“Thirty years ago, the Anglo-American capitalist system was the apartment block everyone in the world admired,” Lady Lynn Forester de Rothschild told a gathering of business and political influentials gathered on the 28th floor of Bloomberg LP’s Lexington Avenue office tower on Thursday morning.
“Now, that apartment block has really nice apartments up on top. In the middle, they’re kind of cramped and dowdy, and on the lower floors, they’re underwater. But the worst part of it is—the elevator’s broken.”
The metaphor wasn’t hers (she’d borrowed it from Harvard economist Larry Katz), but the morning was. Wearing a slim-fitting sleeveless dress and lots of gold, Ms. de Rothschild was welcoming guests to the U.S. launch of something called the Henry Jackson Initiative for Inclusive Capitalism. It was less a think tank than a movement, less a movement than a platform for a double-edged idea: That everyone should benefit from gains made by the capitalist system, and that it’s good for capitalists when everybody does.
The initiative, which grew out of the Henry Jackson Society, a right-leaning British foreign policy think tank named after the Cold War-era American senator, has some recommendations: corporations should invest in training workers for the jobs they’ll need filled in the future, nurture small- and medium-size businesses, and take a long-term view of creating value for shareholders.
But those ideas seemed less important than bringing business leaders together to address a more central concern: In an era of rising income inequality and grim economic outlook, people seemed to be losing confidence in capitalism altogether.
Inclusive capitalism, it turns out, has a pretty exclusive following. Former Treasury Secretary Larry Summers gave the keynote address at Thursday’s launch. Former Fortune 500 CEOs Bob Nardelli and James Robinson III attended, along with an assortment of executives, entrepreneurs, scholars and consultants. Their central question: What could they do to revive an economy in which smart, hard-working people were losing faith in the idea of earned success?
“You have college-educated kids who aren’t finding jobs,” Ms. de Rothschild, 58 and currently CEO of the private investment firm E.L. Rothschild, told us later. “You do that for too long as a society, and people start questioning whether the system works, and then the system becomes something else. Now we have 25 percent of 18- to 24-year-olds thinking this system isn’t working. I am not happy with that.”
Later, Ms. de Rothschild was sitting in the perfumed living room of her duplex in the River House, an East Side co-op of such refined reputation that management has long discouraged brokers from the naming the building in advertisements. In another era, the co-op was famous for turning down Diane Keaton and Gloria Vanderbilt over the company they kept. Blackstone co-founder Peter Peterson and former Salomon Brothers chief John Gutfreund have moved, but Ms. de Rothschild’s friend Henry Kissinger still lives downstairs.
It seemed an exalted place to talk about the gap between rich and poor even before Ms. de Rothschild’s husband, Sir Evelyn, wandered down the stairs in shirt and tie, looking as if he’d just awoken from a nap.
“I thought your American visitors might enjoy this,” he said to his wife, then recited from the printed page in his hand: “I believe that banking institutions are more dangerous to our liberties than standing armies.” Did we know who wrote that? Thomas Jefferson!
“He was remarkably far-sighted, and of course, he had excellent taste in wine,” Sir Evelyn told us. (Unfortunately, none was offered.)
Back, then, to the issue on Ms. de Rothschild’s mind: that today’s under-25 set is doomed by student debt and joblessness to the point of dire national pessimism. It wasn’t that way when she grew up. Few have so thoroughly conquered the American dream as Ms. de Rothschild, who went from a modest childhood in New Jersey to make millions in telecom and then ascend, not merely to the 1 percent but to the upper-upper reaches of American business and politics. Introduced by Mr. Kissinger to a member of one of the world’s wealthiest families, she married British banking scion Sir Evelyn (financial advisor to Queen Elizabeth II) in 2000, and honeymooned for a night at the Clinton White House.
“I wish everyone could live the life I’ve led,” she told us. “It’s not a life you have, then close the door on the rest of the world. There’s a very hot place in hell for people who do that.”
It’s de rigueur to describe Ms. de Rothschild as one part knockout, one part business tycoon. Two years ago, she decided that a woman her age could do the job of an NFL cheerleader. And such a woman could, it turned out—if she was friends with Jeffrey and Christina Lurie, who own the Philadelphia Eagles, and the type to charm her way onto the field and then work hard enough to keep up with women half her age. (In telling the story, Ms. de Rothschild flexed a bicep to prove she hadn’t given up her training regimen.)
If she could use her connections to get onto the 50-yard line at the Eagles’ Lincoln Field, she could probably leverage her friends for a more elevated cause. As she told the business leaders assembled at Bloomberg headquarters on Thursday morning, “We are pretty much all children of the ’60s. Our definition of virtue was, ‘Let’s stop the war in Vietnam, let’s end sexism, let’s end racism.’ Now we have the power and influence to actually do something.”
As recently as four years ago, Ms. de Rothschild might have sought to change the world by playing in politics. She was the first employee of Pat Moynihan’s senate campaign in 1976. In the 1980s, she traveled in Democratic party circles with her husband Andrew Stein, the Manhattan borough president.
Now, however, the political wells have been tainted. In 2008, she raised money for Hillary Clinton, refused to support President Obama and voted for John McCain. (She famously called President Obama an elitist, which some saw as a strange slam coming from a woman who puts Lady in front of her given name and de Rothschild after it.) Despite Bill Clinton’s stumping for Obama at the Democratic National Convention, she told us she plans to vote for Mitt Romney next month, though she wasn’t overly enthusiastic about the prospect.
“Politics is part of this despair that we’re in,” she told us. “I don’t blame it on one or the other. They’re both in this together.”
Ms. de Rothschild was raised 19 miles from the River House in the bedroom community of Oradell, N.J., a town of white picket fences and Country Squire station wagons. Her father was an Air Force veteran who went to work managing an electrical cable company. He started an aviation business out of Teeterboro Airport, but it wasn’t with any grand vision in mind. “He couldn’t have spelled entrepreneur,” Ms. de Rothschild told us. “He was putting food on the table.”
Her mother raised four children, played piano at church and attended New York Giants games. “I told her I wanted to be a stewardess once, and she said really that was just a waitress in the sky,” Ms. de Rothschild said. Still, her parents didn’t have extravagant ambitions for their children. “They wanted us to be saved by Jesus Christ and have happy, healthy lives.”
Ms. de Rothschild graduated from Columbia Law School in 1979 and accepted a job at the white shoe firm of Simpson, Thatcher & Bartlett. She came to specialize in the nitty-gritty details of telecom deals, and then went to work for her most successful client, the visionary telecom mogul John Kluge, who had turned a series of investments in radio and television stations into what was at the time America’s largest fortune. In 1989, when Mr. Kluge was in the process of breaking up his company, Ms. de Rothschild asked him to look at a Puerto Rican company. The billionaire said he wasn’t interested, but suggested she buy the business herself.
“I said, ‘I can’t buy it, I have no money,’” she told us. “He said, ‘It’s not a problem, you raise the money,’ and I did.”
These were the early days of wireless technology, when even she thought “cellular” was a biotech term. By the time she sold her first company in 1995, it was said to be worth $100 million. Meanwhile, Ms. de Rothschild had begun requesting government concessions for the frequency spectrum that would eventually be used to deliver wireless broadband service. Bigger players crowded into the business, and Ms. de Rothschild struck a deal with Teligent, netting herself a reported $100 million in cash and stock.
“I never doubted that a middle class girl whose father was working two jobs and didn’t have a university degree could be top of her class in high school, get to top college, get to top law school, and be as successful as I wanted to be,” she said. “Why did I have the view I had? That was the zeitgeist; that was the world I was in.”
Of course, there are many groups in many rooms with many ideas on how to lift the current malaise. Dr. Laura Tyson, a professor of economics at Berkeley’s Haas School of Business, says the Henry Jackson Initiative is different, owing to its C-level focus on jobs—and its “high-energy and creative” leader. “She’s very smart, and she understands business issues,” Dr. Tyson told us. “She’s got all the ingredients to make this a success.”
Up in the River House, the living room offered a close-up view of Louis Kahn’s newly built Four Freedoms Park, a memorial to Franklin Delano Roosevelt. Ms. de Rothschild and her husband paid for a line of Littleleaf Linden trees leading up to the monument, a gift made with one eye toward the river and one eye to the past, when FDR allowed British children to seek refuge in the U.S. ahead of the Battle of Britain. Sir Evelyn was one of them, she told us.
“I haven’t always had money, but I’ve always had hope,” Ms. de Rothschild said. “I think that a lot of kids have neither money nor hope, and that’s really bad. Because then they’re going to get mad at America.
“What our hope for this initiative, is that through all the efforts of all of the decent CEOs, all the decent kids without a job feel optimistic.”
At the very least, they’ll have a new cheerleader.