Private equity are the crows of the economy. They pick off weak / dysfunctional businesses and open space for fresh competition (or for other markets to open up).
this would be somewhat arguable as okay except for their introduction into categories like daycare, emergency rooms, drug and alcohol rehab, care homes for the geriatric and disabled, etc. things that probably shouldn’t be profit oriented to begin with yet are and are being snatched up by private equity, worsening outcomes in basically all of them
"shouldn't be profit oriented" is another way to say "costs will quickly grow exponentially", because there's absolutely no incentive not to let them.
Is anyone better off if elderly care becomes too expensive to offer at scale?
Unfortunately, this type of conflict can only be adjudicated by courts, which low-income people don't have the time and money for. You couldn't just walk out of the store with the items. You'd need to either: 1. Buy the items and sue. 2. Take the items without paying, likely get the police called on you, and defend yourself in criminal and civil court.
Theoretically there is a third option, stay in the store near the cash register and call the police to come deal with it on the spot before the purchase. The problem is that they probably won't bother coming, and if they do, they won't come quickly enough to make it worth waiting for them given the amount of money at stake. Edit: Yeah, I did say before the purchase, but I should have said after the purchase when they…
this is a tort not a criminal act - cops wouldn't/couldn't do anything.
I see you're not terribly familiar with Costco. Membership fees account for the vast majority of net operating income for Costco and they keep markups on items at no more than 14% over cost (15% for Kirkland brand). So yes, Costco does make most of its profit by ensuring customers are happy and continue to renew their memberships every year.
>Membership fees account for the vast majority of net operating income for Costco This is financially illiterate because you're mixing revenue ("membership fees") with profit ("net operating income"). While it might be tempting to assume that membership fees is pure profit for them, it's not, because people only buy memberships because they're useful for something (ie. shopping at their stores). Therefore you can't s…
It seems to amount to a similar principle, that their business model depends on repeat customers, and would fail if they lost trust.
I much prefer this to stores that are happy to burn customers, never expecting to see them again.
Has private equity ever done anything good for anyone outside of the investors?
I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care about juicing next quarter's earnings.
The big difference is the extent to which PE will go to juice the quarters earnings. Public companies cannot and will not just fire all staff, fleece customers to the point they won’t return and take on debt that they have no intention of paying back. PE will do all of the above and more if it means they get their money. Which means, you as a customer get screwed over more when PE is involved.
Private equity is far worse. It means 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. At least public companies have some diversity in ownership and agenda.
>Private equity is far worse. It’s mean 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. ...as opposed to the average public company? An average company might have more "average joe" shareholders (almost by definition, because private equity is typically off limits to non-accredited investors), but outside of meme stocks, there…
If you’ve ever spoken to employees of a public company that was sold to private equity, you’ll know how much of a difference there is. It is a significant difference.
The sad thing is, people in rural areas that depend on places like Dollar General, and are getting fleeced blame everyone but republicans and they are usually in red areas
I’ll bite… I live in a rural area with a Dollar General about a half mile from my neighborhood. For staples, it’s honestly fine. You want a 6 pack and some hot dog buns because you missed it in the Wal-Mart run the other day (15 miles away), it’s great! You’re not getting fleeced and if you are, the gas savings alone more than make up for it (0.65 per mile per the IRS.) For folks who depend on the local DG for, idk,…
Being in a shopping rich area, I have some luxury of choosing what I get where. DG is a good option for a small list of items, about ½% of my shopping.
But it'd be awful if my best shopping option was 15mi away.
I see you're not terribly familiar with Costco. Membership fees account for the vast majority of net operating income for Costco and they keep markups on items at no more than 14% over cost (15% for Kirkland brand). So yes, Costco does make most of its profit by ensuring customers are happy and continue to renew their memberships every year.
>Membership fees account for the vast majority of net operating income for Costco This is financially illiterate because you're mixing revenue ("membership fees") with profit ("net operating income"). While it might be tempting to assume that membership fees is pure profit for them, it's not, because people only buy memberships because they're useful for something (ie. shopping at their stores). Therefore you can't s…
It’s kind of a meme; Costco’s profits are almost exactly the same as their total revenue from membership fees, which leads people to think that the warehouses run at zero margin and the fees are their only profit source. The fees certainly give them room to run the sales at extremely low margins (though large grocers like Kroger only have something like 3% margins), but it wouldn’t take a huge shift in purchasing patterns to change this coincidence. If all the people who don’t use their membership that much dropped them and those who use them were all large-scale buyers, they would have to increase their prices just to give themselves a bit of cushion.
Has private equity ever done anything good for anyone outside of the investors?
Private equity are the crows of the economy. They pick off weak / dysfunctional businesses and open space for fresh competition (or for other markets to open up).
As far as I’ve seen that’s as far from the truth as it can be. They in fact consolidate terrible businesses, undercut the good ones and drive them out of the market until only they are left, after which point, they get even worse.