Private Equity Bought America's Essential Services
rubbishtalk.com300 points by NoRagrets 5 hours ago
300 points by NoRagrets 5 hours ago
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 would scream bloody murder. But with the higher returns from PE they have 40-50 year runways and people can pretend everything is fine.
So PE firms exist to extract value from basically all high quality goods and services to show a high ROI to prop up pensions. They extract wealth by buying up companies and gutting the “extra” things in them - for luxury goods, it’s quality, customer service and warranties (like my venta humidifier or reformation dresses), for services it’s stripping the underlying excess risk management and quality control. One can argue that PEs make the business more efficient but in my opinion they just turn worker or consumer related benefits into profits (stakeholder and business benefits). It’s a transfer of value from worker and consumer to business and asset holders at a massive scale.
But sadly it’s not some evil dudes at the top doing this transfer, the market force behind it is because we promised old people way too aggressive paychecks when they retired. Pensions need to invest massive amounts of money into higher rates of return and PEs just happened to be the medium that is the most successful. Sure the people running the PE firm extract a ton of value drying up all luxury quality and robust services from the daily lives of working families, but their take home is a tiny fraction of the wealth they extract (but yes they take home a massive amount of wealth for an individual). Instead the wealth extracted shows up on a 1400$/m for some old person probably living in a retirement home somewhere.
So if you wanna fix or ban PE, solve pensions.
> So if you wanna fix or ban PE, solve pensions.
We solved pensions. People have defined-contribution plans now. I would expect insurance float to dwarf pensions as a source of PE funding.
The real reason PE exists is because it charges high fees. The financial industry does not make products to serve customer needs, though by happy accident that sometimes happens. It makes products to charge fees. Index funds removed a big chunk of the fees that active mutual funds used to charge, so financiers went looking for a replacement.
Even if you snapped your fingers and all remaining pensions (and insurance float?) disappeared, PE is aggressively going after individual retirement accounts, now. Most insidiously, trying to work their way into the "target date" funds that are the defaults for most plans. So "solving pensions" will not make PE go away.
Huh? Don’t many jobs still have gold plated pension?
Like millions upon millions?
They need to be paid out somehow.
Looks like about 18 percent, although I would assume there's a particular demographic where this might be higher.
Do they have to be paid out in full, though? I remember cases in the past where a company went bankrupt and had to renege on some parts of pensions, so maybe you'll see that again?
> many jobs... millions upon millions
...no. It doesn't even matter what the rest of the words in the question are. Just no, lol.
> They need to be paid out somehow.
No they don't. Lots of pensions, especially the not-gilded ones, go bankrupt.
In fact, that's precisely what happens to pensions of companies that are acquired by PE. The company gets stripped for parts, it goes bankrupt, and PBGC covers a fraction of the affected pensioners' payouts.
In other words, with or without PE, bloated pensions ultimately end up being the taxpayer's burden.
Are you confused?
Why are you replying to a comment where you believe the words “doesn’t even matter”?
One of the tools we use was bought by PE last summer. When it was time to renew our support contract had tripled in price. I use it across 10 projects so our costs went from $200k to $500k. I let our account manager know this was unacceptable but even his hands were tied. Cancelled those contracts and let them know we were retooling with a competing tool and opensource to fill those gaps. The impression I got was we weren't the only ones. Sales were getting squeezed between customers bailing and PE management wanting to stay the course.
I've seen PE make businesses more efficient by reviewing all contracts and dropping or renegotiating ones that no longer align. Closing product lines that aren't profitable. But that is year 1-2. 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.
> When it was time to renew our support contract had tripled in price.
Currently in PE hell myself. Company I work for was bought out few years ago when the owner cashed out. Right out of the gate it was a numbers go up game. New sales person was hired and their first order of business was - drum roll please - triple prices! Customers balked. Some walked. In addition, some employee benefits evaporated, vacation time cut drastically, shitty health insurance switch, employee perks like the monthly pizza Fridays were canned as if ~$500/mo in pizza was going to bankrupt the company. Meanwhile, employee morale is at an all time low and quality has faded.
Perhaps there is good PE out there. Somewhere. All I see are vampires.
Yes, that is typical for a certain kind of management. Only costs that are visible and easily measurable are taken into account. Invisible costs or costs that are hard to measure are ignored, even though they may amount to a whole lot, up to the ruin of the company. Employee motivation is one example for the second type of costs, while the 500 bucks per month for pizza were easily seen and cut.
This is just the design of a PE fund. They run on a fixed cycle, so early on they heavily invest into their portfolio with the aim of resolving that risk and maximising the sale value by the end of the cycle.
In principle, I don't think there's anything wrong with this. All investment expects a ROI over some time horizon. Public companies do the same thing. Anyone who founds a start-up is doing it too. The only real distinguishing feature of PE is how successful they have become at aggressively optimising for market value.
The issue is that the sale value at the end of the cycle can be massively influenced by cynical financial engineering. This seems to me to be more of an issue with how every institutional investor apparently now prices companies purely on reductive metrics like EBITDA x the industry standard multiple.
The cause of the rot is widespread over-confidence in dumb financialization models shaping the system.
(Or, since it's HN: if your machine learning model is training well, but misaligned with real life: do you blame AdamW?)
> how successful they have become at aggressively optimising for market value
They use money to turn value into money, which they then use to turn more value, into more money. And in the end, they have a lot of money, and all of the value is gone.
That's only possible if the financial system is valuing things systematically incorrectly.
IFF a company is truly, honest to god, less valuable than the sum of its parts, then it (or the subset that would have more value to someone else) SHOULD be dismantled, and those resources sold and reallocated to more productive use. You probably make these sorts of decisions in the capacity of your own personal finances without even thinking about it.
On the other hand (and what I believe is likely happening is) if cynical financial engineering is allowing you to turn a useful company that's valued poorly by the market into a useless company that's is paradoxically highly valued by the market, in the short term, and that keeps happening over and over again, then the tools used to calculate the market value are wrong.
This is illustrated by how PE commonly trashes trusted brands. A brand doesn't show up in your EBITDA. If you trash a brand quickly enough by cutting costs and quality, some institutional sucker will buy the company because they haven't clocked that the current EBITDA is elevated due to asymmetry in how quickly the costs come off and how quickly the revenue falls off after burning the brand.
They've simply valued the company wrong.
> That's only possible if the financial system is valuing things systematically incorrectly.
Well… yeah. I mean, it seems clear that the market is pretty bad at valuing companies. At the very least, valuations are based on a combination of (a) measurable attributes, and (b) vibes. (a) will always be incomplete, and runs into all of the same measurement problems that everything else does. And (b) is really unreliable.
Plus, PE companies are not especially interested in long timelines, whereas companies can eventually provide a lot more value that they’re worth right now.
And that’s not even getting into situations where they own enough of the market to not care about losing customers.
“ In principle, I don't think there's anything wrong with this. All investment expects a ROI over some time horizon”
Huh? Why is there nothing wrong? Yes they wouldn’t make the investment if they didn’t think they had a way to get ROI, but how does that entitle them to one at any cost or make it necessarily moral?
As an extreme example, If I invest to create a company that is clearly exploitive and addictive, nothing is wrong in principle and I’m entitled to my roi?
Bringing morality into it opens a whole can of worms that I don't think we have the tools to answer.
My view is companies don't have a conscience, and any expectation that they are going to independently act with moral righteousness is unrealistic. Any perceived conscience is either for marketing (green/pinkwashing), or the sum of the morals of their owners multiplied by their willingness to exert any moral authority over the company.
Besides, if you try to imagine a company having an independent conscience, what even would that conscience be based in? I'm vegetarian and think it's immoral to eat meat, but obviously I'd be insane to expect companies to divest from meat based on my peculiar moral position.
In most cases, people do not exert any moral authority over anything they own. Do you actively select your pension investments based on your morality and vote in the shareholder meetings? If you do, I'm genuinely pleased and happy that someone is. But the reality is most people don't give their investments any thought beyond "line goes up", so companies end up acting as ROI maximisers.
So: the main way we enforce morality on companies is ultimately the government. If you want companies to act morally, you set the rules such that an ROI depends on following our democratically agreed set of regulations. Maybe that even harms economic growth but we still consider it worth it (which is typically how we think in Europe, but look at our economies are doing!). However, the company and its investors are still acting as ROI maximisers.
That is a baffling response, no one suggested corporations have consciousness.
The poster said “I don’t think there’s anything wrong with this” are they a corporation? If they are, apparently they do have consciousness because they say “I think”
And yes some people do in fact try to vote with their dollars. Canadians are doing it plenty right now for an easy example.
That companies’ sole purpose is to maximize shareholder value, usually near term, is basically a toxic social construct and fairly recent. It’s not grounded in anything other than greed.
In this case, why doesn't someone else see a market opportunity and sell competing tools for less?
Medium / large companies won't take the risk on smaller operations selling a new focused tool unless it's a major pain point. They'll pay more for less risk, assuming the PE-managed company will go out of their way with account management to address all their concerns.
AVGO/Broadcom in some way acts like a big PE firm, rolling up other software companies, integrating them into their huge suite of offerings, ousting the new integrated offering's competing tools from the customers environments and selling the increment, and cutting off smaller customers not willing to subscribe to the huge suite.
Because capitalism and customer brand awareness don’t work like your Econ class told you. There is a lot more nuance, starting with the inertia of customer’s awareness of brand reputation. But don’t listen to my ramblings, this comment in this thread does a better job than I would:
I've been saying pensions should not exist, as they are contradictory to our political system. Some politician 40 years ago can promise everyone the moon, and never force the next generation to figure it out. I'm from Chicago which has a nightmare pension system that's keeping me from ever buying a home in the city I love, because my property tax increases just go to retired people who moved to Florida.
I really appreciate this perspective as It helps fill in gaps in my mental model of where our economy has gone wrong the last 50 years. Unrelated but - I've read an interesting paper on how allowing private banks to create money has led to the infinite profit growth goose chase...
I own a house in Chicago and my property taxes are much lower than my friends in the suburbs.
I live in a working-class southside neighborhood. The people who are complaining about property taxes for SFUs in the city are people in neighborhoods with skyrocketing home values.
Those people stand to receive a massive windfall when they sell. And while it may be annoying for them if they find themselves having to sell when they didn't want to, the they're vastly better off than all then renters in that neighborhood who got priced out much faster with no windfall.
Nah. I own a property in the gold coast area, and my property values have barely changed in the last 20 years. I only see an insane increase in real estate taxes and assessments. These are the things that price renters out, plus the Chicago housing regulations that leave the landlords without any leverage under pretty much any circumstances and force the risk to be reflected in the rent. Currently net profit from rental properties in that area is close to the interest on the equivalent amount of 10y bonds, without all the headache.
> The irony is that PEs exist largely because of pension funds.
The irony goes way deeper than that.
A large part of PE clients are university endowment funds.
Harvard for instance has close to $60B in its endowment fund, 40% of which is invested in PE. At this point, Harvard is more an investment fund, with a university as side business.
I think, if you were to say there is a way where you can take $10b and have that money make more ROI with less risk than $1000 can, people would look at it and scream this is broken let’s policy this out of our economy. It defies all laws of a balanced economy (not a capitalistic one, a balanced one). It’s just like monopolies and we have strong laws against that.
But… if you were to say hey we need to pay our old people and we desperately need some way we can deploy massive amounts of money at higher rates of return, people will say… hmm well it’s broken but the alternative is worse so we’ll ignore it.
But now imagine you have a way to deploy large amounts of money and get large returns off that money. Every large amount of money (endowments basically) will jump on it because why not? That’s literally an endowment dream scenario.
So pension funds are the moral reason these other huge chunks of money to get large returns. PE firms have become a streamlined business model because they continue to improve what they are good at doing, and it’s insane that we haven’t passed laws against it yet. Except of course we can’t mess with it because it touches government workers.
So yeah even if we wanted to policy it out of our society it’s practically impossible from a social point of view.
I don't believe that's ironic. Harvard and other "elite institutions" are the places with massive endowments, not state colleges or anything. Frankly the more I think about it the more it's nothing particularly interesting, just a fractal representation of the privilege of wealth as far as you want to drill down.
Not entirely... U Mich's is ~$20 billion, UVA & OSU are both around $8 billion, UCLA's is ~$5 billion, the Texas + Texas A&M system have nearly $50 billion in AUM.
https://en.wikipedia.org/wiki/List_of_colleges_and_universit...
I don't know why the University of Washington isn't on the list of public institutions, it should be number 6 with 9.4B in assets.
Lost in the commotion is the chaos that NIL is wreaking on universities and their donation funnels. The donations side of things seems to be rapidly drying up as a revenue source.
The stuff that old people need in their retirements to live is getting more expensive due to the types of shenanigans that PE firms are doing. So their pensions appear solvent now but when those old folks actually retire, their money won't go as far? Doesn't add up. I think the people who are really benefitting here are the usual suspects - the ultra rich, and the PE guys at the top doing this transfer really are evil.
You often see them “monetizing the brand.” That’s a nice way of saying “betraying customer trust.” They buy a company that’s known for high quality and then cut the quality. They can keep charging the high prices for a while until people realize that it’s not what it once was. After a while, higher end customers realize what’s happened and stop buying. Then the brand typically becomes a mid market brand and they start selling on Amazon to a less affluent clientele who still associate the brand with quality but wasn’t in their price range before. They usually cut quality again at this stage.
Effectively it’s burning all of the trust built up with consumers as firewood by tricking them into buying mediocre products at high prices.
> Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent.
Pensions fund PE because PE can do a short term cooking of the books in order to smooth out the growth curve. So the return is usually positive each year, not raising problems.
Also what does significant mean? Pensions are the main mechanism non-wealthy people are investing in PE. Being that millions are involved, you would expect pensions would have a sizable portion of the market, but family offices and high net worth offices dominate. If it offers above average returns, why would they not invest? PE is like every other asset class other than housing, the top 1% own a large chunk, the top 20% own the majority, and the bottom 50% own very little. Decisions are not driven by sone fireman, they are driven by the wealthy like everything else. And the origin and continuation of pushing for retirement to come from capital investment comes from the wealthy as well.
I have no idea how reliable this source is, but it looks plausible - from the "American Investment Council", which appears to be some kind of private equity trade association ( https://www.investmentcouncil.org )
https://www.psprs.com/uploads/sites/1/AIC_PublicPensionRepor...
Some interesting details:
- "Nearly 50 percent of the private equity investment dollars that make their way into American businesses come from public pension funds", which substantiates OP's thesis.
- "U.S. public pension funds invest 9% of their portfolios in private equity, on a dollar-weighted basis." 46% is in public equity, so obviously the lion's share is in still in public markets.
This isn't surprising. Public companies tend to be lower risk (and therefore offer lower returns) than PE investments and pension funds want a mix of both. They want the juicy returns of PE deals, but a portfolio invested completely or mostly in PE would be unacceptably risky. Most pension fund mandates will set % limits on how much can be invested in different asset classes, with lower limits for riskier asset classes.
The S&P 500 already returns 7%. Why do pension funds need PE?
And like FIRE devotees, maybe they should model a lower withdrawal rate.
Because if you're hired as pension manager, and you just shove all the money into VTI, you're going to feel like you're doing nothing, and eventually someone will notice your job is redundant, even if you're outperforming your peers.
And the people who hire pension managers are too stupid to see that active pension management is redundant? They haven't read A Random Walk Down Wall Street?
I wonder if this creates opportunity for spinning up competitors to these PE owned companies. If they are underinvesting in their products in order to extract value eventually their offerings will not be competitive.
I think in theory it does, but in practice the customers of PE-bought companies don't update their priors fast enough.
If a company being purchased by PE meant that they lost the vast majority of their customers as soon as contractually possible, then the possible value extracted by PE would drop off a cliff.
This isn't necessarily the fault of the customers - we're all dealing with a lot of information to process.
And, up until recently, it was reasonable to attach reputation to brand instead of to owners.
And I think that's a lot of what PE exploits - the gap between people's belief about a brand's reliability/reputation, and the fact that the actual reliability has been a function of who the actual owners of the company are for many years - but people are still attached to the old mental model.
(there may also be some value for PE to extract from assets aside from customer relationships and the higher-order "brand value", but I suspect that that's secondary - if I'm wrong please correct me)
> eventually their offerings will not be competitive.
How so?
If you read the article it provides a good example. Fire truck businesses with a 4 year backlog and high margins. This is less competitive than the situation prior to PE consolidating it when it had much lower backlog and ~3% margins. Seems like a clear market opportunity.
Ah, okay. Sorry, I misread what you had said. I missed the “owned”, and thought you were saying the PE companies themselves would be uncompetitive—and wasn’t sure what you meant.
My State is essentially screwed for budgeting, because for years, our public retirement system garunteed "AT LEAST 8%" to accounts. Some years was much higher. I have a parent that make more, 10 years after retirement, then they ever did working.
They moved around the year 2000 to accounts that don't have the AT LEAST clause, and they earn what they earn, but due to the backlog of people still retiring that were grandfathered in, its wrecking our state.
My city has a huge budget deficit, but 24% of its total payroll budget goes to the public retirement system to 'catch up' from years when it did not make 8%. Next year or two, that is supposed to jump to 28% of payroll.
Problem won't start getting better until something like 2034 when the boomers start 'leaving the retirement system'
The "advantage" for pensions is that they get to "keep the principal" (unless it's setup even more insane than normally) whereas with a 401(k) the residual gets inherited.
Why don't pensions just invest in index funds generally? High required rate of returns or?
There are multiple reason:
1. If you assume that P.E is uncorrelated/has a low correlation to the stock market (subject of many years of diatribes), then you decrease volatility of your portfolio by adding it.
2. Because a pension fund has a lot of years until they need start to paying out, then it is natural for it to attempt to harvest the illiquidity risk premium.
3. The (edit: removed extra words) "high required rate of return problem" is really a defined benefit problem. A DC plan can (and probably should) just be in mostly straight indices unless it's so big it can negotiate a good fee with asset managers for other classes.
They do (and will generally track the index themselves), but PE offers a higher risk/return profile and diversification.
Yes, underfunded relative to future payout promises, so higher rates of return required to remain solvent.
This reads as apologia, blame-shifting, "I was just following orders".
People have to eat. They need water. They need a roof over their head. Nobody has to buy out all the veterinarians in an area at rates they can't say no to, have them sign non-competes and them jack up all the prices by 300% because, hey, you now own all of them. Nobody has to buy up all the trailer parks, which are normally peopple's last stop before being homeless, and then jack up the ground rent because, hey, where else are they going to go? Nobody has to buy up utilities, spend big on capex because legally you can pass on that charge and effectively double people's electricity bills.
Hannah Arendt coined the term "banality of evil" [1] decades ago and, in all honesty, I think it applies to the predatory nature of PE. It also goes for working for Palantir and a bunch of other companies. "I need to pay my student loans", "I'm just doing data science", "I'm just writing AI software that identifies when somebody is home" and on it goes.
PE serves no useful function in society. It's pure rent-seeking and incredibly predatory in many cases. ~15 years ago, there was a story about Goldman Sachs invented a derivative on the price of wheat and then essentially conspired to jack up the price of wheat [2]. This wasn't just manipulating a ticker on a Bloomberg terminal. It had real-world consequences. People starved and died because of this decision.
Yet I'm sure there were people who argued "I'm just doing legally allowed financial engineering here".
[1]: https://aeon.co/ideas/what-did-hannah-arendt-really-mean-by-...
[2]: https://theecologist.org/2011/sep/13/how-goldman-sachs-start...
Worse than vets is hospital system and medical offices. In our area there are about 6 hospitals within reasonable driving distance. 1 is a mayo and the 5 others are split between the two major mega-providers. One of those also partnered with CVS/Aetna to provide marketplace insurance, until they decided that didn’t have high enough margins so they dropped 100k (28%) subscribers.
The healthcare system is just rent-seeking upon rent-seeking. PBMs are another big one where the PBM gets to decide after the fact what your rebate is. No conflict of interest there when United Healthcare owns Optum, which I think is the biggest PBM.
I see the healthcare system's bloat as a symptom, not a cause of the expense.
It's kind of like the university system. It's a (mostly) privately run industry that gets massive injections of cash from the government because of both campaign promises (everyone needs healthcare, everyone goes to college and, bonus, everyone gets a house) and it being an incredibly unpopular position to either remove that funding or make the program entirely public which would, imo, alleviate both problems (but have their own unique drawbacks). The hybrid model we have is the worst of both worlds.
The hybrid system we have now of massive injections of public money into private industry is like blood in the water for do nothing intermediaries. PBMs are just the assistant dean of underwater basketweaving for medicine.
To clarify the main point is it is wrong but because it affects old people no one wants to crusade against it. It has the perfect moral excuse to hide behind.
Agreed. If we're gonna blame shift PE to pension and university funds, we may as well follow the thread all the way to the glorification of Greed.
I wrote about this not long ago: https://theloop.ecpr.eu/its-not-finance-its-your-pensions/ "It's not finance, it's your pensions"
(it's a blog summary of a much longer, and rather esoteric, academic article)
Pension funds still exist?
There's $32trn of them: https://fred.stlouisfed.org/series/BOGZ1FL594090005Q
Who do you think is buying .. everything? They're holding substantial fractions of both the whole stockmarket and national debt.
The pension plans for many government employees still exist. CalPERS (California Public Employees' Retirement System), Illinois Teachers Pension, etc. (https://en.wikipedia.org/wiki/List_of_largest_pension_scheme...)
It's the corporate businesses that have gotten rid of pensions in favor of 401k plans.
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.
> we are transferring value from our current standard of living to pay for retirement checks
Isn’t this just what happens when you have an inverted pyramid (older population is larger than the younger population)?
> One can argue that PEs make the business more efficient
I’ve never seen it (I agree with you). To improve something they’d have to understand the business and do a bunch of work. Mostly they show up at quarterly meetings and want spreadsheets that measure some number that will go up (regardless if that number means anything).
> if you wanna fix or ban PE, solve pensions
How does one solve pensions?
> How does one solve pensions?
I was thinking that Covid and widespread antivaxxer mentality would have.
But no. This will be the latest ladder-pull by the boomers and silents to extract the last bit of wealth from all the younger generations. And this will impoverish gen-x and all younger generations even more so than we already are.
It goes beyond boomers (the boomerdoomer is already in full swing) - as they're dying off, most new employees do not have pensions (instead having defined contribution plans which have their own issues) - except for a few very large swaths, namely government and education.
lol we know that the vaccine did not stop the spread and didn’t even prevent contraction. I was double vaxxed but they did have some things correct that we were in fact lied to about.
It lowered the chances, and in case of getting sick it also massively lowered the chances of getting the worst side-effects, exactly like any other vaccine does.
It's a shame that even highly educated populations do not understand a basic fact of immunology.
Yeah what a shame. I never claimed that it didn't lower the chances of side effects.
This is what was claimed.
"You become a dead end to the virus." — Fauci, 2021
This was the reality
"[Vaccines against respiratory viruses produce] decidedly suboptimal protection." — Fauci, Cell Host & Microbe journal article, 2023
"The durability of protection against infection and hence transmission was relatively limited." — Fauci, 2024 congressional testimony
Anybody that questioned the religious dogma that the vaccines were super effective and that healthy people needed to get endless boosters were crucified and in many cases, fired from their jobs for refusing an unnecessary medical procedure.
Everyday I am infinitely grateful I have the ability to understand nuance, and the mental firepower to be able to comprehend data coming from sources rather than tiktoks, twitter, and hyper-partisan news orgs.
No one ever said the vaccine would prevent transmission. What they said was that it !could! prevent transmission. But no one would know before studies were done. What they did say is that it would lower mortality rates. Which it did in fact do. But the factors of transmission and spread were dice rolls. And everyone with first hand knowledge knew that from day one.
But, you are in fact correct, you were lied to. But not by anyone with knowledge of the vaccines, but by the grifters you hold up has being "a beacon of truth". The grifters who read "Vaccine has a chance it could slow or stop transmission" and turn around and say "They are promising it will stop transmission!" just so they can tear it down later as "another victory for TRUTH!".
Yes they did say it would. https://thehill.com/homenews/sunday-talk-shows/553773-fauci-...
Also you don’t know anything about me and what media I consume. You can’t quote me on something I didn’t say. They did say it would stop transmission.
Your source clearly says that the likelihood of transmission is reduced, not eliminated.
‘“So even though there are breakthrough infections with vaccinated people, almost always the people are asymptomatic and the level of virus is so low it makes it extremely unlikely — not impossible but very, very low likelihood — that they’re going to transmit it,” Fauci said.‘
Extremely unlikely is a lot stronger than reduced. Calling it breakthrough implies that the norm is prevention. Obviously nothing is 100%.
Preface: I have been in favor of the COVID vaccine and disease mitigations (and wish we would have used this opportunity for clean indoor air...).
I'm willing to accept my memory is wrong here with evidence, but I remember a very strong narrative in the early period claiming that the vaccine did in fact prevent contraction and transmission, to the point where it was supposedly surprising when "breakthrough" cases started being reported.
It's possible there was some loose language around "prevent" as I did see that especially later on, but I have trouble finding reliable information on what they actually believed and if they actually reported this accurately to the public.
There is the unfortunate mark against where they knowingly promoted misinformation around masks - persistent through today - that they were ineffective, in an effort to direct uncontrolled distribution of masks to medical professionals most in need.
Exactly. IN cases of national or world-level event, governments and government related bodies (WHO) will do whatever they can as not to cause a widespread panic. And if that means lying, they will absolutely do that.
And because the capitalists run the show in a lot of countries, https://ruinmyweek.com/wp-content/uploads/2020/07/live-laugh... is a good image that explains why lots of things kept going on as usual.
A world-level 6 week pause would have burned covid and a whole lot of other diseases out. But no. Poor capitalists need their 3rd yacht, 13th vacation home, etc etc etc.
As for me, my SO worked in health care. And Covid is a SARS. We have decades of effects and response. The shit's airborne. WHO knew that. CDC knew that. But they lied and lied and lied.
We take our healthcare in our own hands. I'll critically listen to the "experts" and deal with med doctors for prescription drugs. And Im definitely interested in my own manufacture of pharms https://fourthievesvinegar.org/ . But yeah, the wider and general the message, the more propaganda it likely is.
And we also have a good stock of PPE now, including a few tyvek suits. And everclear is 95% alcohol and $30 here for a handle. Best sanitizer you can easily acquire and food safe to boot.
EDIT as comment to WarmWash:
No. The WHO and CDC lied about Covid being an airborne infection. They refused and refused, up to then redefining what an "airborne infection" is.
https://www.bmj.com/content/385/bmj.q985
Covid is a SARS. Airborne. SARS requires BSL3 to handle properly. https://en.wikipedia.org/wiki/Biosafety_level#Biosafety_leve... "Biosafety level 3 is appropriate for work involving microbes which can cause serious and potentially lethal disease via the inhalation route."
I dont need international experts to tell me a stream of bullshit, when I can look at the type of disease and go "wellll fuck, airborne. time to wear masks outside the home and no parties or events. and go to store when its not busy."
Was Covid as bad as SARS? No. But is SARS response something that can be compared to what we should have did for Covid? Hell yeah.
We all own the means of production. Communism crept in right under our noses.
If the government guaranteed basic human needs are met for every person (food, shelter, healthcare) there would be less of a need for giant pools of public money (pensions, insurance) sloshing around.
Mass index fund investment is basically socialism but stupid. My retirement money is going to get invested in the SpaceX IPO against my will. The market is not efficiently allocating capital, it's structured to allow elites to skim off the top while forcing middle class people to subsidize them.
A 30-year treasury offers 5% and A-grade corporate bonds offer 6.5%. You don't need to exploit essential services for the other 50bps.
[0]: https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupM...
Because treasury rates are rising, it now actually puts even more pressure on PE firms to burn furniture.
.. now. Five years ago that was more like 2%.
The S&P grew at ~15% annualized post GFC, and PE acquisitions of housing and essential services hasn't stopped.
Huh, that somehow reminds me of Crassus from Rome [1]
> The first ever Roman fire brigade was created by Crassus. Fires were almost a daily occurrence in Rome, and Crassus took advantage of the fact that Rome had no fire department, by creating his own brigade—500 men strong—which rushed to burning buildings at the first cry of alarm. Upon arriving at the scene, however, the firefighters did nothing while Crassus offered to buy the burning building from the distressed property owner, at a miserable price. If the owner agreed to sell the property, his men would put out the fire; if the owner refused, then they would simply let the structure burn to the ground. After buying many properties this way, he rebuilt them, and often leased the properties to their original owners or new tenants.
Nice establishment you got here—be a shame if something happened to it.
I wonder if the incidence of fires increased during this time.
https://en.wikipedia.org/wiki/Battle_of_Carrhae
For the curious, above is how Crassus died.
TLDR: Got over his skis and mad with power and money. Decides to invade Parthia. Gets wrecked by horse archers. That ends up being typical for Romans, but this was the first-ish time that happened. Some of those captured legionaries may have ended up in China, though it is unlikely.
>Upon arriving at the scene, however, the firefighters did nothing while Crassus offered to buy the burning building from the distressed property owner, at a miserable price.
sigma
Article doesn't really dig into the angle I personally find most horrifying, strip-mining social capital.
In my area PE is gobbling up mom-and-pop apartment complexes, plumbing companies, restaurants, and generally making customers and employees alike pretty miserable.
Hard-working founders should be able to cash out, but there has to be a better system than this one. Succession, maybe. Not that we should push an unmysterious destiny on our children, but maybe more ought to consider pulling one?
> Hard-working founders should be able to cash out, but there has to be a better system than this one. Succession, maybe.
The large PE buyouts that came from the ridiculous ZIRP period could deliver better financial stability than handing the business down.
I know two families with businesses that attracted huge PE offers in the past few years. One of them took the buyout and the family members slowly left their jobs at the company because they effectively been early retired by their buyout.
Now the kids are looking at new businesses to buy and start for themselves with this new financial freedom that has come to the family. One of their considerations is starting another business in or around their old line of work that was sold off. They have to wait until the contractual non-compete expires, but if the PE owners are really making both the employees and customers miserable then it becomes a golden opportunity for experienced operators to come in and run a good business in the vacuum. Even many of the old employees have expressed a desire to join.
The bad PE phenomenon buyout is annoying, but businesses that become miserable for the customers and employees are not stable long-term businesses. When they decline because competitors show up to do a better job and retain better talent, it becomes a transfer of money from the lenders to the old owners and an annoying churn in the local business scene. As we see more of these failures, the willingness of banks to lend for these buyouts will go down.
I knew of a family-run hoagie shop that sold to "investors" (not sure if it was PE, probably was) three times, each time they ran it to shit amazingly quickly, and they were able to buy it back for a song and fix the damage.
Yep! These situations are annoying for the customers, but an amazing opportunity for people trying to run good businesses. Let the bad operators run a company into the ground and then buy the pieces at an amazing discount.
Companies need to brand as "Not owned by PE" the same way health food has prominent labels on the packaging.
I think part of the problem with the succession idea is that a lot of people in these positions worked these hard jobs to try and give their kids a better life. They encouraged their kids to go to school for their passions and now those kids are in careers far removed from what their parents did.
Instead of succession, I wonder if there is a way to make it easier for these people to sell their company when its time to retire to someone who is looking to start the next step of their career. A lot of software engineers joke about becoming farmers, but if they could instead make an easy transition into a small business by buying a small business, we could prevent PE from raiding things.
The vast majority of people can’t just go out and buy a machine shop or laundromat and then start running the business. It’s a risky asset, not like a house where you put down 20% and any bank will loan you the rest. I’d love to own a small franchise restaurant or something in my town but they cost millions that I don’t have.
And that’s before you even make it to the question of “can the person that manages to buy it actually live off of it as a lifestyle business?”
sure but a restaurant is always going to be a risky asset. I am thinking more in terms of a plumbing business. It's a business that will always have a need, no matter the economy because a bursting pipe doesnt care if its a recession or a booming market.
I guess what I would like to see is a pathway to making it easy to buy or start up crucial businesses like a plumbing business, HVAC company, etc. As the current generation of owners want to sell and retire, we should make it easier for people to be able to get in there and buy these companies before PE can.
A plumbing business doesn't have "assets" though; it's valuable because the owner is good at their job. You can't durably "sell" that brand value unless the new owner is also known to be great at their job, at which point they don't really need to buy your business.
Family businesses handle this by slowly getting the next generation involved, such that the intangible value has been transferred by the time the owner wants to retire. That works less well with a stranger. You really need high levels of trust to make that work fairly for both parties.
I wonder what would make it easier for a regular person to buy a mom-n-pop plumbing business, besides financial help? If the owner wants $5M for it, and you (or a PE firm) walk up to him with $5M, it's yours. The mechanics of buying the business aren't particularly hard--the hard part is obtaining the capital.
The thing is those businesses can't really be "sold" because they make enough money to support a few families, but they can't do the same AND carry the debt-load necessary to buy it.
So they can only really be inherited or given away (and they often are).
But if it's not to kids on death, it's moderately difficult to give away a business that has "paper value".
Yea, I occasionally go to estate sales, and a machine shop going out of business popped up on my radar. Went down there to buy a few power tools, chatted up the elderly owner, and asked him why he was selling everything. The shop had everything, and would have been a really cool business to own and operate! He said 1. his adult kid had no interest in running the business, and 2. he couldn't find anyone willing and able to buy it for more than he could get by "parting it out" and selling all the assets.
I'm sure there are tons of people in my local area who could happily and successfully run such a business, but nobody can swing it financially. The initial financial hurdle of going from "not a business owner" to "a business owner" is real.
Yep, and if you're starting on your own, you might as well get new equipment and such built and made for you.
Same thing happened with a restaurant - nobody wanted to buy the business so it shut down, even though you could have bought the whole business for the cost of the building, basically.
(There's a path for entrepreneurial "youngsters" - identify these businesses 10 years before, and become a valuable employee in such; I've seen them given away for a song to such. Of course, in some of them they also ended up with the daughter, so ...)
I think the other thing is the older generation are of the opinion that a steady paycheck is somehow safer than owning your own company, mostly because most of them never sat in the other side of the table.
This leads to them pushing their kids to be employees even though that's...really contradictory to their actual lived experience.
yea the side of the table they sat on is one that fluctuates month over month, year over year. They recognize that it can work out, but its a gamble whereas working for a steady company (pre 2026 I guess) is the better option for their kids.
Succession is hard for businesses with a majority "intangible" value. Think private practice doctors: your patients are with you because they like you as a doctor, so the "value" of your business is tied directly to your continued involvement.
Family businesses have traditionally gotten around this by having their children involved for 10+ years prior to taking over. That way, you slowly transfer your "social capital" to the new owner (in this case your kid). This is understandably harder to manage with a stranger, because you can't transfer the value before they buy it, but they won't buy it if they can't guarantee you'll help them transfer the value.
> Hard-working founders should be able to cash out
Why? Operating a successful business should be remunerative on its own, or else it's not successful. Owners who don't want to do it anymore can let it become worker owned. If they don't want it, it can dissolve. What else do you need? The very concept that the end of a successful business is a big payday for its creator is itself the poison here. There is no end just another workday, success is ongoing not final. This is natural and correct.
When my parents started farming they had about a half dozen large loans for the base farm, land, equipment, buildings and an operating loan to purchase seeds and other inputs in the spring.
When they retired they didn't have any money in the bank besides the proceeds from their final harvest, but all their loans were paid off. That's where the profits went -- paying off the loans.
The farm was their retirement savings. They sold it off for high six figures, and that's what funded their frugal but comfortable retirement.
The neighbor's son bought the farm; I hope he's pretty much paid off the loan he took out to buy it.
But that's how it is supposed to be. You "just" need to have a system that incentives banks and small entrepreneurs to take on that risk, and makes it not a good investment for PE.
What makes that system rare is that there's a buyer who knows the business available. The new owner needs to understand the industry and convince the bank that they know how to run it as a successful business. PE do their homework on the business before they buy it and don't have to convince the bank that they know what they are talking about. The neighbors son isn't usually an expert on the your business.
I generally agree, but this point of view shifts the blame from one big, evil, soulless PE firm to thousands of small shops owners that just wants to "retire comfortably". It's not easy to sell because one can easily sees oneself as that small owner, but not as a big evil PE.
It's the same with gentrified zones: yes there are some dark patterns going on as well, but mainly is previous, smaller owners that want to make big bucks by selling to someone with money from outside rather than someone local like themselves for less money.
Sorry you're right, I should have been more careful with the phrasing there. The structures, risks, and incentives that make business owners believe and act like this are real, and that's the poison I was pointing at.
I'm not trying to put all of the blame on individuals responding to the pressures being applied to them. But neither am I accepting their abdication of the responsibility to act with honor and courage in the face of those pressures.
I think you're right to zoom in on that point.
My guess is owner-operator selflessness is a key ingredient in a lot of beloved small businesses. I don't know for certain that the winning personality for getting a business off the ground on all the bad days is the same one that raises rates proportionally with their success.
So it becomes all-or-nothing. It's my friends and neighbors when I'm working, when I sell-out it's purely business. No in-between.
I agree. It's a major problem that people who are usually, not always, already very well off decide to do a final "fuck you I got mine" and sell their business to a company they damn well know is going to strip it for all it's worth.
This scene from Ubik has been coming back to my mind very often recently:
The door refused to open. It said, “Five cents, please.”
He searched his pockets. No more coins; nothing. “I’ll pay you tomorrow,” he told the door. Again he tried the knob. Again it remained locked tight. “What I pay you,” he informed it, “is in the nature of a gratuity; I don’t have to pay you.”
“I think otherwise,” the door said. “Look in the purchase contract you signed when you bought this conapt.”
In his desk drawer he found the contract; since signing it he had found it necessary to refer to the document many times. Sure enough; payment to his door for opening and shutting constituted a mandatory fee. Not a tip.
“You discover I’m right,” the door said. It sounded smug.
From the drawer beside the sink Joe Chip got a stainless steel knife; with it he began systematically to unscrew the bolt assembly of his apt’s money-gulping door.
“I’ll sue you,” the door said as the first screw fell out.
Joe Chip said, “I’ve never been sued by a door. But I guess I can live through it.
- Philip K. Dick, Ubik
That's amazing! The "machines as woodland fairies" conceit imagines them as natural creatures, but nature has no laws
"In developing countries, everything is possible and nothing works. In developed countries, everything works and nothing is possible."
End consolidation. Go back to pre-1980s antitrust policy. Encourage competition and bust the trusts.
The pre 1980s standards were ridiculous though. However, even if the US moves to some 3 quarters of the way towards now would be a huge improvement.
The "consumer harm" standard is idiotic.
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
Would you share a more detailed argument? Right now we only have adjectives: "ridiculous", "idiotic".
The US economy generally did very well with those standards, maybe the best it ever did, especially considering distribution of benefits.
Statutory antitrust regulation would be fantastic. Instead of litigation, the regulators, corporations, and shareholders know when a business must split or divest. The firm files a plan, it gets approved, everyone wins except monopolists.
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.
Sounds like communism /s
Its called "free market capitalism". I have been in favour of it for decades: https://pietersz.co.uk/2009/11/fix-capitalism
I am somewhat more inclined to some socialist policies now though.
free market capitalism will always end like this though. the end goal of capitalism is the consolidation of all things into a megacorporation or oligarchy that controls everything, creates nothing, and earns infinite money
Why is this downvoted? To me, it seems like a self-evident conclusion. Even the supporters of the current system would probably agree with it. When you have a system that encourages endless growth at absolutely all costs, while placing no limits at the amount of power a single entity can hold, what other outcome can there be but the biggest players absorbing everything into themselves and using their influence over people and governments to guarantee their dominance?
We haven't had a free market in the United States in awhile. It's public-private partnered market fixing. Which is good for the consumer, many times, though not all the time.
Is there a difference in terms of outcomes? In the final form of a complete 'free market' without a government, the biggest entity would simply replicate the same levers of power that a government has through private militias, issuing scrip, having their own private courts and so on. But, since the US has a powerful government, it's much cheaper, simpler and more stable for them to just buy out as much of it as possible and use the same power through a proxy. Admittedly, the US government is not completely controlled by them, so it could still get much worse.
I had the pleasure of growing up around gray markets (relatively free, bribes were predictable & reasonable enough for an average noodle seller) in Southeast Asia in the 90s. It's quite different from large corporations getting Federal agencies and municipalities to lock out any potential competition. The enforcement of the US govt is far stronger than the enforcement of a handful of corrupt cops, as each precinct is essentially its own feudal regime, and within the department you have individuals mostly loyal to their families. A corrupt cop in a corrupt system driven by loose associations of extended families & fictive kin groups, one of five in a neighborhood say, can be pressured by a group of aunties and uncles serving street food or pirated goods through a web of personal relationships. This was much easier for them than hiring a lobbyist here would be.
I'm not saying it's better, rule of law has many benefits, but it is an example of where there were markets which were more free, that did not have cyberpunk outcomes, and they were quite different.
I'll say that I don't know anything about 90s SEA, but I know a bit about gray markets. One thing that stands out to me in your description is that all the corruption is incredibly localized and small-scale. Everything happens at the scale of individuals. And I don't deny that living under these conditions won't be that bad (a single corrupt official's power can only go so far), but what's stopping it from eventually becoming more organized? With us encouraging endless growth of wealth and influence, corrupt individuals are bound to form groups, then rings, then whole organizations. To me, what you're describing seems like a transitory state caused by societal factors, instability and simply not having had enough time. What the thread is all about is end states. We're already in a place where removing government regulation would turn our biggest players into those same cops, except with trillions of dollars, offices in every country and an ability to get their hands onto anything that money can buy.
