Private equity is devouring the U.S. economy
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Microsoft went public for a valuation of around $300M and is trading over a $1T now. This means that regular investors had a chance at all this growth.
Newer companies like AirBNB and Uber went public at what could be their max market cap valuation of billions so investors wont' get much of a chance to make money from these companies.
In addition to this problem of private investors(VC's) taking most of the profits, we now have such concentration of wealth that the big PE firms can buy alot of what used to be small businesses and roll them up.
Vet clinics, medial practices, engineering firms, etc all use to to thrive on being 20 person shops are now routinely being bought up by PE firms and rolled into larger companies which means far fewer entrepreneurs or chances for up and coming employees to buy into the firm from the founders, which helps stall careers.
Heck you see it now with these firms buying up single family housing in US cities now and then renting them back to people, transforming regular middle class people from home owners to renters, and transferring the home appreciate from the middle and lower class to the PE limited partners ensuring the rich get richer and the middle class disappears even faster.
This will either keep older workers in the workforce longer, preventing younger workers for getting into positions, or it will result in discrimination against older workers who will find themselves unable to get jobs, let go, or laid off to make room for younger, cheaper workers.
The expectation for your 401k is that it's going to grow by 6-8% each year. If there isn't any room for growth in the market then it's going to be hard to deliver that going forward, compounding the problem for later generations who probably won't be inheriting anything from their parents.
The people with insufficient 401k balances aren't making the max. They're doing the minimum, starting too late, or selecting the most conservative investments such as bond funds (NAVs have collapsed) or cash. Many plans don't have good low cost index funds, so people are forced into actively managed funds some of which are complete garbage in terms of fees and returns.
Workers living paycheck to paycheck (61% of the population, see https://www.cnbc.com/2023/07/31/61percent-of-americans-live-...) means that contributions aren't realistic for millions of people.
Further, a lot of people don't understand how they work, and never contribute, even if they could. Even with matching contributions. Or, they don't trust them after the 2008 collapse or a vague suspicion that the system is rigged against them. This is what I hear from my spouse; many of her colleagues won't touch the solid 401k investments offered by their employer.
Some employers have made changes that makes it easier to get started, but many never will, assuming (wrongly) that social security is their retirement solution.
Your predictions about older workers working longer is correct. You can see it now, seniors working at grocery stores into their 70s and even older.
According to US BLS and Federal Reserve studies, only about 15% of the population necessarily lives paycheck-to-paycheck. The median US household has a ~$12,000 surplus per year after all ordinary expenses. Note that "ordinary expenses" includes car payments on a BMW, the latest iPhone, and other by-no-means-necessary expenditures, and also includes all healthcare costs.
If 61% of the US population is living paycheck-to-paycheck, it isn't because they need to. Americans have very high income surpluses compared to the rest of the developed world. 15% of the population necessarily living paycheck-to-paycheck is still a lot of people, but it implies 85% are not.
Consumers can share blame for not living below their means, needless wealth signaling, and financial illiteracy.
But predatory entities are part of the problem, too - car dealers obscuring true costs of borrowing ("how much do you want to pay per month?"), credit card issuers jacking up rates to 37%, and real estate "investors" jacking up rents after buying mom & pop mobile homes and senior rental units knowing that tenants have nowhere else to go. Here's one example from Montana:
“I can’t tell you how many calls I got from folks that were older, like older than 55 or 60, that had lived in their same house for decades, had the same owner for decades who never raised the rent,” Huey said. “Then all of a sudden they lost their housing.”
Huey and other providers across the state have heard countless stories of homeowners turning their rental property into Air-BnBs or evicting their long-term tenants in order to house their own children in increasingly affluent communities.
https://billingsgazette.com/news/state-regional/montana-seni...
"The latest iPhone" is the new "Avocado toast and starbucks". Inflation wise, the iPhone 3GS is only marginally more expensive than the iPhone 15, while delivering far more value. I struggle to understand how ~$75/mo for someone making 100k/year is a deliberating expense for the purpose of wealth signaling especially when that purchase likely delivers far more than $75/mo of actual economic value.
Conversely, those 100k/year earners are likely concentrated in some of the highest CoL areas in the country and simply wouldn't be 100k/yr earners in lower CoL areas. Rent and housing has continue to explode but the idea that these 100k/yr earners are hedonists is starting to feel like a thought terminating cliche to me.
The price of an iPhone has been pretty much constant for 15 years when adjusted for inflation, but 1bdr Rent (adjusted for inflation) in San Francisco is up 60% in that same time period.
Lets say a 100k earner in 2009 did the responsible 30% of income on rent, and spent 2,500/mo. A 100k/yr earner in 2023 would be spending 4,000/mo on a comparable apartment. They might need a roommate, or almost HALF of their income would go to rent. If Earner 1 was saving 10% of their income every month, that would be completely eaten by rent in earner (2) scenario, making them paycheck-to-paycheck. No "iPhones or BMWs" required; and I haven't yet touched the other non-luxury cost of living increases.
That may be true, but even maxing out probably isn't sufficient anymore for most people.
It's not just starting to be broken now; it's been broken for a long time. The 7% average stock market return is completely irrelevant to how people actually invest. And I'm not even talking about irresponsible investing. I'm talking about allocation models (put x% of your portfolio in bonds; more when closer to retirement), and I'm especially talking about how people tend to have less money to invest when times are bad and prices are low, and more money to invest when times are good and prices are high. What use is stocks being on sale if you've been laid off at the same time?
I think if everyone had a practice of tracking the dates and amounts of all their retirement contributions, and calculated APY from their balances, we'd be a lot closer to exposing the huge lies that are at the root of the investment advice communities. If anyone here is deeply embarrassed about barely beating inflation after 20-25 years of investing, you shouldn't be.
I see the people who caused the crisis walking around freely having paid no price for their actions whatsoever. There's nothing "vague" about my suspicion. The government has a responsibility to maintain confidence in markets. They utterly failed in my view so myself and anyone else holding this suspicion are completely correct to do so.
I also get the feeling that insiders front run the market, stealing gains from us, I also get the feeling that most of the volume in the market is driven by people who are not "in it" with me to "earn a retirement" but are instead in a mad dash to grab every lose cent and percentage point on a transaction fee that they can get their hands on.
Uncritically moving the average American over to a 401k was never a smart move as this entire sordid disaster was an obvious outcome given the lax regulatory environment in which the decision was made.
This doesn't mean they are poor. From your cite:
"Of those earning $100,000 or more, only 45% reported living paycheck to paycheck"
It just means they see-money-spend-money.
The biggest problem I have with the 401k is that it was very clearly set up as a tax break for the upper class. It was then extended to be the primary retirement for everyone and it has oh so many footguns and ways to bilk retail investors along the way.
1. It's tied to your employer, and not universally available. 2. Even when it's available, it's not mandatory to save anything. It should at the very least have a decent default contribution with a 'I really know what I'm doing' opt out. 3. Investment options are often active funds with subpar performance and high fees 4. It's too easy for retail investors to panic and sell everything during a downturn.
If the government were really intending to set up a defined contribution retirement plan, they should have just made the TSP available 'at cost' to everyone. Autoenroll everyone at 10% in a 'target date' index fund and don't let them touch it until their 60's unless they have a terminal illness or something. It really is that simple.
This is a non-issue. You can roll it over penalty-free into an IRA when you leave. Anything you contributed is still yours, though there might be a vesting schedule for the employer match.
> Even when it's available, it's not mandatory to save anything.
As long as it's not hard to sign up, I'm an adult. I can save money on my own.
> Investment options are often active funds
My employer has a good plan, and some of the options are Fidelity target date funds. These are great options, and I've been seeing them at more employers. Granted, some might not have these options.
> It's too easy for retail investors to panic
Again, I'm an adult. Every financial advisor says don't do that.
> If the government...
Individuals aren't responsible enough to save money on their own, but the group that couldn't elect a leader for 3 weeks, can barely pass a bill to keep the government running for the next 45 days, plays chicken with the credit limit, and is watching its credit score fall because of these shenanigans is responsible enough?
>> It's tied to your employer
>This is a non-issue.
It absolutely is an issue when half the people in the US do not have access to a 401k
https://www.prnewswire.com/news-releases/new-aarp-research-n...
>I'm an adult.
If you're posting on this site, you're not just 'an adult', you're likely well off, financially literate, are able to delay gratification, and have a great deal more bargaining power than the average joe. No judgement, but that is not most Americans. You know how most publications target an 8th grade reading level? Our retirement plans should target that level of financial literacy as well.
While I don't trust our politicians I do trust the rank and file government employees that serve the american people. I have a tsp account left over from my time with the navy and it is by far the best retirement account I've ever had.
I continued to roll over my 401k's from various employers into an IRA when I changed jobs and now just have the IRA.
The investment choices are often sub-par, and while I can prove nothing, it sometimes "felt" like investment banks would shift losses from their clients into their funds to "spread them out across the retail investors."
This won't matter anyways, or at least it feels that way.
I have no real hope that jobs that open up above me will go to me or someone else in my cohort. What I think instead is one of three things will happen:
1) Those job responsibilities will be split among remaining people as much as possible, and effectively remain vacant with other people scrambling to take over part of it. They will receive a tiny pay bump at most.
2) Those job responsibilities will be filled by someone but pay nowhere near what the person retiring was making.
3) The job will be automated somehow.
Maybe this is too cynical but I really do feel like companies are getting better at making sure employees make exactly the minimum they will tolerate faster than employees are becoming intolerant of how little they are paid.
If we're talking middle management, that's basically just an automated spreadsheet.
When you're interviewing, every company will swear they are growing rapidly and making oodles of money. How do you tell if they really are?
If I could identify growing companies so easily I wouldn't work at all, just make bank on the stock markets, right?
The problem is that people don't put anything in, or only put 1-3% in. My friend works in HR at a company that employs a lot of engineers. These are people that are educated, can do 6th grade math, and make decent incomes. I think the average contribution in the department was a little over 4%. Those people are going to retire with $150k in their account and have to life off social security but they shouldn't blame it on anyone else. I know a lot of people are struggling in America right now, but a lot of retirement savings shortfalls are just ignorance.
The only policy solution to this is to force some kind of deduction from paychecks into retirement accounts. Australia and Singapore do this and it works reasonably well.
Or to admit that privately managed retirement accounts were a mistake, and ramp social security up to the point where it's enough to live on, taking enough contributions to cover that.
Investment should be money that someone can afford to lose. Treating privately managed investment as the way to do retirement savings is going to leave some people destitute.
Investment will continue to be the cornerstorne or retirement, the math for redistribution just doesn't work. Especially if you increase the distributions.
How will that happen when there has been so much growth in the S&P?
https://www.gao.gov/blog/growing-disparities-retirement-acco...
https://www.gao.gov/financial-security-older-americans
(401k plans were a way for capital to con Americans that ditching pensions was the way to go; pension contributions became shareholder profits, and most did not or could not contribute to 401ks in any meaningful fashion)
The fact that people contribute less to their 401(k) means they care less about saving for retirement, not that the plans themselves are a con. I personally don't even have a 401(k) because I am self employed and there are other options.
I wouldn't trade my 401k.
The foreign share is a roughly similar breakdown to the domestic share.
How do you think Pension Funds get a return if not investing in equities in similar ratios to most people's 401k allocation?
Pensions are kind of always problematic because you take control away from people and give it to people with misaligned incentives.
It's the same if you give people control over their own retirement because they can not contribute or mismanage how the money is invested. Defined contribution pensions are maybe an improvement on this because at least you know there is money there and can have a regulatory framework that is simple and heavily restricts how the money can be used. I would really like to see broad market index funds only. Dumb money should stay dumb.
Maybe if you pull the responsibility up to the federal government you minimize the risk of mismanagement, but it's still pretty large.
Seems like we are doomed to pick an option that is still risky and it's every person for themselves. You need to super save and not rely on any framework provided by others. And this is where 401ks shine. Sure I am stuck relying on the stock market, but I think the distribution of outcomes there are more in my favor than if it were managed by someone else. Whatever is in my 401k (or IRA or whatever) is owned by me and is heavily diversified.
I don't believe what you're saying that 401k's are somehow not going to be enough to retire.
Unless you meant retire where housing prices are rising the fastest.
burying the lede here, killer.
to be clear, the 2% mgmt fee in a lot of 401k plans is terrible and is absolutely scamming the average folks.
but you can't retire on something you didn't contribute to, either because you didn't or couldn't.
The stock market is a circus- that’s common knowledge- yet we rely on it for retirement? Okay. That’ll work until it doesn’t.
No one can guarantee stock market returns, but over decades it's a lot safer than depending on pension contributions from a single company. And most 401(k) plans now offer target date mutual funds which automatically reduce stock exposure over time, thus reducing risk of capital loss as you approach retirement.
The merry-go-round of debt ceiling and budget confrontations in congress doesn’t help. Any gains from this year are probably going to be wiped out by that continuing drama.
Finally the increase in cost of living expenses and cost of long term medical care will quickly eat into your 401k once you stop contributing.
The math looks ugly once you sit down and figure it out.
I wish assisted suicide was more popular. I think it will be more popular as time goes on, especially in the US. If you worked your whole life to have say $2 million in assets, would you rather piss it all away on a boring, painful, purposeless existence in a retirement home, or would you rather your kids have a shot at owning their home?
Almost no one gave the obvious answer: Most 401 K plans are not investing in the S&P. Many give you the option to, but it's not the default, and probably over 90% of workers are unaware of the fund.
And quite a few do not even give you the option to invest in it.
If you invested in an index fund, you will get very close to the S&P 500/Russell 3000/Whilshire 5000/etc.
If you invested in an actively managed fund, then the fund manager takes their cut, but also probably tries to be 'too clever' and doesn't get as good returns as a plain index, and so you're not getting as high returns.
I think the guessing they'll work longer is optimistic. Once you hit age 65 or 67 man, you'll be surprised how much harder life is lol. At my workplace, two people retired this year and they announced their funerals within 2 weeks. That caused 5 more to finally retire before it's err, too late.
But I fully agree the 401k meme is in trouble. It's modeled just like social security and pensions. Infinite growth, which simply does not exist. Except instead of the government footing it, we threw it into the market and allowed middlemen to also take a cut.
Sure, this will move some people at the margins, but most people will stop working from physical or mental frailty, to move across the country to be with grandchildren, or to preserve their limited energy to do things that they find more compelling than work. To the extent that they need to, they'll find lower-cost ways to live, probably including down-sizing, living with their adult children, renting rooms, or other informal arrangements within their communities.
Meanwhile 15% or so of our paychecks go towards social security, which many believe won’t exist in 20 years, regardless of contributions you made.
Finally, the cost of retiring heavily depends on two things- healthcare and housing. Many Americans remain employed until 65 when they are eligible for Medicare as their employer-provided health insurance is all they can afford. Prior to Obamacare, these individuals would simply be uninsured, but now it’s “insured but it’s ridiculously expensive” without their employer.
As for housing… it’s common to sell a single family home for X and use X/Y of that money to buy a smaller townhome or condo to live in until the day you die. This can work out well, adding tens or hundreds of thousands of dollars to the retirement account, but it relies on the person owning the home, having significant equity in the home if it’s not fully paid off, and being willing and able to sell the house and downsize.
The system is broken and in this software engineer-heavy forum, I think it’s easy to forget that we make more money than most Americans. Heck, we make more money than most humans.
Over the last 35 years, that would have netted you about $3M in today's dollars. You could argue that's not enough to retire on at 55 (although I'm sure many can), but if you keep it up to 65 that's $6M. Easily enough to retire on.
Self-employed folks can make both employee and employer contributions to tax-advantaged retirement accounts, and the aggregate yearly amount far exceeds what a W-2 employee can contribute on their own.
I also have to take care of my aging parents here, by the time I don't have to do that anymore, I could be near 60 and really not in much condition to manage a big move like that. My own retirement might be...rather short at that point; there is no one to take care of me.
My brother really wants us to try for Irish citizenship (we have distant relatives so its possible while one of my parents is still alive), but its highly unlikely we'd get approved and Ireland is not cheap nowadays. I've looked at Canada but there is a lot of red tape for US citizens to move there, especially ones who are already partially retired.
There is a funny thing though, you can have "too much" in your 401k/IRA :-). When you hit 72 you have to withdraw 10% annually and that amount can put you into the top tax bracket if you've been saving your whole career and have more than a million bucks in there.
Then if you need any nursing care it’s $100k+ per year.
I have always been suspicious of the 6-8% figure, as it also includes an unknown number of insiders. They know when to buy and when to sell, so their returns are higher than 6-8%. Correspondingly, all non-insider returns are lower, such as 3-4%, but you will not be able to tell because statistically, it will still average out to 6-8%.
I’m sorry, are you looking at the same market graphs I’m looking at? Anyone who is retiring soon and has been maxing their 401(k) for the last decade-plus is doing pretty damn well.
I’d be much, much more worried about the depressingly large number of people who have next to nothing saved, who almost certainly will be surprised to learn that retirement isn’t an age, it’s a financial situation.
People can save and invest unlimited additional money outside of those plans. They just don’t get the same tax benefits or potential employer matching.
Is that a hunch you have or are you basing that statement on data?
Combine it with a Cyberpunk 2077 crematorium vending machine and it sounds like a great one stop shop.
Its "funny" that I'm not that old (40s) and I've now lived through 2 major housing crisis as an adult. Its the same number as my parents who are in their 80s, and they never even had to buy a house in a post crisis era. Housing was basically ez-mode for them their whole lives (as was healthcare). Only now are they having any difficulty, even with a defined-benefits pension, but they have me to help out, lucky them (not so much me).
As for healthcare I've given up on that already. I might have one elective surgery next year, after that if anything major goes wrong with me, I'm dead. Not even really bothering with many doctor visits now, though I manage the prexisting issues I know about.
An argument I heard is that companies prefer to stay private longer to avoid the burden/oversight of SOX etc. The charitable interpretation is that they are too busy growing to be bothered, the less charitable is that they aren't capable of growing if they have to be accountable and forthright.
But VC-backed companies is only one part of the private equity trend.
The other part that is discussed is small owner-operated or partnership firms getting bought up by bigger ones. Here again, if the government increases regulations, then that tends to fall more strongly on small businesses than bigger businesses.
I'll just add that, with the path of finding VC well-known and well-worn, we should expect greater difficulty. Even if we somehow reversed the trend of all institutions and bureaucracies to become over time larger and more cumbersome, that is, we streamlined government processes, we should expect an additional hesitation of growing enterprises to return to IPO, because VC is now a comfortable path for a significant portion of the roadmap.
In the past 2 weeks, my local small biz autobody shop and furnace/HVAC company have been bought by large regional firms. The furnace company refuses to service your boiler w/o buying from their preferred oil supplier, and the autobody shop has adjusted their rates to essentially insure they only work with insurance claims.
Right, because like health care they treat the insurance company like a giant piñata to beat free money out of. Ive seen auto shops lie about damages, things like claiming previous damage is part of a claim - anything to bilk them. Of course the clients don't see any moral issues because their car receives "free" work.
Almost all of these companies were massively overvalued by the time they IPO'd. I for one am glad that regular people were not allowed to invest in Theranos or WeWork. Looser restrictions on investing would create even more dodgy company's whose primary goal is to scam retail investors, like what we've seen NFTs.
> Vet clinics, medial practices, engineering firms, etc all use to to thrive on being 20 person shops are now routinely being bought up by PE firms
IMO, this is a symptom and not a cause. Vet clinics and medical practices would be terrible investments if it were sufficiently easy to start new vet clinics and medical practices. Likewise, housing would be a terrible investment if it were sufficiently easy to build more housing.
And after consolidation PE can make better deals with vendors (from pharma to insurance networks to maintenance).
(Of course exorbitant rise in vet costs shows there's room for more vet clinics, but it's mostly a side-effect of a lot of rich people spending a lot on their pets.)
But I also think the rise in interest rates could help reverse this trend, at least somewhat.
Consider: Until recently, interest rates in the US and other developed economies had only declined, in fits and starts, since the early 1980's.[a]
Not coincidentally, the modern private equity sector was born in the 1980's.[b]
Until recently, private equity firms had benefited from interest rates that only decline and valuation multiples that only expand -- for four decades!
A lot of deals that "work" when rates only decline will stop working if rates don't. For example, there are a lot of private-equity-backed middle-market businesses, including plenty of roll-ups, that were financed before rates went up, with such high leverage that the companies are now at risk of insolvency if rates don't decline soon.
If rates stay at current levels or (gasp!) continue to increase, I'd expect to see a significant contraction in the number of private equity firms. Those private equity firms survive may have to become mainly lenders, i.e., banks in all but name, and sooner or later will end up being regulated as such.
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[a] https://fred.stlouisfed.org/graph/?g=1aNbC
[b] https://en.wikipedia.org/wiki/Private_equity#Private_equity_...
Financiers can cater to this clientele with exotic investments that feature more concentrated risk/reward and pay out exclusively to the uber-wealthy and institutional investors: Private equity, hedge funds, and venture capital.
Most PE deals would work (with lower returns) without any debt. The debt allows them to diversify into more deals (since they put less equity into any given deal).
Actually, most LBO-type deals are financed with a combination of bank and bond debt. A shocking number of bond deals will be maturing within 1-3 years, and have to be refinanced. The bank debt, senior to the bond issues, is typically variable-rate and (depending on deal size) split into tranches that must be repaid at different schedules over time. Many PE-backed borrowers in recent years decided not to enter into swap contracts to fix their debt rates. My understanding is that things could get ugly quickly if rates don't come down soon.
> Most PE deals would work (with lower returns) without any debt.
Actually, if a deal returns less than the yield on corporate debt of similar risk, then the deal does not work. LP's in the PE fund will correctly view it as a failure. The raison d'être of PE funds is to earn returns above those yields. Moreover, if a portfolio company is already loaded with debt, finding buyers that will pay the old multiples given the new rates will prove difficult, if not impossible -- similar to the situation many US homeowners that locked-in ~2% mortgage rates a few years ago face today: They cannot sell their home at the old valuation because prospective buyers are looking at mortgages that cost ~8%/year. Higher interest rates make it hard to impossible to "exit" at valuations that generate decent returns.
If they had unlevered yields below the corporate debt yield they would have negative leverage and debt would reduce returns.
The funny thing is now many of these companies aren't even profitable. It's all driven by speculation.
Should it be? Theranos stained biotech badly.
There are failures of course, but most of the big ones recently have been in private markets not the public ones.
Looking at the other 2019 IPO’s you see a lot of volatility but many home runs. https://stockanalysis.com/ipos/2019/
I don't see a way to get out of it without a fundamental change.
As for the idea that PE firms are buying up SFH, I would be surprised if this is happening on a meaningfully large scale (anecdotes aside). Homes are real physical assets that need all sorts of actual maintenance on an ongoing basis. I don't know of any investment firm that is set up in a way that supports this type of operational burden. Even if they outsourced the work, it still wouldn't make sense to have any management overhead to keep on top of it. Investment firms want assets that can exist (for all practical purposes) inside of a spreadsheet. Homes are the opposite of that.
I think some possible solutions would be to;
1) Significantly lower taxes for smaller businesses vs larger. Even better bring personal rate inline to company rates... but this would be a very difficult shift for governments.
2) Tax benefits for companies listed and actively traded, so companies are encouraged to list and share wealth/growth.
3) A 'not in the national interest' law for companies that continually pay little to no tax where you would expect them to. Have tax department give something like a 3 year warning they are on the 'consideration list' and if things dont change the tax office can make them sell, or if they prefer close. And then they remain on said list for a couple decades or so to verify. This, while being risky for overuse, would be an effective tool on the worst tax dodgers and wielded in a limited capacity quite useful for those that have high end tax strategists that keep getting around the rules.
4) Limit investment ownership in residential so people dont spend their life trying to buy a house. This will allow people to take some business risk and invest in their entrepreurship far more easily.
5) Put a low market cap limit on core local business like those mentioned above like vets, dentists, GP clinic, pharmacy. Or maybe a progressively sliding scale annual asset tax past a value/outlet of X. Something that limits how big these organisations can get.
6) Stop large consumer distributors selling their own brand product. Not sure how to word this exactly but places like Amazon or large supermarkets, they should be a retailer of other business goods only. Stop them sticking their own rip-off product next to the other.
Obviously a load more...
As others have stated, great short term, it's going to absolutely bite us in the ass shortly thereafter.
1) A well know component of capitalism is capital concentrates. When that 300 store pharmacy does get run inefficiently, local guy doesn't replace the pharmacy, some other PE goes and buys the badly run chain and fixes it, likely merging another company with a bunch of pharmacies on the way vs new entrants competing.
I dont see the cycle returning to owner run, only being replaced by bigger and more efficient.
2) In my career I used to think companies with short term money extraction, like PE, were 'wrong' and should take a long term view for better business. However over time too often I see the 'quick buck focus' tends to win as while they do often erode the value/reputation of a company in that approach, they extract enough value quickly that they go buy the next company that was more conservative, rinse and repeat, and keep growing that way. This especially during the last era of cheap debt, though maybe that will change if rates go up.
See this for example https://www.institutionalinvestor.com/article/2bstpilo30bmb4...
That is similar to other data I've seen, and given how loathed the industry is, the fact that it's hard to find contrary data suggests to me that it is accurate.
The PE firms have to exit their investments so they are either selling to dumb buyers who don't realize that PE is value destroying, or they are actually creating value by improving operations and selling to intelligent buyers who are willing to pay for the improved company. The former is definitely possible but you'd think after 40 years buyers would get smarter if that were the case.
Then, of course, is the question of whether it will ever go up again... I haven't done the study of whether they are (on average) reliable bargains or fools' gold.
When they don't decide to do a leveraged buy out and have the business help fund its acquisition.
One small step away from Tony Soprano and the sporting goods store bust out.
Can't the regular investors buy PE stock?
Just a little counterintuitive but feasible
For example, in 2016 Softbank was able to buy ARM for US$32 billion, but that was only possible because the stock market priced it below US$32 billion.
Uber is worth 50%+ its IPO valuations.(EDIT: No it isn’t. Sorry, jet lagged.)
Is it?
I just looked at the chart and saw it went public at $45 and it currently trading at $45.
Did it split at some point or issue a 50% div?
Had it kept track with inflation it would be about $50 - up 15%
Had it kept track with S&P it would be about $63 - up 50%
If only those small businesses could just refuse and continue operating on their own... alas.
There are 10 vet practices in your city. 7-8 get rolled up into one uber practice by a PE firm.
They now have far less overhead per patient. Billing, equipment and even vets can be amortized over far more patients.
You, the hold out clinic, are now more expensive, or have a far smaller profit ratio, thus you are operating at a big disadvantage to the other clinics in your city.
You can hold out but what is your edge in this case where your competitor is now bigger and can handle things like a vet quitting as they have a bunch that roam from practice to practice. Or they can handle buying a new machine for millions while the bank won't lend to you due to your shrinking margins.
Economies of scale are a thing and can be a very real competitive differentiator.
You the hold out are now getting crushed by your competitors while you look around and see your fellow vets taking weekends off to take their new boat to the lake because they sold their practice and you're working your 11th weekend in a row because your other vet quit to work for your competitor that can now pay more than you.
I've had friends live this and its not fun.
Nobody seems to care about the student loan debt of doctors, because doctors can make a good salary, but student loan debt still has negative consequences down the road such as this.
Incidentally in Belgium they just passed a law requiring each veterinary practice be owned by a veterinarian. Life could be simple...
To answer your rhetorical question:
1. People would rather deal with neighbors than with PE or megacorps, and will do so to the extent that the difference in price is tolerable (and to the extent that they even know their neighbors.)
2. Management layers and performance based incentives are huge costs that small enterprises should be mostly able to avoid.
3. Owning a business can have a really compelling advantage at tax time in the ranges of professional incomes we're discussing.
4. Owner-operated businesses should be able to integrate with family life, allowing dads to spend time closer to their kids, which should be another advantage in favor of professionals going it on their own.
5. Owner-operated businesses can also operate with much more efficient facilities (housing over top of business) when not forbidden by zoning or other regulations.
On the other hand, people like steady salaries and set working hours. They like leaving work at work. And, especially as these professions increasingly see their schools dominated by women, many of these professionals really like stepping away from work or going part time for 5-10 years around their 30s.
However, people spend a lot of time talking about how they care about more than just price. The actual manifestation is tiny though.
RE 2-5: These are all rounding errors compared to economies of scale the PE-backed companies have. Also, those PE roll-ups target businesses whose owners are at the stage of life when they're just happy to take a big payout and retire. Tax time advantages and spending some time with kids (which is arguably less than salaried employees of the corpo-clinic will have) can't possibly beat being able to not work at all anymore, live comfortably, and have all the time you want for kids.
If the original small business owner sold, the money they got paid isn't gone - they could've used it to start another small business (or fund one as a VC themselves). I don't see how PE is stifling anything, but to produce a more intensely competitive environment.
More profitable perhaps, but not cheaper. In fact, usually more expensive, because the PE firms buy up all the clinics in a city, eliminating competition, and then they can set the rates to whatever they want. Needless to say, any "savings" are passed along to the investors, not to the consumers.
> If the original small business owner sold, the money they got paid isn't gone - they could've used it to start another small business
They're usually selling because of retirement, so they're not going to start another business. The issue here is that the business is not passed along to another new small business owner, it's passed along to a giant PE firm.
> produce a more intensely competitive environment.
In reality, to reproduce an environment with less competition and more consolidation, as mentioned above.
The escape hatch for that is taxes to the powerful market entities, that revert value back to the less powerful market entities, but that's not popular in the U.S.
You have to understand what "more efficient" means. It really means "it's shit and only getting worse, but isn't bad enough to abandon the service entirely". It starts with a corresponding price drop, and you either get a race to the bottom, or the competition gives up early, at which point the quality continues to go down the drain, but the price stays the same, as the provider pockets the difference.
- Analyze all the employees using a "system" to gauge "productivity metrics"
- Pressure management to get rid of an employee or two to increase profits, making everyone else work harder.
- Seek additional income streams from dubious "insurance" products that may or may not pay. Help market their products by spreading false information that insurance gives them "peace of mind".
- Increase costs to see what the market will bear
- Put all employees on a unified HR system that has a strict 1-size policy, little gotchas like "no health insurance for the first 60 days", limited PTO, etc. Ignore anyone who speaks badly because "this is company policy ". Give the business director a bonus when he finds new and creative ways to "maximize profits" at the cost of denigrating staff and making them work harder under more constrained policies.
- Lock all dr's salaries and staff pay to the same scale because "policy". Work harder? Why try? I get paid the same amount either way. Employees game the system to work the minimum to avoid termination. Not because they love animals, those people quit in the first 60 days (which is why our health coverage doesn't kick in before then).
- remove as much of their agency as possible, helping a poor persons injured dog is no longer acceptable, pay-as-you-go and sliding-scale billing are so 1990's, we have a business to run, the policy is "put the animal down and move on to the next paying customer". House calls are a liability and take valuable time away from the business, effective next year they are no longer allowed.
- appeal to emotion to upsell wealthy customers to services that promise to prolong the animal's life (but increase suffering and are medically unethical).
- Fewer people go to the vet now because they can't afford it, more animals suffer so that rich men can have more profit.
We've seen this in medicine in the last 10 years. I know of no independent doctor's offices in my area. They looked at the cost to comply with electronic medical records requirements and joined a local health network.
She's only heard bad things about this other company. Her wage is basically guaranteed to stagnate, they're not as generous about PTO, and they contribute surprisingly little to health insurance plans.
Oh, but I'm sure the management is flying away on a golden parachute.
Generally the problem with treating everything via pure financial models is that some things are valuable but hard to measure financially and those are inevitably destroyed by PE and other entropy-maximizers.
And, that's true, it is more efficient. But those veternarians, despite now having their weekends off, are paid barely market rate for their skills (if that) and more importantly, no longer running their business: A PE firm is. That means they have zero recourse if the PE firm starts doing PE firm shit: keeping bare minimum stock at their clinic of every last consumable, to avoid taxation; keeping bare minimum staff at all times to avoid paying workers; abusing staff and causing high turnover; basically every stupid ass "why would they do that" type decision you've heard of a large business making in the last 30 years, PE's LOVE those decisions.
And that's not even going into the fact that the profits of that business are no longer going to the community in which it operates, they're going to far away shareholders.
See what Walmart did to communities and small business. Efficiency is not all roses.
When private money can grow cancerously via pump and dump crypto schemes, overhyping IPO's that peaked during the series A round, and strong arming small branches of independently owned practices (all to later enable milk mode and reap monopolistic profits), the general public and society is left with overlords who do not build, they eat.
There's functional value in a capitalist system. It just requires ongoing maintenance, to avoid situations like we're currently in. It's not self-repairing. Operated properly, it makes market conditions self-repairing, but this is at the expense of the potential market capturers.
None of those practices create "overlords".
We had a local machine shop (that I used to go to for welding) sadly go out of business because the owner was retiring. I asked him if he considered selling it instead so it could stay open and he said "Who would buy it? I am this shop and I'm retiring. In 5 days it's just going to be a pile of tools."
I have seen "mergers". A doctor will join up with another doctor and then disappear in a year or two. That let's them legally sell the practice while weening patients over.
I have had a CPA start that process recently too. Suddenly announced he's joined up with this new CPA firm . Not to worry, he'll still be here to take care of our corporate needs and has transferred everything over (he's late 60s and snowbirding already)
A PE may buy up a already larger medical practice chain or something, but never individual practices.
The machine shop example is rough, he could do a merger retirement as well, but he needs to have consistent clients that he can bring over to another shop before slowly phasing himself out. Which may not have been scenario unfortunately.
PE is popular for one reason and one reason only: taxes. PE generally makes money on a trade called a leveraged buyout (LBO), where they take out a massive loan to buy a company. Because interest on debt is tax-deductible, going debt-heavy increases the take-home profits of the company (this is called a "tax shield"). Because the profits are higher, the value of the company is higher, and the PE firm makes money on their trade.
What this means in practice is that if you run your company sustainably (low debt, lots of assets). You become a target for a PE firm to attempt a hostile takeover of the company, all while claiming (defensibly, actually) to be doing whats in the best interest of the shareholders. So good companies will try to ward off these attacks by taking on lots of debt and going asset light to minimize the value gain a PE firm might have.
In short, both PE ownership and the brittle, debt-heavy nature of the American economy today can be traced to the tax advantaged nature of debt. For reasons I can't quite understand, nobody seems to be advocating for revoking this tax deduction. I can only surmise this is because everyone hates taxes.
Thank you for coming to my TED talk, your take home exam is a short essay on what you think the mortgage interest tax deduction (started in 1913) did to household debt.
Why can you not understand why the US would prefer people to be invested in the future of the US?
That's essentially what putting your money into US debt means.
You are in the interest of the US not exploding in the middle of the night.
I do think that the typical 90% debt to 10% equity LBO ratio is toxic and should be regulated down. I can see this incentivizing the types that would put in 10M now to get 100M now - spending that on coke & hookers now, and then hoping the US collapses and they don't have to pay anything back.
Investing in US enterprise is good but favouring one type of paper over the other is dubious. If anything you might think the government would want to favour equity holdings as that makes the whole set up more stable in downturns.
I can understand investing in the future of the US. I add an interest in investing in the present of the US, e.g. wages that support the consumption needs of the populace, including but not limited to food, shelter, health care, and education.
When finance bros talk about "interest shields" they forget to include the interest payment in calculating the total cost of the shield. For example, if two companies are identical except that one has equity financing and the other has debt financing, the one with debt financing will always end up in a worse position after accounting for taxes and debt service even though they will pay less in taxes. For companies that wish to remain a going concern, cash flow is more important than effective tax rates. It's possible to survive for decades with a high effective tax rate, but negative cash flow can kill a company in months.
That being said, I agree that allowing for corporate acquisition-debt to be deductible is the factor that artificially props up the entire private equity scam, since they use it to shield debt-funded "distributions" from the their victims and they generally load up their victims with more debt than is actually serviceable (see for example, Toys R' Us).
Well, I'd say it's zero interest rates.
Any extra cost will reduce your profits. It doesn't matter if it's tax-deductible. The reason PE can get so big is because that extra cost is minimal.
The PEs that insist on antagonizing their customers and depend on being large will be bankrupt soon enough now that being large is expensive.
And if taking on debt were so advantageous in and of itself you would think the executives of these companies that solicit PE buyout offers would just issue the debt themselves and enjoy their increasingly valuable options packages.
Btw you can get an SBA loan to purchase a small business. It works exactly the same way, and there are people who raise equity capital plus get an SBA loan to buy and run small companies, in effect they're running a very small PE deal and installing themselves as CEO.
The bigger reasons are twofold: 1 - the biggest one is that pension funds etc get to avoid the constant vol in stock prices. They get to stick their head in the sand and imagine asset prices not moving around. 2 - the annoying parts of being a public company can be avoided (public eye, some sec regs, constant need to "grow" rather than generate cash).
If what you describe holds true for mortgage debt, then we would expect the US to be in a uniquely bad position as a lot of other western countries do not have such tax benefits. But if anything, the real estate market in the US is more affordable, compared to the average salary, than in other western countries.
this is the crux of the American growth engine
> One answer is that the private-equity industry is devouring them.
Another is that public companies buy them and they consolidate. Another is management buyouts. Another is it's harder to run a business than it used to be, for better or worse, so they close.
> One-fifth of the market has been made effectively invisible to investors, the media, and regulators.
No. You still have financial regulations to follow. If you're a medical device company, you'll still have to follow those regulations. You have employment regulations. All sorts of regulations.
You just don't have to follow regulations for public companies (such as "don't talk about this thing with anyone outside a list until you've announced it publically, because that would be unfair to other investors), which are expensive and onerous, nor follow the whims of the market, which can be expensive and onerous.
E.g. Dell went private and the quality got a lot better.
And sure, they still have to follow some regulations -- but with much less oversight when you're not public. "expensive and onerous" is not a sufficient reason to not require a business to do something. Paying employees is expensive and onerous, should that stop?
Public companies are subject to some requirements for good reason. Those reasons may not apply to private companies.
Companies pay employees because if they don’t, they won’t have employees and therefore will lack labor, a critical input.
For PE backed conglomerates I care because they can and do hide shady things in there. There is more motivation to juke the stats; more sophistication and dollars on the table. Sadly, because these companies are not public, when their anti-consumer operations are discovered there is little news about it. That results in a situation, for example, where folk don't think there is any reason to care about the issue.
Whether the company is public or private they still have to follow the relevant laws for their industry.
I don't know where you're getting this from. The reason to not require it is that the regulations don't apply.
However, it's also true that making it cumbersome to do business, while making the big four consulting firms endless amounts of cash, is a real problem for all other public companies.
Consider: surely there is a price for which you would be willing to sell me your business, or your house, pretty much on the spot. The current value of your assets could be X. Maybe you're reluctant to sell for anything under 120% X. Maybe you know your neighbors will hate you if you sell it, so you really won't do it for less than 140% X. I come to you and offer you 160% X. At this price, I can be certain you'll sell. It's a deal of a lifetime. It would be stupid not to.
The trick is, as a PE firm, I can make this profitable for me all the way to say 250% X. I can just keep repeating that deal with every other person like you in the neighborhood, certain they'll all individually agree. And by the time the neighborhood realizes some critical service or area is now owned by a profit-obsessed faceless corporation, it'll be mostly sold out already.
The trick is to target a market segment when you're able to make offers the other side can't refuse. Then you can literally divide and conquer it.
i just dont understand exactly what is the problem here. do you think people shouldnt be able to sell their businesses for what they are worth?
I agree. The opening paragraph reeks of picking numbers to fit a narrative. It states that the number of US listed public firms declined from 8000 in 1996 to 4000 today (suggesting but not explicitly claiming that a significant part has been devoured by PE), but leaves out that the valuation of the public companies in that period increased from 5T to 40T.
It makes sense to take on massive amounts of debt to buy things when you get paid to be in debt.
Companies that do leveraged buyouts are going to have a good time.
When money isn't free - companies that do leveraged buyouts aren't going to have as good of a time.
Look at https://fred.stlouisfed.org/series/REAINTRATREARAT1YE instead, the 1 year real interest rate, and it's barely been positive between 2009 and 2022.
And anyway - yes - a 1% real return really only existed in a long capacity since the 2000s, since QE became main stream.
I think that the common belief that private equity swoops in and sucks the company dry like a vampire is only a half-truth. The “company flipper” style private equity companies are usually buying companies that are not doing all that well in the first place.
Not unlike a venture capital firm investment in a startup, private equity firms probably don’t expect 100% of their investments to pan out. The idea is to buy a struggling company for pennies on the dollar, turn it around, make a big return on that investment. However, turning around a struggling business isn’t always going to happen, and when it fails the private equity firms are perceived as vultures.
A good example of a company that has done well under private equity ownership has been Popeyes. They launched their extremely popular chicken sandwich under private equity ownership. The parent company has for the most part left the strong parts of the business alone (keeping the product up to a good enough standard) while appeasing franchises’ need for more profitable operations, leading to growth in its footprint.
Its not about the investors, is about the economy, the global economy.
- Acquiring massive debt against the new rollup entity
- Using that debt for short term expansion, maybe even subsidizing the business model in some cases
- Payouts to executives at the PE firms. There are instances where larger PE firms actually borrow from themselves via another entity so the debt payback goes solely to the PE firm under favorable terms to the PE firm.
- Then, squeezing as much of the market as possible to service this debt via localized monopolies and/or cost cutting measures. Typically higher prices and worse service follows in short order
- Finally, if they can't continue to service the debt, the debt, since being held by the new entity and not the PE firm directly, the entity declares bankruptcy to restructure the debt (or in some cases, absolve it entirely)
PE firms can then rinse and repeat on this, over and over again, with little oversight or repercussions.
Sometimes I feel like I'm in the wrong business
It used to be syndicated bank loans (often repackaged into CLOs), but now it is jumbo private credit funds. The banks ended up losing (which is why they are retrenching from this space), but I don't believe private credit is (yet).
https://www.ft.com/content/8962a5cc-2c4c-4e18-801c-9ad4e342f...
https://www.wsj.com/finance/fed-rate-hikes-lending-banks-hed...
* https://news.ycombinator.com/item?id=37652479
"Bed Bath and Beyond files for bankruptcy", April 2023:
* https://www.theatlantic.com/magazine/archive/2018/07/toys-r-...
If the Sp500 (VOO, or VTI, VT) is less and less representative of the U.S. market, there is a case to be made that it's becoming disconnected more and more of the "real" economy. This is kind of undermining BogleHead strategy to just buy the full market as the full market is less and less accessible.
> Meanwhile, interest rates have reached a 20-year high, posing a direct threat to private equity’s debt-heavy business model. In response, many private-equity funds have migrated toward even riskier forms of backroom financing. Many of these involve taking on even more debt on the assumption that market conditions will soon improve enough to restore profitability. If that doesn’t happen—and many of these big deals fail—the implications could be massive.
For anyone interested in the nuts and bolts of how private equity works I highly recommend the 50X podcast[1] which covers how a firm focusing on buying out aircraft component suppliers operates.
A lot, given that private equity operates on a debt driven M&A strategy. But don't expect the consolidation to slow down. They will just squeeze their businesses and customers that much harder.
This. The likely outcome is a deterioration of the companies. The deterioration will be felt by employees and customers both. This is the only way PE will be able to recoup any high interest debt they take on.
It doesn't. The PE playbook is to find distressed businesses with solid brand power, milk them dry until there's nothing left, and then sell off or liquidate the remnants. They function more or less as garbage collection for the economy.
Private equity's business model is to profit from the destruction of people's livelihoods. PE partners are the most immoral people I have ever met (and for comparison, I used to work as a public defender representing murderers and sex offenders). If they could make a dollar by murdering a baby, most of them would do it with a smile.
Yes, there are the occasional accidental success stories like Staples. But they overwhelming majority of PE stories are viable companies being ripped apart for their "valuable assets" or saddled with crushing debt to fund the acquisition of the company and/or dividend payouts to their new PE owners.
I saw some cases where the company gave stock options for employees and kept everyone hanging due to a promise of an IPO and when the whole thing scrubs, the founders sells to the PE and the first measure is to expire all the options from the employee pool [1].
Honestly I think the whole thing about options with the rise of PE and this brutal aspect to get best financial resources is over for any person joining wanting to have a more outsized exit.
(I mean, it would likely also nuke the PE domain, but I consider that a feature not a bug).
PE is a pox that focuses on short-term, debt-riddled 3 card monty games, and should be annihilated. It's like the fecal byproduct of something Milken and Gekko would sire.
This means private companies take all the profits, and when there is sign of trouble, can dump their stock to the stock market, get it bundled into an ETF, and a passive retail investor will buy some through their monthly contributes to a popular ETF.
Capital grows about 2-4% each year in real terms, while the economy (labor) in general grows 1-2%. i.e. if you own stuff (shares of companies, property (real or intangible), land, etc. etc.) your worth grow twice that of a working person. Compounded over 60 years (time after WW2), capital has grown ~100% more than labor. There is real generational wealth in America & the rest of the OECD world, and this wealth is growing at absurd rates. I'm not to lobby or claim that I have a solution or that wealth should be distributed. All I'm saying is there is a giant monkey in the room. And this isn't just and Elon or Bezos or Ivy League elite problem. There are even small $1-$10M blue collar businesses that no one could possibly start today even if you had the skills & knowledge with how money it would take to buy equipment, have a shop space / real estate, cash burn in the first few years, etc.
I do think it is worrisome that businesses and its capital are largely going private. Public companies have much more scrutiny with the SEC, big labor, and has more checks & balances. It's also a vehicle for normal folks to invest money into a retirement plan; you can throw tens of thousands of dollars and actually own parts of major companies.
I also think the economy of scale for PE is very worrisome. Many folks here have talked about Vet clinics, medical clinics, etc. When PE gets together, they can buy buy buy and bleed bleed bleed money until the competition is out, and then they can jack up prices to make the difference up.
Thoughts / 2 cents.
Private Equity is an industry that is only standing thanks to investments from pension funds which act as their LPs.
If anything, venture capital is more responsible for a lack of IPOs. At one point, there were over a thousand unicorns that had no reason to go public. Multiple series of fundraising rounds between venture capital and growth equity firms have enabled companies like Bytedance, SpaceX, and Stripe to grow into companies worth hundreds of billions of dollars with minimal pressure to go public.
Additionally, excessive regulation has seriously hampered IPOs. Expensive disclosures - for both investors and companies - makes being private far more compelling. Not to mention the fact that many private companies are sketchy and overvalued. Public markets incentivize market participates to root out fraud in order to more accurately value businesses.
Deep capital markets are one of the many strengths of the United States. To enable individual investors to invest in the next Apple, Microsoft, or Nvidia, the onus is on petty government bureaucrats to make it 10x easier to go public. Over the last few decades, it has instead become 10x more difficult and expensive.
Anyways. As usual, finding that regulation sweet spot is clearly still as hard as ever.
Less regulation is better than more regulation, until it's not.
Although, in situations like this, I feel like having too much is better than not enough.
Consumers are a complete PITA these days. Hard to manage, tons of complaints, looking for the cheapest X. I say this because while I agree there are a lot of movements in the past 2 decades on PE and other investments swallowing up shops, its not always as clear that its the big bad finance guys ruining America. We have small-medium business owners aging out, in a lot of cases no clear succession to the business line and they sell out. It can be a real pain these days to run a business, you not only have to offer the best service, the best product but have to do so at the best price while also managing your PR to identify any attacks that may hurt your business. I can see why people sell out given the opportunity.
1. Borrow a lot of money;
2. Buy some company that is somehow deemed "cheap";
3. Cut costs and raise prices;
4. Load up the company with arcane debt that will blow up some time after the PE investors have cashed out; and
5. Based on the surface-level financials from (3), re-list the company to exit before it blows up.
I'm not worried about PE because this isn't sustainable, for two reasons: if debt isn't cheap, it doesn't work and the debt burden only works so long as the SEC doesn't take a hard look at it.
Remember the investors have to be able to cash out and pay back those loans. If no one buys the junk they create then this business model falls apart.
I'm more concerned with the short to medium term effects of this such as the extortion of housing of our poorest and most vulnerable [1] (which people should absolutely go to prison for), buying up all your local vet clinics [2] and buying up medical practices [3], to name a few.
All of this is just rent-seeking. This is what capitalism is. This is what capitalism does. It's the only thing capitalism does: intermedidation and rent-seeking.
[1]: https://www.newyorker.com/magazine/2021/03/15/what-happens-w...
[2]: https://www.thenation.com/article/economy/private-equity-pet...
[3]: https://www.nytimes.com/2023/07/10/upshot/private-equity-doc...
Concentration of wealth at the very top driving further concentration of wealth to the very top.
From high frequency traders, to the fund managers, to money managers, to Jim Cramer-style filth marketing stock picks.
Hoping that investing in US equity markets as a retail investors, will bring you same benefits as it did for folks in '60s, 80s and 90s -- is being delusional, and lacking critical thinking.
The US institutions that supposedly provide a system of checks and balances, and a form of judicial and executive branch oversight, had long been gone.
We are now in the era of corruption, selective outrage, a system of sabotage/entrapment-of-opposition/spying and executive-level incompetence across most of the institutions that are supposed to provide businesses with a level-playing-fields, and consumers with trust/confidence on those businesses.
This kind of BS makes me think owning the property would be safe, so I don't wake up one morning with a mortgage I can't pay.
I understand why enshittification and all these others process's occur when you have a monopoly or a large market share. I fail to see why it should not be punished by the market when applied to easily disruptable sectors.
It's seldom clear to patrons WHY things have changed. People get stuck in their habits and are hesitant to start somewhere new, particularly with things like medical services. My mom wouldn't recognize PE as the source of a problem at her doctor, dentist, vet or mechanic.
This has been a major problem in smaller communities where there is essentially no choice in services anymore.
You don't have to use currency for everything.
I was home schooled until 4th grade. I finished my schoolwork in 2 hours and then played outside and read the encyclopedia the rest of the day.
I found the "private companies are kind of like public companies pre-1929-stock-market-crash" take to be particularly incoherent.
There might be a good steel-man argument for "privately owned companies are bad", but this article doesn't look like it.
But for all of the consternation here about declining journalism quality, the things PE has done to local new sources is an abomination. If you’re not aware of the part they are playing, you owe yourself a bit of education.
But my emotionalism about that aside, I think this study does a really good job of explaining what’s going on: https://www.nber.org/system/files/working_papers/w29743/w297...