Economy, Law, and Entrepreneurialism: A Conversation with Sam Zell

On April 3, 2012, the Law School hosted a timely discussion with Sam Zell, one of the world’s leading investors, on "The Economy, Law and Entrepreneurialism." Zell, whose investment interests span real estate, energy, logistics, transportation, media, and health care, was joined in conversation with Dean Michael Schill.

Zell is one of the most insightful analysts of economic trends, whose successful investment strategy has made him a perennial member of Forbes billionaire list. Zell founded Equity Group Investments (EGI), the private entrepreneurial investment firm, more than 40 years ago. EGI created one of the largest real estate investment trusts (REITs) in history. He also is chairman and co-founder of Equity International. EI has invested in 22 portfolio companies, including homebuilding, retail, warehousing, distribution, office, hospitality, self-storage, senior living and specialty finance sectors spanning Latin America, the Middle East, Asia Pacific and Europe.

Previously, Mr. Zell served as chairman for Equity Office Properties Trust (EOP), the largest office REIT in the U.S. EOP was sold in February 2007 to The Blackstone Group for $39 billion in the largest private equity transaction in history at the time.

Among Zell’s investment “fundamentals” are these maxims: “When everyone is going right, look left.” “Look for good companies with bad balance sheets.” “Liquidity=Value.” “Understand the downside.” Mr. Zell serves on the JPMorgan National Advisory Board; the Eurohypo International Advisory Board; the President’s Advisory Board at the University of Michigan; the Visitor’s Committee at the University of Michigan Law School; and with the combined efforts of the University of Michigan Business School, he established the Zell/Lurie Entrepreneurial Center. Mr. Zell’s continual assistance to Michigan’s MBA program has also enhanced the Business School’s Polish Studies Program. He was appointed a DeRoy Visiting Professor in Honors at the College of Literature, Science and the Arts at the University of Michigan. He is a long-standing supporter of the University of Pennsylvania Wharton Real Estate Center, and has endowed the Samuel Zell/Robert Lurie Real Estate Center at Wharton. Mr. Zell has also endowed the Northwestern University Center for Risk Management.

A native Chicagoan, Mr. Zell is a graduate of the University of Michigan and the University of Michigan Law School. He began his career in real estate as an undergraduate at the University by managing apartment buildings throughout Southeast Michigan.

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Mr. Zell's views on Equality

It is a shame that there are so many people like Mr. Zell who don't really understand what income inequality actually means.  

Yes, it is true that we are not all the same, some are smarter, some taller, some better looking, and status is indeed important and those that excel do deserve to be rewarded, but the situation today, with regard to the monetary disparity, it has become so lop-sided that there are simply not enough resources circulating for a majority of people to at least have a good living and to even start a business what with onerous regulation that were written by large corporations specifically to crush competition from small business, is daily becoming completely out of reach.  

And when he states that the only safety net we need is for the poor to not have to pay taxes, well I almost choked.  If they are not earning enough to pay income taxes, it is because they are barely earning enough to survive and besides, everyone has to pay some taxes such as local sales taxes and taxes already built in to the cost of an item purchased.   

But History is, if nothing else, consistant and cyclical and this is not the first time in  that income inequality has happened and it certainly won't be the last that the economic games have been rigged, but in each case where the inequality reaches a level where there are only the poor and the rich what happens is a revolution and what happens to the 1%?  Well I will leave that for you to research but you don't have to go much farther than the French Revolution and the phrase "Let them eat cake".