Forget Antifa

Private Equity is coming for you

May 07, 2024

The sticker shock when your beloved pet needs emergency veterinary care can be breathtaking. It does no good to rail against the clinic or the vets—they are barely squeaking by. No, the agents of oppression stressing pet parents are the same ones burdening nursing home patients, healthcare workers, newspaper reporters, and first-home buyers. The legions of Private Equity—stand-alone ventures or holding companies created by major corporations—form The Borg of Finance.

They are the Borg. (They hope) We will be assimilated.

We are the Borg. Surrender your ships. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us.

The target of PE Borg’s latest destructive campaign is veterinary medicine. It’s why your vet bill is so high. Atlantic writer Helaine Olen details how private wealth funds and corporations have gobbled up independent vet practices and smaller vet clinics to create behemoth chains:

Mars Inc., of Skittles and Snickers fame, is, oddly, the largest owner of stand-alone veterinary clinics in the United States, operating more than 2,000 practices under the names Banfield, VCA, and BluePearl. JAB Holding Company, the owner of National Veterinary Associates’ 1,000-plus hospitals (not to mention Panera and Espresso House), also holds multiple pet-insurance lines in its portfolio. Shore Capital Partners, which owns several human health-care companies, controls Mission Veterinary Partners and Southern Veterinary Partners.

The Private Equity Borg is an oligopoly, a form of market domination. To capture a market, powerful conglomerates must suppress competition and prevent unionization (or reduce employee/specialist/professional bargaining power another way). Although price fixing and other collusary behaviors are illegal, they are prevalent. The Borg is big . . . and government enforcement is dilatory.

Notes on a Criminal F***ing Conspiracy

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Or, when corporations do it, it might as well not be illegal. How else to describe the stealthy private equity takeover of the economy? It’s how they act, with impunity. Governmental attempts to restrict corporate power or regulate business operations are opposed via well-funded lobbying campaigns and scorched earth tactics against the few courageous politicians standing in their way.

Last November, I wrote about private equity forays into five economic sectors: healthcare, newspapers, nursing homes, manufactured housing parks, and apartment buildings. Now add veterinary care to the list of the vanquished.

Private equity acquisitions in metro Atlanta in 2021-22 significantly distorted the real estate market, creating hardship for homebuyers and long-term residents.

The private equity incursion into residential neighborhoods followed a familiar playbook. Use investors’ money to outbid individual home buyers, buy up vast swaths of neighborhoods, convert single-family-owned properties into rentals, increase rents, and decrease maintenance expenditures to maximize profits.
The PE companies’ enormous financial advantage made it easy for them to stifle competition and control local real estate markets.

Metro Atlanta is a case study illustrating this sophisticated thievery. In their investigation, the Atlanta Journal-Constitution found:

Metro Atlanta has become ground zero for an investor takeover of the American Dream.
Long the bedrock of family wealth for the middle class, single-family homes have been snatched up in the thousands by private equity firms and publicly traded companies, converted into rental properties and bundled into complex investment vehicles.
These firms did not create Atlanta’s affordability crisis. . . . But a growing body of evidence leaves little doubt that the flood of cash from investors has exacerbated it.
“They go after every listing under $500,000 … it’s like clockwork,” said Maura Neill, a realtor in Alpharetta. “The property gets listed and, sight unseen, they make offers within an hour.”

Back in the day, younger people, working people, and middle-class people could save up for a downpayment, apply for a loan, purchase a “starter home,” and commit to building equity over time. This road to family financial security was a long-term process that promoted economic and family stability, but long-term earnings require good faith actors operating in a fair and competitive real estate market. A housing market dominated by a few private equity companies with inexhaustible financial resources is neither fair nor competitive.

Economic Freedom— for Whom?

Conventional wisdom holds that economic freedom—the neoliberal vision of unfettered, competitive markets—is necessary for individual liberty and democracy. This dogma was pushed in the 1980s by anti-New Deal Republicans and during the 1990s by Clintonian New Democrats. The collapse of the Soviet Union and China’s embrace of for-profit enterprise seemed to validate neoliberalism. Individualism and economic freedom were linked, people thought; democracy was inevitable. The expansion of global markets meant the expansion of freedom.

So what happened? Did globalization birth a neoliberal utopia? Ixnay.

Russia became a kleptocracy under Putin who now seeks to reassemble the ~~Czarist~~ ~~Soviet~~ Russian empire. China . . . I don’t understand what’s happening with China. First I read that China is on the verge of challenging US dominance in the world system; the next two articles describe an exodus of multinationals from China and the imminent collapse of its real estate market. But a general global picture is taking shape: democracy declines, corporate profits increase, and populists ascend.

Nobel Laureate Joseph Stiglitz challenges the rhetoric of economic freedom espoused by right-leaning economists, financiers, and politicians. Stiglitz disputes the neoliberal argument not on ideological, but empirical grounds. His research has shown that unrestricted markets encourage oligopolistic behaviors by powerful corporate actors. This furthers economic inequality and creates unfreedom for the majority. When governments allow mergers and stock buy-backs of ever-expanding companies, the power of the state declines and the strength of the corporations increases. The environment suffers, the people suffer, and democracy wanes.

After decades of conservative propaganda, the neoliberal conviction—that free markets are the most effective mechanism for creating a high standard of living and government just gets in the way—is widespread. When rising inequality results in economic and status anxiety, it is diverted; instead of being directed at the cause of dysfunction, public frustration fuels anti-government sentiment and scapegoats vulnerable minorities.

Stiglitz:

It is remarkable that, in spite of all the failures and inequities of the current system, so many people still champion the idea of an unfettered free-market economy. This is despite the daily frustrations of dealing with healthcare companies, insurance companies, credit card companies, telephone companies, landlords, airlines, and every other manifestation of modern society. When there’s a problem, ordinary citizens are told by prominent voices to “leave it to the market.”

But shouldn’t investors be allowed to put their resources wherever they want? And charge a market price for their products? Isn’t that what it means to live in a free country?

Professor Stiglitz continues:

Any discussion of freedom must begin with a discussion of whose freedom we’re talking about. The freedom of some to harm others, or the freedom of others not to be harmed?
. . . Today, it is neoliberalism that has brought massive inequalities and provided fertile ground for dangerous populists. . . . Contrary to what [right wing economists] suggested, this form of capitalism does not enhance freedom in our society. Instead, it has led to the freedom of a few at the expense of the many. As Isaiah Berlin would have it: Freedom for the wolves; death for the sheep.

There is a viable solution. Stiglitz (who received the Nobel Prize in economics) explains how a better democracy—one that supports the will of the majority—can curb rent-seeking corporations, protect the environment, and create an equitable, sustainable economy. To expand freedom of all, fight for democracy.

Resist the Borg. We will not be assimilated!

And now, your moment of . . . youth action.

‘I’m in awe of our young people’: How Georgia’s Gen Z are taking on teargas, rubber bullets and the threat of arrest

The post-Soviet Georgian government’s bid to pass a repressive, Russia-style law has met spirited opposition, mostly from young people leaning toward Europe.

Since the first attempt to impose the law last year, Gen Z have taken the initiative in resisting it. . . . university and high school students have marched vigorously, singing, dancing and expressing themselves freely and creatively. Much better informed, connected and digitally knowledgable than their elders, these young people have demonstrated unbelievable organising skills.
With no formal leadership, these diverse groups of young people have formed broad and efficient volunteer movements. They distribute water, food, emergency supplies, and first aid. They also create groups on social media, conduct advisory campaigns on how to stay safe during the police crackdown, and help protesters from outside the city with travel and accommodation.
They do all this with ready hugs, smiles and offers of help. At first glance, it looks like a youth festival is happening on the streets of Georgia. But each night their peaceful parties turn into an authoritarian nightmare of arrests and tussles with government forces using teargas and rubber bullets.
Civil society and free media provide the checks and balances in the Georgian state system, and . . . Georgian society is well aware of the dark sides of the governing system – full-scale oligarchic crony capitalism, corruption, and “state capture.”