attendees with a blend of modern analytical insights and historical context that created a unique dialogue about the past, present, and future of the U.S. economic and investing landscape. His perspective reminds investors to be strategic in their decision-making and be well-informed of political and social climates, particularly throughout the election cycle.