Process
Status Items Output None Questions None Claims None Highlights Done See section below
Highlights
id741344065
the actual reason for the seafood chain’s woes is private equity and “another hedge-fund, bust-out scam.”
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the top-line takeaway, as Luke Goldstein argues, is an unholy alliance of private equity and seafood industry monopolies and monopsonies — single-buyers — that concentrated power and allowed the suits to dismantle the chain and sell it for parts.
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Red Lobster’s past private equity owner, Golden Gate Capital, sold off the chain’s real estate and leased it back to the restaurants. As Goldstein points out, that netted the company $1.5 million
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Monopoly, monopsony, and behemoth private equity firms are a massive problem. The concentration of wealth in the market is also a concentration of power. And that power stacks. The more heft you have to throw around, the more capital you have access to, the easier it is to direct the market in ways favorable to those who already hold most of the marbles. Once you reach a certain scale, it’s easy to decide which companies live, which ones die, who wins, and who loses. Of course, working-class folks are the ones who tend to lose.
id741343933
these corporate raider giants were too big, too willing to buy anything they could abuse for a buck, entrenched, cynical, and predatory beyond belief. As if that weren’t enough, they’re also fond of using worker money by way of pension funds to execute their, well, executions.
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Even if we entertained the capitalist myth of self-regulating, self-directing, efficient markets that keep operators in check — a belief that’s hard to swallow under any circumstance — we would have to explain how private equity is anomalous to the functioning of capitalism rather than native to it. Of course, the answer is that it’s not anomalous.
id741343947
Capitalism fosters the pooling of power — the concentration of wealth — and the compound effect has far-reaching consequences. This concentration undermines state capacity, suppresses worker wages, and has adverse effects on working conditions, market prices, and the variety of firms in the marketplace.
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We’re told that sacrificing social welfare and submitting to the ruthlessness of the untethered market is worthwhile for the sake of capitalism’s productive energy and the abundance of choice it supposedly offers. But the trajectory of private equity leads to conditions reminiscent of Soviet-style bread lines, albeit without even the pretense of universal health care, free higher education, subsidized housing, or job guarantees.