Trump's Great Private Equity Bailout, with Dan Rasmussen

Capitalisn't

University of Chicago Podcast Network

Stigler Center, Chicago Booth, Socialism, Antitrust, University Of Chicago Podcast Network, Growth, 087667, Policy, Monopoly, Professors, Distortion, Research, Competition, Capitalisnt, Inequality, Promarket, Politics, Policymaking, Special Interest, Economics, Efficiency, Regulations, Chicago, Business, Markets, University Of Chicago, Kate Waldock, Capitalism, Friction, Bethany Mclean, Government, Macroeconomics, News, Education, Waldock, Georgetown, Microeconomics, Luigi Zingales, Zingales, Finance, Ucpn

4.5 • 584 Ratings

🗓️ 21 August 2025

⏱️ 54 minutes

🔗️ Recording | iTunes | RSS

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Summary

For decades, private equity has been the darling of pension funds, university endowments, and sovereign wealth funds, promising high returns and low volatility. Now, President Donald Trump has made it possible for everyday investors to get in on the magic with his executive order, "Democratizing Access to Alternative Assets for 401(k) Investors.” The order relieves regulatory burdens that limit the access of defined contribution plans, like 401(k)s, to alternative assets such as private equity (but also cryptocurrency and real estate). The hope is to give American workers access to greater choice, diversification, and potential growth towards a comfortable retirement. But Trump's order comes just as longstanding questions about private equity’s promise of high returns and low risk are coming to the fore. Has the distribution of returns slowed to a trickle? What does data actually say about private equity’s performance, and where is the industry headed? There is also a long standing debate whether private equity is good for society, independent of financial returns. Is private equity actually a ponzi scheme that now threatens the retirements of millions of American workers? To make sense of it all, Luigi and Bethany are joined by Dan Rasmussen, an experienced investor and author who began his career in private equity but has emerged as one of the most prescient critics of the industry. Together, the three of them distill what the state of the industry means for the future welfare of investors, workers, and the American economy as a whole.

Transcript

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0:00.0	The S&P 500 is at all time highs and the stock market is booming and the economy seems to be booming. And for some reason, private equity can't sell their deals, right? Like they can't exit their deals. And you're like, well, you know, if these companies are so good, why can't you sell them? Right. Like it seems like a good time to sell. Like it seems like the public markets are doing fine. IPO markets open. maybe these companies just aren't that good, or maybe they paid too high prices for them, right?
0:24.4	I mean,
0:25.0	that's, I think, the sad truth here. I'm Bethany McLean. Did you ever have a moment of doubt
0:32.5	about capitalism and whether greed's a good idea? And I'm Luigi Zengalis. We have socialism for the very rich, rugged individualism for the poor.
0:42.7	And this is Capital Isn't, a podcast about what is working in capitalism.
0:46.6	First of all, tell me, is there some society you know that doesn't run on greed?
0:51.1	And most importantly, what isn't?
0:53.1	We ought to do better by the people that get left behind.
0:56.0	I don't think we should have killed the capital system in the process.
0:59.0	For decades, private equity was the darling of pension funds, university endowments, and sovereign
1:05.0	wealth funds.
1:06.0	It promised high returns, low volatility, and maybe even better companies in the bargain. And now, the Trump administration
1:13.0	has just made it possible for ordinary investors to get some of the magic. On August 7th, Trump
1:19.5	issued a presidential action entitled, Democritizing Access to Alternative Assets for 401K Investors.
1:29.1	His action went on to say, my administration will relieve the regulatory burdens and litigation risk that impede American
1:35.0	workers' retirement accounts from achieving the competitive returns and asset diversification
1:40.9	necessary to secure a dignified, comfortable retirement.
1:45.0	Luigi, isn't that exciting?
1:47.0	You don't need to be a psychologist to hear some sarcasm in your voice.
1:51.0	But you're right, the timing is a bit ironic, to say the least,
1:55.0	because Trump's rulings come just as long-standing questions about private equity are coming to the fore.
2:01.6	Like, why distribution has slowed to a trickle?
	...

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