Book Review: Plunder: Private Equity’s Plan to Pillage America, by Brendan Ballou
Be prepared to be angry when you read this book. Many people are already aware that private equity companies are financial vultures and corporate cannibals. In this book Brendan Ballou draws the curtain back from the insatiable lust for financial gain of private equity firm operators, while being impervious to the devastation and literal death they cause. They accomplish this through a deliberate strategy of preying on constituencies who are least able to defend themselves. The extreme profits made from these activities provides an irresistible incentive for persons so inclined to engage in these tactics—the inhumanity of these individuals is rarely made public.
Ballou documents the repeated practice of purchasing a company (with someone else’s money), selling off its property for an quick profit, and then charging that company to lease back the property it once owned as well as pay exorbitant fees for the privilege of being owned by the private equity company. This emphasis on extraction above all else causes layoffs and poor service to customers, as well as often poor return to investors. Another, different and especially egregious, example is private equity operation of prison phone systems. In addition to excessive call charges to prisoners who cannot afford them, the law enforcement jurisdictions responsible for the prisons themselves receive some of the profits—a practice that walks and quacks like a blatant conflict of interest. Further examples of private equity short term profit extraction are similarly documented for nursing homes, hospitals, rental properties, and retail chains. Suing these companies is like chasing shape shifting phantoms that do tangible damage, while obscuring themselves from accountability.
The uncanny alliance between politicians, courts, and regulators in turning a blind eye and their even assisting this plunder of employees, customers, prisoners, and investors is difficult to fathom—until their political campaign contributions and intense lobbying are taken into account. Government officials at all levels are susceptible to influence, coercion, and co-opting by private equity operators, who expend significant funds on influence to provide favorable conditions for destructive private equity practices. At this stage, most of the government is captured at some level by these influences—yes, mainly through Republicans, although the Democrats being in power by itself does not ensure a clean slate. It’s strangely axiomatic that the amount of campaign money a candidate amasses often determines the differences between being elected and defeated—and it’s equally perplexing why the voting public is influenced by political ads to this unconscionable extent.
There are recourses available for stopping these cruel practices, which Ballou enumerates at the end of the book—if you read nothing else, read that part. Due to their outsized influence on government legislatures, administrations, and courts, the most reliable approach to rein in private equity excesses appears to be to kick them in the profits. Once these destructive behaviors are seen to be unprofitable, the bleeding from everyone else will at least be stanched—we should support effective efforts to apply the pressure now.
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