Mediaboss Marketing

Has the unthinkable, the Swedish political scientist Bo Rothstein mused earlier this month, now entered the realm of real possibility? Could democracy in the United States be disappearing?

Millions of Americans are worrying about that same question and we have plenty of cause for worry, everything from gun-toting militias and the continuing dysfunction of an archaic constitutional order to brazen attacks on the impartiality of our election administrators.

Our overflowing list of dangers to American democracy now has another dagger: the private equity industry. New research out of the NYU Stern School of Business and CalTech vividly details how private equity greed grabs in the newspaper sector are eviscerating local news coverage, dumbing down our politics, and undermining our democratic future.

Private equity firms have emerged over recent years as a major player on Americas economic landscape. Private equity-owned companies currently employ nearly 12 million Americans. Overall, the Private Equity Stakeholder Project noted last October, private equity firms held less than $1 trillion in assets in 2004. In 2021, their assets totaled $7.5 trillion.

What exactly do private equity firms do? They typically take on debt to buy up companies and then shift responsibility for that debt to the companies theyve acquired. That, of course, puts pressure on the acquired companies to operate more efficiently, private equitys standard jargon for squeezing workers and shortchanging consumers.

That combination has helped turn private equity, observes the Private Equity Stakeholder Project, into a billionaire factory thats creating eye-popping wealth for the executives perched at its summit.

Between their yachts, mansions and private jets, the Project adds, these private equity executives live some of the lushest lives of anyone on the planet.

Progressive lawmakers in Congress last fall introduced legislation that targets the most glaring outrages in the private equity playbook. Senator Elizabeth Warren, a sponsor of that reform legislation, gave those outrages an apt rundown.

Private equity firms, she related, get rich off of stripping assets from companies, loading them up with a bunch of debt, and then leaving workers, consumers, and whole communities in the dust.

The Warren-backed bill, the Stop Wall Street Looting Act, would put private investment fund execs on the hook for the companies they control and empower both workers and the pensions funds that have billions invested in private equity deals. But this legislation has next to no chance of passage in the current Congress.

And that mean more rough times ahead for the industries where private equity has already established a major presence, industries like health care where private equitys rush to cash in has triggered fraudulent activity that includes pushing medically unnecessary services and filing claims for services not provided.

In a just-released new report, Private Equitys Dirty Dozen, the Public Accountability Initiative and the Private Equity Stakeholder Project expose how private equity kingpins like the Blackstone Groups Stephen Schwarzman are investing massively in oil pipelines, coal plants, and offshore drilling. These environmentally hazardous investments, the report points out, only add to the destruction and chaos private equity has created in the retail, restaurant, and prison industries.

But private equitys impact on democracy writ large, suggests the new research from CalTech and the NYU business school, may be even more insidious than the profiteering on display in all these individual economic spheres.

Read more from the original source:
From the Kingpins of Private Equity, A New Dagger to Democracy - Inequality.org