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