Like 'sama? Remember, the whole world of VC is a subcategory of private equity.
> * Lobbyists
Lobbyists are the ones that tell the government that if they pass the new environmental regulation, the coal plant employing 300 workers will have to close. Other lobbyists tell the government that if they don't pass the new environmental regulation, that coal plant will impose tens of millions of dollars of healthcare costs on the surrounding neighborhood. Both are important functions.
> * PR researchers
Are cosmetics companies also bullshit in your calculation?
> * Bailiffs
So courts in which dangerous criminals are prosecuted shouldn't have people providing security?
The reason company X needs a lobbyist is often because company Y has a lobbyist. That's certainly why Google and the tech industry started spending heavily; they were losing out to other players. It's basically an arms race to manipulate government. With the additional problem that the battleground is our own country, so that the harm caused by the ongoing war is not borne by lobbyists but by taxpayers and citizens.
Lobbyists are paid to advocate the viewpoints of their clients, but their clients are people: businesses, organizations, and individuals with a stake in the society.
> If we had exactly zero of them, legislators would still learn things and pass laws. They might need to hire more researchers.
Sure, you can move that function into the bureaucracy. Instead of lobbyists presenting information on behalf of clients, you could have technocrats that were part of the bureaucracy. But someone has to present to the legislators the impact a proposal will have on various stakeholders--it would be a bad thing if nobody did that work.
And it's not clear that moving the research function into the bureaucracy would be a good thing. The benefit of the lobbying system is that it's adversarial--Google's lobbyists can attack the evidence and reasoning of Sony's lobbyists. But who attacks the evidence of the faceless unelected technocrat? Non-adversarial processes have failure modes too.
Also, it's not like without lobbyists big corporations wouldn't have influence over government, or even less influence. Companies like mass retailers, oil companies, coal companies, etc, will always have tremendous pull because they employ lots of people or control products vital to the economy. Companies like Google merely have money, rather than hundreds of thousands of voters' livelihoods as bargaining chips. It's a huge credit of the lobbying system that such companies can have as much influence over government as they do.
Protip: no matter what Romney says, corporations are not people. Having started a number of companies, and having also met a few people, I am quite sure they are different. Only one of them is supposed to be running the government.
> But someone has to present to the legislators the impact a proposal will have on various stakeholders
If only there were some organization that could do that. Maybe we could call it the Congressional Budget Office or the Congressional Research Service. Maybe legislators could have aides who specialize in particular areas. Or heck, maybe our legislators could find some way to hear what knowledgeable people say. Like they could invite experts to come by and hear what they have to say. We could call it a hear-ing.
> But who attacks the evidence of the faceless unelected technocrat?
Everybody. Which is basically what happens now. Also, I am no expert, but I am pretty sure that most legislative aides and researchers have faces.
>Companies like Google merely have money [...] It's a huge credit of the lobbying system that such companies can have as much influence over government as they do.
Absolutely. Thank god money can have incredible influence. Lord knows what would happen if the power were actually held by the people. Cats and dogs sleeping together, I'm sure. It'd be anarchy.
As for the rest, I agree.
I don't think anybody would argue that these jobs aren't good for somebody. The real question is whether they are contributing to society at large.
I know somebody who hired a lobbyist too. Worked out great.
Countries where it takes 10 years to force a company/person to pay a debt are not highly ranked and thus people are a lot less willing to do business or invest in them.
Eg You little startup won't be able to lease office furniture if the hiring company doesn't think it can at least seize it back..
Would you like a detailed list of reasons why it's not a list you want to be at the top of or would you rather take my word for it?
Low regulatory protection means stuff like this is deemed acceptable - http://www.tnp.sg/news/sim-lim-squares-phone-scam-makes-head...
It also means that stuff like this, which is regarded as a basic right in other countries, is deem jailworthy - https://sg.news.yahoo.com/singapore-bus-driver-strike-makes-...
This is what it really means to be top of that list.
On the other hand, you seem to be under the misconception that there can be no "common ground" in a society without a state-mandated "common ground". Here are some links to start you off on:
http://en.wikipedia.org/wiki/Non-aggression_principle
http://en.wikipedia.org/wiki/Anarcho-capitalism
http://en.wikipedia.org/wiki/Dispute_resolution_organization
#Note. Sorry for detracting from the main topic being discussed here. But I sometimes do feel compelled to enlighten individuals that seem to have some very "spoon fed" definitions about the possibility of a state-less society, and how it might look like.
Did that country also have laws against carrying firearms? How about laws that prevent individuals from defending themselves? E.g. Castle-doctrine, self-defense, private security firms, etc. You may hail it as proof that without a state, safety is not ensured. But I see it as an unfortunate limbo position where there is no protection provided by the state to the inhabitants, and there are also legal/state obstacles in place to prevent private individuals from performing that function.
I live in a country that is in the top 40 on the list of per-capita murder rates in the world. Probably much higher up on the list if you take into account violent crimes, etc. South Africa. It also has a huge industry for security services provided by private companies. Not only that, but a huge population of the country has opted to live in little "security" estates that have controlled access, private security guards, security cameras, electric fences, etc. Neighborhoods that spend large amounts of money on aiding the police in securing their neighborhood using cameras, volunteer patrols, paid private security company patrols, etc. In order to take private security any further, laws need to be removed because they are not being implemented effectively (like the rest of the country, but that's a separate debate). E.g. neighborhoods can't currently cordon off access to their streets, even if they had permission from all the land owners in the neighborhood. This is also the main reason why so many are moving to security estates, because they're huge chunks of private land and as such bypass those rules.
>"Even if 90% of people don't use violence, that just creates an enormous incentive for the other 10% of people to do so. And those 10%, organized into gangs, can terrorize the other 90%."
One of us is right in this regard. Perhaps it's also some sort of gray area where everything except X, Y, Z can be provided for privately without the need for a state. But would you at least concede that we can never know the true point in this spectrum without testing it? I.e. By slowly allowing private companies/individuals to take over safety/security. Note, removing state protection/security services in one go would be disastrous, I would never advocate it as I think it would cause total violent anarchy overnight.
Private security can't replace the state. In South Africa, the rich can hire private security because the state exists as a backstop to prevent security companies from turning on their clients. Without the state, any organization effective enough in the exercise of violence to provide real security has every incentive to simply enslave its clients.
> One of us is right in this regard. Perhaps it's also some sort of gray area where everything except X, Y, Z can be provided for privately without the need for a state. But would you at least concede that we can never know the true point in this spectrum without testing it?
We have tested it. In Somalia and Yemen and Pakistan. Feudal Europe. States didn't always exist. They arose as defense mechanisms to the power of organized groups to terrorize the majority with violence.
Oh wow, I didn't know Somalia, Yemen and Pakistan were once, or currently are state-less societies? And yes, casual google searching yielded no fruitful results. Except for Somalia, which is a well-known failed-state that that's recently been in a brutal civil war. To compare it to the mild/incremental ideas that I propose/suggest is intellectually low-belt.
>"Private security can't replace the state. In South Africa, the rich can hire private security[..]"
I know it doesn't suit your preconceived notions about "private security" but security in South Africa is actually very affordable. Not that the poor get much "security" in civilized nations for free from the state, but that's a different discussion. You'd be surprised at how effective money is when a group of like-minded individuals spend it on their little neighborhood or slice of land.
>"In South Africa, the rich can hire private security because the state exists as a backstop to prevent security companies from turning on their clients. Without the state, any organization effective enough in the exercise of violence to provide real security has every incentive to simply enslave its clients."
Again, it's as if you're completely side-stepping what I'm saying/proposing with pre-made knee-jerk responses. Enslaving individuals would never be allowed to exist on a large scale in a digital/connected society. But besides that, I suggest slow, incremental shifts towards "more privatized" security that is not hindered by the state. That is the big problem when discussing these issues with "statists", you don't even make any room for the possibility of attempting these ideas, or trying milder alternatives. Alternatives that could signal individuals that 'hey, maybe we don't need the state'. Almost as if you fear competition.
Three simple words derail all idealism in your post:
Corruption. Power. Poverty.
You don't smash people's knees in because you've never had to so you can solicit a payment that you entered a contract and need to eat for the next couple of weeks and you approach the authorities and they've been paid off or don't give a shit.
Humans don't look after each other very well, even if you do.
I simply admit that smashing kneecaps is a valid recourse in a world with the above concerns.
You might want to live in Brazil or South Africa for a bit.
I DO live in South Africa, thank you. I have for the last 8 years. So then, how does that affect your point? Are you implying I don't know what it's like living in a dangerous country because I don't live in one?
The often extreme violence of creditors against debtors, and the way that has debt has been used to control (and often enslave) others is another theme of Graeber's books.
I imagine that you are not a fan.
Lobbyists are critical to the functioning of the American system of government. They're even mentioned in the Constitution.
Private equity firms make retirement possible.
PR researchers enable companies to not have to deal exclusively with the populist swaying of public opinion. Public opinion, generally speaking, is an awful way to do business and to make decisions. Mobs are cruel.
I could go on but this method of dealing with your issues is unsustainable. Suffice it to say that you're just going to have to live with the fact that you don't understand everything and that's okay.
Telemarketing is useful in some way to the person who employs the telemarketer. Otherwise he/she wouldn't pay someone to do it.
It's also useful to the person earning the salary, who then spends their salary consuming in the economy. Not everyone is lucky/brave enough to pursue what they are truly passionate about.
Finally, even if the job doesn't generate any sales, it's still redistributing wealth away from one set of people (shareholders of the company) to others in the economy. Is this useful?
This job is based on lying and/or deceiving to people to trick them into buying somethng. Whoever is paying for it is actively hurting other humans. In a way it's worse than bullshit - it's a malicious job.
And how do you define usefulness for humanity?
Yes, please do. I want to hear what kind of bizarre reality you live in where telemarketing is useful.
I recently received a call to remember to sign up for a charity race before the early signup deadline passed.
It was good for me because I had done it for the past 5 years, but hadn't remembered to sign up yet. The reminder saved me money for early signup.
It was good for the caller because they then had another person committed to doing the event.
----
The college I went to was funded in part by donations from alumni. Without donations received by telemarketers calling, there would be less resources available for my education.
The point being made here is whether Private Equity CEOs are contributing anything substantial apart from concentrating capital. The answer to that has to be no. Private equity firms (the refashioned lbo firms, not vc) have a history of preying on medium-sized solid businesses where they strip the company of assets, load it with debt, and eventually pocket gains at the expense of employees and other stakeholders.
That said, I agree with you in that a PE CEO is a bad example to use in this case. A PE firm is not neutral-useless, it is deleterious to society.
I think that's a different discourse. Slave labour was not a "bullshit job", it was productive. However, it was unethical. You can have productive jobs which are unethical, but that's a separate discussion from bullshit jobs.
That depends on how you do the accounting. If you account for slave labor as the cost of minimal food and housing, then it's not only productive, it's cheaper than almost anything else, especially because the slaves are property, so you can breed them and get a return-on-investment while also extracting labor.
Of course, if you account for slave labor in terms of some equivalent to wages, then all of a sudden society has reason to stop using slave labor and innovate instead. Ditto for today's low-wage labor in which sub-living wages end up subsidized by state antipoverty benefits.
Society has always faced a choice between exploitation and innovation, a zero-sum arrangement and a positive-sum arrangement. Unfortunately, rarely has it been wise enough to choose the latter.
Private equity is one of the most valuable functions of a market based economy, and that's understating its importance. To say the head of a private equity firm serves no purpose, is to claim allocating private capital in a market economy needs nobody in charge of that process at the company doing it.
Nearly all venture capital is private equity. Sam Altman is the President of a private equity company.
Private equity is not about concentrating capital, it's about allocating capital to productive use. It's no more vile than the stock market, which allocates capital from investors during the IPO process and afterward through the common purchase of shares.
Further, your comparison about slavery is obviously entirely false. An angel investor - aka private equity investor - like say Mark Cuban, who owns his own investment company and is the head of it, is not performing a function similar to slavery. Mark's capital is his own, and it was not stolen from people held in slavery by force. There is no similarity, and one cannot simply say they're similar because slavers were re-allocating capital too, that would be an intentionally nonsensical comparison.
Having a good understanding of what KKR does, I fail to see how they're so bad. Most of KKR's deals have involved voluntary buyouts, which were then spun back off and voluntarily purchased by other investors. Almost all of the deals that made them famous in the 1980s were friendly deals.
Can you give me a better understanding, in a short summary, of why KKR is so terrible?
http://www.nakedcapitalism.com/2014/08/guitar-center-private...
The theory and reality of private equity do seem to be worlds apart. Much like the theory and practice of high speed trading.
In theory they reallocate capital more productively. In practice they seem to make money by squeezing workers, taxpayers, investors and even their own customers (some of whom seem content to squeezed - CalPERs, for instance).
Because it sure seems to me that all they are doing is squeezing their employees and vendors ever harder as per the Bain "how to run a company into the ground" handbook.
A successful company is worth vastly more than a destroyed one, or one that has had its assets stripped.
The ideal LBO is one in which you take an undervalued company private, maximize its operations, and then spin it back out at a time when you can achieve maximum return (eg when the market is high).
If Guitar Center is such an amazing business, how did they end up in a shark's mouth to begin with? It's precisely because they were a poorly run business that they were consumed by Bain. If Bain sells pieces of the business, who does that harm exactly? If Bain maximizes profitability and spins GC back out, who does that harm? Fired employees? Well it's business, not charity, nobody is entitled to a job; most businesses exist to generate a profit, not employ people. I find that most people dislike that fact, however that's how every economy works, on profit not charity (which derives from having earned a profit in the first place).
Not to mention that even if you were right, and a company is extremely valuable and all Bain does is destroy good companies, that opens up vast opportunities for good competitors to grow and hire new employees.
Your response might be: and how about the employees of said destroyed company? Sure, and how about the employees of a million businesses that go under every year due to incompetence, we should obviously outlaw bad business operators and entrepreneurs. If you're an employee of any company, anywhere, you're assuming risk of employment, that your employer may go under, weaken, or restructure. There's no avoiding that risk.
When you get down to details, this is basically a euphemism for what I just wrote.
Are these good things? Is it a good thing when a private equity investor starts stomping around your startup demanding you treat your hires like exploitable assets and not like friends or colleagues you respect?
Real income is rising, BTW. It's only real wages (i.e. income excluding benefits) in the US which have not due to a shift of comp from wages to non-wage benefits (the total is also rising).
Pitting third world workers against first world workers isn't good for either of them in the long run.
The same threat that hangs over US workers (we will offshore your job if you unionize and demand higher wages) actually hangs over 3rd world workers too (we will reshore your job if you unionize and demand higher wage).
It's a win/win situation for private equity though.
> It's true that the wealthy Americans who formerly collected rents
Wages are rents now are they? That's doubleplus good doublethink.
>Real income is rising
Median incomes are in decline.
>shift of comp from wages to non-wage benefits
...if you do some creative accounting on healthcare costs. Theoretically you might be getting $150,000 worth of benefits if your company insurance pays for your appendectomy. You and I both know that those absurd prices only really apply to the uninsured.
I'm born to the middle class in Norway. I have done little productive with my life and yet I enjoy better personal financials than 95% of the world's working population. After I'm done with my education I could go into unemployment and be even better off. All because of where I was born. I'm just collecting on the rest of the world's wealth because... Norwegian passport. I am clearly collecting rent.
>Pitting third world workers against first world workers isn't good for either of them in the long run.
>The same threat that hangs over US workers (we will offshore your job if you unionize and demand higher wages) actually hangs over 3rd world workers too (we will reshore your job if you unionize and demand higher wage).
Unionisation's purpose is to increase workers' bargaining power and thus change the wealth distribution in favour of workers. 3rd world workers' problem is that there isn't all that much wealth to be redistributed. 3rd world workers have more to gain from the industrialization of their countries than from unionisation. Your emphasis on the different factors is way off. Eventually we will need international unions to deal with mobile multinationals, though, but it doesn't make sense as long as the income inequalities across borders are as high as they are.
As for income (not wages, which is a subse of income), data is easily googleable.
http://m.research.stlouisfed.org/fred/series.php?sid=COMPRNF...
The rent is not 90k in that case. The rent is negative, in favor of the US; the US economy has benefited most other countries far more than those countries have benefited it. Most of the world gets a vast free rider benefit from what the US economy accomplished in the last ~140 years.
The fact that the US benefits most other countries a lot (primarily due to trade) doesn't mean that anyone collects a rent.
Oh really. What is the price delta between a logically-impossible perfectly competitive market and the current labor market?
>Only part of their wage is rent - if deepika earns 10k rs/month and Danielle earns 100k rs, the rent is 90k.
Assuming deepika and Danielle are the same person.
None of this changes the conclusion that Deepika (a real person and a friend of mine, albeit not named deepika) has escaped poverty thanks to her job at a call center. Based on our previous conversations I know you dont consider her as valuable as a hypothetical american (ugh, dirty foreigners with animal gods and spicy foods), but that's simply a normative difference.
Most labor off-shoring from the US has not gone to corrupt countries (if we're talking about corrupt being Sudan, Venezuela, Zimbabwe, Somalia, etc).
Most of it has gone to India, Mexico, China, Philippines, Vietnam, etc. Rising, former third world nations. US companies obviously don't like to off-shore to countries like Sudan because those countries are neither safe nor stable for investment or operations. It does a company no good to build a factory in Somalia if it's just going to be arbitrarily nationalized or destroyed.
The ones you mention have all problems with corruption, to the point that as a Westerner doing business there you have to be aware of it.
Certain parts and certain businesses are worse off than others, of course, and for example the textile industry which is probably the most discussed and studied, have had huge problems with everything from organized crime to outright slave labor.
A general statement that off-shoring helps poor people is simply too easy to find counter examples to.
b) If you have a private equity investor stomping around your startup, it's because you solicited their investment. If you didn't want it, don't take the money. Simple.
b) So you're saying founders have a choice between accepting bullying or being starved of funding? Perhaps that's not the positive argument for PE it might appear to be.
The reality is that PE culture vampirises and kills real businesses and real affluence. It's only investment in the most toxic and predatory sense.
I will assume what is being referred to here, is LBO or more aggressive acquisition type firms like Bain.
The parent is right however, if Bain comes knocking on your private business, it's up to you as to whether you take their money. They do not use force to make you take their money or terms. I don't think the parent is making an argument in favor of these companies being saints, rather, that they function on a voluntary basis.
They do extend the capacity of democracies dramatically.
eg: Nobody linked mahogany with dying rainforests before Greenpeace.
The oil industry for example is making a mess of the environment, but many people rich. Like wise the guy who invented tetra packs is rich, but what a waste - a plastic carton for every litre of milk? Better off when we were recycling glass.
They also make our mega-sprawl suburbs possible. It's a cop-out to pretend like oil companies aren't getting rich giving people what they want.
edit: I'm not saying that Tetrapaks will turn out to be terrible, just pointing out that things are priced with complete ignorance of their eventual externalities.
And how is the cost of the plastic fragments in the ocean factored in in this example? It won't be zero in the long run.
a person who performs certain actions under legal authority, in particular.
North American:
an official in a court of law who keeps order, looks after prisoners, etc.
British:
a sheriff's officer who executes writs and processes and carries out distraints and arrests.
Ok, so that's one that you cherry picked. How about these?
* Private equity CEOs
* Lobbyists
* PR researchers
* Telemarketers
* Bailiffs
Tell us how the world would be worse off without them.
You could argue that some of these are doing actual harm to society, actually.