Milken and Friends Build a $500 Million Monument to Their Version of the American Dream

Hope is not a strategy

Illustration by Daniel Medina

I almost fell off my chair a couple of weeks ago when I saw a Bloomberg article titled “The Junk Bond King Opens a Shrine to Capitalism Near the White House.” My thoughts instantly turned to an episode of “The Sopranos” in which Tony and the crew discuss building the Newark Museum of Science and Trucking.

The $500 million Milken Center for the Advancement of the American Dream (MCAAD) is funded by such titans as Citadel Enterprise America’s CEO Ken Griffin, Carlyle founder David Rubenstein, music mogul David Geffen, Walmart multi-billionaire Alice Walton, former Google CEO Eric Schmidt and the Embassy of the United Arab Emirates. MCAAD’s website highlights The David Geffen Hall of Dreams, The Kenneth C. Griffin Holodeck Experience, The Word Cloud and much more! I decided to see it for myself, but first, a quick story.

Back in 2017, a Bloomberg interview with Milken caught my attention.

Milken stated about PE:

This is their golden age. You can leverage, you can borrow without covenants, and so for equity holders it affords you very unusual rates of return.

There was also this: “For bond investors today the yields are extremely low, and so therefore you’re not really getting paid much of a premium to invest, but even more important is that the covenants are gone.”

I opined on my former employer’s small blog that PE’s “Golden Age” might be disastrous for the bond and loan holders if they are getting small yield risk premiums with little to no covenants (financial instruments that lenders use to control their risk).

I also noted that in the end, Milken pleaded guilty in 1990 to six felony counts of securities fraud and reporting violations (for which Trump pardoned him in 2020) that resulted in nearly two years of prison, a $600 million fine, and a lifetime ban from the securities industry.

About a week later I received an email from someone at the Milken Institute, the philanthropic think tank that Milken founded in the early 1990s. Milken wanted to speak to me about the article. I told my company, and was told I couldn’t do it. I said to myself, “I’m speaking to Michael Milken!”

My financial career started in the 1980s when Milken was a giant. There are essentially four money-making roles in Wall Street’s bond business: traders, salespersons, strategists and desk heads. Milken had a reputation as being the best at all four roles at the same time. Like it or hate it, the man reinvented finance.

On the appointed day, I called Milken. After exchanging greetings, he said that I was mistaken in my article, mainly because overall, companies are better managed as private entities — basically the same message he had been giving since the early 1980s. I told him that all I was saying was that if it’s a great time for PE borrowers, it probably wasn’t a good time for the lenders (bond and loan holders) because they weren’t getting compensated enough for their risk.

Milken realized that I wasn’t criticizing the private ownership model; I was just taking the other side of the coin. From there we had a very pleasant 15-minute discussion, really just about life in general. After we hung up I said to my wife, “That guy really could sell ice to an Eskimo. Today is Tuesday and if he told me it was Thursday, I’d believe him!”

The Museum

First the good news. Admission is free except for the Kenneth C. Griffin Holodeck Perpetual Story Machine exhibit, which is $15. The MCAAD is a beautiful space with lots of cool digital art displays and a very friendly and helpful staff. Interestingly, the center is located in the old Riggs Bank Building, which is kind of funny considering that a scandal involving the failure to monitor millions of dollars of suspicious transactions from Saudi Arabia after 9/11 eventually sank the bank in 2004.

Overall though, I was disappointed. After reading Bloomberg’s review, I thought the center would be some sort of wild Clockwork Orange experience where words, slogans, visions and flashing lights would come at me in rapid succession to alter my cynical mind into buying into the Milken and Friends version of the American Dream. The David Geffen “Hall of Dreams” sort of did this with charts and graphs about America’s changing opinions on topics such as gay marriage, but I walked out of it as cynical as ever. Words like “Opportunity” and “Immigration” were on the ceiling, and strange white digital clouds “floated” on the glass railings. Perhaps they were supposed to represent dreams.

It made me feel like I was back in the 3rd grade being taught the super-sanitized fairytale version of American History from a textbook published in 1962. Boring pablum. Nowhere was this more evident than the Holodeck. Three saccharine-sweet clichéd stories of making it in America against steep odds that made nearly zero use of the advertised cutting-edge tech. Instead of talking holograms, we got cartoonish-looking people on a screen.

A bit of a disconnect from reality?

The feel-great American dream vibe of the MCAAD differs quite a bit from a recent Wall Street Journal and NORC survey:

The share of people who say they have a good chance of improving their standard of living fell to 25%, a record low in surveys dating to 1987. More than three-quarters said they lack confidence that life for the next generation will be better than their own, the poll found.

Nearly 70% of people said they believe the American dream—that if you work hard, you will get ahead—no longer holds true or never did, the highest level in nearly 15 years of surveys.

Interestingly, soon after entering the MCAAD you can sit down at a little booth and pick videos from the “Foundations of the Dream Gallery” and listen to both everyday Americans as well as famous ones like Katie Couric and Elmo from Sesame Street. Yes, Elmo shares his American dream story. You could choose different themes or groups of people like “Walmart.” This option provides testimonials from Walmart employees who got their start at the company and have made a nice life and career. That jogged my memory that Alice Walton, a scion of the family that started Walmart, was a big contributor to the center.

This was pushback against the narrative that Walmart was one of the main actors in hollowing out America’s manufacturing base, such as in this 2015 study by the left-leaning Economic Policy Institute that showed the effect Walmart had on American manufacturing jobs and the trade deficit with China.

When the U.S. supported China’s entry into the WTO in 2001, the argument was that millions of jobs would be created in China which in turn would create tremendous demand for U.S. imports. Those imports would create great jobs for Americans displaced by manufacturing moving to China.

That didn’t happen. Instead, companies like Walmart expanded like wildfire with their low-cost product strategy as their vendors moved out of the USA and profit margins for much of corporate America increased sharply with the reduction in labor costs. However, for the displaced American worker, labor unions were broken, wages stagnated and good jobs with benefits were replaced with part time, low-wage jobs at companies like… Walmart.

Meanwhile, the Chinese consistently manipulated their currency, subsidized industries and essentially broke many WTO rules while the United States looked the other way. The combination of cheap imports and stagnant wages in the U.S. dramatically lowered inflation. Lower inflation drove interest rates down substantially. Then when Wall Street had its subprime mortgage bubble burst in 2008 causing “The Great Recession,” we had a decade of Federal Reserve interest rates at or near zero. The chart below shows the yield on the 10-year U.S. Treasury Note from 1990 to 2021. We start at about 9% and end up lower than 2%.

Significantly wider corporate profit margins combined with historically low interest rates were nirvana for corporate America, especially Wall Street and hence, the $500 million Milken Center for Advancing the American Dream. Perhaps they should add another floor to the museum with a hologram exhibit of this bit of history. The MCAAD didn’t have to go full-bore pessimistic, but at least Milken and Friends could give a nod to the serious challenges America still faces to make the dream come true for millions more. Instead, there are only brief mentions of things like racial and gender exclusion sprinkled about in the different exhibits.

If the MCAAD is, as Rachel Goslins, the center’s executive director stated, “unapologetically hopeful about the American dream,” shouldn’t the many challenges and potential ideas to solve them be addressed somewhere? After all, hope is not a strategy.

“Why?” was my biggest question when I left the MCAAD. Why would Milken and the other billionaires spend lots of money and time putting all this together?

The messaging of the MCAAD is consistent with what we have witnessed over the last few years from both sides of the political spectrum. Economists-turned-pundits like Paul Krugman told Americans in 2023 that they shouldn’t feel crappy about the economy as inflation raged. He blamed the disconnect between strong economic data and many citizens’ negative opinions on the economy on political partisanship.

Meanwhile, President Trump recently proclaimed in a Truth Social post that, “Prices are WAY DOWN in the USA with virtually no inflation.”

There’s plenty of inflation. Healthcare costs continue to rise, housing costs continue to rise, food prices continue to rise, auto and home insurance continue to rise. It’s a long list of rising.

The politicians and the plutocrats of all stripes can lie to the American people about many things and get away with it. However, when it comes to how Americans are feeling about their economic reality, as Dylan said, “You don’t need a weatherman to know which way the wind blows.”