Stop the presses! Big cheese financial journalist James B. Stewart has weighed in on Steve Schwarzman.
In the Feb. 11 issue of The New Yorker, Stewart, of "Den of Thieves" fame, spills more than 10,000 words on private equity's favorite whipping boy in a profile entitled-what else?- "The Birthday Party." In it, we learn that Schwarzman, one of the richest men in the U.S., has a lot of, well, stuff. Houses, to be exact. Lavish ones. In New York, the Hamptons, St. Tropez and other posh places where wealthy people congregate. He gives to charity, but not as much as he could or should to appease the populist gods. And there's the requisite retelling of details that The Wall Street Journal dug out about Schwarzman in its mean-spirited page one story last summer: the stone crabs, the servant with the squeaky shoes, the over-the-top birthday soiree.
Of course, Stewart's piece has lots of business-y stuff, too, including a history of the Blackstone Group LP dating to Schwarzman's days at Lehman Brothers Inc. and the nasty split between Lew Glucksman and Pete Peterson. There's also an informative explanation of private equity's fee structure and how that's helped ignite the tax debate. But mostly what sets the story apart from everything else that's been written about Schwarzman in recent months is the participation of the man himself.
Stewart talks to Schwarzman, who, as the instant analyzers of the blogosphere pointed out last week, comes off fairly well. Sympathetic, even. Not a creep at all. We learn he has a rare blood disorder that killed his grandfather at 46-hence the 60th birthday blowout. That on the day Blackstone went public-giving him a net worth of more than $8 billion-he just wanted to eat dinner while zoning out to a "CSI" episode. That he doesn't "feel like a wealthy person" because he must prove himself every day.
So kudos to Stewart for taking someone who the rest of the media has reduced to caricature and turning him back into a human being. Stewart's main point seems to be that Schwarzman's highly conspicuous consumption has made him an easy target for vilification during "an era of rapacious capitalists and heedless self-indulgence" on Wall Street, during which "the incomes of ordinary Americans stagnated or fell." True enough. But if we're going to view Schwarzman's story through the income polarization lens, as Stewart does here, shouldn't we also deal with how, exactly, he made his money?
In other words, forget the crabs and the mansions and the birthday bash. What about private equity, which made Schwarzman's superluxe lifestyle possible? What are Stewart's readers supposed to make of that? Is it good for the economy or not? Does it create jobs or destroy them? Improve businesses or sap them? Are ordinary Americans better or worse off because of it?
These are difficult questions to answer. (Heck, the folks at Davos just issued nearly 200 pages on the topic and still can't agree on the economic role of private equity.) But it's hard to have an opinion on Schwarzman without knowing where you stand on these issues.
Still, we were hoping that Stewart, who earned his Pulitzer for explanatory journalism in the WSJ on the market crash of 1987, would give deconstructing private equity a shot, especially when writing for one of the last bastions of serious long-form journalism. Who knows? Maybe he's saving that for a book.
One of Stewart's subthemes in the Schwarzman piece is, of course, envy. And lo and behold, we came across a story in the Feb. 11 issue of New York magazine that is a whine of pure envy. In it the author cries that living in a city so intertwined with Wall Street, "so in thrall to money," has turned him into "a jackass." The values of people "working for a hedge fund or whatever" have encroached on his life, he writes, and suddenly he wants Wusthof knives, a Wolf range, a high-def TV. "It's shameful, of course, to want this much," he moans.
Shameful? How about human? In any case, the story is a fascinating postscript to Stewart's profile. If lusting after knives and appliances is suspect in the eyes of the media, if that's what turns you into a "jackass," Schwarzman, whose very presence is somehow responsible for those big ears and bray, doesn't stand a chance.