Private equity bought America's essential services

Run from investing in PE, run as fast as you can.

I (and leaders at my PE-owned company) cannot say enough bad things about private equity. How anyone who managed to make money in their life decides PE is a good investment blows my mind.

We are now on our 5th PE firm in 10 years, and just completed a "PE lifecycle" of buy -> merge -> sell -> part out -> merge.

None of these PE firms bring anything to the table. Even the hundreds of billions AUM giants. They have zero interest in tangibly improving the company, and lots of interest in cheap window dressings meant to fool other PE firms. Not that they could do much else, because it's mostly business grads with minimal real world exposure, and hunger to be rich above all else.

The most critical thing to understand is that they pay themselves "advisory and oversight fees" for the incredibly difficult work of increasing sales targets 300%. These fees can eat 10% of our revenue, and is one click above theft. Trust me, they will lay-off 75% of the company before even considering cutting back their personal take. Never mind the fees they take from investors too. They bill both sides.

Also, if they kill some of the companies they acquire, it's the investors loss. It is not their loss. They still collect all their fees just the same.

There is a total misalignment between investors and PE firms, where PE firms just want to maximize their looting while investors think they are actually trying to improve the acquired companies. If the invesotrs do see gains, it's mostly because the firm successfully conned another firm into overpaying.

Run from investing in PE, run as fast as you can. Recently they changed the law to allow regular people to have PE in their retirement. They are running out of useful idiots, and want access to the general public. DO NOT FALL FOR IT

In my experience, most self-proclaimed "capitalists" either lap up the scholastic propaganda that capitalism is the 'bestest' economic system in the world, or are a real capitalist and don't have to give one fuck about what others say.

And most of these types NEVER read past, say, page 20 of https://www.gutenberg.org/files/38194/38194-h/38194-h.htm , Adam Smiths treatise on capitalism. Here's a few failures that Smith wrote back in his initial treatise in 1776. I think so far, we're failing every one of these, and basically speedrunning all the terrible warnings Smith wrote about as accomplishments.

Gross inequality was even mentioned there as something to significantly avoid. Book I, Ch. X, Part II; ~p. 50

Principal-agent problems in joint-stock companies. Managers of other people's money "cannot be expected to watch over it with the same anxious vigilance" as owners, leading to waste and negligence. Book V, Ch. I, Part III; ~p. 312-313

Mercantilist policy distortions. Protectionism, export bounties, and import restrictions enrich narrow merchant interests while reducing national wealth by intentionally misallocating capital. Book IV, Ch. II-V; ~p. 183-213

Underprovision of public goods. Markets fail to supply infrastructure (roads, bridges, canals, harbors) and institutions that benefit society broadly but yield no direct profit to private actors. Book V, Ch. I, Part III, Art. I; ~p. 303-305. https://www.independent.co.uk/news/world/americas/us-cities-...

Dehumanizing effects of extreme division of labor. Repetitive specialized labor "renders [the worker] as stupid and ignorant as it is possible for a human creature to become," impairing civic and moral capacities. Book V, Ch. I, Part III, Art. II; ~p. 324 . Even in the 1800's this got so bad that Karl Marx wrote about this in both of his critique of capitalism AND the communist manifesto.

Merchant collusion and monopoly power. Smith warns that "people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices". Book I, Ch. X, Part II; ~p. 54 . Hello, eggs, meat packers,oil products (gasoline), grocery chains, electronics (RAM), health care. Collusion after collusion, and almost no enforcement.

Im not communist, and probably not socialist. But its clear as day as to the failures of capitalism. And as a stopped clock is right 2x a day, capitalism does handle some problems better than any previous system. But we can do better. Lots better. But the entrenched power holds on to capitalism as fervent as a religion, and not dispassionate analysis.

so basically the principal - agent problem turned up to 11?

It really was not. Go look at the success rate of enforcement.