#corporate extraction

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Racism serves wealth extraction.

Stephen Miller functions as an ideological broker—supplying the narrative framework that makes rights restriction, enforcement expansion, and wealth extraction sound reasonable.

open.substack.com/pub/lfitzhug...

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Matt Stoller Explains Monopolies

The latest episode of my podcast Better Offline is a conversation with Matt Stoller — America’s leading voice on monopoly and antitrust matt

Something you have written in the past is that America's in a "monopoly crisis." What do you mean?

So, what you have in a lot of areas — and in most, I think — is monopoly or oligopoly, which is just a small number of companies controlling a market, and [this] is now a systemic feature of the American economy. And it didn't used to be.

There are different ways to measure it. About 75 % of industries in the last 20, 25 years have gotten more consolidated. And we don't have enough public companies for the Wilshire 5000. There are only about 3,400 public companies now. There used to be around 9,000 in the 90s. 

Just the number of big companies is smaller because companies have merged and gotten much, much bigger, and this has a lot of consequences. What you see is wages are much lower than they otherwise would be. You see things like the cost of healthcare, which is largely driven by market power consolidation in hospitals, pharmaceutical companies, and insurers. The price of an insured family of four has gone from about $10,000 to $15,000 a year in 2008 to about $30,000 a year today

If you just take those two facts of just how much harder it is to move to a new job because of consolidation, that $15,000 to $20,000 increase that we're paying in healthcare, that's a lot of money. That's that every single year. It's basically almost a new car every single year that's just extracted from every family by this increased amount of concentration.

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You mean that there's so many monopolies? Yeah, I mean, the crisis is that as people get used to being bossed around, they lose their respect for democracy itself, you see a ton of cynicism. And I think the reason that there's all this cynicism about the rule of law, about the idea of living in a society, is because most people experience living in an authoritarian part of their lives.

I don't want to overstate it. We're not living in a dictatorship or anything. This is still a democracy. The amount of fear in commerce is overwhelming at this point. When you talk to people in lots of different areas, they're afraid to talk about what's going on in their industry because the monopolist can retaliate against them. And so, if you're living in fear, then you're not living. You're not free.

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In the 1970s, there were two different political and intellectual movements that won the debate, one within the Republican Party, and one within the Democratic Party. The [winner of the] Republican debate — the one on the right — was the Chicago School. These were the libertarians. And their argument was power doesn't matter. Concentrations of power don’t matter. Conflicts of interest don't matter. Traditional things like usury caps, all that stuff, is very silly. The only thing that matters is efficiency. 

We need to just think about what is most efficient, and to understand efficiency, let's ask economists. They're the scientists, right? We're going to move this political question out of the realm of the public and the citizen and move it to the expert — the scientist, the economist. That's why these political things become the economy. That's why we start using terms like human capital instead of people, or infrastructure instead of bridges.

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Guess What Private Equity is Doing to Childcare

What Happens When You Try to "Maximize Profit" in a Daycare Center

You recently published a big investigative piece on private equity and childcare in Early Learning Nation, and I was lightly amused by the prologue from the editor, which notes that you have an “established perspective about private equity in childcare.” I also have an established perspective about private equity in childcare, which is similar to my established perspective about private equity in pretty much every industry: it’s scorched earth capitalism. Can you lay out your own perspective and maybe get into why private equity investment can be particularly pernicious when it comes to childcare?

Ha, yes; we wanted to make sure no one could accuse me of pretending I was entirely neutral! At its core, private equity firms — which differ from traditional investment firms in seeking very high returns over a burst of a few years before selling, and are insulated from legal consequences — have an inherent conflict of interest between kids & families and their profit motive. You know, I talked to Melissa Boteach, who heads up child care work for the National Women’s Law Center. And she explained it so well:

“The bottom line for private equity, and investor-backed chains more broadly, is profit for [investors]. The bottom line for child care should be early learning and care for children. And it’s not that you can’t ever reconcile those two things [but] when you implement standards, whether it’s living wages for early educators, low child-to-adult ratios, or other measures that affect the quality of that care, investor-backed chains will face external pressures to comply with these standards in the cheapest way possible, which in turn has implications for either lowering the quality of the care or raising the fees charged to parents.”

And she goes on to talk about how it’s not a dirty thing to try to make money in business, but is a short-term profit-maximizing model an appropriate one for child care?

You’re right to point out other industries, and we should be clear that just about every time private equity has touched a human service industry — nursing homes, autism services, even prison food delivery — the results have been largely disastrous for the people on the receiving end of those services. So it’s hard for me to concoct a scenario in which increased private equity ownership is going to be a positive for kids and families. (By the way, this is where I do my regular plug for a book I wish everyone would read: Plunder: Private Equity’s Plan to Pillage America by former Department of Justice special counsel for private equity, Brendan Ballou. Just don’t read it near breakable things.)

And indeed, my reporting and the reporting and research of others points to the standard private equity playbook being put into place in child care. They’re largely going to affluent areas and upcharging, they are pulling out all the stops to minimize operational costs — I quoted one former site director who said she was told to limit the amount of paper she gave out to kids for arts & crafts! — they are resisting removing teachers from classrooms despite allegedly horrific behavior because that would mean they could serve fewer kids, they’re forcing sites to sell off their real estate and lease back the building (with the proceeds going to the private equity firm, not the site), all of these strategies to squeeze every drop of profit out. That doesn’t mean every private equity-owned child care program is bad — plenty are of perfectly good quality — what it means is that there is a corporate structure layered on top, with executives that wouldn’t be doing their jobs if they didn’t prioritize making money, even at the expense of kids and families.