It's not often a Harvard Law and Economics professor sounds an alarm but John Coates did just that in a Harvard Business School video. He noted private equity controls larger amounts of the U.S economy and its political system.
The promo for his new book "The Problem of Twelve: When a Few Financial Institutions Control Everything" states:
...there’s the rise of private equity funds, such as the Big Four of Apollo, Blackstone, Carlyle, and KKR, which have amassed $2.7 trillion of assets, and are eroding the legitimacy and accountability of American capitalism—not by controlling public companies, but by taking them over entirely, and removing them from public disclosure and scrutiny.
This quiet accumulation in the last few decades represents a dramatic transformation in how the American economy operates—a sea change that few of us have noticed and all of us need to consider.
PEUReport spent the last seventeen years documenting and commenting on Coates' sea change, where private equity underwriters (PEU) have "become their own capital universe."
We once had company towns where one large employer often took extra steps to ensure workers had a place to live, shop, receive healthcare and have some quality of life. The large employer, if still around, is now private equity owned. It shed jobs to cover increased interest expenses, deal and annual management fees and special distributions (often debt funded).
PEUs staked out residential rental housing, healthcare, dining, retail, insurance and professional sports teams. In many cases quality deteriorated while prices soared, the result of PEU crapification.
No regulatory body stepped into the public disclosure void. No laws were enacted to ensure PEU founding legends paid a fair tax rate on their Midas level riches. Coates noted "private equity is (operates) completely in the dark" and the industry views that as "a useful thing."
Politicians Red and Blue love PEU and increasingly, more are one. And that is the product of shadowy private equity concentration in our economy and political system.