Chicago Booth Magazine Spring 2OO920

Five Minutes With Pete Peterson, ’51

What made you launch the foundation?

I had a windfall from Blackstone going

public, and suddenly I was confronted

with the possibility that I would be

an instant billionaire. I thought I cer-

tainly already had more than enough

money. I’m 82. My Greek immigrant

father, who donated a lot to good

causes here and in Greece, said giving

not only makes the recipient happy, it

can also make the giver happy. I was

in the final stages of retiring from

Blackstone after 24 years and I had just

retired from the Council on Foreign

Relations, where I’d been chairman for

22 years. The transition from having a

rather hectic life to having little to do I

found almost depressing. I decided to

commit $1 billion to create a founda-

tion to deal with the issues I’ve been

railing about for 25 years—long-term

fiscal and economic challenges facing

the United States. And I call them

undeniable, unsustainable, but politi-

cally untouchable. I decided there was

room for a foundation—different

from certain other think tanks—that

would focus on the long-term, and

focus on trying to do something about

these problems.

What are the first projects you funded,

and what do you hope they achieve?

The first big project was funding

a movie called I.O.U.S.A., which

explains the melancholy fiscal future.

It ran in about 400 theaters. CNN ran

a shorter version. Now we’re doing it

in even smaller bits for YouTube. We

have a major number of efforts aimed

at young people because they’re

largely uninvolved, yet it’s their future

that’s imperiled. We’re steadily in-

creasing our online presence through

sites like YouTube, MySpace, Face-

book and Twitter. We’ve given money

to mtvU, which partnered with us

to create the InDebtEd campaign

aimed at college students. InDebtEd

has a great website and is currently

developing a video game centered on

personal financial responsibility.

We are working with the Commit-

tee for Economic Development to

Launching a Foundation

After a career that ranged from serving as Richard Nixon’s Commerce Secretary to launching private equity

giant The Blackstone Group, Pete Peterson, ’51, pledged $1 billion last year to form the Peter G. Peterson

Foundation to spur public action on long-term economic problems in the United States. Its first major initia-

tive was a documentary called I.O.U.S.A., which debuted at Sundance and was later nominated for a Critics’

Choice Award. He recently spoke with Chicago Booth Magazine about the financial crisis, YouTube, and what

MBAs can do to help the economy. Interviewed by Patricia Houlihan

Get

ty I

mag

es

Doing Well, Doing Good: Pete Peterson, ’51, has

launched a foundation to address “undeniable,

unsustainable, but politically untouchable” long-

term fiscal and economic challenges facing the

United States.

21Spring 2OO9 Chicago Booth Magazine

energize business leaders. If we don’t

do anything about these long-term

challenges—Social Security and

Medicare, current account and sav-

ings deficits, foreign lending that may

soon reach dangerous levels, along

with health care costs that are out

of control—and try to borrow those

extraordinary amounts or to tax our

way out of them, it’ll have a major

negating macro effect on the econo-

my. And, shorter term of course, the

unprecedented trillions of dollars of

additional budget deficits in the vari-

ous stimulus and bailout effort simply

add to my concerns.

What do you think it will take for

individuals to change? Or politicians?

What makes a difference?

We’re doing something that I

understand is quite rare in founda-

tions—getting involved in citizen

engagement and awareness. We’ve

run double-page ads in the New York

Times and major ads in the Washing-

ton DC–area. We’ve run TV commer-

cials. We have to inform the public

because they have been anesthetized

by a political process that does not

want to tell them the hard truths. For

example, Washington has concocted

something called Social Security

Trust Funds that I call an oxymoron;

they shouldn’t be trusted and they’re

not funded. The money’s already been

spent and there’s nothing in them but

liabilities. The public does not know

that. We don’t think young people

understand their payroll taxes would

have to double to cover the current

promises that have been made. In my

opinion, that is unthinkable.

Once people are educated, they also

have to be motivated to act. There are

huge special interest groups urging

politicians to pay out more benefits

with more programs. We now have a

political system where, unlike what the

founders of the country had in mind,

politicians consider the position a

career and don’t want to lose their jobs.

If they peddle the hard truths, they

fear they’ll lose elections and lose their

jobs. Their focus is not on the next

generation, it’s on the next election.

We want to build a movement of

young people. I realize it’s a fantasy,

but I’d love to see 50,000 to 100,000

young people and their parents in

Washington shouting, “I’m madder

than hell, and I’m not going to take it

anymore.” In other words, it ultimately

has to get expressed in Washington,

and we understand that. But first there

has to be increased awareness.

Do you think there is something that the

business community—including MBAs

from Chicago Booth—can do?

Business can be a huge force in

Washington when it gets focused and

energized. It just has not been focused

on these longer term issues. If the

business community were to decide

these long-term challenges were dan-

gerous to our economic health and

to the health of their businesses, they

could be a much bigger force than

they are now. Tom Friedman calls

us MIAs, missing in action, on these

longer term issues.

I think most executives know these

long-term issues are unsustainable

and undeniable, but many are preoc-

cupied with running far more global,

competitive businesses, and they

probably feel they don’t have the time

to get involved in what may turn out

to be controversial crusades that deal

with these longer range issues.

Which of the professors you had at

Chicago still stand out in your mind?

Milton Friedman, George Stigler, James

Lorie, and John Jeuck. I visited Milton

before I accepted the job in the Nixon

administration as assistant to the

president for international economic

affairs and asked if I should take the

job. He said, “Absolutely not. With

floating exchange rates, the job is

unnecessary. And without them it’s

impossible. A young man your age

shouldn’t be taking a job that’s either

unnecessary or impossible.”

George Stigler used to say, “If you

have no alternative, you have no

problem.” Remembering that, however

daunting these long-term fiscal chal-

lenges, I decided I had no alternative

but to try to do something about

these problems. It’s amazing how

that Stigler principle has stuck with

me in life. n

“ Once people are educated, they have to be motivated to act.” —Pete Peterson, ’51