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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#481

Post by vasco »

spyckie2 wrote: post #408
bondarchuk wrote: post #379

Earlier quoted context omitted.

I don't get it. If pensions stopped existing, would people stop doing PE even though it's profitable? If it is possible to get outsized returns "because pensions need them" then isn't somebody gonna notice and get those returns anyway, pensions or not?

Slavery is profitable. People only stopped doing it when it was perceived as immoral. Lots of things are profitable but immoral. People will do crazy immoral and illegal stuff for money, but we outlaw and slander the more abusive stuff, like monopolies and such. If it wasn't pensions that were funding PE, I'm sure PEs would get a lot more criticism and would not be allowed to do what they do.

Misconception, slavery is not profitable if you do it in your own country with a massive base because those people aren't economically active and don't buy much with their non existing money. In fact many historians argue slavery ended due to capitalism, not morals.

Yes you can pick up cotton at a lower labor cost with slaves, but you can't charge the slaves rent, sell them useless clothes, tax them, etc.

Re: Private equity bought America's essential services

#482

Post by mbesto »

the_sleaze_ wrote: post #385
alexpotato wrote: post #376

Earlier quoted context omitted.

> By year 3 they start the squeeze, layoffs, asset selloffs (stripping), and lowering quality, raising prices. That is where the real teeth of wolf are shown. To play devil's advocate: Doesn't this also open the market to new entrants? e.g. young person looking to start a HVAC company in the old days couldn't compete with the established firm that already had contracts and the local market wasn't big enough for two p…

As long as customers choose services based on quality. The HVAC for example - the large firms around you do not run HVAC/plumbing/electrical, they run marketing companies that happen to schedule and bill H+P+E service appointments. That being said I've never heard or encountered a single services company in the US that can't find business, in fact it's the opposite. They're trying not to drown themselves in front of…

> As long as customers choose services based on quality.

If the market doesn't reward this then maybe quality isn't important to the customer. Could be price, location, availability, etc. - PE can absolutely create that value even when they roll up 70% of your local HVAC market.

Re: Private equity bought America's essential services

#483

Post by mbesto »

bondarchuk wrote: post #379
spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

I don't get it. If pensions stopped existing, would people stop doing PE even though it's profitable? If it is possible to get outsized returns "because pensions need them" then isn't somebody gonna notice and get those returns anyway, pensions or not?

> would people stop doing PE even though it's profitable?

No but there would be a lot less PE dry powder available. To the parent's point - there is currently a trillion dollars in dry powder that is allocated to acquiring businesses. If that trillion dollars drys up then less businesses get acquired - it's that simple.

Re: Private equity bought America's essential services

#484

Post by [deleted] »

amazingman wrote: post #477
BirAdam wrote: post #459

All of the oldest folks I knew were wrong about many things, but they were right to say that morality must be at the center of all public discourse. Pensions were part of the contract of employment for many old companies. As those companies became more interested in ever higher rates of return without offering higher value to customers, the companies became fragile. Becoming fragile, they were eventually broken. Then…

>All of the oldest folks I knew were wrong about many things, but they were right to say that morality must be at the center of all public discourse Most of the Trump supporters most everyone here knows are also the oldest folks they know. Funny that.

[deleted]

Re: Private equity bought America's essential services

#485

Post by toast0 »

thmsths wrote: post #272
smallmancontrov wrote: post #135

Earlier quoted context omitted.

Progressive business taxes. At a certain income level, natural pressure starts mounting to split.

Not a bad idea honestly. Would be interesting to see how it affects tech companies since they rely on hypergrowth. My one worry is that instead of divesting they would just play shell games with complex ownership structures.

Most big tech could relatively easily split into meaningful separate entities. These are all going to be contentious, but ...

Looking at the companies on the top image for https://en.wikipedia.org/wiki/Big_Tech ... it's outdated, but close enough.

Apple: Computers, Phones, maybe even break out Operating Systems

Microsoft: Hardware, Gaming, Operating Systems, Office/other software, Cloud Services, Consulting

Alphabet: Google Search, Ads, Android, Chrome, Cloud Services, Other consumer services, Waymo

Amazon: Retail, Warehouse, Shipping, Cloud Services

Tesla: Cars, Batteries, Charging Network, Solar, Scammy bullshit

Berkshire Hathaway: it's a holding company, spin out the big holdings

Nvidia (this one is tougher): Ethernet, Video Cards, AI cards; maybe chipsets vs cards?

Meta: Facebook, Instagram, WhatsApp. Or ... split out the internal Cloud Services from the frontends.

TSMC: I dunno what to do here, but it's also not a US corp, so yeah. You could spin off fabs by node maybe.

United Health: not a tech company, but Insurance (possibly spin out regionally), Regional Healthcare Providers, Pharmacy Stuff

There's potential to break up some of the other companies along regional lines, like the Baby Bells ... but IMHO, that doesn't make that much sense for most of these.

Have some sort of phase-in, but if ownership between formerly related companies remains similar, contracts between them need to be a) public, b) terms must be available to others (FRAND). For cases where the spun-off companies are still market dominant (a lot of what I've suggested), constrain the company from entering other markets; this doesn't end the monopoly, but it prevents using one dominant position to establish another.

Re: Private equity bought America's essential services

#486

Post by sleight42 »

slibhb wrote: post #418
no_wizard wrote: post #264

Earlier quoted context omitted.

I don’t see how they were ridiculous on the face it. The economy during that regulatory period grew into a huge juggernaut. Most of the R&D that laid the future of the world happened during that period. The middle class grew to its largest portion during that period. I don’t think the economy was hamstrung in the least

Rose colored glasses. The classic example is airline deregulation which happened under Carter. The real cost of flights is way, way down since then. But this doesn't stop people from complaining about how "flying is a worse experience now" and wishing for a return to inane regulations.

Were you alive in the 80s? Flying really was better back then. The food was edible. The seats weren't optimized for torture.

"Inane regulations", however misguided, generally exist to prevent the Torment Nexus. PE devolves companies into the Torment Nexus to create more profit.

Re: Private equity bought America's essential services

#487

Post by ChaseMeAway »

kokanee wrote: post #471
BirAdam wrote: post #459

All of the oldest folks I knew were wrong about many things, but they were right to say that morality must be at the center of all public discourse. Pensions were part of the contract of employment for many old companies. As those companies became more interested in ever higher rates of return without offering higher value to customers, the companies became fragile. Becoming fragile, they were eventually broken. Then…

We need to figure out how to effectively organize boycotts, and find a way to actually incentivize participation. I'm spitballing here, but what if we created a browser extension that gives users the option to block various monopolistic/oligarchic tech platforms. If the browser navigates to a blocked platform, we show a "consider these alternatives" page instead. Competitors to the monopolies could offer incentives (…

I was working on something adjacent to this for a little while.

It was a Chrome extension which allowed a user to upload a list (pluggable community-maintained lists, akin to ublock). It would light up when a user was on a site in the list with details about the site, the ownership/board, recent news, etc.

It also had a space for recommended alternatives. I built it because I was tired of giving money to companies who used the profits to make society worse.

I’d be down to pick up work on it again and get development going in the open or shift to work on the more commercial oriented design you describe. Lmk a good way to reach you if you’re open to it.

If you’d rather I can set up an email for this alias I just don’t have one handy to post publicly at the time of writing.

Re: Private equity bought America's essential services

#488

Post by sleight42 »

trollbridge wrote: post #102
palmotea wrote: post #81

Earlier quoted context omitted.

> How will that work - for example Y Combinator classes. They cannot be acquired? For the record: national economic policy shouldn't revolve around Y Combinator classes and similar startups. I'm totally fine if it turns out a sensible antitrust policy completely destroys the acquisition exit pathway for tech startups. I'm not saying one will, but I'm saying that's a cost I'm willing to pay.

YC startups could just become mature businesses. Nothing wrong with providing a good service, earning a good profit, and employees maturing into stable careers.

But we can't have that because then we'd be wasting potential profit. /s

Re: Private equity bought America's essential services

#489

Post by casey2 »

I haven't read enough Marx to see the thread between PE and a firetruck not being maintained properly or tested before use.

It's a good thing that profit margins for manufacturing have increased, it's a bad that cities don't want to pay what a firetruck is worth in a post-industrial country.

Re: Private equity bought America's essential services

#490

Post by aidenn0 »

bombcar wrote: post #303
aidenn0 wrote: post #230

Earlier quoted context omitted.

Many government employees have pensions. Most of the ones I know are also ... skeptical of the future solvency of those funds by the time they retire.

Most (if not all) gov't pensions still have the defined benefit part as the "optimal" choice even when they offer defined contribution plans. They can also offer some really nice benefits like accessing your pension income at 55 which can be a substantial portion of your last year's salary, and you can keep working elsewhere if you want.

I have a close friend who absolutely would have taken a DC plan if it were offered, since he does not believe the city he works for will be able to meet its financial obligations. It was not offered. Granted I haven't talked retirement with him in about 10 years, so it's possible a DC plan is offered now.
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