The Philanthropist’s Dilemma: Michael Milken

The Friendly Capitalist

[00:00:00]

MM: Nine.

Male Voice: Okay, great, thank you.

MM: Thank you.

Male Voice: We are recording, whenever you’re ready.

MM: Do you want me looking straight at Jeff?

Male Voice: Yes, please.

MM: Good.

JC: Okay. Hello, I’m Professor Jeff Cunningham of Arizona State University, and host of Iconic Voices, where extraordinary is spoken. Our icon of the day is Michael Milken, renowned philanthropist and innovator in the areas of capital access, medical research, public health, and education, and named one of the most influential people of the 21st century. Welcome, Michael.

MM: It’s just nice to be in the 21st century, and it’s great to see you.

JC: Thank you. Fame smiled on you early. Rumor has it that, at age 11, President Eisenhower drafted your help with the space program.

MM: Not really. After Sputnik went up, it had a major effect on me, and it had a major effect on the United States. I believe it was one of the defining moments of the 20th century. I was in fifth grade, and I wrote a letter to the President telling him I was ready to lead our space program. My qualifications: never missing a math or science problem and studying space through comic books. Unfortunately, the President never responded, but it was a passion of mine, astronomy, the concept of space travel, and it changed my focus and my interest in where I’d go to college, many years later, to be focused on math and physics.

JC: Was it hutzpah or clairvoyance? Did this start you off on the technology trail?

MM: I think we are all shaped by what occurred, and I don’t think many people realize how important Sputnik — or Spūt-nĭk, if you were in Russia — was. For the United States, it was a wakeup call. It was a wakeup call from the sense that, in the middle of the Cold War, if you could put things up that circled the Earth, you could drop nuclear bombs. I had a challenge, myself, with my fifth grade teacher who was trying to convince me that, if a nuclear bomb hit Hesby Street Elementary School, I’d be safe under my desk, and I wouldn’t be safe if I wasn’t under my desk. Eventually, we reached an understanding that I wouldn’t disrupt the class, and she wouldn’t try to convince me that, if a nuclear hit our elementary school, I’d be safe under my desk.

I think what it did is it changed America. It was cool to be a physicist, a mathematician. NASA was formed. DARPA was formed. The message in DARPA is that we would never be behind again in science, and my own interaction with those agencies over the coming decades was maybe started in that 1957 event. If you went to places like Lockheed Martin Marietta today, you would find those individuals who are in their 60’s, a high percentage of them, went into science or math because of Sputnik.

I would say, from the Soviet Union’s standpoint, this might’ve been their finest hour. To me, this was the end of the Soviet Union and the end of communism cuz it woke up the United States, and it woke us up in science and math. Today, when you look around many of the challenges the world faces, you always ask yourself, “What is that Sputnik moment? What is the wakeup call? Where’s the straw, quote, that broke the camel’s back?”

JC: For many who may not be aware, DARPA, in effect, invented the Internet, did it not?

MM: Yes, it did, and I think it changed technology as we know it. Every year, we have representatives at DARPA who come to our Milken Institute Global Conference or our Partnering for Cures conferences because they are like a big VC firm arm of the U.S. government, and they want things to fail. They’re hoping for a 20 or 30 percent success rate, the same as a great VC might have, and it has changed the world.

JC: When you speak of inflection points in your life, Sputnik was the first, but you actually have several others that had a profound effect on your outlook.

MM: That is true. The next one that really affected me was the Watts Riots, August 11, 1965, in Los Angeles. I was home from Berkeley. I thought I knew everything. I was 19 years old. I

[00:05:00] had gone to Berkeley to see the world from a college campus. University of California, Berkeley was the number one rated undergrad and graduate school at that time, when I chose to go there, and had more Nobel Prize winners than any other university, particularly in the sciences that I was interested in.

I came home, and it was the middle of the Civil Rights Movement. It was the middle of the Viet Nam War, and Los Angeles was on fire the night of August 11, 1965. I eventually met a young African American man who used to work in a building that was burned down. My father had a number of clients in the South Central area. I had not felt any discrimination growing up or being in those areas, and now the city was on fire. I didn’t have to go to Viet Nam to see armed personnel carriers on the street, and, to me, it really changed my thinking.

This young man told me he wasn’t part of the American dream, that he was never gonna have access to capital. His father never had access to capital. It really changed my thinking, in the middle of the Civil Rights period in America, that one of the civil rights was to the American dream, a right to access to capital and the chance to succeed based on your own abilities, not who your parents were, not what school you went to, not where you grew up, not your religion, and not your race. Obviously, this young man taught me the American dream was not alive and well in his viewpoint.

Therefore, I went back to Berkeley and changed my major from math and science to business, and was gonna try to study on why we weren’t making capital available to people based on their ability. One of the reasons I will never forget the Watts Riot is it changed my life and career, but August 11th, I decided to get married on August 11, 1968. I would never forget those two important dates of my life, the day I got married and the day of the Watts Riots.

JC: I have to ask, do you recall what your yearbook said about you and your wife, Lori?

MM: I sure do. First, my wife, Lori, I met her in seventh grade. We were in the same class for six years. She was voted “Most Likely to Succeed,” so I just wanted to stay as close to her as I could. I was “the Friendliest,” and from a very young age, I’ve learned I always learn more if I see the world through someone else’s eyes. You learn a lot when you’re listening. You have enormous appreciation of an individual, particularly if you want to get them to support some cause that you’re focused on, if you look at the world, not through your eyes, but through their eyes. Yes, I was the head cheerleader. Sally Fields, who became the Flying Nun and a great actress, was my head songleader. As I travel around, I do find a few leaders in business, or in philanthropy, who were head cheerleaders when they were in school.

JC: I’d like to pick up on that thought. People who may not know you see you as this incredible, renowned financier and philanthropist, but in the years that I’ve gotten to know you, you actually have the most loyal group of friends, even followers, to an extent. What is it that helps you build these kinds of relationships that have turned into these lifelong relationships, do you think?

MM: If you didn’t go to school with someone, and you ask yourself, how do you create a relationship with them, there’s really very few things that really change a relationship between two individuals: (1) a common bond, (2) I would say it evolves around health. There are very few things you can ever give a person more than life and a quality of life.

From the late 1970’s, I have had an individual that worked with me, who essentially was the concierge for people, or associates, with life-threatening diseases. Our commitment to the medical research over the last more than 40 years has thrust us onto the forefront of what’s going on in most life-threatening diseases and

[00:10:00] interaction. I, in any one year, will speak to at least 500 people who’ve either have been diagnosed with a life-threatening disease or have had a reoccurrence of that disease.

For me, it focuses my attention because no one is more focused than the day they’ve been diagnosed with a life-threatening disease or have had a reoccurrence. They are doing research. They’re focused on it, and, often, they’re in shock. That establishes a relationship. I think giving of one’s time, effort, and knowledge to another person is what establishes these lifelong bonds.

There’s another one, which you’re experiencing today. That is their children, their relatives, someone wants to get into an early childcare education program, if they’re in New York City, a private elementary or middle school or high school or college, graduate school. Give them an opportunity in their life with access to education. There’s not a week that goes by that we aren’t focused on some young person, or some family that’s focused on the education of that individual in that family, so those bonds.

The third area, in addition to growing up together, is financial freedom, that you backed them when no one else believed in them. When a person is at the zenith of their success, everyone’s lined up around the block to pat them on the back or to give them capital, but when a person is in a difficult period of their life, where people don’t agree with their ideas in business, the person that was there to provide capital builds a long-term relationship.

Craig McCaw — it’s now the 1980’s. You would think that people would believe in mobile or cellular technology. Do you want something hooked up to a wall, or do you want your communication device to be where you are? Now, I grew up watching Star Trek, so I already heard Captain Kirk tell Scotty to beam him up, and it seemed to me only natural that technology would allow you to do this.

It was extremely difficult to get people to believe in mobile telephonic technology. Craig, who I did not have a relationship with, went to almost every other firm to try to raise money, and no one could raise money for him. You might have an idea, but many of these ideas take billions of dollars in capital, and so a friendship was forged at that point in time, with not only Craig, but Bruce and John and other members of his family, that continues today. I think I found in life those four areas: health, education, access to capital, or common bonds or memories.

I recently assembled a group for the 50th anniversary of the Free Speech Movement at Berkeley. Some of the these individuals, who we lived together, I had not seen in 50 years. Within an hour, the 18 of us — we lucky few who were still in good health, that reconvened at Berkeley, that were involved with the Free Speech Movement and lived together — it was the same as if not a minute of time had passed. The two days that we spent together at Berkeley threw us back into common memories and common experiences when we were either 18 or 19 years old. That bond exists today.

JC: When you first — I think it was at Berkeley, in the reading stacks, you came across this idea that below-investment grade bonds had higher returns. How did you connect the dots from there? It was an instrument people weren’t even interested in investing in, and you turned it into a form of financing that literally changed the landscape.

MM: I think the issue is, when you go to college — and I’m sure, at Arizona State, you study regression analysis. Now what is regression analysis? You load data that then assumes that the future will be like the past. When people invest based on the past in a changing world, they’re taking enormous risk that they might not perceive that they’re taking.

[00:15:00] After the Watts Riots, I went back to Berkeley and started studying credit, and what did I find? I found that the riskiest credit, spanning hundreds of years, if not thousands of years, were sovereign nations, government organizations. They were constantly defaulting, and some countries had defaulted five or six or seven times on their debt, but they were all considered to be triple-A. It wasn’t based on fact.

The second thing I found is that individuals have ups and downs, and they are the second worse credit, and the best credit were businesses. Fundamentally, the question was: Were you a business of the future, or were you a business of the past? Were you an organization that was providing value to society, or society did not feel you were providing value? Most important, did you have good leadership or not?

I know, in your work over the decades, you see clearly how much a great leader makes, what a difference they make. It wasn’t hard to go back to the Depression and look at the work of Heckman, who looked at every single bond issued from 1900 to 1944. Here, you see that even through the Great Depression period, that the yield afforded on non-investment grade debt, which makes up almost every company, more than offset the risk. In fact, the double‑A railroads, which was about the second highest rating you can have, had a 219 percent higher default rate than single-B industrials.

I think the other lesson to be learned, for everyone, is very few people ever look at the facts. When you ask them, “Why do you have that opinion?” someone told them something. Then if you ask the person that told them, “Where did you get that?” someone told them, but no one ever did research.

As a student at Berkeley, with the crisp 17:10 tapes available to all students, free, you could go back and look all the way back to 1917, with the unbelievable job that Heckman did, who was the head of the Cleveland Federal Reserve. You could look at every issue covering a 44-year period of time, if you wanted to study it. The facts were totally opposite of what people thought. They thought countries were the best credit, individuals were the next best credit, and these small and medium businesses were the worst credit. Now you’re armed with 44 years of history of actual facts.

I extended that to a 200-year period of time. Therefore, I concluded that this individual who I met, who seemed to have ability and be an entrepreneur, should’ve been able to have access to capital. I chose first to go to Wharton, second to join what was the most respected research firm in the world, and, third, eventually to go to New York to try to change the flow of capital.

JC: Is it fair to say that you were investing in passion? By that, I mean entrepreneurial passion over sovereign passion or personal housing passion.

MM: Well, to a certain degree. I was investing in ability and a business plan that made sense. It seemed to me that mobile communications were the future, not the past, yet everyone viewed them as too risky to invest in.

One of my closest friends, who was one of the world’s greatest investors, when we started to finance the cable industry, told me, “Who would ever need a cable channel when television is free? Why would anyone ever pay?” He took me and invited me up with some fatherly advice, and told me that, if I believed that the price of copper was gonna go up, in this copper they were laying, then I should just buy copper because the only value in these cable companies will be digging up the streets and melting down the copper or other metals that are going into those wires.

What clearly seems as a logical thing for some is not for others. The challenge that you mentioned — let’s talk about housing. One of the great challenges for America in its future today lies in two areas. It lies in one of prevention, wellness, and healthcare. The physique of America has totally changed, and so the main driver of the world’s economy for the last 200 years is either public

[00:20:00] health or medical research. It is accountable for more than 50 percent of all growth. In America, we have totally changed our physique in the last two decades.

JC: You mean, literally, our physique?

MM: Correct, and so America’s become obese. People might not remember, but there was not one football player in the National Football League that weighed over 300 pounds. It’s amazing that people even watched, thinking, “There’s not one football player that weighs over 300 pounds.” Today, there’s more than 400 players in professional football that weight over 300 pounds. You go to a high school football game, you can find an offensive line, in some of the leading high school teams, where the entire offensive line averages more than 300 pounds. My high school football team, which won the city title here in Los Angeles, and was one of the greatest football teams of all time, I had first team, all city offensive linemen that weighed less than 200 pounds on the team.

When you step back and think about what’s occurred — and that’s not just football, but in America — it’s due to a number of factors we could talk about, what’s happened with the food chain and what we eat, the remote control, the automatic garage opener, sitting at your computers, et cetera. We’ve discovered that 70 percent of all healthcare costs are related to lifestyle, not to heredity. Now that recent studies show that you can actually change your genes, within a decade, you might not be able to blame anything on your parents. It’ll be all how you conducted your life. This is a challenge to America, and we estimate it costs the United States $1 trillion a year, this change in weight, just in seven chronic diseases. If you’re concerned you might not get cancer in your lifetime, if you gain weight, you can substantially increase your chances of getting cancer.

The second area is education, and it links to your comments on housing, Jeff. The rate of return on residential housing, adjusted for inflation, in the last 120 years, based on the work of Nobel Prize winner Shiller, is zero. If you’d invested in the stock market index, adjusted for inflation, you have a thousand times your money, so it is no surprise why America’s middle class has one of the lowest median net worths of any developed country in the world.

Our middle class has been bribed, coerced into putting their investments in residential housing, thinking that’s the best investment, instead of a home for your family to grow up, and so the size of the middle class family home has increased dramatically. The square footage per person has increased, dramatically, as the number of people have gone down, and people put their life savings into a piece of real estate. The number one allocation for the middle class in America is towards their house. The second is towards their car. Fifty percent of the income of the middle class in America goes to their house and their car. Two percent goes to supplemental education.

Now I just came from Asia, where the number one allocation in Asia is food for the middle class. The number two is education. They spend as much on supplemental education, tutoring, private school. Eighty percent of the kids in Korea go to school after school. Fifty-five percent of the kids in the middle class in China go to English language schools after their Chinese schools. The priorities have switched in America, and as the house and the car becomes more important than the education of your child, it’s a real challenge to our future.

JC: Let me take you down a path. I’ll introduce the concept. Steve Forbes would talk to me about the fact that America’s a continental country. He said, “You can’t compare American education to Scandinavia. You have to compare it to all of Asia or all of Europe because, as a continent, we’ve got a lot of issues.” The question is: Asians in this country are as emphatic about education as they are abroad, and so you have a diversity and ethnicity issue

[00:25:00] here in this country, don’t we? That’s something we have to get around or something we have to try to fix, in terms of education.

MM: First, we should never forget that the United States of America, and maybe Great Britain, and maybe even Rome, at one period of time, were the greatest civilizations that mankind has known. If we go back farther, the Egyptians were well ahead of their time. America is changing its face peacefully. Other countries would not, I believe, be able to do what America has.

The majority of Americans will find that their ancestors came from Latin America or Asia. It’s only a matter of time. Seventy percent of everything that happens in our country, good and bad, starts in the State of California. In California, today, as of a year or so ago, the number one ethnic group in the State of California are individuals whose ancestors came from Latin America; not from Europe, but from Latin America.

The fastest growing ethnic group in the State of California are people whose ancestors came from Asia, and so the vast majority today of Californians, the majority of their ancestors came from Latin America and Asia. Someday, the entire country will find, itself, that the majority of our citizens — in a democracy, the majority of our voters — their ancestors came from Latin American and Asia. I’m assuming that, speaking of education, that the textbooks will be rewritten, and your grandchildren and my grandchildren and our great-great-grandchildren will study more of the history of Asia and Latin America than they might of Europe, when we went to school.

From the first standpoint, America is changing its face, and it’s changing its face peacefully. Fifty percent of all the scientists and engineers in Silicon Valley were not born in the United States, 50 percent. If I look at our largest early childcare education company that we have, location of that company — and we’re the largest provider through KinderCare and Children’s Creative Learning Centers and Cambridge and others, of early childcare education in America. Our largest center is in Silicon Valley. In that center, more than 50 percent of our children, one of their parents was born in India.

Fifteen percent of every company founded in Silicon Valley, the CEO was born in India, so we have benefitted, millions of jobs have been created by immigration. I’m a big supporter of changing the face, and I also believe that Americans are very competitive. Okay? They always say, “Our team won.” You can ask, “What’s your association with the team?” “Well, I live in that city,” whoever your team is. I believe the commitment to education that Asian Americans have — and the highest performing group today is Korean Americans, in terms of their commitment to education — I think they serve within a very competitive force for people to raise the level of their game. I believe that’s a positive, a real positive to our society.

The challenge to our society is something that we all know, and I think this is part of being an innovator or changing the course of history, is that I believe most of us can tell the future, what’s going to happen. We just don’t know when, but what’s eventually going to occur, and so we know that the majority of Americans will eventually have their ancestry come from Latin America and Asia. A couple of generations ago, 80 percent of everyone that was not born in America came from Europe or Canada. Today, more than 80 percent of everyone not born in America came from Latin America and Asia, so it’s inevitable.

Let’s step back and think about the challenge. If education is the most important thing to middle class parents in eleven Asian countries, then their children are going to receive better and better education. There are six children in India for every child in the United States. There are five children in China for every child in the United States. Therefore, if our children are only competing against the top ten percent in China and India, there are more

[00:30:00] children in the top ten percent in Indian and China that U.S.

This, to me, is kind of a call to action to focus on education, and also the questions of inequality in a world of technology. Now, we all should had recognized this challenge early, and it lies with women in America. I worked for a consulting firm for nine months in the mid-1960’s. The smartest person at that firm I met was a manager. She did the software programming for what is computerizing the Tax Code, and did the work for a company called Computer Science then.

A friend of mine was the managing partner, and as I left, I went and spoke to him. I said to him, “I just met this individual and worked with her, and this is the smartest person I’ve met at this firm. Why is she a manager and not a partner?” He looked at me and said, “A woman partner? We don’t have any women partners at our firm.” America, the secret sauce for 100 years, was the best and brightest women, whose job opportunities were somewhat restricted to nurse or teacher.

Once they were emancipated and the opportunities came — and today, the CEO of our largest car company and the CEO of our largest defense company and the CEO of IBM are all women. The country needed to recalibrate and think, “Okay, the people that have educated this country for 100 years, our best and brightest, many of them might be moving to other fields now, as opportunities are opened to them. We’re gonna have to reevaluate the compensation structure and incentive structure in our educational system to deal with the fact that we’re not competing with whether they’re gonna be a nurse or a teacher, but whether they’re gonna be the CEO of IBM or not. The country, even today, has not fully adjusted to that change that really started occurring in the 1970’s.

JC: What about the commonplace, perhaps misperception, that women either aren’t as interested in the STEM areas or don’t have the aptitude? How do we combat that?

MM: Well, you do that by looking at how many women are CEOs of technology companies. I think the challenge there is one of opportunity, from that standpoint. We are very focused at the Milken Institute on making sure women have access to capital. This has become a large part of our efforts in this area, is to make sure they have access to capital. The number of women today that are running investment firms is increasing, and just like with either Latinos or Hispanic or African American or Asian and different groups, by getting control of financial capital in the hands of people of certain ethnic backgrounds or gender backgrounds, you’ll also get more capital spread out.

That’s one, but, two, exposing people to their talent. I think that’s a mission of the Milken Institute today, is to make sure we level the playing field in access to capital and access to opportunities for women. We have really focused on that at our conferences around the world, our largest of which is in Los Angeles, at the Global Conference. My guess is probably 30 percent of all of our panelists, more than 200 of them out of the 600-plus panelists, will be women, and exposing them to a different group that they might not normally interact with. It’s coming.

JC: You referenced China earlier. Your Milken Institute research suggests that China will be the world’s largest economy by 2050, larger than the United States. Is that a Sputnik moment for us, or is that just the way the world works?

MM: I don’t think it’s a Sputnik moment for us. I think the commitment to education of their children — China, just by sheer numbers, in the flattening of the world’s economy, will be a larger economy. For most of the last 2,000 years, China and India have been the largest economies in the world. China has many built-in problems. One of them is this fact that the number of people between 35 and 54 is about to go down, so the one child policy, for a few generations, is

[00:35:00] gonna place a number of challenges on China.

It’s not unusual, when I visit schools, to find that there’s two parents, four grandparents, and if they’re living, eight great-grandparents for one child. That one child is carrying forth all of these different families that might’ve been — in just a couple of generations here, three different families have gone now into one child, and so they have certain challenges. There are far more children in India than China, and so there’s the Sputnik moment for the United States, I feel, is understanding these educational challenges that we’ve had.

We have combatted it with having the world’s leading university system, and therefore we’ve recruited the world’s best and brightest to come here to go to school. If we had better immigration policies, most of them would stay here and create opportunities for other Americans, too.

JC: What’s a change we should make in our immigration policies? Is there a quick fix?

MM: I think some of the things that Canada did, where people who could invest capital, people that were highly educated, spoke multiple languages, we should make it easier for them to come here. There is a challenge in America, trading off how we’re gonna deal with those that are here and are undocumented versus letting qualified people come in. There isn’t a day that goes by that some technology company is not trying to find out a way to bring talent here to the United States. I think this is a leveling of the world’s educational system.

After 9–11, the United States changed its immigration policies. It made it far more difficult for students from the rest of the world to come to the United States, even if they were accepted at colleges. If you go to Imperial College in the UK, who did not change their immigration policies, or Oxford or Cambridge or London University College or the University of Edinburgh, those five are 25 percent of the leading bioscience universities in the world. Now if we just looked at an example of Imperial College, there were 100 students from China on 9–11–2001. Today, there’s 1,800, and 50 percent of the increase of all students have come from China.

Many of those students, when we’ve talked to them, would’ve come to the United States, and so the UK, Canada — Canada, today, Toronto has the largest population of Chinese ancestry now in North America, and Vancouver, to some, is a Shanghai, Hong Kong suburb. Both the University of Toronto and the University of British Columbia are now two of the leading bioscience universities in the world.

A friend of mine, Peter Ueberroth, who led us in the Olympics in 1984 and led Rebuild America, who was the trustee of USC, gave me a quiz one day and said, “Okay, where do you think the most number of foreign students are coming, non-U.S. students to USC?” Now, the University of Southern California has the largest number of foreign students of any university in America, and has for quite a while. For the first answer is, most naturally, China, which is correct.

The second one, I guessed India, was wrong. The second one was Canada, but 70 to 80 percent of everyone that came from Canada to the United States was of Chinese ancestry. His comment to me was, “They were both from China, one from Canada — they were Canadians now — and one from China.” I think this has changed the focus of immigration. When I meet with students, graduate students around the United States, and you talk to ’em, in the last six months of completing their graduate degree, they spent almost 40 percent of their time trying to figure out how to stay in the United States, for half of them. Half of them want to go someplace else in the world today.

An unknown fact is there was almost as many professors and teacher assistants in universities, in 1993, in America, as college students. They only had three million college students, in 1993,

[00:40:00] in China. Today, there’s 25 or 27 million college students in China, and so China’s challenge is, do they have the jobs for the students that are receiving this education? Unfortunately, many of these students are underemployed since the economy was so based on the manufacturing economy that, at the moment, they haven’t found a way to change the economy to adapt to a more highly educated citizen. They have more students now than jobs to fill from them. I’m sure they’ll work that one out, but the challenge is not the size of China’s economy. The challenge is the commitment to an educated workforce in an ever-changing world.

JC: The subject of jobs — I was reading the other day, in China, there was built an 11,000 square-foot house in 50 days, built in 50 days, for $161,000.00, by 3D printing. Now you’re familiar with what Marc Andreessen said, that, “Software eats everything.” My first question is, what’s going to happen with these technologies and the labor force in this country?

MM: We had a preview of how important software was. I don’t know if you saw that trilogy of movies, The Matrix, but maybe even some of the students at the university have seen those Matrix movies. At the end of the day, the machines and the humans teamed up to defeat the social worker. That gave us a little glimpse of the future.

I think it is a major challenge for society in any democracy. Can a person have a fulfilling life? Decades ago, I was involved with Occidental Petroleum in a couple of projects. One in a coalmine, where the project was to keep people working with picks and shovels, 10,000 people employed. Another one was one that was profitable, that used large Caterpillar and modern equipment, 30 people; so 30 people could have the same output as 10,000.

I think you’ve laid the challenges we have today in manufacturing. The whole systems have changed with technology and programming, and so the big issue is: What are the jobs or things that give a person a meaningful life? We can extend the length of their life through the breakthroughs in science and public health. We can extend the quality of their life, but what about the meaning in their life? What can we do? Do they feel they can have a fulfilling job? The person that wanted 10,000 people working in a coalmine wanted to make sure they felt that they were accomplishing something. They were not economically competitive, but it provided employment to large numbers of people. I would say to you, let’s just think about agriculture.

In America, in 1800, more than 90 percent of the population was involved in agriculture. Realistically, one person fed one and a quarter. By 1900, 40-some-odd percent of America was involved, and each person was feeding three or four people, not just here, but exporting. Well, today, one and a half percent of our population is involved in agriculture. Just think of the challenges for China, Viet Nam, India, Indonesia, and other countries of the world, Sub-Sahara Africa. You have modern agricultural techniques, and technologies are deployed to grow food. What are you gonna do with, where a majority of your population is involved currently in agriculture, where they’re not needed? A billion jobs eliminated on our planet. What are we gonna do? What are the opportunities?

I think this is one of the great challenges of the 21st century, meaningful jobs of importance. Great companies — and I know, Jeff, you’ve really focused on great leadership. Well, when I think of a company like Starbucks, today, one of the things Howard Schultz has done is got relatively low-waged workers to feel that their job is important. Aspiring to wear a black apron, so you know more about coffee, that you can represent them in opening a new Starbucks. You can’t open a new Starbucks unless you’re a black apron. A green apron isn’t high enough rank. Focused on

[00:45:00] their philanthropy, that they’re a responsible member of society, and people feeling proud to work for that company.

That is a challenge for any leader today. How can you get a person to feel proud in a job they’re doing, and what are those jobs that are gonna employ people? That’s why I come back — human capital is the major force of any society, and there are three things that drive it. We’ve touched on all three. One, immigration, getting the best and brightest in or bringing the most talented to your country, to your state, to your city, or to your company, or to lead you in government; two, extending the length and the quality of life; and, three, educating people so they can take many different jobs in their lifetime.

To me, those are the “Sputnik moments” today, and the challenge for the United States is educating our people so that they can actually do the jobs of the 21st century, not the jobs of the 19th century. In the middle of the 20th century, 80 percent of jobs did not require a skill. You could be in the middle class. You had two cars. You could have your kids go to college. You could have a house without a skill. Well, that opportunity is not available today, and that is the challenge. When people talk about inequality or equal opportunity, America, why it’s so much different than any other country is not just the chance to succeed, but the chance to fail and start again.

In the late 1980’s, I visited with a really brave man named Gorbachev, at the Russian Embassy in the United States, in D.C. He had with him his equivalent to our Commerce Secretary, and he told me they wanna get into venture capital. They wanna get into small and medium businesses. They understand that they create all the jobs, and they wanna find a way to make that happen. They have a very strong science commitment in Soviet Union.

I told them, [sigh] “You need to understand, if you’re gonna get involved with venture capital — not later financing, but to start new businesses, it’s quite possible seven of the ten will fail.” Then the Commerce Secretary, Commissar, said to me, “Do you put the people in jail then?” Okay, of those seven out of ten that fail. I said, “No. We assume they’ve learned something from the experience, and they’ll be better the next time.” Then I told him, “I don’t think you’re quite ready for venture capital,” at that time.

I think this is something about America. I remember, in the 1980’s, we did a study that showed 80 percent of every oil well drilled in the world was drilled in the United States, this small land mass. Why? Well, first, right of property rights, rule of law that, if you found something, it actually belonged to you, that you had the mineral rights, here in our country. It’s not just the human capital component, it’s the social capital component. University education, property rights, rule of law, community organizations, the Boys and Girls Clubs and others that make up the fabric. I think we underestimate this importance of social capital.

Gary Becker was maybe the leading proponent, a Nobel Prize winner, who passed away last year, and a close friend, from the University of Chicago. James Coleman, who passed away from cancer in the early part, in the early 1990’s, was really the father of social capital and the importance of those elements. When we talk about China having the world’s largest economy, I would say the key elements are the human capital and the social capital elements.

JC: When I think of you as a philanthropist, it sounds like you’re having more fun giving away money than you had making it, but my question is: Are you an allocator of capital in the same way that you were in your days at Drexel, that you look at promising opportunities, in this case, in philanthropy in disease? How do you think about yourself in that respect?

MM: I would say there hasn’t been a change in that respect. When you

[00:50:00] talk about having fun, I finance more than 3,000 companies. I only had one CEO ever tell me he was in it for the money, and so I think one of the lessons to be learned, whether you’re in the field of communication, is do you have a passion for it? Do you have an idea? Does that idea have value? We have many people that visit us with ideas and things they wanna do. In the building we’re in today, we have six floors. Four floors are nonprofit, two are for-profit. We have people come and visit us on our for-profit floors that belong on our nonprofit floors cuz they have a great idea. It’s just not viable as a for-profit idea.

I think, for me, the enjoyment was: Can you build something? Can you create jobs? Can you empower an individual? Whether that individual is being empowered, as Steve Wynn, who I saw as an adult Walt Disney, or Ted Turner, who had this idea of a station that you can get through a cable wire out the sky, or Bill McGowan, who was gonna build a company to take on the largest company in the world, AT&T. He had 35 employees when AT&T had 1.4 million, or Sam Walton, that I never provided capital to, but I met in 1974, and Sears was 1,000 bigger.

They had 1,000 times the number of employees and 1,000 times the revenue, but the facts are, the Sears model could not compete with the Walmart model, and many of the other models could not compete with Steve Wynn. AT&T could not compete with fiber optics, and Bill McGowan, even though they had 1.4 million to the new technology coming and what new dynamics would be in telecommunications, and so they changed. That is invigorating.

For me, when I think back on my own lifetime, providing capital to Reg Lewis in 1986 and ’87.

MM: Beatrice?

JC: At Beatrice Foods, booked-in, for me, kind of my life’s work. In 1965, I changed my life because I wanted to make sure we had access to capital and the American dream was alive and well for everyone. Reg Lewis, an African American buying something and outbidding everyone else, and having someone give him a billion dollars, was a signal that it was available to you all.

The year before, we provided money for an individual that was a woman to buy one of the Fortune 500 companies, the first time a woman in America, in 1986, ever controlled one of the Fortune 500 companies that she didn’t inherit. These changes, today, 27, 28 years later, as I travel around the country and spend time with African American groups, this was, in many ways, their emancipation on the business, that Reg Lewis, an African American, had equal access to more than a billion dollars in capital.

The third area that changed my life was my father’s illness. Whether it’s on a for-profit or nonprofit basis, the idea that medical research has laid us at the doorstep of eliminating cancer as a cause of death. What started in 1972 to 1974, with my father and mother-in-law, I now see the conclusion of that effort. Stage 4 melanoma, 90 percent of patients die with a year. Today, we’re now looking at clinical trials where more than 70 percent are in remission, two to three years out, and maybe melanoma will be eliminated as a cause of death.

We’ve seen a lot of technology that’s occurred. I believe we’re into an entire transformation in bioscience. Twenty-five years ago, if I ran around and told you that, “You are what you eat. Your weight could be affecting your probabilities of getting diabetes or cancer,” and if you changed your intake, what you ate, that could dramatically reduce the growth rate of cancer or reduce your probability of getting a life-threatening disease, there were many skeptics.

[00:55:00] Today, by sequencing your biome, by sequencing your genome, by looking at how your proteins work, we can actually see what the results are when you eat or drink or how you conduct your life. You can now actually get the facts, and I think this will change the consumer products industries dramatically by finding ways to incorporated things that we know have beneficial — proved by sequencing your genome and your biome.

A clinical trial has started, in the middle of 2014, which involves meditation, involves massage, and involves extreme change in diet, vegetarian diet. It’s attempting to show that you can change your biome in a couple of weeks. Since the majority of all the genes in your body are bacteria, they’re not human, that you quite possibly change your human genes by changing what you eat and what you put in your body, and meditation and massage, and, lastly, that you might be able to extend your life by conducting these things. These are exciting opportunities that can be proved statistically.

When I, in ’65, began studying credit, I had real data that I could look at and access, as a student, for little to no money. Now, for a student, when it costs 3.8 billion to sequence one person’s genome and takes 13 years, no student can afford that databank. Now, at an hour and less than $1,000.00, and someday, $100.00, and who knows? — a minute. Those students, whether they be at Arizona State University or other universities, can collect data and analyze their best ideas.

I was able to simulate what my ideas were and look at the history for little to no cost. The students in the next decade will be able to look at biodata, biological data, and look at inputs and look at results, for very little cost. I couldn’t be more optimistic on bioscience today where it’s not only gonna affect your health and your life and the quality of your life and the length of your life, but it’s gonna affect agriculture, energy, water, environment, and, hopefully, positively affect bioterrorism.

MM: We have the way, but you often bring up the concept of whether or not we have the will. Will people make the decisions that are right? Will they bring in the discipline that they need to improve in the ways that you’re talking about?

JC: I think two areas are really important. One, leadership, a person that’s brave enough to attempt to take people to where facts and the future is, and, two, an educated populous in a democracy. Jefferson often wrote about the need for an educated populous, and it’s very hard to change people’s opinion. In the world of communications, with millions of alternatives available, people have the opportunity to search out only those sources of information that support their viewpoints. The question is, how do you get people to listen to the other side? I, my whole life, have been very focused on seeing the world through other people’s eyes.

How do you get people to do that? I would say, my feeling is, through quizzes, competition, an individual who — you take tests where only you see the scores. You’re not embarrassed, no one’s judging you, and if your answer is wrong — I gave a list, once, of 100 companies to the head of the Federal Reserve in America, who was very negative on “junk” or high-yield companies, even though they make up 99.99 percent of all the companies. I said to him, “Which ones do you think are high-yield or junk companies?” He looked at it for 15 minutes and checked four. All 100 were non-investment grade companies. There’s only 400 or 500 in

[01:00:00] America, and so it was my way of getting him to rethink his viewpoint.

To me, finding people, in a nonthreatening way, to be exposed to questions that have multiple choice answers or things. Sometimes movies do that, stories, compelling stories that tell you a story and then make you look at the world differently or look at the world through someone else’s eyes. That is the challenge, in my opinion, and one of the great challenges to our communication field and to many of the students today. How do you get people to look at both sides of an issue?

At the Milken Institute, we don’t allow any speeches at these conferences. There’s always all panelists. The reason is we wanna make sure people hear both viewpoints. Even in The Milken Institute Review, we don’t give you side of an issue. I feel the only way for a person to change their opinion on something they truly believe in is through self-discovery. You have to give them an opportunity of self-discovery, to ask them to think about it, and I think that’s one of the challenges of our universities. Many professors in universities, even today, want to indoctrinate students with their own opinion, rather than let them have choices of their opinion. This is a real challenge in modern communications today.

There’s many people in business that are frustrated now that we’ve reduced our number of enemies. Our superheroes have to fight the businessmen as the evil person. Even in The LEGO Movie, the businessman was the bad person, for all our little kids to understand all the superheroes have to fight the businessperson. I think we have challenges, but I think this is one of the great challenges for our communication profession. How do we get people to understand more than one viewpoint and to see the world?

JC: In the next ten years, do you see, with your work, the elimination of any noncommunicable diseases that plague our society today?

MM: I do. I couldn’t be more optimistic about the potential to turn a large percentage of cancers into chronic diseases. The National Cancer Institute was projecting 150,000 men were gonna die in 2015 from prostate cancer. That number will be 80 percent lower, and I think we have enough in the pipeline here that we’ll probably take the death rate down another 80 percent. I think Alzheimer’s, dementia, the work that’s beginning and what we’re learning there is it’s quite possible the signs of this — not the symptoms, but if you could, essentially, scan your brain, that you could start to see these things 15 years earlier. If you saw ’em 15 years earlier, you could adopt certain treatments that might make the 15 years 50 years, so it never occurs for that individual.

I think bioscience has enormous possibilities. I just came from a week and a half in India, and India is an example where large numbers of people — if you can find and develop solutions that are low-cost solutions, you have 100 million, 200 million, 500 million customers. It’s an anomaly where you see the most expensive house ever built just a few blocks away from an area where they wash the clothes, and you might define in America as the slum. Seeing them side-by-side gives you an opportunity to the unbelievable potential of India, to solve the problems for hundreds and hundreds of millions of people, not solve the problem for a million people, so I couldn’t be more optimistic.

I think the challenges that we have today of religion and forcing your religion on another person, whatever that religion be, we all studied that with the explorers, in the 16th century and the 17th

[01:05:00] century. It tells us that civilization doesn’t always move forward. Sometimes it moves forward and back. How are we going to involve people in the 21st century, if they don’t have skills of the 21st century? There are a lot of challenges for society, but most of ’em find their way into public health and medical research. They find their way into education. They find their way into education, and they find then a way into access the capital.

Hernando de Soto, who I read many, many years ago, used to tell me that most the terrorists and anarchists in the world are really entrepreneurs who need access to capital. They could be far more productive with many of their ideas if they had access to capital. We need to find a way to reach out to a lot of people, and I think this is a real challenge in the 21st century to anyone that’s working the field of communication, whether it’s print or digital. South Korea has recently said that their new technologies will allow you to download a movie in one second.

I remember sitting in meetings at what is now a company called Time-Warner, who was in the forefront of the technology of the DVD, and trying to figure out, if I put a movie on two DVDs, front and back, would people want to watch that, where they have to get up, after the first quarter’s over, flip it over, then take it out, put a new one in, and flip it over because you couldn’t store it, or you took 24 hours to download the content in a movie. Well, at one second, our traditional forms of communication and distribution of information are gonna change dramatically.

How are you gonna communicate with the seven billion people on the planet? How are you gonna separate fantasy or misinformation from accurate information? How are you gonna get people to see the world through different people’s eyes? That is gonna be a real challenge for the communication field, if we are in democracies, where the majority votes, if we’re gonna move forward, rather than move backward in our societies.

JC: You’ve achieved so much in your various iterations, and the question I was gonna have for you is, what do you see in the future? Which I’m very happy if you’d answer, but I have a different question. What would you say to your father, if he was sitting here today?

MM: Well, let’s start with my father. My father’s mother died in childbirth, father died in a car accident, when he was 11 or 12, and he contracted polio as a young boy. He grew up in the middle of the Depression, and one of the few things that was left by his father to him was his Bulova or Timex watch. I think it was Bulova, but I’m not sure. To tell you the relative value of things, my Timex watch which I wear costs $16.00 and it lights up at night, et cetera. His college education, for almost an entire year, at the University of Wisconsin, as an in-state student, was paid for by selling his Bulova or Timex watch, at that point in time.

For him, he lost a large percentage of his relatives in the Holocaust, and family and community was essential to him. He felt there could never be a good life for his children unless there was an opportunity for all children. I think, from that standpoint, I would say to him that there is an opportunity for all children today. If 40 percent of all the children in the world live in China and India, and then another percentage in Indonesia, there are opportunities for those children that there never was before, never were.

I think that, for him, as it relates to dying form melanoma, and an effort that I myself initiated over a five-year period and ended in failure with him dying, I would tell him today, “Dad, we can relax because we’re gonna have a solution.” I remember sitting with

[01:10:00] him, in ’76, when I concluded and he knew that science would never move fast enough to save his life. I think we could look at the world different together, and he could look, instead of passing away when he was 61 years of age, and not getting to see his grandchildren grow up — though he did get to see his two oldest be born — that he can have a much different perspective on life, and that the opportunities for all are available.

I think, as it relates to myself, I think my greatest accomplishment is I met this wonderful young girl in seventh grade, who was most voted most likely to succeed —

JC: And did.

MM: — and did, and I succeeded because of that. I think people don’t recognize how important it is to have a relationship in life, whether it’s a best friend, whether it’s a spouse. The phenomenal job that my wife, Lori, did in raising our three children, today, nine grandchildren. I am no different than anyone else who was told they have limited life expectancy — 22 years ago, told I had 18 months to live — today, more than 22 years later, feeling healthy and being with you today. The first thing you think is, are you ever gonna see your kids grow up? Are you ever gonna see ’em married? Are you ever gonna see your grandchildren? I have been blessed with those gifts of seeing my children grow up, seeing them happily married, and today having nine grandchildren that I get to spend time with.

I’ve also seen hundreds or a thousand people that I’ve worked with or financed succeed in what they’re doing, and I couldn’t be more excited of how many of them are involved in philanthropies with us today. My message that there can’t be a great opportunity unless there’s a chance for everyone, many of them providing those chances today, makes me feel that we’ve accomplished a lot in life. Your legacy is often those businesses, those children that you’ve helped raise, your grandchildren. My grandchildren should get a good chance to see the 22nd century, and, hopefully, they’ll be productive members and leaders in the efforts there in the 22nd century.

JC: When I was in your office with you the last time, you were drinking a smoothie. I don’t know if it was something you had recently discovered, but it looked fantastic. I’d like you to leave us with this. What’s the perfect smoothie in your opinion, for health, as well as taste?

MM: Well, I think you have to start with taste. There’s many people that have tried to tell you to eat something that’s healthy for you, but it tastes terrible. We have spent the last 20 years trying to reproduce things that I or other people like, that taste the same, look the same, just have different ingredients, getting green tea in it, getting things that, have antioxidants in it, getting fruits and vegetables in that shake, and getting it to taste fantastic. If you love strawberry banana, how are you gonna get that thing to taste like strawberry banana?

It’s amazing how many things that look green and have green color can taste like they’re not green. I think those are the challenges that are in front of us, but there are so many groups today that now are juicing things, and the learning that it’s maybe the skin, not what’s inside that’s even more important. How do you capture the skin? If you think about it, of just thousands and millions of years, the average human being in the United States was maybe only eating nine different things. Well, why are there thousands of them? Why does a chimpanzee, who’s the closest to a human, eat 300 different fruits, berries, and other things that they eat?

[01:15:00] People have followed chimpanzees around to look at what they’re eating. Why have they gone on that, and the fact that they have survived through all this period of time, from that standpoint of — we’ve changed our diet so much by farm feeding things that used to go out there and graze and eat grass, to now shoot ’em up with hormones and give ’em grain and molasses to fatten ’em up more. We don’t fully understand what’s happened, but now that we can take the DNA, we can look at these changes. I think you’re gonna see an explosion of new products on the market.

You see an increase, for example, today, in 2015, of Greek yogurt sales versus regular yogurt sales. Well, there were studies that came out, last year, suggesting regular yogurt could be slightly inflammatory and Greek yogurt is slightly non-inflammatory, the reverse, reduces inflammation. Well, those type of facts cause people to change what they’re eating. I think it’s gonna be very exciting to see the new food concepts and the new manufacturing of things that people eat and drink, once we know the data as to how they actually affect the human being.

Recent studies show that the sugar that’s in carbonated drinks potentially has the potential to shorten your lifespan. This data, as it comes out, will change what we eat, but it still has to taste good, and that, I think, is the challenge. I don’t think people fully realize, if you go to Sub-Sahara Africa today and think that, a generation ago, a woman had a 98 percent to a 95 percent chance of passing AIDS on to her children, and today, she’s got a two percent to five percent chance of passing aids on to her children. What a miraculous thing that’s occurred.

Most of that activity occurred in the science laboratories here in the United States. What are the results for society? A doubling of life expectancy in one generation, in six or seven of the fastest growing economies in the world, in Sub-Sahara Africa, if you’re living longer, healthier lives, and not passing AIDS on to their children, and they’re not faced with that challenge at birth. Now we have a few patients where AIDS has been eliminated from their body by treating it and dealing with it as you do with some cancers, and they don’t have to take drugs for the rest of their life.

Just a dramatic effect, and two-thirds of everyone living with AIDS today is living in Sub-Sahara Africa. We understand that saving one life could be saving the world, but given economic terms, it has unleased enormous potential from that standpoint, enormous potential for Sub-Sahara Africa to grow and provide opportunities, and for many people, life has never been better, and the opportunities have never been better.

JC: Michael Milken, thank you. Thank you for being an iconic voice. It’s been a pleasure.

MM: Jeff, great to see you, and good luck with changing communications for this century.

JC: Indeed. Thank you.

MM: Bye-bye.

JC: It’s a really a pleasure. By the way, I was diagnosed with melanoma, with Stage 1, so, actually, at Mayo, they removed it all, but —

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