Speaker 1: Hey, there's that gang. It's super producer justin here letting
Speaker 1: you all know that as Miles is out of the
Speaker 1: country gallivanting across Italy, Jack's body turned against him, probably
Speaker 1: due to mentioning the Havana syndrome one too many times.
Speaker 1: Who knows. Anyway, he's now out sick. So instead of
Speaker 1: a brand new episode, we are re releasing this classic
Speaker 1: episode in case you miss it the first time.
Speaker 2: Enjoy Hello the Internet, and welcome to season two ninety three,
Speaker 2: episode one of der Allyshi Guys Say production of My
Speaker 2: Heart Radio. This is a podcast where we take a
Speaker 2: deep dive into america shared consciousness. And it is Tuesday,
Speaker 2: June twenty seventh, twenty twenty three, six two seven, twenty
Speaker 2: twenty three. You know what it means.
Speaker 3: Sorry my computers crashing. Oh wirral doesn't matter. They can't
Speaker 3: stop us because six twenty seven. Oh you better. I
Speaker 3: don't even know what I was gonna grow. I was
Speaker 3: gonna pivot to. But anyways, National Orange Blossom Day, National
Speaker 3: Sunglasses Day, International Pineapple Day, National peat SD Awareness Day,
Speaker 3: Micro Small and Medium Enterprise of National Onion Day, Naturally
Speaker 3: Type Testing a Natural ice cream Cake Day. There's a
Speaker 3: lot of days. Today we got them all.
Speaker 2: We got two of my favorites fragrances, you know, orange blossom.
Speaker 2: I got some orange blossom like candles blossom te ohney
Speaker 2: and then onion onion tea, yeah, onion.
Speaker 3: Candles that like that onion perfume that.
Speaker 4: You have is dish water right high watering, like because
Speaker 4: you just like get a little misty. Could you imagine
Speaker 4: if there was a thing where like you were just
Speaker 4: fucking emitting the ship that makes your eyes water from onions, like.
Speaker 3: Like, yo, the fuck is that actually cheering up near you?
Speaker 2: Well, my name is Jack O'Brien aka on we on
Speaker 2: we on we on we. I swear to you that
Speaker 2: I know this word man on we only hung wee
Speaker 2: hon we. I know how to speak, I promise you
Speaker 2: I can. That is courtesy of a cw GB O
Speaker 2: on the Discord making fun of me, humiliating me for
Speaker 2: a mispronounced thing. On we as n u n u
Speaker 2: y a U I what's the word u? Anyway, I'm
Speaker 2: thrilled to be joined as always by my co host
Speaker 2: mister Miles grab Wells Gray K. I'm a bitch.
Speaker 3: I'm in Orca thinking y'all just stop my Yorca. I'm
Speaker 3: a sinner. I'm a well I'm gonna hit you with
Speaker 3: my tail. Okay. Shout out to Algaraventa PG up in it,
Speaker 3: who found this on the Twitter. It's funny. I love
Speaker 3: when people find things that are like, yo, listen to AKA.
Speaker 3: They don't even listen to the show. But these people
Speaker 3: don't know what you wrote is an AKA And that
Speaker 3: was from Connor Daily on Twitter. But yeah, hell yeah
Speaker 3: Conners aren't they aren't the activities spreading of the orcas.
Speaker 2: Yeah, I think there was another one where they like.
Speaker 3: In like near the British Isles or something there. I
Speaker 3: call it British miles like I'm an old explorer.
Speaker 2: Yeah, I think I read about a new one. I
Speaker 2: don't know what it means for how far the message
Speaker 2: has spread from White Gladys, yes, but north of Scotland
Speaker 2: they say damn. They say that again, this could be
Speaker 2: like a slight thing where now.
Speaker 3: Like media is like being like this is this is
Speaker 3: a new thing or attack spreading like wildfire because I
Speaker 3: said quote it appears to be leap frogging across oceans.
Speaker 2: Well, they're fucking have like cell coverage out there, how
Speaker 2: would it be leap frogging they got that five gjack,
Speaker 2: or maybe whales swim that far that fast.
Speaker 3: Or maybe orcas just know how to stay on code.
Speaker 2: Yeah, that's right. Anyways, Miles, this is a very special episode.
Speaker 2: Our guest today is an expert or of a book
Speaker 2: that I will just say explained a lot, explained everything
Speaker 2: about how modern America operates in a lot of aspects.
Speaker 3: And you'll even hear me admit the beginning. I'm like
Speaker 3: I was going around a lot of my adult life
Speaker 3: vaguely understanding what we're talking about, and then but hearing
Speaker 3: it act properly and like reading it, have it be
Speaker 3: properly articulated by someone who's like looking at it from
Speaker 3: a legal standpoint, and like, oh, yeah, yo, that's fucking terrible.
Speaker 3: I mean, like I knew that broadly, but this is
Speaker 3: it gives it so much texture in a way that Yeah,
Speaker 3: but it.
Speaker 2: Might seem at first like a little depressing because it's
Speaker 2: like it's giving you really good texture on like why
Speaker 2: things are bad in certain ways. But I think ultimately
Speaker 2: it's kind of hopeful because it at least gives you
Speaker 2: an understanding of how things are actually operating. So We're
Speaker 2: going to talk to our expert guest, Brendan Belu, for
Speaker 2: a couple acts here for like the next forty minutes,
Speaker 2: come back and close things out after that. So we
Speaker 2: will talk to you guys in a bit.
Speaker 3: Just a caveat. I normally, I just I don't speak
Speaker 3: to the Feds normally, So please don't. I don't want
Speaker 3: you guys writing in about how.
Speaker 2: I made I was doing it. I said, it's a
Speaker 2: It's always been fine for me. Come along, friend, let's
Speaker 2: talk to the Fed. All right, miles, We are thrilled
Speaker 2: to be joined in our third seat by a federal
Speaker 2: prosecutor who served as special counsel at the Department of Justice.
Speaker 2: He is the author of the book Plunder, which he
Speaker 2: is here to talk to us about today. It is
Speaker 2: a hugely compelling, infuriating read about an industry I knew
Speaker 2: very little about. So Brendan, first of all, welcome, Thank
Speaker 2: you for joining us.
Speaker 5: Thank you so much for having me.
Speaker 2: So I just want to I want to go as
Speaker 2: long as I can talking about this without mentioning the
Speaker 2: name of the industry that your book is about, just
Speaker 2: because I feel like when I hear the two words
Speaker 2: that are the name of the industry, Like my brain
Speaker 2: just goes to sleep because it's also like the name
Speaker 2: that I've heard people who I like went to school
Speaker 2: with be like, oh, well I do some things and
Speaker 2: m and I'm just like, okay, I don't. I don't
Speaker 2: know what that's like, right, it's so divorced from reality
Speaker 2: and like anything that makes sense to me, And maybe
Speaker 2: that's by design, I don't know, but just some facts
Speaker 2: real quick. So these companies are massive and invisible in
Speaker 2: a lot of cases. You mentioned that they would be
Speaker 2: two of them would be the third and fourth biggest
Speaker 2: employers of people in the country behind Amazon and Walmart
Speaker 2: if they like admitted that they existed or owned these
Speaker 2: entities right one. This industry helps explain why ambulances are
Speaker 2: aren't free. Ambulances used to be free. Like you have
Speaker 2: a quote that is very close to some things we've
Speaker 2: been saying on our show, Like anecdotally, it feels like
Speaker 2: everything's getting a little worse. Our products are lower quality,
Speaker 2: our stores are understaffed. And this book, more than anything
Speaker 2: I've read recently, really helped me make sense of why
Speaker 2: that is or how that's happening. And then there's also
Speaker 2: this list of companies that this industry took over and
Speaker 2: then those companies declared bankruptcy that I just want to
Speaker 2: read through really quickly. Like, so we've got j Crew, Neiman,
Speaker 2: Marcus Toys, r us Sears, twenty four Hour Fitness, Aeropostyle,
Speaker 2: American Apparel, Brookstone, Player's, David's Bridle, dead Spin, Jimberry, Hurts,
Speaker 2: KB Toys, Linen's and Things, Mattress Firm, Nine West, pay
Speaker 2: Less Shoes, Radio, Shack Shop, co Sports Authority, true religion, friendlies, friendlies, yes.
Speaker 2: And I just so I had just kind of taken
Speaker 2: it for granted that those places, along with the like
Speaker 2: mom and pop stores like just no longer needed to
Speaker 2: exist because Amazon or something you know like that. It
Speaker 2: was just like Walmart and Amazon coming in and out
Speaker 2: dueling the mid size guys with scale. But a lot
Speaker 2: of those companies still deliver on the central premise of
Speaker 2: capitalism of like delivering value to people's lives and getting
Speaker 2: paid for it. And like, so this helped me fill
Speaker 2: in a bank a blank that like a lot of
Speaker 2: these companies are actually getting killed off by this scient
Speaker 2: killer that is private equity. Private equity folks said it
Speaker 2: all right again, a word that has the magical power
Speaker 2: to turn my brain off.
Speaker 3: But it's one of those words too, like it turns
Speaker 3: my brain off because it sounds like when I hear
Speaker 3: it so much that I'm embarrassed to admit how little
Speaker 3: I know about it. And you're like, yeah, private equity,
Speaker 3: I know, Like I hear that all the time, and
Speaker 3: if someone asked me to start explaining it, I would
Speaker 3: probably start like sounding like some maga republic in trying
Speaker 3: to explain like how the insurrection was an inside job
Speaker 3: or like the dog Like, well, the thing you got
Speaker 3: to understand is like the Clinton socks case and documents.
Speaker 3: And you're like, whoa, wait, huh that I'm that I
Speaker 3: think it's also that's sort of like the brilliant part
Speaker 3: of this industry is that it so many of us
Speaker 3: are blissfully ignorant of its power while it is able
Speaker 3: to just run rampant.
Speaker 2: Yeah, but let's talk scale first of all, Like these
Speaker 2: are massive companies, as you mentioned, third and fourth biggest
Speaker 2: employers in the country.
Speaker 5: Yeah, so it's kind of amazing how big private equity
Speaker 5: firms are. And I should say at the outset, of course,
Speaker 5: that I'm speaking purely personally and not necessarily reflecting the
Speaker 5: views of my employer. So let's just talk numbers here.
Speaker 5: As you mentioned the some leading private equity firms, if
Speaker 5: they were considered with their portfolio companies, would be the third, fourth,
Speaker 5: and fifth largest companies in America after just Amazon and Walmart.
Speaker 5: In terms of what they're buying. Private equity firms spent
Speaker 5: a little over trillion dollars buying companies last year and
Speaker 5: one point two trillion dollars the year before. Just for
Speaker 5: a sense of perspective, the entire US GDP is about
Speaker 5: twenty five trillion dollars, so it's not an insubstantial part
Speaker 5: of the entire US economy. And in terms of where
Speaker 5: they're spreading out, it's just about every industry you name,
Speaker 5: you can think of. You know, you already named, you know, ambulances,
Speaker 5: you named a lot of retail stores and so forth.
Speaker 5: But whether we're talking about healthcare, housing, prisons, education, municipal services.
Speaker 5: You know, literally the font of my book was owned
Speaker 5: and licensed by a private equity portfolio company, so it
Speaker 5: really surrounds you.
Speaker 2: Yeah, I guess my assumption and maybe maybe the reason
Speaker 2: that like the the ideas behind private equity like didn't cohere,
Speaker 2: didn't like stick. My brain is that like it doesn't
Speaker 2: they don't take over, And I guess the premise is
Speaker 2: right that they take over a company and they figure
Speaker 2: out ways to make the company better and more profitable,
Speaker 2: like as this, you know, in and of itself, this
Speaker 2: company now delivers better value to the customers that serves
Speaker 2: that are cheaper price. But instead of doing that, they
Speaker 2: really seem to be doing something between that and stripping
Speaker 2: it for parts and like getting them to pay them
Speaker 2: fees and putting them out of business in a way
Speaker 2: that is legally structured so that they don't face any
Speaker 2: of the consequences.
Speaker 5: Yeah, you know, I think, you know, Miles kind of
Speaker 5: framed it right because it's something that I felt starting
Speaker 5: out of this project. Is private equity is a word
Speaker 5: that a or a term that I think we've all heard,
Speaker 5: but like if we're honest, like we usually don't actually
Speaker 5: know what it means. And I'll confess I didn't know
Speaker 5: what it meant until about a third of the way
Speaker 5: through this project. So I don't think anybody should feel
Speaker 5: embarrassed about that.
Speaker 2: So just taking a step back, So what is private
Speaker 2: equity and.
Speaker 5: How does this business model work. So private equity firms
Speaker 5: take a little bit of their own money, some investor money,
Speaker 5: and a whole lot of borrowed money to buy up
Speaker 5: companies you were saying, Jack, And then what they do
Speaker 5: is they sort of enact these operational or financial changes
Speaker 5: with the aim of selling it for a profit a
Speaker 5: few years later. So it's a very simple idea. But
Speaker 5: the problem that we've got is our laws and regulations
Speaker 5: are structured in a way that really leads to a
Speaker 5: lot of bad outcomes. So, for instance, private equity firms
Speaker 5: typically just own companies for a few years, so they
Speaker 5: have a very short term perspective. And when they own them,
Speaker 5: they tend to load the companies up with a lot
Speaker 5: of debt, and they tend to extract a lot of fees.
Speaker 5: And then third, and this is the part that interests
Speaker 5: me the most is a lawyer, is they're extremely good
Speaker 5: at insulating themselves from legal liability for the consequences of
Speaker 5: their actions. So when you've got those three problems, it
Speaker 5: leads to all the things that we're talking about here.
Speaker 5: Short term, a lot of debt, insulation from responsibility. It
Speaker 5: means that private equity firms often profit but the companies,
Speaker 5: the customers and.
Speaker 2: The employees often don't. Yeah, And it like how much
Speaker 2: is that? Because like that that is something even as
Speaker 2: you are describing it, like just this idea of adding
Speaker 2: hidden fees to these companies and extracting fees like using
Speaker 2: them like ATM machines and like doing things that are
Speaker 2: just like short term value grabs as much as possible
Speaker 2: or just like money grabs. Like that seems to be
Speaker 2: like you talk about how these are the new cool
Speaker 2: places to work in the finance industry, and it like
Speaker 2: that logic of like no longer think about long term
Speaker 2: health and just like kind of cynically like smashing a
Speaker 2: company until smashing thing you are doing business with until
Speaker 2: it gives you money.
Speaker 5: Like that.
Speaker 2: It feels like that we're seeing that kind of everywhere,
Speaker 2: like when we talked about like the new HBO Max
Speaker 2: changing its name to Max and like that. But like
Speaker 2: his main insight is like just cut budgets like that.
Speaker 2: That's the other thing that just keeps coming up over
Speaker 2: and over again is like their big insight, if you
Speaker 2: can that is just like cut budgets, don't don't spend
Speaker 2: any money so that we can turn things around really quickly,
Speaker 2: and that that ends with them like being understaffed during
Speaker 2: like they they cut doctors, like what one of one
Speaker 2: of the private equity firms that like bought an ER
Speaker 2: was in some way like in charge of an R
Speaker 2: was like cutting staff during the COVID pandemic. Like it's
Speaker 2: it's just they they only have like three answers and
Speaker 2: they're they're all just short term value graps. Right, Yeah, Well,
Speaker 2: let me.
Speaker 5: Give an example of sort of how this sometimes works,
Speaker 5: it works in practice, and then maybe I can address
Speaker 5: I think what your broader point is here. So you know,
Speaker 5: one of the examples that I always turned to is
Speaker 5: Carlisle's acquisition of HCR Manor Care, which was this very
Speaker 5: large nursing home chain in the United States. So they
Speaker 5: bought it up primarily with death, executed a lot of
Speaker 5: tactics that you were sort of alluding to, like what's
Speaker 5: called a sale lease back, where they required Manor Care
Speaker 5: to set all of its buildings and offices and then
Speaker 5: lease it back to itself, which kind of gives it
Speaker 5: a quick hit of cash, but means that now they
Speaker 5: sort of have a lease on something that they used
Speaker 5: to own. They extracted transaction fees and management fees, which
Speaker 5: were essentially fees for the privilege of being owned by
Speaker 5: the private equity firm. And you know, understandably, you know,
Speaker 5: when you start extracting money and disinvesting in the company,
Speaker 5: health code violet, health code complaints spike. You know, residents
Speaker 5: start complaining about you know, rodents and roaches and things
Speaker 5: like that. Eventually somebody dies in one of the nursing homes.
Speaker 5: But when their family sues for wrongful death, Carlisle's able
Speaker 5: to get the case against it dismissed by arguing that
Speaker 5: it is not the technical owner of the nursing home chain. Instead,
Speaker 5: it merely advises a series of funds whose limited partners,
Speaker 5: through several shell companies, own the nursing home chain.
Speaker 2: And that's enough to.
Speaker 5: Get the case against it dismissed. And that's you know,
Speaker 5: sort of a typical exam Buller. I shouldn't say typical,
Speaker 5: but a frequent enough example of how you can have
Speaker 5: a bad consequence with this business model. Now, if I
Speaker 5: can get to it, I think what your broader point is,
Speaker 5: which is I think that there's a feeling in this
Speaker 5: economy that you know, there's sort of a short term
Speaker 5: perspective that there's a sort of idea of extraction rather
Speaker 5: than investment and all these things, and I think that
Speaker 5: there are sort of broad macro things happening in our
Speaker 5: economy that can account for that, and sort of talking
Speaker 5: about the rise of the ideology of shareholders supremacy.
Speaker 2: And things like that.
Speaker 5: But one thing that I always try to hit home
Speaker 5: is that private equity actually is new and is different,
Speaker 5: and it's something sort of unique and separate from the
Speaker 5: rest of the financial industry. Which is not to say
Speaker 5: that the rest of the financial industry is pure and
Speaker 5: clean and you know, perfect, but it's something distinct. And
Speaker 5: I do that because I think if we sort of
Speaker 5: throw up our hands and say that the entire sort
Speaker 5: of economy is broken, the nature of capitalism has failed,
Speaker 5: and so forth, it can lead to a certain level
Speaker 5: of you know, sort of nihilism. Whereas if you say,
Speaker 5: we've got this specific problem with this private equity business model,
Speaker 5: I think it's something that we can actually fix.
Speaker 2: Right. Yeah, I definitely felt more knowledgeable and therefore hopeful
Speaker 2: following reading your book than I did before, because, yeah,
Speaker 2: it doesn't feel necessarily like it is everything having to
Speaker 2: do with capitalism it feels like capitalism has this horrible
Speaker 2: version of like capitalism cancer that is just you know,
Speaker 2: invading and being able to spread, and it's silent and
Speaker 2: so and kind of invisible to a lot of people,
Speaker 2: and so it's kind of out of control, I.
Speaker 3: Think to that point, right of being able to diagnose
Speaker 3: the issues, because I think broadly we see the issues
Speaker 3: of capitalism in this form of hyper capitalism we're in.
Speaker 3: But it's one thing to be able to say, okay, now,
Speaker 3: let's be able to an or be able to diagnose
Speaker 3: these specific causes because before, like to Jack's point, I
Speaker 3: was on a like just sort of this ignorant path
Speaker 3: of being like I don't know, the Amazon like ruined
Speaker 3: all these like small places. I'm like, I don't know.
Speaker 3: Maybe people are aren't buying toys anymore. That's why Toys
Speaker 3: r US went under. And it's like, no, it's because
Speaker 3: there is a very it's like a very proven method
Speaker 3: of making money like this, and it's and it's we're
Speaker 3: incentivizing it because people are also on top of this,
Speaker 3: like's like I don't want to lose sight of the
Speaker 3: amount of money that these people make sort of at
Speaker 3: at our own expense at the expense of these people
Speaker 3: that are in these you know, nursing homes or in
Speaker 3: prison or working for certain countries or certain companies. Sorry,
Speaker 3: but you're like you point it to like a really
Speaker 3: interesting statistic, because just to give people an idea of
Speaker 3: how wealthy the people that are involved in the pe
Speaker 3: pirate equity or whatever you want to call it, to
Speaker 3: get people's ears like up a little bit, like what's
Speaker 3: the like, what's the sort of disparity and how much
Speaker 3: money these people make versus something like we can wrap
Speaker 3: our heads around, like you know, like professional athletes.
Speaker 2: Yeah.
Speaker 5: So one of the statistics that really grab my attention
Speaker 5: is that there are now more private equity managers who
Speaker 5: make over one hundred million dollars a year than all
Speaker 5: other financial executives, investment bankers, and professional athletes combined. So
Speaker 5: this tiny part of the industry is really dominant. I mean,
Speaker 5: you know, to go back to a point I think
Speaker 5: you were making earlier jack about how private equity, even
Speaker 5: though this sort of obscure sounding thing is is sort
Speaker 5: of the hot place to be in finance. The head
Speaker 5: of Blackstone, which is one of the leading private equity firms,
Speaker 5: last year made I think ten times as much as
Speaker 5: the CEO of Goldman's Acts, and I don't think the
Speaker 5: CEO of Goldman's Acts is terribly underpaid. So you know,
Speaker 5: these are areas where, you know, literally you have folks
Speaker 5: whose net worth is the GDP of you know, some
Speaker 5: small country.
Speaker 2: Right, yeah, yeah, you taught you describe some parties that
Speaker 2: they're throwing in the book, and it's.
Speaker 3: And the whole head of Goldman is the DJ. That's
Speaker 3: how these guys are, Like, dude, I have him here
Speaker 3: to be the DJ, not to be a guest.
Speaker 5: I think one of the parties Stephen Schwartzman's seventieth birthday,
Speaker 5: he's that he's one of the heads of Blackstone has
Speaker 5: I think at least one or two Chinese temples built
Speaker 5: in his honor on his property in Florida, had sort
Speaker 5: of dancers, hired the cast of Jersey Boys boys brought
Speaker 5: in and had Gwen Stefani sing him Happy Birthday personally.
Speaker 5: So you know, these folks have a fair amount of
Speaker 5: money to work with.
Speaker 2: And he's got taste.
Speaker 3: You know, he's a no, no doubt fan. He's like,
Speaker 3: I love Tragic Kingdom. How much money do I got
Speaker 3: to pay for you and Tony to get back together
Speaker 3: the basis I loved that that don't speak video. The
Speaker 3: other thing too, is like again we talk about because
Speaker 3: everything is typically that we see, it's always praying on
Speaker 3: the weakest in our society, whether it's like draconian legislation
Speaker 3: or like the kinds of consumers these companies go after.
Speaker 3: I feel like it's like almost guaranteed that the people
Speaker 3: that are on the shit end of the deal are
Speaker 3: working people or people who have no options. Can you
Speaker 3: talk about like how specifically, like how this works too,
Speaker 3: because there is a methodology to getting as much money
Speaker 3: as they can out of this because they know they
Speaker 3: have a sort of captive consumer base.
Speaker 5: Yeah, I think your phrase captive consumer base is exactly right,
Speaker 5: because you know, I started out on this project, I
Speaker 5: sort of assumed that private equity firms would go after
Speaker 5: industries for wealthy people, because you know, that's where the
Speaker 5: money is. But I was surprised by how many industries
Speaker 5: or businesses private equity firms bought up that targeted not
Speaker 5: the rich, but the poor and working class. You know,
Speaker 5: whether we're talking about we sort of alluded to this earlier,
Speaker 5: you know, prison services, mobile homes, for profit colleges, various
Speaker 5: parts of the healthcare industry that target sort of lower
Speaker 5: income and working class families. And I think the reason
Speaker 5: for that buy and large is working class people have
Speaker 5: fewer alternatives. So when you're talking about prison services, you
Speaker 5: can lower the quality of care, or when you're talking
Speaker 5: about mobile homes, you can raise the cost of the
Speaker 5: lot at least because folks literally don't have an alternative
Speaker 5: and don't have another option. Yeah, you taught you mentioned
Speaker 5: elsewhere in the book about how like why ers are
Speaker 5: attractive to them, and it's you know, the inelasticity of
Speaker 5: demand and the fact that nobody really has has much
Speaker 5: say over where they are when they get shot or
Speaker 5: have a heart attack, and so they're like bingo, these
Speaker 5: this consumer base isn't going anywhere, and so we can
Speaker 5: function up as bad as we want to, essentially, and
Speaker 5: we'll have we'll be able to spend very little and
Speaker 5: continue extracting money from people.
Speaker 3: It kind of just reminds me of just like you
Speaker 3: were saying, like ambulances used to be free, that to
Speaker 3: the point now we have like it's now in our consciousness,
Speaker 3: no no, no, called ambulance.
Speaker 2: Yeah, they'll do that don't do that, and.
Speaker 3: You're like, oh, that's the invisible hand of private equity
Speaker 3: right there, just putting that into our minds.
Speaker 5: It's really interesting, you know, ambulances specifically, I think for
Speaker 5: folks from our generation, like we didn't even really realized
Speaker 5: that until pretty recently. You know, ambulances used to be
Speaker 5: largely owned by municipalities. It wasn't until the nineteen nineties
Speaker 5: and two thousands that you started having this privatization movement,
Speaker 5: and private equity firms have gotten very active in ambulances.
Speaker 5: One of the really interesting things is it doesn't seem
Speaker 5: like they've done a terribly great job managing them. There
Speaker 5: was a really interesting expos in the New York Times
Speaker 5: about them, about how sort of a disproportionate number of
Speaker 5: ambulance companies owned by PE firms were going bankrupt and
Speaker 5: going out of business and so forth. But to take
Speaker 5: one step back, I mean, I think emergency rooms are
Speaker 5: the really interesting story because two private equity firms own
Speaker 5: the leading physicians staffing companies for emergency rooms, and according
Speaker 5: to research by some folks at Yale, really the business
Speaker 5: model of these staffing companies is essentially to staff the
Speaker 5: doctors at these emergency rooms in a way strategically so
Speaker 5: that people pay surprise out of network bills. So you
Speaker 5: go to a hospital, you think it's in your in
Speaker 5: your network for your insurer, but you're actually treated by
Speaker 5: a doctor who works for a different hospital and as
Speaker 5: a result, have to paint out of network bill.
Speaker 2: So it's yeah, it's an area, Yeah, go ahead, it's
Speaker 2: just trick. It's it's adding confusion, adding complexity to the
Speaker 2: system so that they can extract fees without delivering any
Speaker 2: value whatsoever. Like that really seems to be Sorry, let's
Speaker 2: take a quick break and I yeah, I want to
Speaker 2: kind of come back and just look further at the
Speaker 2: track record because it really like the number of examples
Speaker 2: you give really suggests this is the model. Like this
Speaker 2: is this is what they do. They come in, they
Speaker 2: make it worse. They somehow get so rich that they
Speaker 2: can build Chinese temples at their birthday party.
Speaker 3: With Gwen Stefani.
Speaker 2: Yes, with Gwen Stefani, And we're back. So that story
Speaker 2: about how their insight into staffing was to trick people
Speaker 2: into using doctors outside of their network is just one
Speaker 2: of the stories in your book that is incredibly infuriating.
Speaker 2: There's also the worst hacking disaster in US history. Do
Speaker 2: you want to talk about how that came about in
Speaker 2: partnership with private equity.
Speaker 5: Yeah, So, two private equity firms bought up the tech
Speaker 5: company Solar Winds, which provides a lot of sort of
Speaker 5: like boring it and security services to companies. Looking through
Speaker 5: the documents in Solar Winds public filings, it appears that
Speaker 5: after it was bought by a private equity firm, staffing
Speaker 5: company was cut, and at least according to their public disclosures,
Speaker 5: a lot of their engineering work was moved overseas, including to,
Speaker 5: among other countries, Belarus, which is great yeah in the
Speaker 5: news recently. Yeah yeah, oh Lukashenko, great guy.
Speaker 3: Yeah, yeah yeah.
Speaker 5: Whether that's causal or not, ultimately, Solar Winds suffered what
Speaker 5: one government official called the greatest hack in United States history.
Speaker 5: I believe the Department of Defense, Treasury, State Justice, and
Speaker 5: others were all compromised, and at least it appears on
Speaker 5: sort of initial reporting that the leaders of the private
Speaker 5: equity firms may have dump stock in advance of the
Speaker 5: public disclosure of that. Now there's an investigation going on
Speaker 5: to that at the SEC. I don't know what the
Speaker 5: outcome of it was but it was another example of
Speaker 5: you know, you have this industry, you know sort of
Speaker 5: it security that really needs to be thinking in terms
Speaker 5: of years and really decades for how to make sure
Speaker 5: that you've got to secure product when you're working with
Speaker 5: the government and they're being bought or controlled by private
Speaker 5: equity firms that are trying to make a profit you know,
Speaker 5: in a matter of months or a manner of years,
Speaker 5: and it's just a very different perspective for how to
Speaker 5: run these businesses.
Speaker 2: Yeah, yeah, that's right. I mean similar to the you know,
Speaker 2: getting involved in er staff thing that they also took
Speaker 2: over the operation of nine to one one calls at
Speaker 2: one point, Like just all these things that Yeah, it
Speaker 2: just when you read stories of businesses that become successful
Speaker 2: over the over a long period of time, like it's
Speaker 2: really about fixating on like how to do the one
Speaker 2: thing that they do for customers like better than anyone else.
Speaker 2: And time and time again, it seems like when these
Speaker 2: private equity firms come in, like it's just like that
Speaker 2: is the third or fourth thing that they're interested in,
Speaker 2: and the most interesting thing is delivering value for themselves
Speaker 2: and get yeah, financial success it's interesting. You know, you
Speaker 2: look at the biographies of folks that run private equity
Speaker 2: firms and it's you know, it's not a critique of them,
Speaker 2: it's not a surprise, but you know, it's generally folks
Speaker 2: that do not have experience in sales or it or
Speaker 2: engineering or marketing or logistics. It's folks with a financial background.
Speaker 2: And so when they approach these companies typically, you know,
Speaker 2: not always, but typically, you know, what they're trying to
Speaker 2: make are essentially sort of financial changes to these businesses
Speaker 2: that's going to you know, get a fairly quick return.
Speaker 2: You know, you look at the diversity of what some
Speaker 2: of these private equity firms buy into. You know, it's
Speaker 2: a plastic logistics company, it's a municipal water service, and
Speaker 2: it's that dating app bumble, you know, and it's like
Speaker 2: one person doesn't really have the expertise to run all
Speaker 2: those different kinds of companies.
Speaker 3: Yeah, they just know how to make line go up right,
Speaker 3: And it's sort of like, oh, what what does that mean.
Speaker 3: It's like, well, we're not gonna have enough nurses. I
Speaker 3: don't know, man. But then when I look at these projections,
Speaker 3: I like what I'm seeing. Let's do that and figuring
Speaker 3: out afterwards. What's really difficult is, like we hear about
Speaker 3: all this, it is so apparent to everyone, you know,
Speaker 3: Like I think at this point, even everyone listening is like, right, okay, okay,
Speaker 3: pirate equity bad or like not not necessarily out here
Speaker 3: where everyone's best interest. But then you think about, like
Speaker 3: a lot of the examples that you give in your book,
Speaker 3: like it's also very very hard to hold these fucking
Speaker 3: people to account because of the nature of like all
Speaker 3: of the advantages that these companies have, whether it's through lobbying,
Speaker 3: whether it's through like a revolving door of entities that
Speaker 3: have been in government that end up there and then
Speaker 3: end up lobbying people they already know on the hill
Speaker 3: and things like that, or just the amount of complex
Speaker 3: like like hight like whack a mole of who owns
Speaker 3: this thing that all come together. Because I think a
Speaker 3: lot of the times, especially when we talk about these issues,
Speaker 3: like on our show, we're like, well, what's the problem.
Speaker 3: Why can't it why can't it stop? Right, Like it's
Speaker 3: we get it, We're seeing it. Like the cost is
Speaker 3: people losing their lives, the cost is people going bankrupt,
Speaker 3: the cost is untold suffering, and then you know, to
Speaker 3: be real, it's like, hey man, we're looking at you
Speaker 3: the FEDS.
Speaker 2: What's going on? Uh?
Speaker 3: And I know you've said this too, like it's the
Speaker 3: federal Like the DOJ is not the only end to
Speaker 3: you that can go after this, But like, how how
Speaker 3: do you explain like when people talk about the frustration
Speaker 3: of like well then what like something's out of give
Speaker 3: where where will it give?
Speaker 2: It will give? Yeah?
Speaker 5: Yeah, it's a huge issue because you know, as you
Speaker 5: started off, you know, private equity I think has been
Speaker 5: uniquely successful in lobbying. You know, if you look at
Speaker 5: who private equity firms have hired, it's former secretaries of State, Treasury, Defense,
Speaker 5: two former Speakers of the House, to a vice president,
Speaker 5: former chair people of the FCC and SEC. I mean,
Speaker 5: it's a really deep bench, and that means that they
Speaker 5: have just been extraordinarily successful at sort of advancing their
Speaker 5: legislative and regulatory agenda. I think the other challenge that
Speaker 5: we've got, and I think you hit on this exactly right,
Speaker 5: is it's really hard for ordinary people to hold private
Speaker 5: equity firms accountable. We have this doctrine called corporate veil piercing,
Speaker 5: which means that it's very hard to hold an investor
Speaker 5: responsible for the actions of the company that they invest in.
Speaker 5: That makes sense for you and me, where we've got
Speaker 5: our little Vanguard account and have like one share of
Speaker 5: stock and a company, you know, we don't really have
Speaker 5: much to say over them. That doctrine doesn't necessarily make
Speaker 5: sense for a private equity firm that has a controlling
Speaker 5: stake in these businesses and can essentially tell them what
Speaker 5: to do. And then lastly, I mean, I think you
Speaker 5: hit the point exactly right, which is a lot of
Speaker 5: times it's just hard to even figure out.
Speaker 2: Who owns what and who to sue. I talked with
Speaker 2: folks that sue nursing homes on behalf of families whose
Speaker 2: you know, parents died or were injured or whatever it
Speaker 2: happens to be, and they're telling me, you know, look,
Speaker 2: these guys have these really broke organizational structures where they're
Speaker 2: shifting assets across multiple shell companies and you know, sort
Speaker 2: of across different shells, and it's really hard to figure
Speaker 2: out who is responsible and who has the assets to recover.
Speaker 2: So it's a really tough problem.
Speaker 3: Yeah, and it's something that's becoming normal too, like other
Speaker 3: industries are like you know what kind of works is
Speaker 3: if you kind of spread it all around, right, no
Speaker 3: one knows how to get like seek damages.
Speaker 2: Right. Yeah. You tell this one really memorable story about Ashford,
Speaker 2: which is, you know, a Franciscan University of the Prairies
Speaker 2: is what it's called. But it's like a really small
Speaker 2: college run by nuns. And then it gets taken over
Speaker 2: and turned into Ashford University, which becomes this you know,
Speaker 2: Phoenix University like adjacent thing, and it's really this like
Speaker 2: outraging thing. And then you also mentioned that like the
Speaker 2: private equity firm that now runs it is Warburg Pinkus,
Speaker 2: which is run by Obama's former Treasury Secretary Secretary Tim Geitner.
Speaker 2: And it's just like you just see that over and
Speaker 2: over again, like the amount of people from positions of
Speaker 2: power who like know how things work better than anybody.
Speaker 2: You know, most people listening to this and like know
Speaker 2: how things really work behind the scenes are are going
Speaker 2: into private equity and it just really feels like a eluding,
Speaker 2: a plundering that's happening.
Speaker 5: I yeah, I heard this third hand, so I don't
Speaker 5: know how true it is. But there was a senior
Speaker 5: government official who ended up doing some work for a
Speaker 5: private equity firm, and somebody was chiding them, and they said, look,
Speaker 5: you know, it's not who's working for private equity, it's
Speaker 5: who isn't working for private equity right now. So it's
Speaker 5: it's pretty extraordinary the breadth of their success.
Speaker 3: Right and just like the greed, how it compounds itself,
Speaker 3: you know, because now it's like it seems like you're
Speaker 3: almost incentivized to get into private equity because of how
Speaker 3: little repercussions people face. And I'm curious, like when you
Speaker 3: have a case like like the ones we've talked about,
Speaker 3: when it's like, yeah, man, like they own this company
Speaker 3: and they basically started throttling back their level of care
Speaker 3: which led to someone losing their life. Okay, well, then
Speaker 3: tell me who owns this and that person's responsible. Like
Speaker 3: when these cases get like dismissed things, is that the
Speaker 3: cynical part of like, I think, the cynical shorthand version
Speaker 3: of someone who believes in how like cronyism works and
Speaker 3: things like that, believe that like, oh, the judges are
Speaker 3: in on it too. Everybody's in on this. That's why
Speaker 3: it's happening. But I think you've also raised the point
Speaker 3: that it's not necessarily like like there's there's a huge
Speaker 3: barrier to get over, which is informing people of how
Speaker 3: this even works too, and like having enough public pressure
Speaker 3: like around this idea or this industry of private equity
Speaker 3: that gets people to sort of be on the same
Speaker 3: page to understand the issues.
Speaker 5: Yeah, you know, I think one of the challenges that
Speaker 5: we've got is exactly what you're saying is education. And
Speaker 5: that's not just educating you know, sort of your listeners
Speaker 5: or you know people and you know, you know, people
Speaker 5: that are just generally interested in this topic. It's also
Speaker 5: informing judges, people in government, you know, what private equity
Speaker 5: is and what the practical consequences are. One of the
Speaker 5: challenges that I think people who are critical of the
Speaker 5: private equity business model have is, you know, private equity
Speaker 5: frames have an enormous amount lount of money to lobby
Speaker 5: and to litigate their issues, and the other side, you know,
Speaker 5: just has a fraction to do the same thing.
Speaker 4: You know.
Speaker 5: One of the.
Speaker 2: Cases was over this obscure sort of retirement law issue,
Speaker 2: and at stake was like four point five million dollars
Speaker 2: for the private equity firm. It was essentially a rounding error.
Speaker 2: They spent ten years litigating the case in order not
Speaker 2: to have to pay out because they had the resources
Speaker 2: to do it and they wanted to set the precedent
Speaker 2: that they could. And so, you know, we've got to
Speaker 2: inform people, and we've also got to figure out how
Speaker 2: to sort of empower activists and folks that want to
Speaker 2: work on this stuff so that they can do this
Speaker 2: work for the long term. Right, can we can we
Speaker 2: just list some of the industries where people might have
Speaker 2: seen their work, because it just going back to that
Speaker 2: initial statement about like we have an anecdotally everyone seems
Speaker 2: to have a feeling that things are getting worse, but
Speaker 2: you know, it's kind of hard to we don't have
Speaker 2: much to compare it to. But they're you know, there's
Speaker 2: presence in the dental industry, veterinary I think you mentioned
Speaker 2: grocery stores at one point that they're one of the reasons.
Speaker 2: They're like two grocery stores in the in the country
Speaker 2: that didn't used to be the case. Yeah, yeah, So
Speaker 2: private equity is you know, I don't want to overstate
Speaker 2: the case, but they they're active in you know, most
Speaker 2: most every industry that you can think of, whether you're
Speaker 2: talking about sort of retail things we were talking about toys,
Speaker 2: r us and stuff earlier, or grocery stores.
Speaker 5: As you say, when we're talking about healthcare, it's not
Speaker 5: just emergency rooms and ambulances. It's ordinary sort of opgyn
Speaker 5: and urgent care clinics buying up literal insurance companies, you know,
Speaker 5: life insurance claims, of worker compensation companies, to things like
Speaker 5: manufacturing infrastructure. In some places, private equity firms literally bought
Speaker 5: up the municipal water services that you might use to drink,
Speaker 5: you know, water from your tap.
Speaker 2: How'd that work out for them?
Speaker 5: Unfortunately, it didn't work out terribly well. So the private
Speaker 5: equity firm operated it with A with A as a
Speaker 5: joint venture, ultimately dramatically raised the price for users to
Speaker 5: such an extent that local reporters were saying that people
Speaker 5: quote unquote became water nazis, would time their family members
Speaker 5: in the shower and would only buy flowers that didn't
Speaker 5: require a lot of water. So, unfortunately, that's a contract
Speaker 5: that those two cities are now going to have to
Speaker 5: sit with for the next thirty years or so because
Speaker 5: of how is how is negotiated. But to the extent
Speaker 5: you're interested in these things and you're concerned about a business,
Speaker 5: you know, private equity firms rarely advertise their ownership, So
Speaker 5: what you should do is google the company name and
Speaker 5: just add private equity and see what comes up.
Speaker 2: Yeah, chances are.
Speaker 3: It's almost like what industries aren't they involved in?
Speaker 2: It might be an easier question.
Speaker 3: Yeah, it's like, oh, yeah, they're not behind the push
Speaker 3: for medicare for all. I'll tell you that they don't
Speaker 3: have they don't have a dog in that fight unless
Speaker 3: it's on the other side of it.
Speaker 2: Yeah, I don't think they're active on that one. Yeah. Interesting,
Speaker 2: How do you talk about it? Like I've there's been
Speaker 2: in a couple social settings since reading your book and
Speaker 2: just been like, yeah, it's crazy, but like unable to
Speaker 2: like really fully you know, put into words because it's
Speaker 2: the problems like so big and so acute. But like,
Speaker 2: how do you usually introduce the idea of your book
Speaker 2: to people? Like when you're just like talking to them
Speaker 2: at a cocktail party or something.
Speaker 5: I always explain the basic business model, and I say
Speaker 5: that private equity is going to transform the country. In
Speaker 5: this decade the way that big tech did in the
Speaker 5: last decade and subprime lenders did in the decade before that.
Speaker 5: And I say, what, the three basic problems are short termism,
Speaker 5: a lot of debt and fees, and insulation from liability.
Speaker 5: And if we can fix those three things, we can
Speaker 5: basically solve the problem.
Speaker 3: Yeah, And that's kind of another thing I want to
Speaker 3: talk solving the problem because again, a lot of the
Speaker 3: times it's easy to fall into the nihilism of being like,
Speaker 3: well this is it, like I don't know, like I
Speaker 3: don't even know, we don't even know who to sue
Speaker 3: talked about how like again, activists have helped to like,
Speaker 3: you know, offset or alleviate the cost of like phone
Speaker 3: calls from prisons, you know, like actually have made headway there,
Speaker 3: and like that's a victory. What are some other like
Speaker 3: is what are some other specific areas where we are
Speaker 3: seeing some bit of the clinging back of the fuckery
Speaker 3: as it were.
Speaker 5: So I think the prison area is really encouraging. So,
Speaker 5: you know, private equity firms brought up prison phone companies,
Speaker 5: started charging extremely high rates for these short, fifteen minute calls.
Speaker 5: This was a many year effort to sort of make
Speaker 5: progress here. Ultimately, you know, they were able. Activists were
Speaker 5: able to get legislation passed in cities New York and
Speaker 5: San Francisco capping rates for phone calls, then passed state
Speaker 5: legislation in Connecticut, and ultimately pass federal legislation. So they
Speaker 5: were really really effective working on this specific issue. Beyond that,
Speaker 5: there's been really good work on for instance, you know
Speaker 5: we were talking about nursing homes. There's rulemaking going on
Speaker 5: right now at the Department of Health and Human Services
Speaker 5: to try to establish national standards from minimum staffing criteria
Speaker 5: for nursing homes, which will be absolutely transformative. So I
Speaker 5: think when activists have chosen really specific issues where the
Speaker 5: effect on people is clear, I actually think that they've
Speaker 5: been really successful. You know, private equity firms have the money,
Speaker 5: but activists have the people on their side, and I
Speaker 5: think they've shown that they've been actually able to get
Speaker 5: a lot done.
Speaker 2: Right.
Speaker 3: So rather than being like when you're going to pass
Speaker 3: the down with private equity bill, it's like about kind
Speaker 3: of getting a little more specific in a way that
Speaker 3: connects to people. Because again, like like we're saying at
Speaker 3: the top, just saying the word it becomes nebulous and abstract,
Speaker 3: and I'm like, I don't even know what yeah versus
Speaker 3: shouldn't there be a number, like a minimum number of
Speaker 3: staff in a nursing home so someone doesn't like like
Speaker 3: needlessly lose their life and be like yeah, yeah, yeah, yea,
Speaker 3: yeah yeah that part. But then again, there is there
Speaker 3: a similar thing that gets at the accountability part, because
Speaker 3: I think that's the part that really like frustrates me
Speaker 3: is how easily they can walk and hide behind being
Speaker 3: like I don't know, I don't own it. I just
Speaker 3: tell these funds what to do in the Maltain that
Speaker 3: that's that's where it ends. So I don't know where
Speaker 3: the buck stops. What are is there? Like where can
Speaker 3: people put their energy in terms of like finding that
Speaker 3: part out or at least making that augmenting that movement
Speaker 3: a bit.
Speaker 5: Yeah, No, I think that's a really good question. And
Speaker 5: you know, you're talking about private equity being a boring term,
Speaker 5: like they're working to make it even more boring. A
Speaker 5: lot of the leading firms now I don't even call
Speaker 5: themselves private equity firms anymore. They are alternative asset managers.
Speaker 5: So be on the lookout for.
Speaker 3: Those cool Yeah, so interesting, So what is it where
Speaker 3: like it wears flannel and has a nosering and like
Speaker 3: has Doc Martin, Like yeah, like the alternative rock movement, but.
Speaker 2: Asset management actually style on fund just kind of like
Speaker 2: being an all band in the nineties exactly. So, you know,
Speaker 2: in terms of sort of the deeper sort of accountability issues, obviously,
Speaker 2: Congress is one sort of avenue, and there's important legislation
Speaker 2: you know, sort of being proposed there.
Speaker 3: But I actually think that.
Speaker 2: There are a lot of levers of power here, whether
Speaker 2: you're talking about federal regulators like the SEC, Treasury, Fed,
Speaker 2: and so forth, but also states and localities. You know,
Speaker 2: we're talking about some of these tactics that I think
Speaker 2: can be harmful for companies in the long term, you know,
Speaker 2: sale lease backs, dividend recapitalizations. States could just simply say,
Speaker 2: you know, we're going to legislate to say, if the
Speaker 2: company's headquartered in our district, you know, in our jurisdiction,
Speaker 2: you can't do some of these tactics, or if you
Speaker 2: do them and the company goes bankrupt, the workers are
Speaker 2: going to get paid first. And I actually think that
Speaker 2: there really is interest at the state level on this,
Speaker 2: but we've got to you know, folks need to draft
Speaker 2: up the legislation and there needs to be the push
Speaker 2: for it. I think that's where the real change is
Speaker 2: going to happen in the next few years. Right towards
Speaker 2: the end of your book, you talk about different scenarios
Speaker 2: that the country could take. And some people financially think
Speaker 2: it's like Japan in the eighties and nineties, like heading
Speaker 2: for a financial fall, and some people think it's like
Speaker 2: whymar Germany, and but you kind of say, there's also
Speaker 2: this hopeful possibility that it's like America at the turn
Speaker 2: of the twenty like nineteen oh three, and you know,
Speaker 2: emphasize that we generally today don't recognize how bad it
Speaker 2: was at that time and how like incremental the changes were.
Speaker 2: We just see, oh, in the earliest twentieth century, the
Speaker 2: New Deal happened, so must have been must have been good.
Speaker 2: There were Gatsby parties, and then the New Deal came
Speaker 2: through in response to how lavish the Gatsby parties were.
Speaker 2: But it was generations of people working on very specific changes,
Speaker 2: right that got us out out of that very similar
Speaker 2: situation where it was just unregulated capital running rough shop
Speaker 2: over the country. Yeah, the Gilded Age worked wonderfully for
Speaker 2: a select few people, but was a miserating for you know,
Speaker 2: so many. Whether it was the movement to stop the
Speaker 2: labor movement to use the anti trust laws to actually
Speaker 2: break up labor unions but protect monopolies, the movement actually
Speaker 2: to rescind suffrage for working class people in New York
Speaker 2: and the institution of Jim Crow in the South that
Speaker 2: was endorsed by the New York Times. I think you said, right, yeah, yeah,
Speaker 2: the New York Times endorsed, Yeah, rescinding suffrage for I
Speaker 2: think working class white men. So but you know, in
Speaker 2: some ways it was it was a politics or an
Speaker 2: economy that's very similar to ours. The trusts of the
Speaker 2: early twentieth century legally are very similar to how private
Speaker 2: equity firms work. And a century ago we managed to
Speaker 2: constrain the trust you know, we created the first, you know,
Speaker 2: you know, the most robust anti trust laws. We created
Speaker 2: the Federal Trade Commission, We passed labor laws, environmental laws,
Speaker 2: passed women's suffrage, and so forth. It was a time
Speaker 2: that was really really transformative for the country, and ultimately,
Speaker 2: you know, sort of set the stage for sort of
Speaker 2: the greatest moment in American middle class history, you know,
Speaker 2: the nineteen forties and fifties, And so if we've done
Speaker 2: it once, we can do it again. We just need
Speaker 2: to have the patience and the will to do so.
Speaker 3: Yeah, yeah, in a way to offset all the lobbying efforts,
Speaker 3: which I'm sure if a state starts saying things like, yeah,
Speaker 3: we're thinking about enacting some laws that would really constrain
Speaker 3: private equity, you're just going to start seeing as like,
Speaker 3: don't vote for this, because we're going to leave your
Speaker 3: state and you're going to be broke, so don't even
Speaker 3: think about it, and then off we go. And I
Speaker 3: think part of that is for people to really understand
Speaker 3: the threat that this sort of untethered greed operates and
Speaker 3: how it affects us in ways that are just so tangible,
Speaker 3: but yet we think are like again like for me,
Speaker 3: I was like, there's just so nebulous. I'm like, it's
Speaker 3: just part of this vast thing of all the money
Speaker 3: moving in one direction versus also very specific groups of
Speaker 3: people looking at it in this way and were just
Speaker 3: sort of experiencing the lack of investment on the other side.
Speaker 3: I wonder how many triangle shirtwaist fires that'll take for
Speaker 3: us to wake up out of this one, because I
Speaker 3: feel like we're averaging like one a day.
Speaker 2: Yeah, it's it's really interesting.
Speaker 5: I mean you sort of look at the number of
Speaker 5: legal tragedies that are happening in private equity portfolio companies,
Speaker 5: and yet the private equity firms, you know, are rarely
Speaker 5: held accountable. I will say, just you know, as a
Speaker 5: as a workaday, you know, bureaucrat, I will say that,
Speaker 5: don't underestimate your power and influence as a person outside
Speaker 5: of government. People inside of government listen to complaints and
Speaker 5: you know, if you're saying this is a broken system,
Speaker 5: this is not working, it really empowers people in a
Speaker 5: bureaucracy to try, you know, who want to do the
Speaker 5: right thing, to feel like they've got people on their side.
Speaker 5: So I felt that personally. I know others people do
Speaker 5: do too, So I know that can be a somewhat
Speaker 5: frustrating thing to hear, but it really does make a
Speaker 5: difference for folks.
Speaker 2: And yeah, just not having it happen quietly invisibly like that,
Speaker 2: when when you just tell this story, it is the
Speaker 2: sort of story that people respond to. It is an
Speaker 2: all out war being waged on the lives of people
Speaker 2: who aren't extremely wealthy by people who are extremely, extremely wealthy.
Speaker 2: Like it's just, it is that simple. It's they they
Speaker 2: are taking away comforts and you know, things that people
Speaker 2: rely on and getting rich off of it. It's pretty
Speaker 2: pretty straightforward. And I'm glad you told the story in
Speaker 2: your book. I'm hoping more more and more people kind
Speaker 2: of continue to tell it. So and thanks for coming
Speaker 2: on and talking to us about it.
Speaker 3: And yeah, I got to say, normally I don't talk
Speaker 3: to the feds, but this has been fantastic.
Speaker 5: Well, thank you guys so much for the time. I
Speaker 5: really appreciate it.
Speaker 2: Yeah, where can people what can you remind us the
Speaker 2: name of the book and where people can read it
Speaker 2: and all that good stuff. It's plunder, private equities, plans
Speaker 2: to pillage America and you can buy it anywhere you
Speaker 2: might buy a book.
Speaker 3: Perfect or Barnes and Noble also private equity.
Speaker 2: Yeah, yeah, Brendan Blue, thanks for coming on. Appreciate it.
Speaker 2: Thank you so much. All right, that was our interview
Speaker 2: with Brendan Man. I learned a lot from this book.
Speaker 2: I feel like, you know, how when I read a
Speaker 2: New Yorker article. I'll like reference it at least five
Speaker 2: times over the course of the next week, like this
Speaker 2: is it's over for you, hos, Like this is all
Speaker 2: I'm going to be referencing from now.
Speaker 3: Wait, so is this going to push out coal gas
Speaker 3: study Havan syndrome.
Speaker 2: So those are just the those are the keepers, those
Speaker 2: are the.
Speaker 3: Ones that those are like that try you and God
Speaker 3: of your mind. Yeah exactly, Yeah, but those will not
Speaker 3: be usurped. But yeah, again, I think it's it's so
Speaker 3: helpful to like be able to be like that's why
Speaker 3: these certain things got shitty, yeah, you know, or like again,
Speaker 3: like toy store.
Speaker 2: The toy store really fucking did it for me. Man.
Speaker 2: That was the one where I was like, oh, yeah,
Speaker 2: there's no reason there should be Like kids still, yeah,
Speaker 2: I can speak kids really still fucking like toys, I
Speaker 2: can tell you that much. Now we just have the
Speaker 2: toy section of Target and there are no toy stores.
Speaker 2: And I remember at the end of the Toys r
Speaker 2: Us run, like going to Toys r Us to like
Speaker 2: for a kid's birthday party, get get a toy, and
Speaker 2: it was just wildly understaffed and it looked and like
Speaker 2: it looked like Sears did when it was going out
Speaker 2: of business. Yeah, like they're the floors are kind of
Speaker 2: torn up, like think they're just like boxes of like
Speaker 2: palettes laying around because they just are totally understaffed. And
Speaker 2: it makes total sense that they just you know, pact
Speaker 2: that these workers are lazy, right exactly, which is what
Speaker 2: I was yelling. But you know what, but that is
Speaker 2: the kind of shit older people was saying. Of course,
Speaker 2: they were like, I don't know what the hell happened here?
Speaker 2: These people are so lazy.
Speaker 3: And then you're like, no, it's being like sucked the
Speaker 3: life sucked out of it from the inside financially, and
Speaker 3: what you're seeing is like the husk of a once
Speaker 3: operating business.
Speaker 2: Yeah, and this is having the fact that this is
Speaker 2: like like a an epidemic that is across the entire economy,
Speaker 2: like more people are being asked to do more work
Speaker 2: or fewer people are being asked to do more work,
Speaker 2: like just everywhere, and so yeah, everybody's going to be
Speaker 2: like immiserated, as you know, like I think hey used
Speaker 2: to that word, and really, you know, both on the
Speaker 2: customer side and on the employee side, these companies absolutely
Speaker 2: spread misery as part of their business model and become billionaires.
Speaker 3: That's the wild part too, is like you get you know,
Speaker 3: we talk about all the time, how like human life
Speaker 3: gets reduced to like a number figure on a spreadsheet,
Speaker 3: and that's truly how these people are looking at it
Speaker 3: when you have only guys who have finance brain being like, yeah, yeah,
Speaker 3: I can help operate a healthcare provider. Watch this, snip
Speaker 3: snip snip, And then you know, we just continue to
Speaker 3: talk about the the ongoing movement of privatization and how that's.
Speaker 2: Only going to lead to fucking disaster. Yeah.
Speaker 3: It also made me realize too, like when I was
Speaker 3: lobbying for for profit colleges, like how like the for
Speaker 3: profit college section is really wild. I mean that was
Speaker 3: the thing that helped loosen my brain to be like
Speaker 3: I don't I can't be doing this, Like I can't
Speaker 3: be consulting like this at all. But then really, even then,
Speaker 3: the private equity part was a little bit abstract to me, sure,
Speaker 3: like I was only the company levels the company. Yeah yeah, yeah, anyway,
Speaker 3: I'm stupid and that's easy to say now.
Speaker 2: But we yeah, we're we're all part of this system
Speaker 2: that has just been attacked invisibly. And this is the
Speaker 2: first time I've just seen somebody say it out let,
Speaker 2: you know, in print, just be like, this is the company,
Speaker 2: this is what they're doing. It is like the most
Speaker 2: deeply anti I don't know, it's just it's it's so
Speaker 2: clear cut. It just seems wild that nobody said it
Speaker 2: out loud up to this point. Yeah, people probably have been.
Speaker 2: It's wild that I haven't read it to this point,
Speaker 2: and it's probably because the phrase private equity made my
Speaker 2: brain go to sleep.
Speaker 3: I also blame the New Yorker from not making a
Speaker 3: cartoon about it.
Speaker 2: Thank you. Understand, all right, we're gonna take one more break.
Speaker 2: We're gonna come back. And hear from a reader who
Speaker 2: has some job experience that is somewhat related to this.
Speaker 2: It seems like it's operating the same principles with one
Speaker 2: of the industries we're just talking about. Yeah, we'll be
Speaker 2: right back, and we're back. And I was talking to
Speaker 2: a former guest this weekend. I'm not gonna out them,
Speaker 2: but like when I was taught.
Speaker 3: As I'm actually the two thousand episodes and trying to
Speaker 3: forge come back.
Speaker 2: As I was saying to Brandon, like after reading his book,
Speaker 2: I've tried to speak to it everywhere because it's like
Speaker 2: all I can think about. And one of the people
Speaker 2: I spoke to was like, dental care. That was the
Speaker 2: one when I was like, it's like this, it's veterinary care,
Speaker 2: it's nine to one one call centers, it's retirement homes,
Speaker 2: it's dental care. Like dental care was the one that
Speaker 2: jumped out, and they were like, yeah, you know, I
Speaker 2: have lived both in the US and in another country,
Speaker 2: and the US like you would see the dentists like
Speaker 2: over and over and over with the same problem. They'd
Speaker 2: just be like, I don't know, man, like brushmore, you know,
Speaker 2: and just give you the same solution and just seemed
Speaker 2: taxed and overwhelmed. And then like when we're able to
Speaker 2: have this problem fixed and oh hey you said a bit.
Speaker 3: No, I mean I think, yeah, we can pay justin
Speaker 3: you can censor that.
Speaker 2: But anyways, so the dental industry, we have a listener
Speaker 2: who works in billing in the dental industry and also
Speaker 2: works with insurance companies. Again, this similar logic in that
Speaker 2: even without even if the listener's company is not owned
Speaker 2: by private equity, it seems to operate on a similar
Speaker 2: logic of like making things really profitably for them, unprofitably
Speaker 2: for the consumer. Very complicated, very annoying to deal with.
Speaker 3: When it comes to insurance, it's like incentivized bumbling and
Speaker 3: incentivized miscommunication or non communication. And then be like, oh,
Speaker 3: you know here from us, well you owe us that.
Speaker 3: Now we got those interests on top of that, now
Speaker 3: you owe us more money. But shout out to this listener,
Speaker 3: and I believe we'll be okay using your name because
Speaker 3: it is a handle. We'll call this person pirate Pam. Yeah,
Speaker 3: which is actually great because we're talking calling it pirate equity.
Speaker 3: But anyway, Pirate Pam has been saying, you know, she's like,
Speaker 3: you're not working dental and insurance, and I can tell
Speaker 3: you a little bit about how how wacky it is.
Speaker 3: And when we started talking on discord, I was like,
Speaker 3: oh no, walk me through it a little bit. And
Speaker 3: I said, when did you realize how fucked up shit
Speaker 3: was with like indental insurance and how you work with it?
Speaker 3: And this what you said quote. I think it was
Speaker 3: just a lot of disbelief. I went to business school
Speaker 3: and was taught how important it was to close out
Speaker 3: your accounts and be efficient with accounting. I used to
Speaker 3: work for a medium large private manufacturing company, and we
Speaker 3: were all about production efficiency and technology improvement. Then I
Speaker 3: found out that many times insurance companies will be inefficient
Speaker 3: with their claims processing as a strategy allegedly. Okay, we're
Speaker 3: putting that there legally. My boss actually told me that
Speaker 3: when I started. My boss actually told me that when
Speaker 3: I started, and I honestly didn't believe him until I
Speaker 3: saw it for myself. They quote lose our claims all
Speaker 3: the time and have a terrible back end system for
Speaker 3: cataloging information. I knew that insurance companies were evil and
Speaker 3: that they raised rates, refused to cover procedures, et cetera,
Speaker 3: but just didn't expect to trickle all the way down
Speaker 3: to their day to day business off business processes. I
Speaker 3: have some pretty blatant examples that just boil my blood.
Speaker 3: It has really radicalized me even further to the point
Speaker 3: where I don't even believe people should be able to
Speaker 3: purchase private insurance on top of universal coverage. They will
Speaker 3: do anything and everything in their power to squeeze profit
Speaker 3: out of.
Speaker 2: People in need, so basically not deliver the thing that
Speaker 2: it is their job to deliver, which yes, yeah, that
Speaker 2: is interesting to hear because you know, like the whole thing,
Speaker 2: the whole logic of the universe that is created in
Speaker 2: this story about private equity in Pirate Pam's story about
Speaker 2: what it's completely like the central gravitational like force, like
Speaker 2: the gravitational center of the entire like capitalistic enterprise was
Speaker 2: supposed to be to deliver value in exchange for money, right,
Speaker 2: like that, That's what a business is designed to do,
Speaker 2: is to solve a problem, address a need some thing.
Speaker 2: And the better you are at that, the more likely
Speaker 2: you are to get repeat customer. Like there's just this
Speaker 2: very central core gravitational center, like economic like center, central
Speaker 2: truth that is supposed to be at work. And I
Speaker 2: think we've just like crossed over to a place where
Speaker 2: like that seems even like that seems idealistic for me
Speaker 2: to even say that at this.
Speaker 3: Point, right, Or it's kind of like what Brendan said,
Speaker 3: there's two versions.
Speaker 2: Right.
Speaker 3: There's the version for working people, right, and you have
Speaker 3: no alternatives and you're basically checkmated there. And then if
Speaker 3: you have a little bit more money, then you do
Speaker 3: have the ability to be like, well, I'm not going
Speaker 3: to stand for this specific kind of treatment. Yeah, And
Speaker 3: do you just see how much that chasm just grows
Speaker 3: more and more and more as the companies that are
Speaker 3: like quote unquote smarter, like you got to go after
Speaker 3: like the working people businesses. Yeah, because if you own
Speaker 3: every dermatology practice in a county, what are they gonna
Speaker 3: do leave the county for cheaper rates. No, Now, we
Speaker 3: determine what the market is and it's you know, rinse
Speaker 3: and repeat.
Speaker 2: The whole enterprise on the private equity side, like really
Speaker 2: resembles a Ponzi scheme. So like that when I was
Speaker 2: asking him like about how this is like the new
Speaker 2: hot place to work in the world of finance, Like
Speaker 2: that's it's it's not just that like these are isolated
Speaker 2: companies doing this. It's also like the like people are
Speaker 2: seeing that this is a system that works and makes
Speaker 2: you incredibly wealthy, and like that in that industry is
Speaker 2: like kind of what is worshiped and held up and
Speaker 2: you know, pursued by other people who work in that industry.
Speaker 2: And then also like on the level of you know,
Speaker 2: we've talked before about how it seems like we're increasingly
Speaker 2: interested in scams because it feels like the entire economy
Speaker 2: has turned into a scam. Like these most successful companies
Speaker 2: of the past ten years, the ones who have become
Speaker 2: as you know, big as Amazon and Walmart, suddenly without
Speaker 2: us ever learning their names, like they are doing it
Speaker 2: by extracting fees, and you know, that is the mo
Speaker 2: of the moment, and so of course, like it's going
Speaker 2: to trickle down everywhere. Like people aren't stupid, they recognize
Speaker 2: what's being done to them. They're just without power or
Speaker 2: without people advocating on their behalf or without options.
Speaker 3: Right, And I think that's why we're kind of at
Speaker 3: the end of that discussion with Brendan. It's like you
Speaker 3: go from fighting an invisible enemy to now beginning to
Speaker 3: define at least one very specific kind and seeing how
Speaker 3: it works among many other things that are moving in
Speaker 3: are like global economy. But I want to add the
Speaker 3: part where I asked pirate Pam, I said, what can
Speaker 3: you just talk about like one thing you deal with
Speaker 3: and and you're like, these people are fucking around like
Speaker 3: that you know this is bullshit and say quote one
Speaker 3: instance was when I had to send a bunch of
Speaker 3: documentation and X rays for a claim that they didn't
Speaker 3: want to pay the insurance. We got a letter from
Speaker 3: the insurance company that they had received all of our
Speaker 3: documentation and that we didn't need to do anything else.
Speaker 3: I call them out a month or so later, These
Speaker 3: appeals can take a while, and they said they had
Speaker 3: never received any of it from us. We also have
Speaker 3: a lot where we send it two to three times
Speaker 3: and they still claim they have never received anything. So again,
Speaker 3: just part of like the inefficiency, whether it's like you know,
Speaker 3: intentional or just part and parcel of understaffing whatever, it
Speaker 3: tends to benefit you know, them in the long term,
Speaker 3: long term which.
Speaker 2: Talk for them to be inefficient. Yeah, and we are.
Speaker 3: Yeah, you realize how much you know. There are other
Speaker 3: examples from that book that are just wild about like yeah,
Speaker 3: you buy like a clothing store and then you're like, yeah,
Speaker 3: I guess what now you're only going to buy clothes
Speaker 3: from this other company we own, right, Yeah, you're doing
Speaker 3: like the Mike Tyson meme with the pigeons saying now
Speaker 3: kiss but just like the corporate raider for like you're like, what,
Speaker 3: we don't even buy clothes from this way? Like no,
Speaker 3: now you do you?
Speaker 2: We don't care about you yeah. Yeah, and and then
Speaker 2: we're just like, man, J Crew really lost it. Huh,
Speaker 2: they really got real crappy, got real crappy. All of
Speaker 2: a sudden, Toys r US just started having palettes of
Speaker 2: toys half ripped open laying around when you walked in.
Speaker 3: That was weird. Yeah, that's a new policy. No, No,
Speaker 3: you're seeing the you're seeing the thing turned into a
Speaker 3: ghost in real time.
Speaker 2: Yeah, so wild. The comparison, Like, I do think a
Speaker 2: lot about the how the Gilded Age, the last Gilded
Speaker 2: Age in the US like somehow turned into the New
Speaker 2: Deal and like they're being actually beneficial to America socialism
Speaker 2: in a lot of cases. And if we could do
Speaker 2: that without the racism that the first New Deal had,
Speaker 2: like incremental like just but these those things did happen incrementally,
Speaker 2: right that Yeah, change, I mean.
Speaker 3: A lot of work, And I honestly, I think that's
Speaker 3: why we see a lot of emphasis from the powers
Speaker 3: that be to like try and make younger people as
Speaker 3: ignorant as possible, or make them like take back their
Speaker 3: ability to vote by raising the voting age. There's a
Speaker 3: lot where I think already I think just existing in
Speaker 3: the United States is probably one of the most potent
Speaker 3: radicalizing forces right now for young people merely just being
Speaker 3: alive and observing things, and hopefully that manifests into like
Speaker 3: a huge wave of like you know that the numbers
Speaker 3: are there to have like bigger changes rather than people
Speaker 3: that are holding onto the scraps of yesteryear.
Speaker 2: Yeah, I would highly recommend people people check out this book.
Speaker 2: If that conversation was interesting to you. Yeah, Miles, I
Speaker 2: would highly recommend they check out you on social media.
Speaker 2: Where can people find you?
Speaker 3: My goodness, to find me on Twitter, Instagram at Miles
Speaker 3: of Gray. Check out Miles and Jack on our basketball
Speaker 3: I said, Miles and I went third person on them. Anyway,
Speaker 3: find us on our basketball podcast. Miles and I got
Speaker 3: mad Boosti's And if you're gonna be in Las Vegas
Speaker 3: for NBA Con, well, guess what. Guess what will your boys,
Speaker 3: because we're gonna be on there doing a couple of
Speaker 3: live shows. And hey, if you got recommendations about Vegas,
Speaker 3: you want to take us out for a spin in
Speaker 3: your cool Lamborghini or helicopter ride to the Grand Caple.
Speaker 3: But yeah, oh I'll hop in. I'll hop in a
Speaker 3: Lambo with a listener. I don't care. I don't know
Speaker 3: where that ends up.
Speaker 2: Finally, answer that question, how I get to.
Speaker 3: Yeah, how do I get the Lambeau? I had somebody
Speaker 3: rent one in Vegas and we got in it.
Speaker 4: Uh.
Speaker 3: And then you can find me on forty with Sophia
Speaker 3: Alexandra talking non political, non serious stuff like ninety Day
Speaker 3: Fiance or Love is Blind?
Speaker 2: All right, And is there a work a media that
Speaker 2: you've been enjoying.
Speaker 3: Uh, honestly I have. It's probably from Uh. I got
Speaker 3: a shout out again. We talked about this on the
Speaker 3: Trending episode yesterday at Underscore, ched earthling Urgev and Siaga,
Speaker 3: who definitely got the Portuguese flag flying in that Twitter
Speaker 3: display name put us onto this like TikTok, fucking like
Speaker 3: just mash up of all these kids protect like just
Speaker 3: trying the new Grimace Shake from McDonald's and then just
Speaker 3: ending up in like the worst horrifying physical positions or situation.
Speaker 3: So yeah, shout out to shout out to that video.
Speaker 3: It's it's I don't know, I don't know what you search.
Speaker 3: Just search Grimace Shake causing irreversible damage to society.
Speaker 2: Just go look at Miles' likes on Twitter you know
Speaker 2: how about this, gonna retweet it? There you go. That
Speaker 2: makes it easy.
Speaker 3: Boom, check that out.
Speaker 2: Check that out, and you can find me on Twitter
Speaker 2: at Jack Underscore O'Brien. A couple of tweets I enjoyed
Speaker 2: over the weekend picture of George Bush finding out about
Speaker 2: nine to eleven and somebody saying a second Russia has
Speaker 2: hit the Russia, which I thought summed it up pretty
Speaker 2: nicely what it felt like at first, tearing at Young
Speaker 2: Hitty tweeted, the baby is kicking. He must like vodka
Speaker 2: Red bulls. Oh my fascinating. Tweeted a picture of the
Speaker 2: founder of Gucci and said the life of Gucci O Gucci,
Speaker 2: founder of Gucci, and Zach Raffio retweeted that and said
Speaker 2: the life of Dunkey No Duncan, founder of Dunkin, And
Speaker 2: then Sydney Battle tweeted, whoever came up with the word
Speaker 2: morsels was correct? Yeah, perfectly named.
Speaker 3: Yeah, where'd that come from? Maybe some etymologies in the store.
Speaker 2: Yeah. You can find us on Twitter at daily Zeitgeist.
Speaker 2: We're at the Daily Zeitgeist on Instagram. We have a
Speaker 2: Facebook fanpage and a website, Daily zeikeis dot com. Where
Speaker 2: he posts our episodes and our footnotes take off to
Speaker 2: the information that we talked about in today's episode, as
Speaker 2: well as a song that we think you might enjoy. Well,
Speaker 2: that's what's the song the people might enjoy.
Speaker 3: Oh well, guess what You've died and gone to Babe Heaven,
Speaker 3: because that's the name of this West London band, Babe Heaven.
Speaker 3: Really great man, this track is just like again, it's
Speaker 3: called make Me Wanna And apparently like this group started
Speaker 3: off with like two friends who were like really into
Speaker 3: groups like Massive Attack and stuff and trip hop and
Speaker 3: then slowly started getting their band together. And y'all are
Speaker 3: making some good music now. If you like Massive Attack
Speaker 3: and stuff like that Cocktail Twins, check this group out.
Speaker 3: But this is a track make Me Wanna by Babe Heaven.
Speaker 2: All right, well we will link off to that in
Speaker 2: the footnotes. The Daily Zeitgeist is a production of iHeartRadio.
Speaker 2: For more podcasts from My Heart Radio, visit the iHeartRadio app,
Speaker 2: Apple podcast, or wherever you listen to your favorite shows.
Speaker 2: That's gonna do it for us this morning, back this
Speaker 2: afternoon to tell you what's trending, and we'll talk to
Speaker 2: you all then Bye.
Speaker 3: Bye,