The Industry Devouring the American Dream
Private equity’s tentacles reach nearly every aspect of our lives, and it’s making everything worse.
Do newspaper endorsements matter? It’s a question that’s been kicked around a lot in recent years. Some editors laud the tradition; others think it’s time for them to end. I’ve always felt that these sledgehammerings from on high, purporting to help voters pick and choose, are no substitute for the woven tapestry of journalism that creates a well-informed public. But that doesn’t mean that I’m cheering the news that one major publisher has announced that it is dispensing with them altogether. And that’s because this particular decision is being handed down by a firm called Alden Global Capital, best known for being at the vanguard of a recent trend: private equity devouring the world.
The New York Times’ report on the matter offers only Alden’s point of view, which sounds innocuous enough at first blush. In a forthcoming editorial set to run in Alden’s publications, the firm says its decision to spike endorsements was done in the spirit of “advanc[ing] a healthy and productive discourse” and reducing “acrimony.” The “common ground,” it writes, “has become a no-man’s land between the clashing forces of the culture wars.”
But as The Nation’s Washington correspondent (and TNR’s former editor) Chris Lehmann notes at length, red flags abound. “The ‘no man’s land’ rhetoric here is especially risible,” he writes, “given that Alden has laid siege to local news markets on its relentless binge of media acquisition.” Indeed, Alden isn’t so much known for advancing the discourse as it is for gutting it; the “no-man’s land” it speaks of has become more of a “no-newspapers land” under its watch, as it lays off employees and closes newsrooms across the country, leaving the aforementioned tapestry of journalism in tatters. But this is just the damage that one private equity firm is doing to one industry.
The tale the private equity industry tells about itself is a virtuous one: They’re savvy investors rescuing ailing firms and making them profitable. Naturally, popular culture has provided an alternative story: that of leveraged buyouts and hostile takeovers. But as Mother Jones’s Hannah Levintova explained, yesteryear’s mythmaking doesn’t really capture how much the industry has evolved. It’s no longer the case that private equity firms mainly hunt down dying businesses to pluck profit like carrion from their bones. Now, she writes, “the bulk of the work done by modern-day private equity firms is not to finish off sick companies, but rather to stalk and gut the healthy ones.”
Consequently, there is almost no aspect of American life that hasn’t been financialized; there is always fresh meat at the private equity smorgasbord. As The Financial Times reported in June 2021, the private equity industry’s assets amounted to more than $3 trillion. And its acquisitions run the gamut: As Levintova notes, the industry acquired numerous for-profit colleges, “enveloped the health care sector,” and gobbled up nursing homes, with the end result being lower graduation rates, increased student debt, higher medical costs, and a rise in the mortality of nursing home patients. Elsewhere, we learn that these firms have devoured trailer parks, neighborhood grocers, and big retail chains. (One thing private equity consistently fails to do is make things better. As TNR contributor Jon Skolnik recently noted, “In the retail sector alone, the industry is estimated to have killed at least 1.3 million jobs since 2009.”)
Beyond the staggering array of assets that private equity firms are absorbing, there is also the broad impact of their rapaciousness to consider. The industry bears some responsibility for climate change and surprise medical bills. It even somehow got its mitts on billions of dollars’ worth of forgivable bailout loans from the Paycheck Protection Program, even though the industry was excluded from those proceeds. Private equity was such a bedevilment to Taylor Swift that it’s surprising she’s not yet penned an “All Too Well (Taylor’s Version)”–style ballad about her experiences.
So private equity is hoovering up every piece of the American dream it can. And in recent years, it’s been targeting one of the most essential parts of the lives we all hope to build for ourselves: where we live. As ProPublica reported in February, private equity–backed companies have “stormed into the multifamily apartment market, snapping up rentals by the thousands and becoming major landlords in American cities,” raising rents and chewing up tenants in their profit-squeezing schemes. And Marketwatch reported in July that the industry has upped its stake in the available stock of single-family homes, competing against ordinary home buyers in a mad dash to snatch up available housing stock and shift it onto the rental market.
That ordinary American families now have to outbid Jeff Bezos for their dream home is a grim and dystopian fact of life. Fortunately, there is some pushback: U.S. Representative Adam Smith, who represents Washington state’s 9th district, has introduced the Saving Homes From Acquisition by Private Equity Act, which, if enacted, would “create a significant federal real estate transfer tax on institutional investors and private equity firms who purchase single-family homes on the open market,” raising revenue that states can then use to build or maintain affordable housing and “slow the consolidation of single-family home ownership among the investor class.”
Democrats should climb aboard this bandwagon; defending ordinary Americans from clear and obvious plutocratic predators is what the Good Life agenda is all about. But the party needs to get to it quickly: Before long, there might not be enough newspapers left to endorse the defenders of the American dream.
This article first appeared in Power Mad, a weekly TNR newsletter authored by deputy editor Jason Linkins. Sign up here.