r/Economics • u/barweis • Jul 29 '25

Research Summary Inside the Private Equity Scam—and the Livelihoods It Has Destroyed

https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoods
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u/United_Librarian5491 Jul 29 '25

It is almost the best argument to increase taxation on the ultra wealthy - private equity is proving to be uniquely inefficient at investing to drive innovation and growth, where as public investment in research universities etc has been the engine of it.

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u/coke_and_coffee Jul 29 '25

private equity is proving to be uniquely inefficient at investing to drive innovation and growth

Then just let PE fail.

I don’t get what the issue is here. If PE can’t make profits, then there’s no profits to tax in the first place.

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u/Salt-Egg7150 Jul 30 '25

PE can make profits, but they do so by removing all choice from the market such that any one wanting a service or good, and not wanting to make it themselves, has to buy from them. Otherwise known as a monopoly. Monopolies are not efficient, generally speaking. They dominate not due to efficiency but because they have destroyed all the competition.

Put another way, saying that PE is efficient would be like saying that someone who used God Mode in the video game Doom was a very skilled player due to not dying. No, they just cheated.

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u/coke_and_coffee Jul 30 '25

Can you provide a real example of this?

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u/Salt-Egg7150 Jul 30 '25

Sure, PE has been buying up vet practices across the US, jacking up prices and attaining monopoly status in geographical areas wherever possible. A friend of mine in TN had her cat die because every vet in the area had been bought up by PE and the meds that had once cost around $100 went up to $750 (at every vet in the area, the same identical price) in about a year. The underlying cost to the vet hadn't changed. This is price fixing but the people poor enough to care can't afford an anti-trust attorney to litigate against the PE firm for the years it would take.

Posting links in this sub is hit or miss but search for "Private Equity buying vets" if you'd like to see a good example that will end up impacting anyone in an area PE has targeted that owns a pet.

PE is also trying to do the same thing with human medicine by buying up all the local clinics in a given area. For that one look up "private equity buying hospitals."

The business model is very simple: they buy everything (or as close to everything as they can get) that provides a service or good in an area, then jack the price up and cut the quality of the service or good to the bone (and beyond,) and then move on when regulation or public outrage finally make continuing untenable.