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...

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jonhohle 9 hours ago | parent | next [-]

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.

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jmyeet 8 hours ago | parent [-]

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.

	▲	parineum 8 hours ago \| parent [-]
		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.

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spyckie2 7 hours ago | parent | prev | next [-]

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.

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gosub100 6 hours ago | parent [-]

I've never heard of the tie between PE and pensions until today.

I find it very hard to believe that if pensions didn't exist, nobody would have come along and exploited the same loopholes.

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jmyeet 5 hours ago | parent [-]

I've been thinking about that comment and I don't think it makes sense. When it comes down to it, PE is really just doing two things:

1. Taking advantage of a pricing inefficiency; and/or

2. Using local monopolies, inelastic demand and regulation to jack up prices.

But what powers PE is the LBO (leveraged buyout). That is, you buy csome company with borrowed money and then you borrow against the assets of that company to repay your original loan.. That... shouldn't be allowed. Obviously that company is saddled with debt and it's usually structured to explode at some future point when the buyers won't actually own it anymore. I think of it like subprime lending in a way.

Now passive funds kind of have to buy sufficiently large companies. This has been an issue with the SpaceX IPO because SpaceX is doing a small float (~5%) and NASDAQ has changed the rules to essentially force passive funds to buy SpaceX where up until now that wasn't the case unless at least 25% of the company was available to buy. It's so nakedly corrupt.

Anyway, if a LBOed company saddled with complicated debt gets re-listed it kind of has a captive market of buyers with passive funds.

So going back to (1) there is long historical precedent for pricing inefficiencies. I'm speaking about the corporate raiders of the 1980s. The movie Wall Street was about this era (well that and insider trading). Essentially ailing companies would be trading below their book value. The book value was simply the value of assets (real estate, etc) so you could buy the company, sell it for parts and make a profit. All the lost jobs be damned.

The companies that tend to get targeted for PE own real estate. This has been a competitive advantage because yet other rent-seekers can't exploit them by jacking up rents. But real estate is an easy asset to sell to pay back your LBO and you can even split the real estate into a separate company and lease it back from that company. It's just financial hocus pocus.

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gosub100 5 hours ago | parent [-]

Sort of off topic but I like HN and comments like yours for educating me about subjects I would otherwise know nothing about. Thank you

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Karrot_Kream 4 hours ago | parent [-]

Please read a book about these things. HN commentary on any form of trending issue (of which PE acquisition is right now in various other social media) tends to be more about the commenter's own value judgement than any form of disciplined analysis. There are many case studies on LBOs and other forms of corporate turnarounds and you won't have social media pageantry affecting your thoughts.

Private Equity/Capital IMO is a pretty fascinating topic and I have some nuanced thoughts on it but this isn't the forum to have that conversation. There are great books out there on it though and I highly suggest reading them.

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gosub100 3 hours ago | parent [-]

Have you seen the stories / studies about how crowd sourced knowledge can be very accurate when taken in aggregate? I don't know the name for it, but if 1000 people guess how many peanuts are in a barrel, their errors cancel out and the average is quite close to the actual value. That's how I ingest social media comments.

	▲	Karrot_Kream 2 hours ago \| parent [-]
		Wisdom of the Crowds has been shown to be overly idealized and not particularly effective unless aggressively controlled for independence of opinions. Basically, if you tend to hang out on similar social platforms you won't actually be able to fight bias. Some papers about this: * https://pmc.ncbi.nlm.nih.gov/articles/PMC12216932/ * https://www.pnas.org/doi/10.1073/pnas.1008636108 I specifically find conversations about private equity to be highly polarized by community which is why I think it's a better idea to learn from first principles and then engage in the Internet commentariat.

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pphysch 8 hours ago | parent | prev [-]

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.