We have a problem in this society. We have many problems. One of them is the role of private equity in destroying products and services that were once household names.
Here is an example: One of the stores that many New Yorkers love is Fairway Markets. It started as one store on the Upper West Side. It was the place to go for an amazing selection of cheeses and fresh produce and dozens of varieties of olive oil and more.
But it started to grow, and it turned to equity investors for new capital to expand. The investors had big plans. They paid themselves big salaries. They loaded up the company with debt. They went public and took on more debt. And before long this once-successful chain was doomed.
This article appeared at Bloomberg News by Joe Nocera.
There is more. This article in Slate describes how private equity investors have pillaged well-known retail operations. Jordan Weisman wrote:
The list of retailers that have been bought and wrecked by private equity firms keeps on growing. This week, the beloved New York grocery chain Fairway filed for its second bankruptcy in less than four years and announced plans to sell off its stores, thanks to a disastrous run of mismanagement by a series of buyout shops. It’s on a list of casualties that now includes Toys R Us, Payless ShoeSource, and Sports Authority, among many others. That’s on top of financially troubled names like Neiman Marcus that have managed to avoid Chapter 11 or liquidation (so far).
Last year, a group of progressive nonprofits reported that of the 14 largest retail bankruptcies since 2012, 10 had involved companies owned by private equity. The thud of corporate failures has become so constant that it’s essentially become a meme in the financial press.
This is the marketplace that choice advocates favor as the future of schooling.
Scott Maxwell, a columnist at the Orlando Sentinel, tweeted a few days ago:
”Berate public schools all you want. There will never be a day when you take your child to aPublic school only to find it’s gone out of business.”
Diane Ravitch's blog 
When It Reigns It Poors
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When It Reigns It Poors
Corporate-owned financial institutions pull off the most massive theft of the Common Wealth in American history and the corporate-owned media wring their hands about the “economic downturn”. We are told it’s time for “austerity measures” and “shared sacrifice” — all the while we stare a tidal wave of slush funds in the face that corporate lords have been stashing away for a reigny day, the day they finally bust us down to the estate of serfs and guildless peons once again.
Neo-cons, Neo-libs, and their Neo-speak economists — their snoots so full of theory they long ago lost the sense it takes to “follow the money” no matter how bad it stinks up their audit trails — divert the People with tales of the Invisible Hand while light fingers lift the loot in broad daylight from under their noses. “It’s an Act of God, a natural disaster. No one mugged thee, Nemo did it.”
But the game is up. We see it now. Irresponsibility is its name, it’s out of control, it’s past the tipping point, and it just keeps howling for more, more, more.
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Beautifully said, Jon., Spot on.
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when ‘shared sacrifice’ ONLY means ‘shut up and take it’
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a slightly subtle allegory of capitalism …
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yup
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”Berate public schools all you want. There will never be a day when you take your child to aPublic school only to find it’s gone out of business.”
… that is, unless it’s a public (COUGH! COUGH!) charter school.
As seen in the classic John Oliver video, those “public” entities go out of “BIZ–nohzz“:
(at 3:15)
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If the powers that be have their way, there will be no public schools. They will essentially shut down that department and privatize it ☹.
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Jack,
John Oliver just did a piece on Medicare for All that was outstanding!
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The media tends to give Amazon and the internet in general all the credit for store closures. Southeastern Grocers (Winn-Dixie, Bi-Lo) went bankrupt (and survived) a few days or week after Amazon’s acquisition of Whole Foods and there was an article crediting Amazon for that, which was a total farce.
Most won’t know about the private equity issue unless they read financial news. They media are just now finally starting to give stores like Walmart, Target and Costco credit for the struggles of other stores. Why go to Bed Bath and Beyond when I can get the same stuff closer to home and cheaper at Walmart or Target? Why go to GNC when I can get protein powder and other supplements from CVS/Walgreens and not have a salesperson following me around the store suggesting the most expensive products? Target has upped their fashion game, so why go to JC Penny? Why drive to the hipster neighborhood to get specialty or organic foods when the legacy traditional chain in my neighborhood now sells most of the same stuff? Off-price stores like Ross, TJ Maxx, and Marshall’s are having a field day right now.
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Financial services including hedge funds are a 2% drag on the GDP according to Forbes. Hedge fund practices are particularly loathsome. They are vultures that attack struggling companies, load them up with debt, pay themselves exorbitant salaries and cause a financial collapse in companies. They then sell off the company’s parts for more profit. We sometimes see a similar strategy used against floundering charter schools as hedge funds are often charter school investors.
The victims of this practice are often working families. As a result of the settlement, they often negate or diminish any pension obligations to workers. Our government has failed to regulate or mitigate this vandalism. In my opinion one of the reasons that many blue collar workers no longer trust the government is that politicians have done little to help them. They are victims of globalization and unfettered capitalism. https://www.forbes.com/sites/stevedenning/2015/05/31/wall-street-costs-the-economy-2-of-gdp-each-year/#3e9026594cd1
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Perhaps it needs to be recalled that the complaint against government is that it is detached, bureaucratic, unresponsive, and incompetent. Critics of government point out that it gets to exist despite all of these negative attributes. For some reason, the same behavior from investment companies and management groups gets a bye on these characterizations. I wonder why.
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I’d speculate that such behavior is not something that a President Bloomberg would seek to regulate. Just sayin’.
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Vulture Capitalism at work. They come in, loot the company of anything of value, then move on to their next target.
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