Last February, I got a letter telling me that the electric and gas provider in my home state of Rhode Island—a local, independent company—was about to be purchased by an energy company called PPL Corporation, headquartered in eastern Pennsylvania.
The notice came in my mail just as I was in the middle of reporting two separate stories about private equity firms, a class of Wall Street financiers who have gobbled up an increasingly large share of the US economy by investing in every corner of our existence, from housing to medical offices to fast food, in search of gains for their wealthy investors, and themselves. The issue, I'd been learning, was how private equity gets those gains. Often, it entails "restructuring" the companies they buy to extract maximum profit on an accelerated timeline: lay off workers, cut benefits, and slash costs, degrading the quality of the goods or services offered to customers.
So when I read that letter, I groaned. Why was a Fortune 500 company that is based hundreds of miles away suddenly interested in spending $5.3 billion to provide energy to Rhode Islanders who, frankly, had been doing just fine? And was this in any way related to the private equity investing that I was researching for work?
Of course it was. Some quick Googling turned up the specifics. Though PPL itself is not a private equity firm, just a few months before it was set to close its deal with Rhode Island's energy provider, it had partnered with a private equity investment fund based in Manhattan. Now, PPL claimed its goal for the Rhode Island deal was to advance clean energy: yet it never clarified how it would go about doing that in keeping with RI's climate change laws. It was looking more and more like the main goal of this investment wasn't a more sustainable energy future for America's smallest state; it was money. Lots of it.
My brush with private equity is just one small example of the nationwide trend I've reported on for the last six months: private equity's growing grip on society. We've built out a massive, 15-story package that tries to understand the strength of this grip—and its real-life impact. It is so big that I'm not sure we could ever encompass it all: private equity firms control about $7.3 trillion in assets, roughly the value of Amazon, Apple, Tesla, and Microsoft combined. But as I wrote in the opening essay for this package, it is important to understand both this industry's enormous and growing power, and the consequences of what life looks like when everything from the basics to our most vulnerable moments are financialized for investors' gain:
The evidence can be seen in small inconveniences: the decision by a PE-owned hospital, for instance, to buy the cheapest, roughest paper towels for nurses who wash their hands dozens of times a day. Or in broader indignities: a PE-owned hospice care company that provides fewer visits to dying patients by medical assistants who are cheaper to employ, but for whom the company can bill Medicare the same amount as for a visit by a nurse. And then there is life-altering damage: medical bills that gut family finances all because private equity firms have bought up so much of the health care sector that they can charge virtually anything.
—Hannah Levintova
No comments:
Post a Comment