Bloomberg Businessweek Weekend - September 25th, 2026

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0:08Speaker 2:This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Masser and Tim Stenevek on Bloomberg Radio.

0:32Speaker 3:Hi, everyone.

0:32Speaker 1:Welcome to the Bloomberg Business Week weekend podcast. Our backdrop this week, the 81st annual UN General Assembly in session in New York City. President Trump addressed the United Nations General Assembly, saying that he expects the U.S. will reach an agreement with Iran after the midterms.

0:49Speaker 4:He also said that the U.S. rejects the globalist scheme to control AI. He reiterated that he believes Cuba will fall.

0:57Speaker 3:And that the U.S.

0:58Speaker 4:Will start building two, quote, very major military bases in Greenland that will give the U.S. permanent control over security and all other needs on that territory.

1:08Speaker 1:The address was President Trump's second before the United Nations since returning to the Oval Office in early 2025 and comes at a very different moment of his presidency, one where his approval rating is at or near record lows, according to polls, And warning signs continue to flash for Republicans ahead of November's midterm election that could see them lose control of Congress. It also comes at a time when President Trump's approach globally has faced pushback from other world leaders.

1:37Speaker 4:So lots to think about around the world and our global news team converging here in New York City to talk with leaders in town for the U.N.

1:44Speaker 1:Gathering.

1:45Speaker 4:You can check out all of our coverage on the Bloomberg Terminal and at Bloomberg.com.

1:49Speaker 1:As for us this hour, we wanted to focus on the U.S., the politics of the country, the economy. We catch up with someone who knows President Trump well, having served as the White House communications director for 10 or 11 days, depending on who you ask, before becoming one of his most outspoken critics. Anthony Scaramucci is here with his new book and on his front row seat in a Trump White House. But remember, he was also someone who knew the president before he came to the White House.

2:19Speaker 4:Plus the two economists from Princeton and the University of Chicago who are behind the new book about who really is rich in America, how they got there, and the power that they have. It turns out we may be living in the age of millionaires.

2:33Speaker 1:All of that to come, but first, you may know him from Wall Street. It's someone we've covered a fair amount here at Bloomberg. You may also know him from his flash-in-the-pan time in the Trump White House during his first term or his unfiltered take on modern politics.

2:49Speaker 4:Anthony Scaramucci is founder and managing partner of the hedge fund of SkyBridge. He's the co-host of the podcast The Rest is Politics, and he's the author of the new book All the Wrong Moves, How Three Catastrophic Decisions Led to the Rise of Trump.

3:02Speaker 1:Was being in the White House for you a wrong move? Do you consider it a wrong move as you look back?

3:07Speaker 5:Well, I would say campaigning for Donald Trump. I was with Jeb Bush, Jeb dropping out of the race, and me accepting the offer from then-candidate Trump to go work for him was a colossal mistake, probably the biggest mistake, until I made the bigger mistake of going to work inside the White House. So I would say that they were graduating and exponentially bigger mistakes.

3:30Speaker 1:But didn't feel like a mistake at the time, or did it?

3:33Speaker 5:Well, by 24 hours into it, it started to feel like a mistake, because it was a crazy situation, and there was heavy levels of dysfunctionality. And I'm taking you back nine years now, but Priebus and Bannon.

3:45Speaker 1:And They were not on your side.

3:47Speaker 3:No, no, they hated my guts.

3:49Speaker 1:Yeah.

3:50Speaker 5:Yeah, but you know, the funny thing about Priebus, he should just tell you that he hates your guts. He doesn't have to act like Richie Cunningham from Happy Days.

3:55Speaker 1:Well, you talk about being like, I'm out there in front, and I lay it out.

3:59Speaker 5:No, I said, I'm a front stabber. I'm not a back stabber.

4:01Speaker 3:I'll tell you to your face. Come on, I'm a New Yorker. You guys know you're in New York.

4:05Speaker 1:Listen, we all have visited the White House. We have a feel. We see it. We see the pictures. We see the president coming out and making... Take us inside the White House. Your first day, your second day, and what that was like. And I understand under President Trump and his administration, they were different.

4:20Speaker 5:You have to remember, I had friends of mine that worked for President Clinton. I had a relationship with President Obama. So I had been out of the White House for 30 years. And in the Oval Office, the Roosevelt Room, I had been in the Navy mess. I had never been to the residence. So the first time I was in the residence was when I worked in the White House for President Trump.

4:39Speaker 3:But it's a small place. You know that. It's not that big. The West Room.

4:44Speaker 5:building isn't that big. The West Wing offices is not big. The Oval itself is not that big. Moreover, the President's study is probably smaller than anything that was at Trump.

4:53Speaker 3:Tower for Donald Trump.

4:55Speaker 5:But it is a magisterial historic place, and it's very well preserved. And there's a White Historical Association, which I did get familiar with in that short period of time. And the Truman Renovation, prior to the recent Trump renovations, was unbelievably necessary. People don't remember that, but the entire White House was gutted, and a steel frame was put in, and the place was rebuilt. And thank God for that, because it was really falling apart. But listen, I'll tell you a human story about the president, though, because I know I'm at odds with him, but this is a human story. First day I was with him, after I did my press conference, we were sitting in the Oval Office together alone. It was just the two of us.

5:36Speaker 5:And I laughed, and I said to him, you know, we're two New Yorkers.

5:39Speaker 3:You're from Queens. I'm from Nassau County.

5:41Speaker 5:Can you believe you're behind the Resolute Desk and I'm sitting here?

5:45Speaker 3:And he says, I'm very human.

5:46Speaker 5:He said, you know, first time I got here, I was very unnerved by it. I was sitting here saying, okay, I'm actually the president. And then the phone was ringing. He picked up the phone. It was White House protocol.

5:58Speaker 3:And he said, Mr.

5:59Speaker 5:President, you've got a head of state coming and you're going to meet Prime Minister Theresa May at the North Portico. And President looked at me and said, I had no idea where the North Portico was.

6:08Speaker 3:You know what I mean?

6:09Speaker 5:He was, he was a very honest and very human moment, which you don't often see with the president.

6:13Speaker 4:You know, the, the last time you and I spoke was, I believe when your memoir came out 2018, it was called Trump, the blue collar president.

6:22Speaker 3:Yeah.

6:23Speaker 4:In that book, you wrote that I believe we have a real opportunity in a Trump presidency to change things dramatically for the good. We might never have a president again who can move intractable barriers and the way he does. It was a very complimentary portrait of the president. It was written after your time at the White House.

6:39Speaker 5:Yeah, I certainly didn't want to be that baby or play the victim after I got fired. I was very supportive of the president up until about August of 2019. That book, if you go back and read it, I think it stands the test of time. And it's a good corollary to this book, because what I explained in the book is that we have a crisis of wages for a very large group of people in the United States that we've sort of left a large group of people, blue collar.

7:05Speaker 3:Workers, et cetera, out.

7:06Speaker 5:You know, we have an economically aspirational society for many. And certainly for my blue collar family, we felt economically aspirational. But if you look at the data, there's about 20 to 25% of the people now that feel economically desperational. And so the message of blue collar president was he has the ability to cross over. He could be a postpartisan president. He could be a, transformative president. He could help get deals done to bring that community back into the social contract of America, but that didn't happen.

7:38Speaker 3:But he had the potential to do that.

7:40Speaker 4:What happened for you that changed your view on him?

7:43Speaker 3:What was it?

7:45Speaker 5:Well, I mean, there was a number of different things, but the main one, I was on the Bill Moore show actually defending him.

7:50Speaker 3:I thought I was defending him.

7:53Speaker 5:Catherine Rampell, I don't know if you ever interviewed her, but she was on the show with me. She turned to me and said, well, what about the squad? And so for your listeners and viewers, what is the squad? It's four women that are in the House of Representatives. They're pretty much hard left leaning. He said that they should go back to the countries they originally came from. Three of them are born in the United States. One is a naturalized citizen. That's American nativism. That's a form of racism. So Catherine asked me on a live television show, well, you're defending the president. What do you think of the remarks about the squad? I said, listen, I don't like them.

8:26Speaker 5:My Italian-American grandmother was told that. In the 1920s, it broke her heart. She used to talk about it to us in the 1960s and 70s. And I wish he wouldn't talk like that. That's a form of nativism. It's a form of racism. He's the American president. Well, Bill Maher said to me, he's going to attack you tomorrow.

8:43Speaker 3:I said, there's no way.

8:44Speaker 5:I was defending him. He said, ah, you were seven for eight for him. You got to go 13 for 10. I said, he's not watching your show.

8:51Speaker 3:He goes, what are you, an idiot? Stormy Daniels was on the show tonight. That was his first guest.

8:54Speaker 1:He was watching.

8:55Speaker 3:And so he was watching.

8:56Speaker 5:And he started blasting me the next day.

8:59Speaker 3:I'm a New Yorker.

9:00Speaker 5:So I started blasting back. And then he blasted me again, and I blasted him. Then he started attacking my wife. And so he knew that Deirdre and I were going through a personal relationship crisis when I was in the White House. We had a divorce paperwork put together. Thank God we reconciled our marriage because we love each other. But it was a bridge too far for me. He's capable of doing things that are way outside the standard deviation of what's normal for an American president. And I had given him millions of dollars.

9:30Speaker 3:I'd supported him.

9:31Speaker 5:And you're going after my wife. You know, I've got a problem at home that I'm trying to repair. It's just a bridge too far for me. And I said, okay, this guy's not the type of leader that should be the president of the United States. And so I spoke out against him. I was probably one of the first people that was an aide or an assistant to the president. There are many now, not just me, that try to tell people how dangerous he is. But that's what happened.

9:53Speaker 5:That's the origin of me saying, hey, no mas.

9:56Speaker 3:That's not cool.

9:58Speaker 1:What happened, though, to the contract, in your view, that Donald Trump made while on the campaign trail, certainly the first time around, in saying, I'm going to bring more of you people into the economy. I'm going to help those of you who feel like both Democrats and Republicans maybe have left you behind in some ways.

10:15Speaker 5:Well, that was the blueprint for blue-collar presidents, so. So there were so many different things he could have done to do that.

10:20Speaker 1:But why didn't he? That's my question. I understand the promises that he made.

10:24Speaker 3:He's a distracted guy.

10:25Speaker 5:He'll stay on a thing, and then he moves to another thing very quickly. We're supposedly having infrastructure weak in the first term every week.

10:34Speaker 3:It never materialized.

10:36Speaker 5:I think the tax cuts that got put through in 2017, which the conservative, more traditional Republicans like Paul Ryan wanted those tax cuts, and also the SALT which hurt places like New York and blue states. I think that hurt his standing with the Democrats, frankly. And then, if you remember, he said S-H-I-T, whole countries, and as he was trying to put together the immigration package, and these things started to unwind on him.

11:06Speaker 3:And you had traditional.

11:07Speaker 5:Republicans in there that were indifferent to that cause, if we're being honest. Traditional Republicans in Trump won. probably protected the country and the world from the tariffs, bellicose of rhetoric against NATO, potential trade war with Canada.

11:23Speaker 6:The guardrails, right?

11:24Speaker 5:Yeah, all those things were things that were likely to have had happened in Trump 1 had he had this level of personnel. The Trump 2 personnel in Trump.

11:33Speaker 3:1, you would see that.

11:34Speaker 5:But the Republicans also prevented some of the stuff that we're talking about in terms of bringing those people back into the integration of the economy.

11:44Speaker 1:You talk Republicans. A lot of the Republicans are the personnel that are allowing things to happen. And I think it's fair to say— They're.

11:53Speaker 3:Not traditional Republicans, though.

11:55Speaker 5:The Republicans of Mitt Romney and John McCain and the Republicans of Adam Kissinger and Paul Ryan and General John Kelly, they're long gone from the party. This was a— you want to talk about a decapitation— We have a decapitation strike in Iran, but the first decapitation strike for Donald Trump was removing senior Republican establishment leadership from the Republican Party. This was an M & A, and he installed MAGA and the Heritage Foundation. They call themselves Republicans, but they're not the Republicans I.

12:26Speaker 3:Grew up with.

12:27Speaker 1:Who are these Americans? Who are these leaders? It just feels like we didn't drain the swamp.

12:34Speaker 5:Well, you know, let me tell you, under Donald Trump, it's not a swamp. It is a gold-plated hot tub. Okay, I mean, think about it. It's very high-level, open-faced, shameless activity to self-enrich people. And I think it's disgusting. And I do think they'll be held accountable, though. I don't think they can get away with it. I mean, he can pardon his family members and pardon himself, but there's a whole big atomic blast there.

12:58Speaker 4:That was Anthony Scaramucci, former White House communications director, founder and managing partner of the hedge fund SkyBridge. And the co-host of the podcast, The Rest is Politics. He's also author of the new book, All the Wrong Moves, How Three Catastrophic Decisions Led to the Rise of Trump.

13:10Speaker 1:And we're going to continue with Anthony Scaramucci, including getting his thoughts on the relationship between the United States and China.

13:17Speaker 4:You're listening to Bloomberg Businessweek. This is Bloomberg.

13:26Speaker 2:You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m.

13:32Speaker 3:Eastern.

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13:39Speaker 4:I want to get right back to Anthony Scaramucci. He joins us now. He's founder and managing partner of Skybridge. He's the co-host of the podcast, The Rest Is Politics. of course, former White House communications director to his new book, All the Wrong Moves, How Three Catastrophic Decisions Led to the Rise of Trump. You know, it's interesting. We were talking about your previous book, your memoir, Trump, the Blue Collar President. And I know as preparing for this, after reading this, I did go back and look at that book.

14:04Speaker 4:And you're right. There's a lot of connection to what you talk about growing up on Long Island, your working class background, And then you get into more detail in the first part of your book here, the catastrophic, what you call the three catastrophic decisions that led to the rise of Trump. I want to talk about some of those decisions now. Let's talk a little bit about China and the World Trade Organization, because you say a lot of it comes from that.

14:27Speaker 5:Well, OK, so you have to step back and you have to see where America was at that time. The Berlin Wall has fallen down. Francis Fukuyama said the end of history. We put budgetary guardrails together between Bush one and Clinton. that are leading America to a budget surplus. Everybody knows we printed a $ 200- plus billion surplus at the end of 2000, but now we're in November of 1999. China wants permanent status in the World Trade Organization. American business leaders want to give it to them. We see at that time, and I write the first chapter, I got this wrong. I saw a Chinese market opening.

15:02Speaker 3:I saw an.

15:03Speaker 5:Opportunity for us to sell goods and services to 1.3 billion people, as did the Fortune 100 CEOs. As did Wall Street.

15:11Speaker 4:You're not the only one who got this wrong.

15:13Speaker 1:I'm just going to say, I was at the Wall Street Journal and kind of the lead up to it. We actually, you know, created a show, the Asian Wall Street Journal over in Hong Kong. Everybody was clamoring to push open. Everybody wanted access to that market. I mean, I don't think there was any way to stop that.

15:29Speaker 3:But that market didn't open. That market didn't open, and that's what we got wrong.

15:33Speaker 1:But I think the concept was that people thought, okay, if we have a presence, if you have the Western presence and all these multinational companies over in China, they will change. I think they really thought the.

15:44Speaker 5:Government was going to change.

15:45Speaker 3:I write all about that in the book. There was one person.

15:48Speaker 1:And that was the belief.

15:49Speaker 3:Because I looked.

15:50Speaker 5:Through tons of interviews, tons of Wall Street Journal articles and research for the book. There was one person who said it's not going to work. And I give her a lot of credit for that. That was Nancy Pelosi. And she got on C-SPAN. There was more than one C-SPAN speech. She was warning about it's a one-party system. We're taking a leap that they're going to open their system politically. They had just had the Tiananmen Square crisis in 1989, and they had a lot of anti-libertarian crackdowns in the country. And so we got it wrong because we were projecting what we wanted them to do based on our perspective and our pride in our own system. Now, I think China should be in the World Trade Organization, if you read the book. And I think we should have globalism. And I believe in the David Ricardo principles of global trade, seeking the lowest cost provider. However, when China is coming in as an emerging market, like El Salvador or Dominican Republic, and they get to the size of the UK or the size of Germany, they needed to be treated like Germany or the UK.

16:56Speaker 3:And they weren't. And they were clipping off 11%, 10% growth.

16:59Speaker 5:Had their market closed, flooded our markets. We benefited lower cost goods and services and things like that.

17:05Speaker 1:Every American, yeah.

17:07Speaker 5:But we lost a lot of our manufacturing and we flatlined our wages for a very large group of people. And we have to accept that. And China was part of it. It wasn't the whole story, but it was a big enough symbolic part of it that it weighs heavy on those people.

17:22Speaker 1:You also talk about President Obama, the bailout of Wall Street. You also talk about George W., the war without taxes, so we didn't pay for it basically without raising taxes. There were a lot of things at play. I feel like, Anthony, as you lay it out, and we talk about it a lot, and we are, you know, capitalism, this is what we report on all the time, that greed in many ways, too much money in politics, too much concerns about the bottom line, which is why we pushed everything offshore.

17:50Speaker 1:Like that in many ways ultimately led to kind of where we are.

17:54Speaker 3:I think so.

17:55Speaker 5:But I think under President Clinton's leadership, we put guardrails on the Congress. We had budgetary constraints. You know, Al Gore was cautioning about a reaction in the Gulf after the 9-11 crisis. I mean, you may remember this George Soros, I mean, he's a pariah to the conservatives, but he wrote an op-ed in the New York Times in November of 2001 to be careful, don't overreact and play into Osama bin bin Laden's hands. If you go to the dark web or you read Lawrence Wright's book about 9-11, Osama bin Laden said, I'm going to hit America in the homeland. They're going to overreact and come to my land and spill their blood, spill their treasure. They will pull their civil liberties. And we did that with the Patriot Act. And we ended up spending $ 8 trillion on those two wars. And I'll just point out, we cut taxes in May.

18:47Speaker 3:April of 2001.

18:47Speaker 5:We went to war in October in Afghanistan. We cut taxes again in 03, early part of 03, at war in.

18:54Speaker 3:Iraq in March.

18:56Speaker 5:And that blew a hole in the system. And so just hear me out because I threaded these things. Stagnant wages. Now you have this inflationary induction of deficit spending. And guys, you know this, but the US dollar has lost 28% of its value since December of 2019. And so that's a huge problem for wage earners. And then the last piece, oh, by the way, let's just bail out the fat cats. There's nothing in the allocation for poor or middle-class families or people that need credit card relief or rental relief.

19:28Speaker 5:People say, hey, there's a two-tiered system.

19:30Speaker 3:It's not fair.

19:31Speaker 5:That's how you got to occupy Wall Street.

19:32Speaker 1:My husband said we should have just paid everybody's mortgages off and we would have solved the problem.

19:35Speaker 5:It's not about paying their mortgages off as much as about apportioning an assonation. If you're going to bail out one group out without bailing the other group out, you're going to make that group feel that it was unfair and you're going to engender the Tea Party movement and you're going to engender Occupy Wall Street.

19:52Speaker 4:Our thanks to Anthony Scaramucci, founder and managing partner of SkyBridge and the author of the new book, All the Wrong Moves, How Three Catastrophic Decisions Led to the Rise of Trump.

20:00Speaker 1:Now from the high stakes drama of Washington and political influence to what our next guests say is the real engine of economic influence in America.

20:09Speaker 4:We're talking about the American multimillionaires. They are the people who are building extraordinary wealth. And according to our next guests, are quietly rewriting the rules of money and power. We're talking about Eric Zwick, professor of economics and finance at the University of Chicago Booth School of Business, and Owen Zadar, professor of economics and public affairs at Princeton. It's all in their new book, The Everywhere Millionaire, who was really rich in America and how they got there.

20:35Speaker 6:You know, if you look at the data, it's really amazing. There's this legion of millionaires who are ordinary Americans running pretty mundane businesses who are extraordinarily wealthy. And collectively, if you add up all of their wealth, it's 10 times that of the people you just named, the richest 400 people.

20:52Speaker 4:Yeah, you guys have like a chart at the beginning of the book that shows like, here's the Forbes 400, and here are the other people we're focused on. And it's a remarkable delta.

21:01Speaker 7:That's right. You went down that list, and it was tech, tech, tech, a little bit of finance, tech, And so we're told kind of the path to prosperity, the path to the top is Silicon Valley, Sand Hill Road, Wall Street. And we're interested in Main Street and Metro Parkway.

21:14Speaker 1:Or the car dealerships. Exactly. But hold on, hold on.

21:17Speaker 4:Before we get to the car dealerships and the farmers and the HVAC folks, which you guys read about.

21:22Speaker 1:Or doctors.

21:23Speaker 4:There is something to be said about what is happening and what has happened in technology. You go out to Silicon Valley right now. I mean, you can't find an entry, a starter home in San Francisco. Yeah. Because- you know, everybody who's worked at anthropic open AI or space X are gobbling those things up. You're going to, we're going to have, I don't have that data in front of me, but you're going to have something like seven from just from anthropic alone, seven billionaires in them, like many hundreds of millionaires as a result of that.

21:49Speaker 7:That is a totally change the game happening. That is totally a story that's true. And it remains the case. The American economy is far broader and far more diverse. So there are 8 million homes worth more than a million dollars before this demand surge in San Francisco. It's true that if you look at the coast, maybe they have 10% of the population, 25% of the income. It's also true that 75% of it's away from the coast. And we're sort of saying, look, it's the duck-rabbit story.

22:16Speaker 7:Kind of like, yeah, it's a duck. We're not saying it's not a duck. But if you look at it a slightly different way, it's also a rabbit. We're saying there's this massive amount of wealth that's abundant, also closer to home, for so many Americans that aren't used to thinking about it that way and think that tech is just gobbling everything up. And we just aren't seeing that.

22:33Speaker 1:Let's get to the process, because you guys basically make this point that we are in the first age of millionaires. How did you guys go about collecting this data? I think that in itself was kind of fascinating. Owen, come on in.

22:48Speaker 3:There are two steps.

22:49Speaker 6:So the first is a decade of research where it started with an investigation at the Treasury Department where they brought us in to try to figure out how much private business owners are paying in taxes. So we had to link private business owners to the, sorry, businesses to their owners to figure out the answer to that, which is a pretty nerdy kind of small thing. And then what emerged was this amazing picture of extraordinary wealth that no one talks about. And it's just really hard to capture who's rich because if they're not public company CEOs, they don't report to investors. And wealthy people don't answer surveys often. And so this was a new view on wealth in America.

23:26Speaker 1:But they filed tax forms.

23:28Speaker 6:Exactly. Everyone.

23:28Speaker 3:Everyone.

23:30Speaker 6:And so we had that as a toehold, and then we did a series of research projects, and that was the first step. And then the second step was to go out and move beyond that private and protected data, which is de-identified, to try to tell some stories and bring it to life. And so we went and collected private jet data, super yacht data, property registries, industry information of things like car dealers that showed up on the list.

23:55Speaker 1:Right.

23:56Speaker 6:We started to get these stories and asking people, who's the wealthiest person you know? And you get amazing stories. We have so many millionaire stories now of just people doing pretty mundane things like storing paper or fixing garage doors or distributing toilet paper.

24:13Speaker 1:Or tanning salons.

24:14Speaker 6:Tanning salons. And it's very fun. And people then are like, oh, yeah. And now that I think about it, the guy who has that really nice vacation house, they own seven Jiffy Lube's. And that's really wealth in America.

24:25Speaker 7:Yeah, we both have little kids at home, and we sort of joke that it's the ABC book, like the ABCs of getting rich. A is for auto dealers, B is for beer distributors, C is for contractors, D is for dentists, and we can keep going.

24:37Speaker 4:You know what's interesting about the A and B? They're kind of like natural monopolies. So a car dealership has barriers to entry. You can't just open a Ford dealership next to another Ford dealership. There are barriers to entry with this stuff. Beer distributors, I mean... That's a challenging business to get into for a lot of reasons.

24:58Speaker 1:But not for Cindy McCain's family, which I did not know that.

25:03Speaker 7:Indeed, the Hensley, the keys to that campaign were really funded on a boat winding down a river of beer. The beer distributors, I mean, it was amazing. He didn't know how many houses they owned in the middle of the housing crisis because it was mostly the Hensley family's wealth. And so, yeah, the beer distributors, these businesses, there's a class of them that are operating in these local markets with protections that are codified in state and local law in a lot of cases. As demand for that activity has grown, these middlemen and middlewomen are, you know, grabbing a slice of this growing market. And so we see tons of these car dealers and beer distributors. The Chicago Blackhawks, you know, I'm in Chicago. That's a beer distributor family, the Wurz family.

25:49Speaker 1:Still ahead on Bloomberg Business Week. More with professors Eric Zwick and Owen Zadar. They are the co-authors of the new book, The Everywhere Millionaire, who is really rich in America and how they got there.

26:01Speaker 4:This is Bloomberg.

26:06Speaker 2:You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m.

26:13Speaker 3:Eastern.

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26:20Speaker 1:Let's get back to Eric Zwick and Owen Zadar. Eric is professor of economics and finance at the University of Chicago Booth School of Business. Owen is professor of economics and public affairs at Princeton University.

26:31Speaker 4:Together, they're the authors of the new book, The Everywhere Millionaire, who is really rich in America and how they got there.

26:37Speaker 1:Can we just go to how the book begins? Because when you guys were going to talk about a wedding, I'm like, oh, they're going to talk about the Jeff Bezos wedding.

26:43Speaker 4:That was the Carol Masser wedding.

26:46Speaker 1:It was not the Carol Masser wedding. Tell us about this, a $ 60 million wedding that had multiple moving parts.

26:53Speaker 7:Yes, so reportedly a more expensive wedding than the Bezos-Sanchez wedding, in fact, called the Wedding of the Century by social media. That's sort of how we came across this extremely extravagant wedding. So for folks who read The Millionaire Next Door, there's a lot of frugality in that book. This is a very conspicuous consumption behavior. This does not fit out of that book. But it turns out they flew all the guests by private jet to Paris. They ran out for a side, not for the wedding, but just for another event the day before.

27:22Speaker 1:And they dressed the part, didn't they? It was great. They had makeup artists, right? And people like styling them.

27:26Speaker 7:I think unironically dressed in the period costume of the late monarchy, you know, the bride at the bachelorette party dressed as Marie Antoinette on one evening.

27:34Speaker 1:Let them eat cake.

27:35Speaker 3:There you go. They did. And they ate plenty.

27:37Speaker 7:And Adam Levine sang the first dance. uh you know it's in room five it's.

27:42Speaker 1:Really outstanding that means that means.

27:44Speaker 7:We got a good we got a snort so we're done yeah so they were car dealers that the punchline.

27:51Speaker 6:And nick saban bought the dealership with a consortium i think for several hundred million dollars uh nick saban the football coach of alabama so it's you know.

28:00Speaker 7:You're seeing finance go after these these same businesses too right If you're.

28:04Speaker 4:Just joining us, we're speaking with Owen Zadar, Professor of Economics and Public Affairs at Princeton University. Eric Zwick with us too, Associate Professor of Finance at the University of Chicago, Booth School of Business. They're the authors of the new book, The Everywhere Millionaire. They join us here at Bloomberg. Owen, I want you to come in because the way you started talking about the process for this, it sounded actually a lot simpler than you lay it out in the book.

28:24Speaker 4:This was not an easy thing to do. People would think, okay, Treasury Department, they should know how much small businesses are paying in taxes. Or you should be able to log into some database pretty easily and get this information. You guys moved into D.C. to do this.

28:39Speaker 1:In a really nice part of the building, right?

28:41Speaker 6:Oh, we were in the basement.

28:43Speaker 3:It was lovely.

28:43Speaker 6:They were moving things out of the room to just get us a place. I was looking through some old photos, and it really brings you back. But the way the systems are set up, it's the information on tax forms, but they're stored so that one auditor can kind of go on a specific form and check, does that make sense? They're not at all set up to do these big linkages and make sure that the aggregates make sense. And so there were periods when, you know, Eric should tell the story because he was the one who did it.

29:12Speaker 6:We'd have to, like, figure out what was going on because sometimes you'd add up all the stuff that's supposed to add up to the other thing and it wouldn't come anywhere close. And then it turns out that zeros were actually missing and meant different things and digits were out of order. And so Eric went to go talk to someone we called the architect.

29:31Speaker 7:Come on in, Eric.

29:31Speaker 6:At the Treasury, right.

29:32Speaker 7:So, I mean, they're trying to do tax policy you know, proposals. They're trying to figure out what revenue would be raised if we changed the tax code. But you want to know where you're starting from. Like, what tax do these businesses currently pay?

29:45Speaker 6:Right.

29:45Speaker 7:And for this emerging class of businesses where the tax isn't paid by the business but by the owners, they couldn't do the link at scale. And it turns out.

29:53Speaker 1:The pass-through. The pass-throughs.

29:55Speaker 7:So this is sort of like this watershed moment, 1986 tax reform... spawned the growth of these pass-through businesses to where they were a very small share of the economy, to where they're more than half of business income, about half of employment. Most businesses are pass-throughs, even today. They account for more than half of the rise of the top 1% income share, business income coming from those pass-throughs. So Treasury was trying to link them at scale, and the way the data's stored, you know, the links are kind of all broken up and, you know, and so I actually knew this guy who was working as kind of a database systems engineer architect, whom we called him the architect based on the matrix, actually, I think. And I was like, oh, I'm going to go give a talk in Utah. Let me stop and have lunch with him and just ask him all these, you know, enduring questions about the code he wrote to build the system and that kind of set of questions and then following up with him over time. But I met him for a burger and a beer's And he's wearing a plaid lumberjack shirt with a beard. He's sort of not the

30:59Speaker 7:person you would expect to be the architect of this electronic filing tax system. And we had a great conversation. I had a great time with him. But that was sort of one of the moments of unlock for us.

31:11Speaker 4:Very briefly, before we get to the implications of this, the how we got there part is what I want to focus on. Because whether I was reading about building equipment contractors, specialty trade contractors, quiche makers, private equity... came up over and over again for the way that these folks exited their businesses and sold them for billions of dollars or hundreds of millions of dollars. What is the role of private equity in making these people millionaires?

31:32Speaker 7:So I love to think like private equity is almost like the child that some of these founding business owners never had because they didn't have anybody to take over the business. Private equity has determined there's a lot of money left in the banana stand when the founder doesn't have anybody to hand it off to. And they come in and they buy up these businesses. And that also helps us find some of the more salient stories because They are paying big multiples for businesses in very unglamorous industries.

31:58Speaker 7:Private equity is looking for home security businesses, pest control solutions, methadone clinics, roll-ups. Portillo, one of the heroes of the middle of the book where we tell his story of how he started this hot dog stand and grew it to the largest private chain of fast casual restaurants in the Midwest selling Italian beef and chocolate cake shakes. He sold it to Berkshire Partners for over a billion dollars, still had a lot of the real estate and rented it back to them. never took outside investors, but private equity was looking at the numbers. The margins in these stores were outrageous compared to maybe a typical McDonald's. They were doing three times as much revenue, and they were more profitable per unit. They reset the multiples, the prices, in the whole fast-casual dining scene. So there's a pizza company called Malnati's based in Chicago, and the guy who worked there when they sold to private equity was like, I love the Portillo's sale because it got us a much better price. Private equity is... flooding capital in, and they're looking for targets, and there are just tens of

32:57Speaker 7:thousands of these businesses, if not hundreds of thousands, that are big enough for exits that look really great for the founders.

33:04Speaker 1:We have a question coming in from one of our viewers, Brendan, sending in a question. It says, given our changing labor dynamics, as you reveal in your book, do you have any thoughts on how the education industry could shift gears to provide broader opportunities for students to pursue these path to millionaire jobs? Any thoughts?

33:21Speaker 6:So one lesson that comes out of our book is the way you often get rich is by owning and not earning. And so even if you're an adult kind of thinking about your kids, what should they do early on? If you want to be an owner, one way to do it is to start in an industry like construction or auto repair where it's much more likely to go and become an owner 10, 15 years down the line.

33:45Speaker 4:Nobody was telling us that in college.

33:46Speaker 6:No, but if the comparison is that or working at Ford or GM, they're much less likely to do that. And it depends on what you want to do. There's risk, so it's not everybody should do this. But it's remarkable just how many people in America are getting rich. It's kind of giving the blueprint for success or a blueprint when a lot of younger people are not feeling great about the conventional advice of work hard, get a good job, go to a name brand company and just earn a salary for your life.

34:13Speaker 1:There's so many different ways we could go from here, and we've just got a few minutes left here, but you write in the book about how we need to hold Main Street millionaires accountable when they wield their power unfairly, and a lot of them do.

34:25Speaker 7:So one of the surprising facts we learned in the course of this investigation, our research more broadly, was how politically active a subset of these. So the typical one, I think, cares about politics insofar as it affects the tax bill, the bottom line, but they're not super engaged. But when we start to look at who's politically active, it turns out They're way, way overrepresented. So a quarter of Congress and even closer to 30%, 40% of state and local office is occupied by private business owners. And if we look at public policy outcomes in certain sectors, whether it's local market regulations that affect who can enter, what types of protections workers enjoy, who's writing those rules?

35:06Speaker 7:In a lot of cases, in a lot of places, everywhere are millionaires that are actually occupying elected office, not just lobbying. If you look at the tax code, over the last 40 years, we've seen a lot of benefits accrue to these business owners in the form of reduced tax bills, opportunities to deduct things that maybe are on the border between investment and consumption, opportunities to pass on the businesses to the next generation with relatively little tax.

35:30Speaker 7:They don't sell the private equity, or maybe they can structure that sale to minimize the tax for transfer. Those tax rules are, again, influenced disproportionately by these folks that are occupying elected office.

35:40Speaker 1:The other thing is, though, sometimes the consumer is getting hurt in this process, whether it's through medicine or... I mean, right? That's the takeaway also.

35:49Speaker 3:Absolutely.

35:49Speaker 6:So one of the big problems in America is things are more expensive. You had the beef prices not that long ago. And if you think about what people are spending money on, it's like housing, health care, cars.

36:02Speaker 3:And in a lot of.

36:02Speaker 6:These industries, you see everywhere millionaires.

36:05Speaker 3:And so.

36:06Speaker 6:In housing, for example, a lot of the demand for housing when we're not building that much is not from Elon Musk. And for cars, a lot of protections that initially went in to try to protect the little guy from bullies ended up creating a new class of bullies that effectively make these things more expensive for us.

36:23Speaker 3:Those are the car dealers.

36:26Speaker 1:Why is it important? We've only got about a minute left here. And I'm just thinking, as we wrap up here, how do you want readers to... to use this information? Why is this important, this story to tell?

36:37Speaker 7:So we think of this as like an eye-opening experience for people if they're able to read the book. And, you know, we want them to see the economy as it really is and not necessarily as Instagram Reels tells them it is with this amplification distortion that's just Elon, Elon all the time.

36:52Speaker 1:I mean, my white kitchen and my.

36:55Speaker 3:For example.

36:56Speaker 1:Perfect teeth.

36:56Speaker 7:Look, the cooking videos, go for it. I'm all about it. But yeah, so if you want to understand the economy as it really is, what's going on with economic growth, what's going on with income and wealth inequality and how that's evolved. If you want to have a prosperous future for yourself or for your kids, thinking about the American dream and whether it's alive or dying, I mean, I think there's a lot of lessons here. If you want to fix public policy problems, there are also a lot of lessons here that I think we should pay more attention to. So in each case, it's just seeing the world as it is, so then we can move forward from there with our goals.

37:29Speaker 4:Our thanks to Eric Zwick, professor of economics and finance at the University of Chicago Booth School of Business, and Owen Zadar, professor of economics and public affairs at Princeton.

37:37Speaker 1:And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us.

37:42Speaker 4:Be sure to tune in to Bloomberg Business Week daily, Monday through Friday, starting at 2 p.m. Wall Street time on Bloomberg Radio, Bloomberg TV, and on Sirius XM channel 121.

37:50Speaker 1:You can also watch our daily broadcast on YouTube. Just search Bloomberg Podcasts. We're simulcast on Bloomberg Originals, available on Bloomberg.com slash originals, And streaming platforms including Roku, Amazon Fire TV, Samsung.

38:03Speaker 2:TV Plus, and more.

38:04Speaker 4:I'm Tim Stenebeck.

38:05Speaker 1:And I'm Carol Masser. Have a good and safe weekend, everyone.

38:08Speaker 2:This is the Bloomberg Businessweek Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.