This mindset is happening in the public sector too! I quit teaching in public education after 17 years because the school board and superintendent of my small town had exactly that attitude - we are richer than teachers so we are smarter than teachers. Rather than thinking about how best to serve our community, they were so obsessed with saving money and not listening to teachers that our once amazing school system rapidly tumbled to the bottom. It is very hard for people without $ to serve on school boards because it is a lot of time for meetings, etc which is unpaid. So the wealthier folks show up with crackpot ideas about saving money but that is absolutely not why school districts exist! (Every year they made massive financial mistakes and hid money from us!)
Since the late 1970s and early 1980s, the notion of looking after the interests of shareholders took precedence over the interests of stakeholders (employees, the communities being served, etc.). As a consequence, company managers were given stock shares to help align their interests with that of most shareholders, Reagan cut the highest marginal tax rates from 70% to 50% (and then 28%) and inequality surged.
Sounds like the same for private equity as for public corporations. Making money became the be-all and end-all, and the losers were the people who had a "stake" in business, but not so much in the financial side of things.
2. I'm a new grandpa. My daughter gets 6 months maternity leave (4 months fully paid, I think) from her woman owned company and my son-in-law gets 2 weeks paid and 12 weeks (California mandatory) from his "bro-oriented" company.
I've always thought that for-profit entities in the business of caring for humans -- e.g., healthcare, prisons, ... -- should not exist. They are led by the thirst for profit to make decisions that do not result in improving the care of people. This helped me see that all businesses are about the care of people, directly and indirectly (jobs, families, communities). Proper capitalism should be about what is best for consumers, employees, and communities. It seems that private equity cares little for consumers, employees, and communities and is all about making themselves wealthier.
I mistakenly signed up for your blog/substack a couple of days ago, and then wrote you asking if I could back out and be reimbursed the $150. I confused you with a niece's substack. Did you receive that email?
Private equity ruins everything and everyone. The only thing the consumer gains from PE acquisitions is poor service and worse products. The demise of the Whataburger chain in Texas comes to mind.
When I worked in supplier quality, a supplier going under PE ownership was usually a red flag that the quality was about to go down. Usually cutting costs in manufacturing correlates with worse quality.
Great post. I never realized how pervasive PE is across the board. Although I did witness first-hand how private equity (via their restructuring of Gannett) killed the Community section of the NJ newspaper I worked at as a cub reporter. I never realized how vital local coverage like that was until it was gone. They kept the local police blotters and some of the larger county news, but the feeling of a hyperlocal newspaper was gone, the awareness of local community was gone, and within months it was barely distinguishable from USA Today.
Listen to Jesse Welles “the Poor”
This mindset is happening in the public sector too! I quit teaching in public education after 17 years because the school board and superintendent of my small town had exactly that attitude - we are richer than teachers so we are smarter than teachers. Rather than thinking about how best to serve our community, they were so obsessed with saving money and not listening to teachers that our once amazing school system rapidly tumbled to the bottom. It is very hard for people without $ to serve on school boards because it is a lot of time for meetings, etc which is unpaid. So the wealthier folks show up with crackpot ideas about saving money but that is absolutely not why school districts exist! (Every year they made massive financial mistakes and hid money from us!)
Excellent. Thanks.
Since the late 1970s and early 1980s, the notion of looking after the interests of shareholders took precedence over the interests of stakeholders (employees, the communities being served, etc.). As a consequence, company managers were given stock shares to help align their interests with that of most shareholders, Reagan cut the highest marginal tax rates from 70% to 50% (and then 28%) and inequality surged.
Sounds like the same for private equity as for public corporations. Making money became the be-all and end-all, and the losers were the people who had a "stake" in business, but not so much in the financial side of things.
Time for more employee ownership.
Privatize the profits, socialize the cost.
Two non-post-related notes:
1. The Rocky Mountain Woodturning Symposium is featuring an all woman lineup this year: https://rmwoodturningsymposium.com. Woodturning is a really fun and rewarding hobby, and there are amazing women artists who are leaders. Also see: https://www.woodturner.org/Woodturner/Woodturner/WIT/WIT-Home-Page.aspx
2. I'm a new grandpa. My daughter gets 6 months maternity leave (4 months fully paid, I think) from her woman owned company and my son-in-law gets 2 weeks paid and 12 weeks (California mandatory) from his "bro-oriented" company.
Congratulations on the grandkid!
Thank you! I will buy this book!!
I've always thought that for-profit entities in the business of caring for humans -- e.g., healthcare, prisons, ... -- should not exist. They are led by the thirst for profit to make decisions that do not result in improving the care of people. This helped me see that all businesses are about the care of people, directly and indirectly (jobs, families, communities). Proper capitalism should be about what is best for consumers, employees, and communities. It seems that private equity cares little for consumers, employees, and communities and is all about making themselves wealthier.
Lyz,
I mistakenly signed up for your blog/substack a couple of days ago, and then wrote you asking if I could back out and be reimbursed the $150. I confused you with a niece's substack. Did you receive that email?
Stuart Hurlbert hurlbert@sdsu.edu
Private equity ruins everything and everyone. The only thing the consumer gains from PE acquisitions is poor service and worse products. The demise of the Whataburger chain in Texas comes to mind.
When I worked in supplier quality, a supplier going under PE ownership was usually a red flag that the quality was about to go down. Usually cutting costs in manufacturing correlates with worse quality.
Excellent piece. Looking forward to reading the book.
Great post. I never realized how pervasive PE is across the board. Although I did witness first-hand how private equity (via their restructuring of Gannett) killed the Community section of the NJ newspaper I worked at as a cub reporter. I never realized how vital local coverage like that was until it was gone. They kept the local police blotters and some of the larger county news, but the feeling of a hyperlocal newspaper was gone, the awareness of local community was gone, and within months it was barely distinguishable from USA Today.
Thanks Lyz, great deep dive on a very interesting topic, esp that rural hospital in Oskaloosa.