The Neoliberal Looting of America

https://www.nytimes.com/2020/07/02/opinion/private-equity-inequality.html

by rapnie • 6 years ago

46 9 6 years ago

pphysch2• 6 years ago

Any rebuttal from HNers on the merits of LBOs/private equity consolidation? I personally can't see the national benefit of it over 50 years.

SllX2• 6 years ago

Not going to defend private equity companies if only because I don’t care for them, but the author is chasing the wrong story. When the government is willing to bail you out when you make risky bets, then the government screws up the way the market is supposed to work.

Capitalism is a system of profit and loss, but if you don’t have to worry about the losses, then the incentive to do your due diligence on risky bets is also lost because you’re effectively playing with taxpayer money instead of your own. The real story is that we bought into too big to fail and that was a mistake.

pphysch2• 6 years ago

The corrupt politicians must be held accountable for enabling this snowball of financial deregulation and regulatory capture. Unfortunately, this is probably >90% of Capitol Hill. Corporate lobbying quid-pro-quo culture (read: corruption) is deeply entrenched.

If the recent KY primary is any indication, the corrupt authorities are going to fight very hard to avoid that moment, and reform will not occur bureaucratically.

Barrin92• 6 years ago

but the author is chasing the wrong story. When the government is willing to bail you out when you make risky bets, then the government screws up the way the market is supposed to work.

The author explicitly addresses this point when he argues that the free-market deregulation led to industry consolidation which led to the very policy environment you're critizing.

Capitalism isn't a system of profit and loss, it's whatever capitalists make of it and if you hand them enough power they'll eliminate the loss.

This is pretty much the very obvious insight of the last few decades. The system of deregulation and neoliberalism is contradictory because it destroys the tools it depends on, akin to how the laissez-faire attitude on speech which was supposed to strengthen democracy has in fact led to mass abuse, foreign interference and a general suspicion of free expression.

What the people like Hayek didn't get (probably because they were too busy complaining about socialism all day long), is that their system is fundamentally contradictory if left to its own devices and that functioning markets are socially constructed, and rely on being nurtured and maintained by principles that aren't found in the markets themselves.

Seabiscuit• 6 years ago

LBOs are not synonymous with private equity.

LBOs do not always lead to corporate raiding or asset stripping, in the same way that the restructuring and rationalisation that follow an LBO does not always result in mass redundancies. Theoretically, LBOs allow a company to avoid the pressure of the quarterly reporting cycle for a while and make more long-term decisions without facing instant 'repercussions'.

If you're interested in how LBOs got the reputation they got, and a case study in the biggest and most notorious LBO, try 'Barbarians at the Gate', which follows the LBO of RJR Nabisco.

mauflows• 6 years ago

Not an expert, but have experienced some pretty bad government services. I like the public market for private entities + gov entitlement route over public option. Seems like entitlements make it harder for a hostile administration to divest.

Plus soak the rich that neoliberalism helped create. Article didn't address this, but tenants of neoliberalism like free trade are helpful for peaceful negotiations among countries and global cooperation

The Neoliberal Looting of America

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