- 02 Jul 2020 17:28
#15104556
The current economic crisis has revealed that the health of the finance industry and stock market are completely disconnected from the actual financial health of the American people. As inequality, unemployment and evictions climb, the Dow Jones surges right alongside them — one line compounding suffering, the other compounding returns for investors.
One reason is that an ideological coup quietly transformed our society over the last 50 years, raising the fortunes of the financial economy — and its agents like private equity firms — at the expense of the real economy experienced by most Americans. Private equity firms use money provided by institutional investors like pension funds and university endowments to take over and restructure companies or industries. In pursuit of maximum returns, such firms have squeezed businesses for every last drop of profit, cutting jobs, pensions and salaries where possible. The debt-laden buyouts privatize gains when they work, and socialize losses when they don’t.
An examination of the recent history of private equity disproves the neoliberal myth that profit incentives produce the best outcomes for society. Would-be monopolies squeezed competitors, accrued political power, lobbied for even more deregulation and ultimately drove out any rivals, leading inexorably to entrenched political power. When federally subsidized banks left low-income communities, vulture-like fringe lenders — payday, title, tax-refund lenders — filled the void. As it turns out, private equity firms are invested in some of the largest payday lenders in the country.
Neoliberal deregulation was premised on the theory that the invisible hand of the market would discipline risky banks without the need for government oversight. Even a former Fed chairman, Alan Greenspan, the most committed free market fundamentalist of the era, admitted in the understatement of the century, that “I made a mistake.” We can start fixing the big flaws propagated over the last half century by taxing the largest fortunes, breaking up large banks and imposing market rules that prohibit the predatory behaviors of private equity firms. W can move beyond the myths of neoliberalism that have led us here. We can have competitive and prosperous markets, but our focus should be on ensuring human dignity, thriving families and healthy communities. When those are in conflict, we should choose flourishing communities over profits.
One reason is that an ideological coup quietly transformed our society over the last 50 years, raising the fortunes of the financial economy — and its agents like private equity firms — at the expense of the real economy experienced by most Americans. Private equity firms use money provided by institutional investors like pension funds and university endowments to take over and restructure companies or industries. In pursuit of maximum returns, such firms have squeezed businesses for every last drop of profit, cutting jobs, pensions and salaries where possible. The debt-laden buyouts privatize gains when they work, and socialize losses when they don’t.
An examination of the recent history of private equity disproves the neoliberal myth that profit incentives produce the best outcomes for society. Would-be monopolies squeezed competitors, accrued political power, lobbied for even more deregulation and ultimately drove out any rivals, leading inexorably to entrenched political power. When federally subsidized banks left low-income communities, vulture-like fringe lenders — payday, title, tax-refund lenders — filled the void. As it turns out, private equity firms are invested in some of the largest payday lenders in the country.
Neoliberal deregulation was premised on the theory that the invisible hand of the market would discipline risky banks without the need for government oversight. Even a former Fed chairman, Alan Greenspan, the most committed free market fundamentalist of the era, admitted in the understatement of the century, that “I made a mistake.” We can start fixing the big flaws propagated over the last half century by taxing the largest fortunes, breaking up large banks and imposing market rules that prohibit the predatory behaviors of private equity firms. W can move beyond the myths of neoliberalism that have led us here. We can have competitive and prosperous markets, but our focus should be on ensuring human dignity, thriving families and healthy communities. When those are in conflict, we should choose flourishing communities over profits.
"Society in those days was a perfectly competent, perfectly complacent, ruthless machine." Virginia Woolf 1897
. My house was built in 1899 and my tenant pays rent which pays all the property expenses. 
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