The Daily Zeitgeist - Who Killed The Free Ambulance? (It’s Not Millennials) 06.27.23

Episode Date: June 27, 2023

In episode 1507, Jack and Miles are joined by Brendan Ballou to discuss… Did You Know Ambulances Used To Be Free? An Enlightening, Infuriating Talk With the Author of Plunder: Private Equity's Plan to Pillage America About the Industry That’s Destroying America From the Inside Out and more! LISTEN: Make Me Wanna by BabeheavenSee omnystudio.com/listener for privacy information.

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Santos! Listen to Lucha Libre Behind the Mask on the iHeartRadio app, Apple Podcasts, or wherever you stream podcasts. Hello, the internet, and welcome to Season 293, Episode 1 of Dirt Daily's iGuys, a production of iHeartRadio. This is a podcast where we take a deep dive into america's shared consciousness and it is tuesday june 27 2023 627 2023 you know what it means sorry my computer's crashing oh i already know doesn't matter they can't stop us because 627 oh you better i don't

even know what i was gonna where i was. But anyway, it's National Orange Blossom Day. National Sunglasses Day. International Pineapple Day. National PTSD Awareness Day. Micro, Small, and Medium Enterprise. National Onion Day. National HIV Testing Day. National Ice Cream Cake Day.

There's a lot of days today. We got them all. We got them all. Two of my favorite fragrances. You know, Orange Blossom. I've got some Orange Blossom candles. Orange honey and then uh onion onion tea yeah onion candles that like that onion perfume that you have is eye water right eye watering i'm like you just like get a little misty eye could you imagine if there was a thing

where you were just fucking emitting the shit that makes your eyes water from onions? As a perfume, like, yo, what the fuck is that? Actually tearing up near you. Well, my name is Jack O'Brien, a.k.a.

Ennui, Ennui, Ennui, Ennui. I swear to you that I know this word, man. On we, on we, on we, on we. I know how to speak. I promise you I can. That is courtesy of a CWGBO on the Discord. of a CWGBO on the Discord.

Making fun of me. Humiliating me for mispronouncing on Wii as N-U-I. N-U-I. N-U-I. What's that word? N-U-I?

N-U-I. N-U-I. I'm thrilled to be joined, as always, by my co-host, Mr. Miles Gray! Miles Gray, a.k.a.

I'm a bitch, I'm an orca, sinking yachts just off Mallorca. I'm a sinner, I'm a whale. I'ma hit you with my tail. Okay, shout out to Al Garabenta, PG, up in it, who found this on the Twitter.

It's funny, I love when people find things that are like, yo, this is an a.k.a. They don't even listen to the show, but at least people don't know what you wrote is an aka and that was from connor daily on twitter but yeah hell yeah connor aren't they aren't the activities spreading of the orcas yeah i think there was another one where they like in like near the british isles or something they're i call it the british isles like i'm an old explorer yeah i think i i read about a new one i don't know what it means for how far the message has spread from white gladness yes but on north of scotland they say damn they say i don't again this could be like a slight thing

where now like media is like being like this this is a new thing orc attack spreading like wildfire because i said quote it appears to be leapfrogging across oceans well they're fucking have like as being like, this is the new thing. Orca attacks spreading like wildfire. Because they said, quote, it appears to be leapfrogging across oceans. What, are they fucking going to have cell coverage out there? How would it be leapfrogging? They got that 5G, Jack. That's right. Or maybe whales swim that far that fast.

Or maybe orcas just know how to stay on code. Yeah, that's right. Anyways, Miles, this is a very special episode. Our guest today is an expert author of a book that I will just say explained a lot, explained everything about how modern America operates in a lot of respects. modern america operates in a lot of respects and you'll you'll even hear me admit in the beginning i'm like i would i was going around a lot of my adult life vaguely understanding what we're talking about and then but hearing it properly and like reading it have it be properly articulated by someone who's like looking at it from a legal standpoint like oh yeah yeah oh that's fucking terrible i mean like i i knew that broadly but

this is uh it gives it so much texture in a way yeah but it might seem at first like a little depressing because it's like it's giving you really good texture on like why things are bad in certain ways but i think ultimately it's kind of hopeful because it at least gives you an understanding of how things are actually operating so we're going to talk to our expert guest, Brendan Ballou, for a couple acts here for like the next 40 minutes. We'll come back and close things out after that. So we will talk to you guys in a bit. Just a caveat.

I normally, I just, I don't speak to the feds normally. So please don't, I don't want you guys writing in about how I made miles doing. I said it's a it's always been fine for me. Come along, friend. Let's talk to the feds. by a federal prosecutor who served as special counsel at the Department of Justice. He's the author of the book Plunder, which he's here to talk to us about today. It is a hugely compelling, infuriating read about an industry I knew very little about. So, Brendan, first of all, welcome. Thank you for joining us. Thank you so much for having me. So, I just want to go as long as i can talking about this without mentioning the name of the industry that your book is about just because i feel like when i hear the two words that that are the name of the industry like my brain just goes to sleep

because it's also like the name that i've heard people who I like went to school with be like, oh, well, I do some things and I'm just like, okay, I don't know what that means. It's so divorced from reality and like anything that makes sense to me. And maybe that's by design. I don't know. But just some facts real quick. So these companies are massive and invisible in a lot of cases you mentioned that they would be two of them would be the third and fourth biggest employers of people in the country behind amazon and walmart if they like admitted that they existed or owned these entities. One, this industry helps explain why ambulances aren't free.

Ambulances used to be free. Like you have a quote that is very close to some things we've been saying on our show. Like anecdotally, it feels like everything's getting a little worse. Our products are lower quality. Our stores are understaffed. And this book, more than anything I've read recently, really helped me make sense of why that is or how that's happening. And then there's also this list of companies that this industry took over and then those companies declared bankruptcy that I just want to read through really quickly. So we've got J.Crew, Neiman Marcus, Toys R Us, Sears, 24 Hour Fitness, Aeropostale, American Apparel, Brookstone, Claire's, David's Bridal, Deadspin, Gymboree, Hertz, KB Toys, Linens and Things, Mattress Firm, Nine West, Payless Shoes, Radio Shack, Shopko, Sports Authority, True Religion. Friendlies. Friendlies. Yes. And I just, so I had just kind of taken it for granted that those places along

with the like mom and pop stores, like just no longer needed to exist because Amazon or something, you know, like that it was just like Walmart and Amazon coming in and out dueling the midsize guys with scale. But a lot of those companies still deliver on the central premise of capitalism, of like delivering value to people's lives and getting paid for it. And like, so this helped me fill in a blank that like a lot of these companies are actually getting killed off by the science killer that is private equity private equity folks said it all right again a word that has the magical power to turn my brain off but it's one of those words too like it turns my brain off because it sounds like when i hear it so much that i'm embarrassed to admit how little i know about it and you're like yeah private equity. I know, like I hear that all the time. And if someone asked me to start explaining it, I would probably

start like sounding like some MAGA Republican trying to explain like how the insurrection was an inside job or like the dog, like, well, the thing you got to understand is like the, the Clinton socks case and documents. And you're like, whoa, wait, huh? That I'm, that I think it's also, that's sort of like the brilliant part of this industry is that it so many of us are blissfully ignorant of its power while it is able to just run rampant. Yeah. But let's talk scale, first of all. Like these are massive companies, as you mentioned, third and fourth biggest employers in the country. the country. Yeah. So it's kind of amazing how big private equity firms are. And I should say at the outset, of course, that I'm speaking purely personally and not necessarily reflecting the views of my employer. So let's just talk numbers here. As you mentioned, some of the leading

private equity firms, if they were considered with their portfolio companies, would be the third, fourth and fifth largest companies in America after just Amazon and Walmart. In terms of what they're buying, private equity firms spent a little over a trillion dollars buying companies last year and $1.2 trillion the year before. Just for a sense of perspective, the entire U.S. GDP is about $25 trillion. So it's not an insubstantial part of the entire U.S. economy. And in terms of where they're spreading out, it's just about every industry you name. You can think of, you know, you already named, you know, ambulances, you named a lot of retail stores and so forth. But whether we're talking about health care,

housing, prisons, education, municipal services, you know, literally the font of my book was owned and licensed by a private equity portfolio company. So it really surrounds you. Yeah. I guess my assumption and maybe the reason that like the the ideas behind private equity like didn't cohere, didn't like stick in my brain is that like it doesn't they don't take over. And I guess the premise is right that they take over a company and they figure out ways to make the company better and more profitable. Like as this, you know, in and of itself, for parts and like getting them to pay them fees and putting them out of business in a way that is legally structured so that they don't face any of the consequences yeah you know i think you know miles kind of framed it right because it's something

that i felt starting out of this project is private equity is a word that I term that I think we've all heard. But like, if we're honest, like, we usually don't actually know what it means. And I'll confess, I didn't know what it meant until about a third of the way through this project. So I don't think anybody should feel embarrassed about that. So just taking a step back. So what is private equity? And how does this business model work? So private equity firms take a little bit of their own money, some investor money, and a whole lot of borrowed money to buy up companies, as you were saying, Jack. And then what they do is they sort of enact these operational or financial changes with the aim of selling it for a profit a few years later. So it's a very simple idea. But the problem that we've got is our laws and regulations are

structured in a way that really leads to a lot of bad outcomes. So for instance, private equity firms typically just own companies for a few years. So they have a very short term perspective. And when they own them, they tend to load the companies up with a lot of debt, and they tend to extract a lot of fees. And then third, and this is the part that interests me the most as a lawyer, is they're extremely good at insulating themselves from legal liability for the consequences of their actions. So when you've got those three problems, it leads to all the things that we're talking about here. Short term, a lot of debt, insulation from responsibility. It means that private equity firms often profit, but the companies, the customers, and the employees often don't.

Yeah. And like, how much is that? Because like that, that is something even as you are describing it, like just this idea of adding hidden fees to these companies and extracting fees, like using them like ATM machines, like doing things that are just like short-term value grabs as much as possible or just like money grabs like that seems to be like you talk about how these are the new cool places to work in the finance industry and it like that logic of like no longer think about long-term health and just like kind of cynically like smashing a company until smashing thing you are doing business with until it gives you money like that it feels like that we're seeing that kind of everywhere like when we talked about like the new hbo max changing his name to max and like that but like his main insight is like just cut budgets like that that's the other thing that just keeps coming up over and over again is like their big insight

if you can call it that is just like cut budgets don't don't spend any money so that we can turn things around really quickly and that that ends with them like being understaffed during, like, they cut doctors. Like, one of the private equity firms that bought an ER or was in some way in charge of an ER was cutting staff during the COVID pandemic. Like, it's just, they only have, like, three answers, and they're all just short-term value grabs, right? Yeah, well, let me give an example of sort of how this sometimes works in practice. And then maybe I can address, I think, what your broader point is here. So, you know, one of the examples that I always turn to is Carlisle's acquisition of HCR ManorCare, which was this very large nursing home chain in the United States. very large nursing home chain in the United States. So they bought it up primarily with debt,

executed a lot of tactics that you were sort of alluding to, like what's called a sale-leaseback, where they required ManorCare to sell all of its buildings and offices and then lease it back to itself, which kind of gives it a quick hit of cash, but means that now they sort of have a lease on something that they used to own. They extracted transaction fees and management fees, which were essentially fees for the privilege of being owned by the private equity firm. And, you know, understandably, you know, when you start extracting money and disinvesting in the company, health code complaints spike, you know, residents start complaining about, you know, rodents and roaches and things like that, eventually somebody dies in one of the nursing homes. But when their family sues for wrongful death, Carlisle's able to get the case against it dismissed by arguing that it is not the technical

owner of the nursing home chain. Instead, it merely advises a series of funds whose limited partners through several shell companies own the nursing home chain. And that's enough to get the case against it dismissed. And that's, you know, sort of a typical example, or I shouldn't say typical, but a frequent enough example of how you can have a bad consequence with this business model. Now, if I can get to, I think, what your broader point is, which is, I think that there's a feeling in this economy that, you know, there's sort of a is, I think that there's a feeling in this economy that, you know, there's sort of a short term perspective that there's a sort of idea of extraction rather

than investment and all these things. And I think that there are sort of broad macro things happening in our economy that can account for that and sort of talking about the rise of the ideology of shareholder supremacy and things like that. But one thing that I always try to hit home is that private equity actually is new and is different. And it's something sort of unique and separate from the rest of the financial industry, which is not to say that the rest of the financial industry is pure and clean and perfect, but it's something distinct. And I do that because I think if we sort of throw up our hands and say that the entire sort of economy is broken, nature of capitalism has failed and so forth, it can lead to a certain level of, you know, sort of nihilism. Whereas if we say we've got this specific problem with this private equity

business model, I think it's something that we can actually fix. Right. Yeah. I definitely felt more knowledgeable and therefore hopeful following reading your book than I did before, because, yeah, it doesn't feel necessarily like it is everything having to do with capitalism. It feels like capitalism has this horrible version of like capitalism cancer that is just, you know, invading and being able to spread and it's silent and so and kind of invisible to a lot of people. And so it's kind of out of control. I think to that point, right, of being able to diagnose the issues, because I think broadly we see the issues of capitalism

in this form of hyper-capitalism we're in. But it's one thing to be able to say, okay, now let's be able to diagnose these specific causes. Because before, like to Jack's point, I was on just sort of this ignorant path of being like i don't know amazon like ruined all these like small places i'm like i don't know maybe people are starting buying toys anymore that's why toys rs went under and it's like no it's because there is a very it's like a very proven method of making money like this and it's and it's we're incentivizing it because people are also on top of this, like, let's like, I don't want to lose sight of the amount of money that these

people make sort of at our own expense, at the expense of these people that are in these, you know, nursing homes or in prison or working for certain countries or certain companies. Sorry. But you're like, you pointed to like a really interesting statistic because just to give people an idea of how wealthy the people that are involved in PE, pirate equity or whatever we want to call it, to get people's ears up a little bit. What's the sort of disparity in how much money these people make versus something like we can wrap our heads around like professional athletes? Yeah. professional athletes. Yeah. So one of the statistics that really grabbed my attention is that there are now more private equity managers who make over $100 million a year than all other financial executives, investment bankers, and professional athletes combined. So this tiny part of the industry is really dominant. I mean, to go back to a point I think

you were making earlier, Jack, about how private equity, even though it's this sort of obscure sounding thing, is sort of the hot place to be in finance. The head of Blackstone, which is one of the leading private equity firms last year, made, I think, 10 times as much as the CEO of Goldman Sachs. And I don't think the CEO of Goldman Sachs is terribly underpaid. So, you know, these are areas where, you know, literally you have folks whose net worth is the GDP of, you know, some small country. Right. Yeah. Yeah. You taught you describe some parties that they're throwing in the book and it's really. And the whole head of Goldman is the DJ. That's how rich these guys are. They're like, yeah, dude, I have him here to be the DJ, not to be a guest. I think one of the parties, Stephen Schwartzman's 70th birthday, he's one of the heads of Blackstone,

had, I think, at least one or two Chinese temples built in his honor on his property in Florida, had sort of dancers hired, the cast of Jersey Boys brought in, and had Gwen Stefani sing them Happy Birthday personally. So, you know, these folks have a fair amount of money to work with. And he's got taste, you know? He's a no doubt fan. He's like, I love Tragic Kingdom.

How much money do I got to pay for you and Tony to get back together, the bassist? I love that, the don't speak video. The other thing, too, is like, again, we talk talk about because everything is typically that we see it's always preying on the weakest in our society whether it's like draconian legislation or like the the kinds of consumers these companies go after i feel like it's it's like almost guaranteed that the people that are on the shit end of the deal are working people or people who have no options can you talk about like how specifically like how this works, too? Because there is a methodology to getting as much money

as they can out of this because they know they have a sort of captive consumer base. Yeah, I think your your phrase captive consumer base is exactly right. Because, you know, I started out on this project, I sort of assumed that private equity firms would go after industries for wealthy people because, you know, that's where the money, for-profit colleges, various parts of the healthcare industry that target sort of lower income and working class families. And I think the reason for that, by and large, is working class people have fewer alternatives. So when you're talking about prison services, you can lower the quality of care. Or when you're talking about mobile homes, you can raise the cost of the lot at least because folks literally don't have an alternative and don't have another option.

Yeah. You mentioned elsewhere in the book about how like why ERs are attractive to them. And it's, you know, the inelasticity of demand and the fact that nobody really has has much say over where they are when they get shot or have a heart attack and so they're like bingo there's right these this consumer base isn't going anywhere and so we can fuck shit up as bad as we want to essentially and we'll have we'll be able to spend very little and continue extracting money from people. It kind of just reminds me of just like you were saying, like ambulances used to be free. That to the point now we have like it's now in our consciousness. Oh, no, no, no, don't call the ambulance.

Yeah. Don't do that. Don't do that. And you're like, oh, that's the invisible hand of private equity right there. Just putting that into our minds. It's really interesting. And you're like, oh, that's the invisible hand of private equity firms have gotten very active in ambulances. One of the really interesting things is it doesn't seem like they've done a terribly great job managing them. There was a really interesting expose in the New York Times about them, about how sort of a disproportionate number of ambulance companies owned by PE firms were going bankrupt

and going out of business and so forth. But to take one step back, I mean, I think emergency rooms are the really interesting story because two private equity firms own the leading physician staffing companies for emergency rooms. And according to research by some folks at Yale, really the business model of these staffing companies is essentially to staff the doctors

at these emergency rooms in a way strategically so that people pay surprise out-of-network bills. So you go to a hospital, you think it's in your network for your insurer, but you're actually treated by a doctor who works for a different hospital, and as a result, have to pay an out-of-network bill. So it's an area, yeah, go ahead. It's just tricks. It's adding confusion, adding complexity to the system so that they can extract fees without delivering any value whatsoever. Like that really seems to be. Sorry, let's take a quick break. And yeah, I want to kind of come back and just look further at the track record because it really like the number of examples you give really suggests this is the

model like this is this is what they do they come in they make it worse they somehow get so rich that they can build chinese temples on at their birthday party with glenn stefani yes with glenn I've been thinking about you. I want you back in my life. It's too late for that. I have a proposal for you. Come up here and document my project. All you need to do is record everything like you always do. One session.

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I think I need to hear you say it. That was live audio of a woman's nightmare. This machine is approved and everything? You're allowed to be doing this? We passed the review board a year ago. We're not hurting people. There's nothing dangerous about what you're doing. They're just dreams.

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to how it became a global symbol of Mexican culture. We'll learn more about some of the most iconic heroes in the ring. This is Lucha Libre Behind the Mask. Listen to Lucha Libre Behind the Mask as part of My Cultura Podcast Network on the iHeartRadio app, Apple Podcasts, or wherever you stream podcasts. And we're back. So that story about how their insight into staffing was to trick people into using doctors outside of their network is just one of the stories in your book that is incredibly infuriating.

There's also the worst hacking disaster in U.S. history. Do you want to talk about how that came about in partnership with private equity? Yeah. So two private equity firms bought up the tech company SolarWinds, which provides a lot of sort of like boring IT and security services to companies. Looking through the documents in SolarWinds public filings, it appears that after it was bought by a private equity firm, staffing at the company was cut. And at least according to their public disclosures, a lot of their engineering work was moved overseas, including to, among other countries, Belarus, which is in the news recently. Yeah. Oh, Lukashenko, great guy. Yeah, yeah, yeah.

Whether that's causal or not, ultimately, SolarWinds suffered what one government official called the greatest hack in United States history. I believe the Department of Defense, Treasury, State, Justice, and others were all compromised. And at least it appears on sort of initial reporting that the leaders of the private equity firms may have dumped stock in advance of the public disclosure of that. Now, there's an investigation going on to that at the SEC. I don't know what the outcome of it was. But it was another example of, you know, you have this industry, you know, sort of IT security that really needs to be thinking in terms of years and really decades for how to make sure

that you've got a secure product when you're working with the government. And they're being bought or controlled by private equity firms that are trying to make a profit, you know, in a matter of months or a matter of years. And it's just a very different perspective for how to run these businesses yeah yeah it's right the i mean similar to the you know getting involved in er staffing that they also took over the operation of 9-1-1 calls at one point like just all these things that yeah it just when you read stories of businesses that become successful over a long period of time, it's really about fix like that is the third or fourth thing that they're interested in. And the most interesting thing is delivering value for themselves and get, yeah, financial success. It's interesting. You know, you look at the biographies of folks that run private equity firms and it's, you know, it's not a critique of them. It's not a surprise. But, you know, it's generally folks that do not have sort of financial changes to these businesses that's going to, you know, get a fairly quick return.

You know, you look at the diversity of what some of these private equity firms buy into, you know, it's a plastic logistics company, it's a municipal water service, and it's the dating app Bumble, you know, and it's like, one person doesn't really have the expertise to run all those different kinds of companies. Yeah, they just know how to make line go up. at Bumble, you know, and it's like one person doesn't really have the expertise to run all those different kinds of companies. Yeah. They just know how to make line go up. Right. And it's sort of like, oh, wait, what does that mean? It's like, well, we're not going to have enough nurses. I don't know, man. But then when I look at these projections, I like what I'm seeing. Let's do that. And figuring out afterwards, what's really difficult

is like we hear about all this. is so apparent to everyone you know like i think at this point even everyone listening is like right okay okay uh pirate equity bad uh or like not not necessarily out here for everyone's best interest but then you think about like a lot of the examples that you give in your book like it's also very very hard to hold these fucking people to account because of the nature of like all of the advantages that these companies have, whether it's through lobbying, whether it's through like a revolving door

of entities that have been in government that end up there and then end up lobbying people they already know on the Hill and things like that, or just the amount of complex, like hype, like whack-a-mole of who owns this thing that all come together because i think a lot of the times especially when we talk about these issues like on our show we're like well what's the problem why can't it why can't it stop right like it's we get it we're seeing it

like if the cost is people losing their lives the cost is people going bankrupt the cost is untold suffering and then you know to be real, hey, man, we're looking at you, the feds. What's going on? And I know you've said this, too, like it's the federal like the DOJ is not the only entity that can go after this. But like, how do you explain like when people talk about the frustration of like, well, then what like something's got to give? Where will it give? It will. Yeah. Yeah. It's a huge issue because, you know, as you started off, you know, private equity, I think, has been uniquely successful in lobbying. You know, if you look at who private equity firms have hired, it's former secretaries of state,

treasury, defense, former two former speakers of the House to a vice president, former chairpeople of the FCC and SEC. I mean, it's a really deep bench. And that means that they have just been extraordinarily successful at sort of advancing their legislative and regulatory agenda. I think the other challenge that we've got, and I think you hit on this exactly right, is it's really hard for ordinary people to hold private equity firms accountable. We have this doctrine called corporate veil piercing, which means that it's very hard to hold an investor responsible for the actions of the company that they invest in. That makes sense for you and me, where we've got our little Vanguard account and have like one share of stock in a company.

You know, we don't really have much say over them. That doctrine doesn't necessarily make sense for a private equity firm that has a controlling stake in these businesses and can essentially tell them what to do. And then lastly, I mean, I think you hit the point exactly right, which is a lot of times it's just hard to even figure out who owns what and who to sue. I talked with folks that sue nursing homes on behalf of families whose, you know, parents died or were injured or whatever it happens to be. And they're telling me, you know, look, these guys have these really broke organizational structures where they're shifting assets across multiple shell companies and, you know, sort of across different shells. And it's really hard to figure out who is

responsible and who has the assets to recover. So it's a really tough problem and it's something that's becoming normal too like other industries are like you know what kind of works is if you kind of spread it all around and no one knows how to get like seek damages right yeah that you tell this one really memorable story about ashford which is you know a franciscan university of the prairies is what it's called but it's like a really small college run by nuns and then it gets taken over and turned into ashford university which becomes this you know phoenix university like adjacent thing and it's really this like outraging thing and then you also mentioned that like the private equity firm that now runs it is warburg pince pinkis which is run by obama's former treasury secretary secretary tim geithner and

it's just like you just see that over and over again like the the amount of people from positions of power who like know how things work better than anybody, you know, most people listening to this and like know how things really work behind the scenes are going into private equity. And it just really feels like a looting, a plundering that's happening. I yeah, I heard this third hand, so I don't know how true it is, but there was a senior government official who ended up doing some work for a private equity firm and somebody was chiding them and they said, look, you know, it's not who's working for private equity. It's who isn't working for private equity right now. So it's it's pretty extraordinary the breadth of of their success. Right. And just like the greed, how it compounds itself, you know, because now it's like it seems like you're almost incentivized to get into private equity because of how little repercussions people face.

And I'm curious, like when you have a case like like the ones we've talked about, when it's like, yeah, man, like they own this company and they basically started throttling back their level of care, which led to someone losing their life. Okay. Well then tell me who owns this. And that person's responsible. Like when these cases get like dismissed or things, is that the cynical part of like, I think the cynical shorthand version of someone who believes in how like cronyism works and things like that believe that like, oh, the judges are in on it too. Everybody's in on this. That's why it's happening. But I think you've also raised the point that it's not necessarily like, like there's, there's a huge barrier to get over, which is informing people of how this even works too. And like having enough public pressure, like around this idea or this industry of private equity that gets people to sort of be on the same page to understand the issues. Yeah. You know, I think one of the challenges that we've got is exactly what you're saying

is education. And that's not just educating, you know, sort of your listeners or, you know, people and, you know, you know, people that are just generally interested in this topic. It's also informing judges, people in government, you know, what private equity is and what the practical consequences are. One of the challenges that I think people who are critical of the private equity business model have is, you know, private equity firms have an enormous amount of money to lobby and to litigate their issues. And the other side, you know, just has a fraction to do the same thing. You know, one of the cases was over this obscure sort of retirement law issue, and at stake was like $4.5 million

for the private equity firm. It was essentially a rounding error. They spent 10 years litigating the case in order not to have to pay out because they had the resources to do it and they wanted to set the precedent that they could. And so, you know, we've got to inform people and we've also got to figure out how to sort of empower activists and folks that want to work on this stuff so that they can do this work for the long term. Like we have anecdotally, everyone seems to have a feeling that things are getting worse. But, you know, it's kind of hard to we don't have much to compare it to. But there, you know, there's presence in the dental industry, veterinary. I think you mentioned grocery stores at one point that, you know, one of the reasons they're like two grocery stores in the country that didn't used to be the case.

Yeah. Yeah. So private equity is, you know, I don't want to overstate the case, but they're active in, you know, most every industry that you can think of, whether you're talking about sort of retail things. We were talking about Toys R Us and stuff earlier or grocery stores, as you say. When we're talking about health care, it's not just emergency rooms and ambulances. It's ordinary sort of OBGYN and urgent care clinics, buying up literal insurance companies, you know, life insurance claims, worker compensation companies,

to things like manufacturing, infrastructure. In some places, private equity firms literally bought up the municipal water services that you might use to drink water from your tap. How'd that work out for them? Unfortunately, it didn't work out terribly well. for users to such an extent that local reporters were saying that people, quote unquote, became water Nazis, would time their family members in the shower and would only buy flowers that didn't require a lot of water. So unfortunately, that's a contract that those two cities are now going to have to sit with for the next 30 years or so because of how it was negotiated. But to the extent you're interested in these things and you're concerned about a business, you know,

private equity firms rarely advertise their ownership. So what you should do is Google the company name and just add private equity and see what comes up. Yeah. Chances are it's almost like what industries aren't they involved in? It might be an easier question. Yeah. It's like, oh yeah, they're, they're not behind the push for Medicare for all. I'll tell you that they don't have, they don't have a dog in that fight unless it's on the other side of it yeah yeah i don't think they're active on that one yeah interesting how do you talk about like i've i've there's been in a couple social settings since reading your book and just been like it's it's crazy but like unable to like really fully you know put into words because it's the problems like so big

and so acute. But like, how do you usually introduce the idea of your book to people? Like when you're just like talking to them at a cocktail party or something? I always explain the basic business model. And I say that private equity is going to transform the country in this decade, the way that big tech did in the last decade and subprime lenders did in the decade before that and i say what the three basic problems are short-termism a lot of debt and fees and insulation from liability and if we can fix those three things uh we can basically solve the problem yeah and i and that's kind of another thing i want to talk solving the problem because again a lot of the times it's easy to just fall into the nihilism of being like, well,

this is it. Like, I don't know. Like, I don't even know. We don't even know who to sue. You've talked about how, like,

again, activists have helped to like, you know, offset or alleviate the cost of like phone calls from prisons, you know, and like actually have made headway there. And like, that's a victory.

What are some other, like, cause what are some other specific areas where we are seeing some bit of the clawing back of the fuckery, as it were? So I think the prison area is really encouraging. So, you know, private equity firms bought up prison, phone companies started charging extremely high rates for these short 15-minute calls. This was a many-year effort to sort of make progress here. Ultimately, you know, they were able, activists were able to get legislation passed in cities, New York and San Francisco, capping rates for phone calls,

then pass state legislation in Connecticut, and ultimately pass federal legislation. So they were really, really effective working on this specific issue. Beyond that, there's been really good work on, for instance, you know, we're talking about nursing homes. There's rulemaking going on right now at the Department of Health and Human Services to try to establish national standards for minimum staffing criteria for nursing homes, which will be absolutely transformative. So I think when activists have chosen really specific issues where the effect on people is clear, I actually think activists have chosen really specific issues where the effect on people is clear, I actually think they've been really successful. You know, private equity firms have the money, but activists have the people on their side. And I think they've shown that

they've been actually able to get a lot done. Right. So rather than being like, when you're going to pass the down with private equity bill, it's like about kind of getting a little more specific in a way that connects to people. Because, again, like like we're saying at the top, just saying the word, it becomes nebulous and abstract. And I'm like, I don't even know. Yeah. Yeah. One hundred percent versus shouldn't there be a number like a minimum number of staff in a nursing home?

So someone doesn't like like needlessly lose their life and be like yeah yeah oh yeah yeah yeah that part but then again is there is there is there a similar thing that gets at the accountability part because i think that's the part that really like frustrates me is how easily they can walk and hide behind being like i don't know i don't own it i just tell these funds what to do and the malam that's that's where it ends so I don't know. I don't own it. I just tell these funds what to do. And that's where it ends. So I don't know where the buck stops. Where can people put their energy in terms of finding that part out or at least augmenting that movement a bit? Yeah, no, I think that's a really good question. And you're talking about private equity being a boring term. They're working to make it

even more boring. A lot of the leading firms now don't even call themselves private equity firms anymore. They're alternative asset managers. So be on the lookout for those. Oh, cool. Yeah. So in terms of... What is it? It wears flannel and has a nose ring and has Doc Martens.

Yeah, like the alternative rock movement. But asset management. Alt asset management, actually. Yeah, yeah, yeah. Sort of inheriting the grunge style. And an alt fund, which is kind of like being an alt band in the 90s. Exactly.

So they, you know, in terms of sort of the deeper sort of accountability issues, obviously Congress is one sort of avenue and there's important legislation, you know, sort of being proposed there. But I actually think that there are a lot of levers of power here,

whether you're talking about federal regulators like the SEC, Treasury, Fed, and so forth, but also states and localities. You know, we're talking about some of these tactics that I think can be harmful for companies in the long term, you know, sale leasebacks, dividend recapitalizations. States could just simply say, you know, we're going to legislate to say if the company's headquartered in our district, you know, in our jurisdiction, you can't do some of these tactics. Or if you do them and the company goes bankrupt, the workers are going to get paid first. And I actually think that there really is interest at the state level on this, but we've got to, you know, folks need to draft up the legislation and there needs to be the push for it. I think that's where the real

change is going to happen in the next few years. and but you kind of say there's also this hopeful possibility that it's like america at the turn of the 20 like 1903 and you know emphasize that we generally today don't recognize how bad it was at that time and how like incremental the changes were we just, in the early-ish 20th century, the New Deal happened. So must have been good. There were Gatsby parties, and then the New Deal came through in response to how lavish the Gatsby parties were. But it was generations of people working on very specific changes, right, that got us out of that very similar situation where it was just unregulated capital running roughshod over the country. Yeah, the Gilded Age worked wonderfully for a select few people, but was immiserating for, you know, so many, whether it was the movement

to stop the labor movement, to use the antitrust laws to actually break up labor unions, but protect monopolies, the movement actually to rescind suffrage for working class people in New York and the institution of Jim Crow in the South. That was endorsed by the New York Times, I think you said, right? Yeah, yeah. The New York Times endorsed, yeah, rescinding suffrage for, I think, working class white men. So but, you know, in some ways, it was it was a politics or an economy that's very similar to ours. The trusts of the early 20th century, legally are very similar to how private equity firms work. And a century ago, we managed to constrain the trust, you know, we created the first, you know, you know, the most

robust antitrust laws, we created the Federal Trade Commission. We passed labor laws, environmental laws, passed women's suffrage and so forth. It was a time that was really, really transformative for the country and ultimately, you know, sort of set the stage for sort of the greatest moment in American middle class history, you know, the 1940s and 50s. And so if we've done it once, we can do it again. We just need to have the patience and the will to do so. Yeah. Yeah. And a way to offset all the lobbying efforts, which I'm sure if a state starts saying things like, yeah, we're thinking about enacting some laws that would really constrain private equity, you're just going to start seeing ads like, don't vote for this because we're going to leave your state and you're going to be broke. So don't even think about it. And then off we go. And I think part of that is for people to really understand the threat that this sort of untethered greed operates and how it affects us in ways that are just so tangible. But yet we think are like, again, like for me, I was like, this is so nebulous. I'm like, it's just part of this vast thing of all the money moving in one direction versus also very specific groups of people

looking at it in this way. And we're just sort of experiencing the lack of investment on the other side. I wonder how many triangle shirtwaist fires it'll take for us to wake up out of this one, because I feel like we're averaging like one a day. Yeah, it's really interesting. I mean, you sort of look at the number of legal tragedies that are happening in private equity portfolio companies, and yet the private equity firms, you know, are rarely held accountable. I will say, just, you know, as a workaday, you know, bureaucrat, I will say that don't underestimate your power and influence as a person outside of government. People inside of government listen to complaints. And, you know, if you're saying this is a broken system, this is not

working, it really empowers people in a bureaucracy to try, you know, who want to do the right thing to feel like they've got people on their side. So I felt that personally. I know others people do do too. So I I know that can be a somewhat frustrating thing to hear, but it really does make a difference for folks. And yeah, just not having it happen quietly, invisibly like that when you just tell this story, it is the sort of story that people respond to. It is an all out war being waged on the lives of people who aren't extremely wealthy by people who are extremely wealthy. It is that simple. They are taking away comforts and things that people rely on and getting rich off of it. It's pretty straightforward.

I'm glad you told the story in your book. I'm hoping more and more people kind of continue to tell it. So thanks for coming on and talking to us about it. And I got to say, normally I don't talk to the feds, but this has been fantastic. Well, thank you guys so much for the time. I really appreciate it. Yeah. Where can people, can you remind us the name of the book and where people can read it? It's Plunder, Private Equity's Plan to Pillage America. And you can buy it anywhere you might buy a book. Perfect.

Or Barnes and Noble, also private equity. I think they might have been. Brendan Ballou, thanks for coming on. Appreciate it. Thank you so much. All right. That was our interview with Brendan. I learned a lot from this book i i feel like you know how when i read a new yorker article i'll like reference it at least five times over

the course of the next week like this is it's over for you hoes like this is all i'm going to be referencing from now on wait so is this going to push out coal gas study havana syndrome no those are just the those are the the, those are the keepers. Those are the ones that I read. The triune God of your mind. Yeah, exactly. Yeah. Those will not be usurped.

But yeah, I, again, I think it, it, it's, it's so helpful to like, be able to be like, that's why these certain things got shitty. Yeah. You know, or like, again, like. The toy store, the toy store really fucking did it for me man that was the one where i was like oh yeah there's no reason there shouldn't be like kids still yeah i can speak kids really still fucking like toys i can tell you that much now we just have the toy section of target and there are no toy stores and i remember at the end of the toys r us run like

going to toys r us to like for a kid's birthday party get get a toy and it was just wildly understaffed and it looked and like it looked like sears did when it was going out of business you know like they're the floors are kind of torn up like think they're just like boxes of like pallets laying around because they just are totally understaffed and it makes total sense that they just you know it's not that these workers are lazy right exactly which is what i was yelling but you know what but that is the kind of shit older people was saying of course they were like i don't know what the hell happened here these people are so lazy and then you're like no it's being like suck the life sucked out of it from the inside financially and what you're seeing is like the husk of a once operating business yeah and this is the fact that this is like and like a an epidemic that is across the entire economy. Like more people are being asked to do more work or fewer people are being asked to do more work, like just everywhere.

And so, yeah, everybody's going to be like immiserated as, you know, like I think he used that word. And it really, you know, both on the customer side and on the employee side, these companies absolutely spread misery as part of their business model. Yeah. And become billionaires. That's the wild part too, is like you get, we know we talk about all the time, how like human life gets reduced to like a number figure on a spreadsheet.

And that's truly how these people are looking at it when you have only guys who have finance brain being like yeah yeah i can help operate a health care provider watch this snip snip snip and then you know we just continue to talk about the the ongoing movement of privatization and how that's only going to lead to a fucking disaster yeah it also made me realize too like when i was lobbying for for-profit colleges like how like yeah the for-profit college section is really wild i mean that was the thing that helped loosen my brain to be like i don't i can't be doing this like i can't be consulting like this at all but then really even then the private equity part was a little bit abstract to me sure like i was only thinking

the company levels the company yeah yeah yeah anyway i'm stupid and that's easy to say now but we yeah we're we're all part of this system that has just been attacked invisibly and this is the first time i've just seen somebody say it out you know in print just be like this is the first time i've just seen somebody say it out you know in print just be like this is the company this is what they're doing it is like the most deeply anti i don't know it's just it's it's so clear cut it just seems wild that nobody said it out loud up to this point or people probably have been it's wild that i haven't read it to this point and it's probably because the phrase private equity made my brain go to sleep. I also blame the New Yorker from not making a cartoon about it. Thank you. Understand. All right. We're going to take one more break.

We're going to come back and hear from a reader who has some job experience that is somewhat related to this. Seems like it's operating on the same principles with one of the industries we were just talking about. Yeah, we'll be right back. I've been thinking about you. I want you back in my life. It's too late for that. I have a proposal for you.

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And I was talking to a former guest this weekend. I'm not going to out them, but like when I was talking, as I mentioned- weekend i'm not gonna out them but like when i was taught as i'm actually the 2000 episodes and try and figure it out as i was saying to brendan like after reading his book i've tried to speak to it everywhere because it's like all i can think about and one of the people i spoke to was like dental care. That was the one when I was like, it's like this, it's veterinary care. It's 911 call centers. It's retirement homes. It's dental care. Like dental care was the one that jumped out. And they were like, yeah, you know, I have lived both in the U.S. and in another country. The U.S., like you would see the dentist like over and over and over with the same problem. They'd just be like, I don't know, like brush more, you know, just give you the same solution and just seemed taxed and overwhelmed. And then like when we're able to have this problem fixed and.

Oh, hey, you son of a bitch. No, I mean, I think you got that. Sorry. hey you son of a bitch no i mean i think you guys we can hey justin you can censor that but anyways so the dental industry we have a listener who works in billing in the dental industry and also works with insurance companies again this similar logic in that even without even if the listeners company is not owned by private equity it seems to operate on a similar logic of like making things really profitably for them unprofitably for the consumer. Very complicated, very annoying to deal with when it comes to insurance. It's like incentivized bumbling and incentivized miscommunication or non-communication. And then

be like, oh, you didn't hear from us? Well, you owe us that. Now we got those interests on top of that. Now you owe us more money. But shout out to this listener. And I believe we'll be okay using your name because it is a handle.'ll call this person pirate pam yeah which is actually great because we're just talking calling it pirate equity but anyway pirate pam has been saying you know she's like you're not working dental insurance and i can tell you a little bit about how like how wacky it is and when i when we started talking on discord i was like oh no walk me through it a little bit um and i said when did you realize how fucked up shit was with like in dental insurance and how you work with it?

And this is what you said, quote, I think it was just a lot of disbelief. I went to business school and was taught how important it was to close out your accounts and be efficient with accounting. I used to work for a medium large private manufacturing company and we were all about production efficiency and technology improvement. Then I found out that many times insurance companies will be inefficient with their claims processing as a strategy, allegedly. Okay, we're putting that there legally. My boss actually told me that when I started, my boss actually told me that when I started, and I honestly didn't believe him until I saw it for myself. They quote, lose our claims all the time and have a terrible backend system for cataloging information. I knew that insurance companies were evil and that they raised rates, refused to cover procedures,

et cetera, but just didn't expect to trickle all the way down to their day-to-day business processes. I have some pretty blatant examples that just boil my blood. It has really radicalized me even further to the point where I don't even believe people should be able to purchase private insurance on top of universal coverage. They will do anything and everything in their power to squeeze profit out of people in need. So basically not deliver the thing that it is their job to deliver. Yes. Yeah. That is interesting to hear because, you know, like the whole thing, the whole logic of the universe that is created in this story about private equity,

That is created in this story about private equity in Pirate Pam's story about what it's completely like the central gravitational like force, like the gravitational center of the entire like capitalistic enterprise was supposed to be to deliver value in exchange for money right like that that's what a business is designed to do is to solve a problem address a need something and the better you are at that the more likely you are to get repeat customer like there's just this very central core gravitational center like economic like center central truth that is supposed to be at work and i think we we've just like crossed over to a place where like that seems even like that seems idealistic for me to even say that at this right or it's kind of like what brendan said there's two versions right there's the version for working people. Right. And you have no alternatives and you're basically checkmated there. And then if you have a little bit more money, then you do have the ability to be like, well, I'm not going to stand for this specific kind of treatment. Yeah. And you just see how much that chasm just grows more and more and more as the companies that are like, quote unquote, smarter.

Like, you got to go after like the working people businesses. Yeah. Because if you own every dermatology practice in a county, what are they going to do after like the working people businesses yeah because if you own every dermatology practice in a county what are they gonna do leave the county for cheaper rates no now we determine what the market is and it's you know rinse and repeat the whole enterprise on the private equity side like really resembles a ponzi scheme so like that when i was asking them like about how this is like the new hot place to work in the world of finance like that's it's it's not just that like these are isolated companies doing this. It's also like the like people are seeing that this is a system that works and makes you incredibly wealthy and like that in that industry is like kind of what is worshipped and held up and you know pursued by other people who work in that industry and then also like on the level of you know we've talked before about

how it seems like we're increasingly interested in scams because it feels like the entire economy has turned into a scam like these most successful companies of the past 10 years the ones who have become as you know big as amazon and walmart suddenly without us ever learning their names like they are doing it by extracting fees and you know that that is the mo of the moment and so of course like it's going to trickle down everywhere. Like people aren't stupid. They recognize what's being done to them. They're just without power or without people advocating on their behalf or without options. to now beginning to define at least one very specific kind and seeing how it works among many other things that are moving in our like global economy but i want to add the part where i asked pirate pam i said what can you just talk about like one thing you deal with when you're like these people are fucking around like that you know this is bullshit um and say quote uh one one

instance was when i had to send a bunch of documentation and x-rays for a claim that they didn't want to pay the insurers. We got a letter from the insurance company that they had received all of our documentation and that we didn't need to do anything else. I call them out a month or so later. These appeals can take a while. And they said they had never received any of it from us. We also have a lot where we send it two to three times and they still claim they have never received anything. two to three times, and they still claim they have never received anything. So again, just part of the inefficiency, whether it's intentional or just part and parcel of understaffing, whatever, it tends to benefit them in the long term. Yeah, profitable for them to be inefficient. Yeah. And we are, yeah, you realize how much, you know, there are other examples from that book that are just wild about like, yeah, you buy like a clothing store and then you're like, yeah, guess what? Now you're only going to buy clothes from this other company we own.

Right. Yeah. Yeah. Like the Mike Tyson meme with the pigeons saying now kiss. But just like the corporate raider version, like you're like, well, we don't buy clothes from this, but like, no, now you do. We don't care about you. Yeah. Yeah. like what we don't buy clothes from this but like no now you do not you we don't care about you yeah yeah and and then we're just like man j crew really lost it huh they really like wow it got real crappy yeah it got real crappy all of a sudden toys r us just started having pallets

of toys half ripped open laying around when you walked in that was weird yeah that's a new policy no no you're seeing the you're seeing the thing turn into a ghost in real time yeah so wild the comparison like i do think a lot about the how the gilded age the last gilded age in the u.s like somehow turned into the the new deal and like they're being actually beneficial to america socialism in a lot of cases and if we could do that without the racism that the first new deal had like incremental change utopia jack jack well like just but these those things did happen incrementally right but yeah i mean it ended up happening a lot of work and i honestly i think that's why we see a lot of emphasis from the powers that be to like try and make younger people as ignorant as possible or make them not

like take back their ability to vote by raising the voting age there's a lot where i think already i think just existing in the united states is probably one of the most potent radicalizing forces right now for young people merely just being alive and observing things and hopefully that manifests into like a huge wave of like you know that the numbers are there to have like bigger changes rather than people that are holding on to the scraps of yesteryear yeah i would highly recommend people people check out this book if that conversation was interesting to you yeah miles i would highly recommend they uh check out you on social media where can people find you my goodness you find me on uh twitter instagram at miles of gray check out miles and jack on our

basketball i said miles and i went third person on them anyway find us on our basketball podcast miles and jack got mad boosties and if you're gonna be in las vegas for nba con well guess what guess what we'll cheer boys because we're gonna be on there doing a couple live shows uh and hey if you got recommendations about Vegas, you want to take us out for a spin in your cool Lamborghini or a helicopter ride to the Grand Canyon for free. I will not be doing either of those things, but yeah. Oh, I'll hop in a Lambo with a listener.

I don't care. I don't know where that ends up. Finally answer that question. How I get to. Yeah, how do I get to Lambo? I had somebody rent one in vegas and we got in it uh and then you can find me on uh 420 day fiance with sophie alexandra talking non-political non-serious stuff like 90 day fiance or love is blind all right and is there a work of media

that you've been enjoying uh honestly i have it's probably from from I got a shout out again. We talked about this on the trending episode yesterday at underscore Chet Earthling. Herbs de Provenciaga, who definitely got the Portuguese flag flying in that Twitter display name, put us on to this like tick tock fucking like just mashup of all these like kids pretend like just trying the new grimace shake from mcdonald's and then just ending up in like the worst horrifying physical positions uh or situations so yeah shout out to shout out to that video it's it's i don't know i don't know what you search just search grimace shake causing irreversible damage to society or just go look at miles's likes on Twitter. How about this?

I'm going to retweet it. There you go. That makes it easy. Boom. Check that out. Check that out. You can find me on Twitter at Jack underscore O'Brien. A couple of tweets I enjoyed over the weekend.

A picture of George Bush finding out about 9-11 and somebody saying, a second Russia has hit the Russia, which I thought summed it up pretty nicely, what it felt like at first. Taryn at Young Titty tweeted, the baby is kicking. He must like vodka Red Bulls. Oh, my God. Fascinating. Taryn tweeted a picture of the founder of Gucci and said, the life of Gucci, oh, Gucci, founder of Gucci and said the life of Gucci oh Gucci founder of Gucci

Zach Raphael retweeted that and said the life of Dunkey no Duncan founder of Duncan and then Sydney Battle tweeted whoever came up with the word morsels was correct perfectly named

yeah where'd that come from maybe some etymologies in store. Yeah. You can find us on Twitter at Daily Zeitgeist. We're at The Daily Zeitgeist on Instagram. We have a Facebook fan page and a website, dailyzeitgeist.com, where we post our episodes and our footnotes. Footnotes.

We link off to the information that we talked about in today's episode, as well as a song that we think you might enjoy. Miles, what's the song that people might enjoy oh well guess what you've died and gone to babe heaven because that's the name of this west london band babe heaven uh really great band this track uh it's just like again it's called make me wanna and apparently like this group started off with like two friends uh who were like really in the groups like massive attack and stuff and trip hop and then slowly started getting their band together and y'all are making some good music now if you like massive attack and stuff like that cocktoe twins uh check this group out uh but this

is a track make me wanna by babe heaven all right well we will link off to that in the footnotes the daily zeitgeist is a production of iheart radio forio. For more podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows. That's going to do it for us this morning. Back this afternoon to tell you what's trending, and we'll talk to you all then. What was that? That was live audio of a woman's nightmare. Can Kay trust her sister or is history repeating itself? There's

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