Something that seems to be skipped over in many private equity discussions is the nature of business growth and development in general. A business grows like a plant from some sort of seed which can take decades. To take the analogy further, there are some cases where a tree is dying and in danger of falling on someone's house or the branches are threatening traffic. But the argument that private equity firms are doing a valuable service is misinformation. Their goal is to make profit, they don't generally make more money from companies that are failing and need to be dismantled, they may be more likely to get access, but if they are given access to a company that is getting by ok or that is simply having a bad year, they don't take the moral path and think about what is good for society in the long run. The best example is US industry in the rust belt. The factories and plants (hey analogy pun) that they dismantled and sold off there took decades to build up, they were supporting large parts of the local, state and national economy. They were built in part with public funds. Some of them may have been operating at a loss but that may have been temporary, economic slowdowns are common but not permanent. The idea of simply sacking hundreds of workers is bad for everyone. What those industries needed was to be modernised, which would have cost a lot of money in the short term, but resulted in long term benefits across the board after a decade or so. Even worse, they didn't just sack the workers, they sold off everything that wasn't nailed down, sometimes just for scrap. Destroying something that has that level of social investment over that length of time is unconscionable. Even in a working capitalistic system the companies that own them could go bankrupt, without the buildings and machinery needing to be melted down or left to rust. The doctor cutting off diseased limbs analogy is wrong, the correct version is doctors taking organs to sell on the black market. Some of them have a modicum of morality and only take them from dead people, some don't make that distinction. In terms of my plant analogy, it can be compared to bulldozing vast areas of rainforest so that they can sell the land to real estate speculators. This is short term greed and it is destructive. Given any failing company that still has valuable assets like skilled workers, machinery, land, infrastructure, there is always a way to make it successful again in the long term, and the gains from doing so are always worth it. There is no short term way to make money from this though. Private equity is nothing short of looting and pillaging, sanitised.
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Topic: American Election Megathread - It's Over (Read 764932 times)