Pirate Equity Mines Humans
Links are at the end, passively awaiting their dooms.
Yr. editor has talked about pirate1 equity2 firms3 a lot.4 That’s because unlike many destructive corporations, where destruction is a byproduct, destruction is their business model. They acquire companies, suck them dry and abandon them, not too infrequently leaving some corpses—actual human corpses, not euphemistic ones—in their wakes; during the past 10 years they’ve been especially activity in medical arenas, acquiring hospitals, nursing homes, clinics and hospice centers.
Maureen Tkacik, writing in The American Prospect, reviews5 two new books on pirate equity: “These Are the Plunderers: How Private Equity Runs—and Wrecks—America,” by Gretchen Morgenson and Joshua Rosner, and “Plunder: Private Equity’s Plan to Pillage America,” by Brendan Ballou.
The Carlyle Group wanted to pay its investors a billion-dollar dividend, so it pawned the real estate holdings of a nursing home chain, forcing it to cough up a half-billion-dollar yearly rent check, which was managed through savage staffing cuts that likely condemned thousands of elderly Americans to die slowly of dehydration, gangrenous bedsores, and preventable falls even before COVID-19 killed a quarter-million residents nationwide.
KKR wanted to extract its own payday from a chain of group homes for developmentally disabled adults that had already been sucked dry by a Canadian private equity firm, so it slashed pay to $8 an hour and told workers that it would have them arrested for patient abandonment if they attempted to leave “early” from open-ended “shifts” that lasted as long as 36 hours. On five separate occasions, Texas health inspectors visited KKR’s facilities to find no staff at all. In a single August 2020 day at one West Virginia group home, three of eight unsupervised residents very nearly killed themselves; the unnamed soul who drank antifreeze and was not hospitalized for nine hours damaged his organs permanently.
Whatever you think about pirate equity firms, no matter how harshly you judge them, they’re worse than you thought, and many of the horror stories involve people who are where they are through no choice of their own, whether it’s nursing homes, hospices, hospitals or prisons.
Ballou’s Plunder spends a chapter surveying private equity’s takeover of correctional services, introducing readers to Miami’s $55 billion H.I.G. Capital, whose portfolio company TKC Holdings fired a Michigan cook for refusing to serve 100 bags of rotten potatoes that were covered in green and black mold at Kinross Correctional Facility.
“It was the most disgusting thing I’ve seen in my life,” said the cook, whose employer maintains contracts with 400 prisons. In addition to feeding people in prison, TKC is also the “leading” supplier of correctional commissaries, from which inmates can buy edible junk food and clean water with the 10 or 25 cents an hour they make working for … TKC. So rotten cafeteria food sending incarcerated people to price-gouging commissaries is baked into the business model, and workers who object to poisoning inmates are 86’d on grounds the cook described to the Detroit Free Press: “They told me I was trying to start a riot.”
Ironically, TKC had been contracted by the Kinross prison after a riot had broken out over the maggot-infested meals served by Aramark, a publicly traded company that had been raided in the past by the private equity firm Warburg Pincus. TKC demanded (and obtained) an extra million dollars a month in state funding to take the job, using the same workers and the same processes. And yet, “somehow, the food has gotten worse,” one inmate said. “No matter what they serve, it’s always worse.”
Capitalism is a system aimed at extracting value from labor and paying it out to profiteers. Pirate equity is the ultimate expression of capitalism. Their practices remind one of the old slaughterhouse and meat packers saying about pigs: “We use everything but the squeal.” That’s a boast, if you’re wondering.
As is often the case in capitalism, pirate equity regards impoverished people as extractive resources. A while back we were talking about poverty expert Matthew Desmond’s research on this subject,6 and about Desmond’s interview with Annie Lowery in The Atlantic,7 in which he explained how exploiting the poor is immensely profitable (because there are so many of us—a dollar or two a day from 50 million people adds up) not just for companies like banks, but for companies warehousing them in prisons and nursing homes, and in crappy housing; all pies in which pirate equity has their fingers.
Pirate equity is good to politicians, of course, and politicians are good to them. Readers with spiteful memories may recall then-Newark mayor Cory Booker’s plaintive defense of pirate equity firms during the 2012 presidential election season, when the Obamans were teeing off on Mitt Romney’s involvement with the industry.
“This kind of stuff is nauseating to me on both sides,” he said on Meet the Press. “It's nauseating to the American public. Enough is enough. Stop attacking private equity.” (The other side was attacks on Obama through the vehicle of Jeremiah Wright, which were coming from Democrats, eventually including Obama, as well as Republicans. Both sides! Passionate preacher and homicidal capital! Same-same!)8
Not incidentally, about 25% of Booker’s campaign funds for his successful 2012 senatorial run came from pirate equity firms.
Booker isn’t alone among Democratic pirate equity fans, and of course Republicans find them, and their money, orgasmic. Like hedge fund operators, pirate equity investors are taxed at much lower rates than run-of-the-mill federal taxpayers; despite semi-annual attempts to close the tax code loopholes—which are more in the way of congressional handouts than they are loopholes—benefiting the firms, nobody has come close to repealing them.
So we have these immensely wealthy firms wrecking businesses and people in every sector of the economy.
And not just people; Tkacik’s review opens with a look at the pirate-equity owned PetSmart chain, where the owners routinely abuse both workers and the chain’s other living resources, the animals for sale there.
It had somehow never occurred to me how much of the average PetSmart worker’s job involves managing the corpses of dead animals. Some of them show up dead on arrival; some die in the backroom sick area if managers consider them too visibly ill to sell; some die on the showroom floor of infectious diseases transmitted through filthy cages; some die of malnutrition, caused by budget cuts or when the company fails to schedule a staffer for feeding duty; some die of heatstroke and hypothermia during power outages that stretch as long as a week because PetSmart is too cheap to equip stores with backup generators; and some even die from the neglect of undertrained $9-an-hour pet sitters and groomers—though most of those workers love animals so much they are willing to sign neo-feudal “training repayment” contracts that force them to pay PetSmart thousands of dollars if they don’t last two years in the job.
Vile, vile, vile people, taking best advantage of a vile system, at immense profit and immense human cost, and all more or less legally.
Ah well.
Music: Deerhoof is among my favorite of the bands whose music is of a genre unto themselves, according to me, although I’m sure better-lettered listeners have a name for it other than “the music Deerhoof plays.” Anyway, here they are, along with a pair of bands new to me but similarly iconoclastic. (I knew Bush Tetras’ name but I don’t recall listening to them.)
Deerhoof, “Mountain Moves;”9 Tropical Fuck Storm, “A Laughing Death in Meatspace;”10 Bush Tetras, “Happy.”11
That, Comrades, is all there is. Share it if you like it, and please consider subscribing if you’ve not already—it’s free unless you want to pay, and of course paying is fine with me.
Take care, be well.
I loved this piece. I spend so much of my time with my nose to the grindstone, and I love the way you keep me thinking about really important things that I'm at best vaguely aware of.
I hope you're well.