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HOW PRIVATE EQUITY CONQUERED AMERICA  
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Chris Hedges and Gretchen Morgenson
March 2, 2024
Scheerpost
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_ Blackstone, Apollo, and a handful of other firms are demolishing
the US economy for short-term gain, and leaving workers and
communities in the wreckage. _

, New Economic Thinking

 

Private equity firms are buying up the US economy and stripping it for
parts. From healthcare to education, utilities, and more, massive
firms like Blackstone and the Carlyle Group have acquired vast
holdings across critical industries essential to the health and
well-being of everyday people. Instead of seeking to make these
ventures more profitable, private equity firms are more likely to
orchestrate to bleed their assets for short-term gains—even if those
assets are univerisites, hospitals, or nursing homes. Gretchen
Morgens0n, author of _These Are the Plunderers: How Private Equity
Runs—and Wrecks—America
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returns to _The Chris Hedges Report_ to discuss how private equity
came to hold America hostage. This is the second part of an earlier
interview, you can watch the first part here
[[link removed]]. 

Studio Production: Cameron Granadino, Adam Coley
Post-Production: Adam Coley

TRANSCRIPT

CHRIS HEDGES:  The US economy is being held hostage by a small cohort
of financiers who run private equity firms. Apollo, Blackstone, the
Carlyle Group, Kohlberg, Kravis, Roberts; These equity firms buy up
and plunder businesses, piling on debt, refusing to reinvest, slashing
staff, and often driving companies into bankruptcy. The object is not
to sustain businesses but to harvest them for assets to make a
short-term profit. Those who run these firms such as Leon Black, Henry
Kravis, Stephen Schwarzman, and David Rubenstein have amassed personal
fortunes in the billions of dollars.

The wreckage they orchestrate is taken out on workers who lose jobs,
see salaries and benefits slashed, are taken out on pension funds that
are depleted because of usurious fees, or are abolished. And on our
health and safety, residents of nursing homes, for example, owned by
private equity firms, experience 10% more deaths because of staffing
shortages and reduced compliance with standards of care.

Private equity owns hospitals and has created a health crisis. Nursing
shortages have contributed to one of every four unexpected hospital
deaths or injuries caused by errors. The private equity firms do not
serve patients but profits. They have closed hospitals, especially in
rural America, and they cut back on stockpiles of vital medical
devices including ventilators and personal protective equipment. In
1975, the US had about 1.5 million hospital beds and a population of
about 216 million people. Now, with a population of over 330 million
people, we have around 925,000 beds. 56% of Americans have medical
debt, even though many have insurance, and 23% owe $10,000 or more.

Emergency room visits and emergency rooms, often run by private equity
firms, contributed to medical debt for 44% of Americans. At the same
time, the healthcare system – Because of this slash-and-burn assault
– Was unprepared to handle the COVID epidemic, seeing 330,000
Americans die during the pandemic because they could not afford to go
to a doctor on time. These private equity firms, like an invasive
species, are ubiquitous. They have acquired educational institutions,
utility companies, and retail chains while bleeding taxpayers hundreds
of billions in subsidies made possible by bought-and-paid-for
prosecutors, politicians, and regulators.

Joining me to discuss private equity firms and their assault on the
economy is the Pulitzer Prize-winning journalist, Gretchen Morgenson,
who – Along with Joshua Rosner – Wrote, _These are the
Plunderers: How Private Equity Runs and Wrecks America_. Let’s begin
with what they are. They’ve just rebranded themselves, but I’ll
let you start.

GRETCHEN MORGENSON:  Well, Chris, these are the old takeover titans
that we started to learn about in the ’80s, RJR Nabisco was the big
deal that focused everyone’s attention on them. They just rebranded
themselves into something called private equity. A little bit genteel,
sounds like it might be fair – equity being that word. So these are
those corporate raiders that were fearsome, and Congress, at that
time, was concerned about what they were going to do to the economy.
Congress lost interest and went on to the next thing, and they did
then go on to – Over the next few decades – Pillage the economy
and workers and pensions, as you pointed out.

CHRIS HEDGES:  Explain how they work. Because it’s all about debt.
And what’s interesting from your book, is they don’t put very much
money in. But I’ll let you explain the mechanics of it.

GRETCHEN MORGENSON:  Okay. These firms, first of all, raise money for
their buyouts. They don’t use a lot of their own money for those
buyouts. What they do is they go to public pensions, they go to
endowments, they go to the big institutional investors and say,
we’re putting together a fund, we’re going to buy-out companies,
we’re going to make them more efficient, and then we’re going to
sell them in 5-7 years at a profit, and you will be able to reap those
gains along with us. But yes, the private equity titans do not put a
lot of their own money at stake here. 1%-2% of these funds are
typically the private equity firm’s money. So after they have raised
the money, they go out and look for companies to buy, and they home-in
on companies that have assets they can strip.

CHRIS HEDGES:  These are often physical assets that they can sell.

GRETCHEN MORGENSON:  Physical assets like real estate. Now, you
pointed out that they’ve taken over a lot of retailers. When that
was going on, often they would be buying retailers that had either
very, very favorable leases or had land underneath their stores that
they could then sell at a profit, stripping the company. It’s not
about operating the company, as you say, it’s about stripping the
assets, extracting the money that they can from it. It’s an
extraction business.

So they buy a company, they then find out how they can make it more
efficient, which means, usually, firing many people, stripping the
assets, selling them off, and sometimes they sell the assets and they
get all their money back – Initially, very, very early on in the
process – And what’s left is a carcass. What’s left is a company
that has now got an enormous amount of debt piled on top of it.

These transactions are funded by debt, but it’s not the private
equity firm that takes on the debt, it’s the company they’re
buying. So if they buy a retailer, they’ll put a load of debt on
that retailer. Suddenly that retailer has way higher costs of
operating, which means that then they have to cut costs elsewhere:
fire people, and deplete pensions. It’s a game where a very narrow
slice of people win and a huge circle of pain of losers is involved.
Everybody else is on the losing end.

CHRIS HEDGES:  Well, because it’s about short-term profit. You have
an example in the book about a nursing home system – This was an
amazing story. What they did is they sold the physical buildings that
had the nursing homes, and then suddenly these nursing homes had to
rent, I think it was $40,000 or something more a month. I’ll let you
explain. So they’re not just loading it up with debt but also
carrying out policies that physically destroy corporations or
businesses before they arrive – You have the story of Samsonite,
we’ll talk about the steel mill you write about – That we’re
healthy.

GRETCHEN MORGENSON:  Absolutely. So the nursing home company that you
were talking about, Manor Care, was very well run. The reason that the
acquisition was made – And this was Carlyle Group, which is one of
the top private equity firms –

CHRIS HEDGES:  Let me interrupt because as you point out in the book,
like James Baker, they pull in heavyweight political figures once
they’re out of office to run these groups.

GRETCHEN MORGENSON:  Unlike the other firms which are located in New
York and are the Wall Street type folks, Carlyle is based in
Washington and it’s much more politically astute and there’s a
revolving door with government officials; Very high-powered government
officials. Anyway, they bought Manor Care. It was a very
well-established, well-run, national nursing home company. They
immediately sold the land under the nursing homes and made the nursing
homes pay rent.

They took out the equivalent of what they had put into the company.
They received that when they sold the land. So they were free and
clear. Everything after that became gravy for them, so they weren’t
concerned about the profits; They were already in the money, as they
say. But the nursing homes suddenly had to pay exorbitant rents and
that meant that something else had to give.

Ultimately, what ended up happening was an enormous Medicare fraud
that was designed to overcharge Medicare for services to these
residents, and the stories are absolutely gut-wrenching. There were
some whistleblowers who came forward talking about what they were
seeing and the DOJ took the case, but then blew the case. But some of
the tales that these whistleblowers told about forcing aged, frail,
ill residents to go through an incredible rehabilitation that they
didn’t need, in order to bill Medicare for these processes, was
shocking.

CHRIS HEDGES:  You write about the ER. What are they called? Surprise
bills? I can’t remember the term you use. They will hospitalize
people who don’t need it. It’s all about money. And then the care
is substandard because the staffing is cut.

GRETCHEN MORGENSON:  That’s right. That’s right. So ultimately,
Manor Care was driven into bankruptcy by the people who bought it, but
they didn’t lose because they had done this transaction to buy the
land underneath all of the nursing homes.

CHRIS HEDGES:  You call these private equity firms – These are your
words – “Money-spinning machines.” Before we go into specifics,
talk about it. Because the amounts are staggering. Maybe we can talk
about the charming, is it Leon Black? These people are bringing in
these figures – Billions upon billions of dollars. Talk about the
amount of money they’re generating.

GRETCHEN MORGENSON:  The net worths of the people running these
companies are in the tens of billions. In the COVID years, Steve
Schwarzman… He is the head of Blackstone. His net worth doubled
during COVID, I think it went up to something like $35 billion or
something. Anyway, these companies extract enormous fees for their
operation. They extract fees from the pension funds that invest with
them.

CHRIS HEDGES:  I want to interrupt you. The deal is they get the
pension funds to invest because supposedly the pension funds will make
a profit. But then as you write in the book, they force the pension
funds to pay them management fees. You have cases in the book where
they’re not even doing anything, but if I remember, they’re
pulling like 10%, a lot of money. And these pension funds, in the end,
don’t make a profit.

GRETCHEN MORGENSON:  Many times they don’t, sometimes they do. The
rule of thumb is called “2 and 20.” So they’ll get 2% of the
assets under management as a management fee every year, and then 20%
of the gains that they make. So this has translated into a
billionaire-making machine for these guys that run these firms. And
yes, it’s staggering when you pull back the curtain on some of their
practices.

One of them that’s outrageous is when they buy a company, they will
often install people on the board of the company to watch over it to
make sure that they’re going in the right direction. For them
anyway, not for the company, necessarily. And they will charge them
fees over a period of time for their management expertise. These fees
are generally contracted on a 10-year life, but many of these deals
they end up selling between 5-7 years.

That’s the goal, as you pointed out, the short-term nature of this.
But the company has to pay for the full 10 years of the fees that the
private equity firm is charging them. And that’s money for doing
nothing. That’s just one of the tricks of the trade that they do to
generate billions of dollars for themselves while they’re
impoverishing so many other people.

CHRIS HEDGES:  You write that they operate in secrecy with hidden
ties to companies they control. The wreckage they leave behind is
often difficult to track back to its origins. And I want to raise
another point that you do in the book and I thought it was important:
Many Americans who are being assaulted this way, know something’s
wrong, but they don’t quite know what is wrong. It’s tied to this,
almost invisible, hand. Explain that. And then I want you to talk
about their political clout because it’s significant. They get the
tax breaks, they corrupt the system enough to essentially grease the
skids for them to continue to operate.

GRETCHEN MORGENSON:  Absolutely. Absolutely. So the secrecy is
important. One of the reasons that we wanted to write this book is to
let people know how pervasive this business model is.

CHRIS HEDGES:  Well, you write at one point that all of us, although
we don’t know it, are engaging with private equity firms. So talk
about how extensive it is and then talk about that secrecy too.

GRETCHEN MORGENSON:  I write in the book, that the coffee and donut
that you pick up on the way to work, the child care entity where you
drop your son or daughter off, the nursing home where your mother or
father lives, it is cradle to grave. You’re impacted by private
equity but you don’t know it because these are companies that are
buying and selling, but you don’t know who the real owner is behind
the scenes. And they like it that way, they want to keep it that way
because they operate best in secrecy. They’re private companies.
They don’t have to make filings to the Securities and Exchange
Commission so a lot of their business and a lot of their practices are
hidden from view, and that is by design.

One of the things that could improve our perception or educate people
about how pervasive private equity has become is to force these firms
to identify themselves as the owners; So it should be the Carlyle
nursing home or the Blackstone donut shop or whatever. Just so you are
aware of who you are dealing with and whose pocket you’re putting
your money into. Now, the secrecy is one thing, the political clout is
immense. They have so much money, their tax treatment is an outrage,
and many presidents have tried to change it, but have not been able to
do so.

CHRIS HEDGES:  Explain the tax part.

GRETCHEN MORGENSON:  Their fortunes are enhanced by the fact that
they pay a fraction of what you and I pay on our incomes every year
because it’s called carried interest; It’s not considered ordinary
income. The ordinary income tax rate is what, up to 35%? What these
people pay is around 21% of the income that they receive from their
operations. That’s something that’s been in the books for decades
but it has created a skewed system where they make fortunes, billions
of dollars. The government loses because they’re not generating the
tax revenues that they should on those billions. It’s nuts. Now, the
last time someone tried to change this, Kyrsten Sinema was a holdout,
the –

CHRIS HEDGES:  Because it was good for the people of Arizona.

GRETCHEN MORGENSON:  – Lawmaker from Arizona. She received $1.5
million from the private equity world to stand up and say no, and she
scotched it. So getting them to pay their fair share of taxes would be
a good thing. It would help the government, it would generate more
income, and it would take away this unfair aspect of their business.

CHRIS HEDGES:  You write, “Routinely lionized in the financial
press for their dealmaking and lauded for their ‘charitable’
giving, these unbridled capitalists have mounted expensive lobbying
campaigns to ensure continued enrichment from favorable tax laws.
Hefty donations have won them positions of power on museum boards and
think tanks. They’ve published books on leadership extolling ‘the
importance of humility and humanity’ at the top while eviscerating
those at the bottom.  Their companies arrange for them to avoid
paying taxes on the billions in gains that their stockholdings
generate. And, of course, they rarely mention that the companies they
own are among the largest beneficiaries of government investments in
highways, railroads, and primary education, reaping massive perks from
subsidies and tax policies that allow them to pay substantially lower
rates on their earnings.

These men are America’s modern-age robber barons. But unlike many of
their predecessors in the 19th century, who amassed stupefying riches
by extracting a young nation’s natural resources, today’s barons
mine their wealth from the poor and middle class through complex
financial dealings.” These people not just control politicians, but
they serve in government. You have several examples of that. So
explain a little bit about how they dominate the political system.

GRETCHEN MORGENSON:  Jay Powell, our head of the Federal Reserve
Board, was a Carlyle executive. They’re everywhere. Again, it’s
this pervasiveness. But even if they’re not on the job, say, in the
government, they are behind the scenes manipulating outcomes so that
their businesses will benefit. They’re so powerful and so wealthy.
And you know, Chris, better than anybody, how money is so central,
unfortunately, to how our government works. You have not had enough
attention to this wealth grab by these people.

The one thing we did have, the activity, the practices were so
outrageous that it got Congress to act, and that was on the surprise
medical bills that you mentioned a bit ago. This was a creation, the
brainchild of a company called Envision, which is owned by KKR. And
what Envision did was it went into emergency departments and started
running many of those emergency departments in a hospital. It
wouldn’t own the hospital, but it ran the emergency departments.

Envision decided that what they could do is they could make the
emergency department a separate entity outside of the insurance
coverage that the hospital’s patients would normally have. So
you’re in your town, you go to the emergency department, you’ve
broken your arm or whatever, your insurance – Which covers your
normal hospital stay or treatment – You naturally assume it’s
going to cover your emergency department bill.

Well, Envision carved themselves out of that so that you would have to
pay more. And this was something that was so crazy and impossible to
think could happen, that Congress did something about it and changed
and curbed the practice. They didn’t eliminate them, but they curbed
it. And guess what? Envision went bankrupt after that because its
business model required them … Its business model was based on
ripping people off.

CHRIS HEDGES:  I want to talk about several cases, including that
heartbreaking case of the girl and woman who needs constant medical
care, but people have to get the book. Let’s talk about, in detail,
Noranda Aluminum.

GRETCHEN MORGENSON:  Noranda was a company that had a very
profitable, very, very well-located aluminum smelter on the banks of
the Mississippi River in the Bootheel region of Missouri. Not a
wealthy part of the country, but this was a company, was a smelter
aluminum production that had 2,500 jobs. Well-paying jobs, good
benefits, healthcare, and the company had been there for many, many
years. And this was a well-established smelter doing a tremendous
business on the Mississippi. They could deliver their aluminum all up
and down the country. Great company. Apollo comes in and buys it. And
they promise –

CHRIS HEDGES:  Let me interrupt you.

GRETCHEN MORGENSON:  – Yes.

CHRIS HEDGES:  When a private equity firm like Apollo comes in to buy
it, it’s not always the case that the company’s looking to sell.
Is that correct?

GRETCHEN MORGENSON:  Well, the company has to be willing to sell.

CHRIS HEDGES:  But aren’t they able to pressure companies to sell
against their will or not?

GRETCHEN MORGENSON:  Well, it depends. Usually, it’s about money.
So if it’s a public company that has publicly traded shares and the
shareholders are the ones who will then make the decision about
whether the acquisition is made, generally what happens is that the
shareholders say, great, I’m going to get a windfall. I’m going to
get whatever premium to whatever the stock price was trading at when
the acquirer comes in and says, I’ll pay you $10 more a share.
Generally speaking, the shareholders say, yay. Let’s do it. Let’s
do the deal.

When it’s a private company, you’re then talking about persuading
whoever owns it that they are better off taking the money and running.
But it’s almost always a premium they’re paying and that gets
people’s attention and the owners or the shareholders say yes. So
Apollo comes in, they buy the smelter, they promise that they’re
going to do right by the 2,500 families whose workers are there, and
they immediately load it up with debt. This was a company that did not
have a lot of debt, so it didn’t have enormous interest costs. It
didn’t have to pay those costs.

CHRIS HEDGES:  I want to ask… When they load it up with debt, did
they say, okay, these are our assets, and put the assets… That’s
how they can get the debt because they’re putting the assets up as
collateral?

GRETCHEN MORGENSON:  Correct. So the asset is this smelter and this
huge infrastructure. And they also had a very low cost of electricity.

CHRIS HEDGES:  Just to interrupt again, is that debt used to pay for
the acquisition?

GRETCHEN MORGENSON:  Yes.

CHRIS HEDGES:  Yes.

GRETCHEN MORGENSON:  The debt is used to pay for the acquisition, but
it again allows the private equity firm to take the money out.
They’re loading the debt onto the company itself, not onto the
private equity firm. So the company is the one that now has to
struggle with the debt costs, the increased interest expense that’s
associated with the debt. So Noranda, they load it up with debt.
Almost immediately Apollo gets its money out. All of its money is out.

CHRIS HEDGES:  Which it wasn’t that much.

GRETCHEN MORGENSON:  Wasn’t that much. Maybe six months or
something like that. They were able to extract all their money by
putting the debt on the company. So now Noranda is struggling under
this debt load. Apollo then raises more debt, they ultimately make
three times their money on the Noranda purchase. Meanwhile, the
company starts to struggle. Not surprisingly.

CHRIS HEDGES:  It goes under because it has to service the debt now.

GRETCHEN MORGENSON:  It starts to struggle because it has to service
the debt. So then Apollo says, wow, this is a problem. We need to
negotiate with the state of Missouri’s utility commission to lower
our electricity costs or otherwise, we’re going to leave. We’re
going to sell the company, take it somewhere else or something. So
they negotiate with the utility commission a lower rate, even though
it means that the other ratepayers in Missouri have to pick up the
slack and have to cover that difference.

Apollo gets the lower rate, it then starts to fire people because it
can’t make ends meet. The company is struggling again, the debt is
too high, and there may have been an economic downturn. Aluminum
wasn’t quite as in demand but it was the debt that was causing the
problems. The company ultimately goes bankrupt, but Apollo has made
three times its money. So people are thrown out of work. They savaged
three different pensions. The Pension Benefit Guarantee Corporation
had to come in and bail out three Noranda pensions because of the
bankruptcy.

They had ratepayers paying more across the state. Noranda was the
biggest taxpayer in this small town in Missouri all of a sudden, the
tax base crumbled, and the school teachers had to pay their own
healthcare costs. What Noranda owed for the school payments, for its
taxes, was not paid because they went bankrupt. So this was a perfect
example of the circle of pain that these people create when they make
all of the money for themselves. Three times their investment but they
harmed ratepayers, they harmed school teachers and school children,
they harmed workers, and they harmed pensioners. That’s what we’re
talking about.

CHRIS HEDGES:  You write, “To outsiders, the buyout firms appeared
to be fierce rivals competing assiduously to beat each other out for
the companies they hope to acquire. In reality, the firms were cozy
collaborators, members of a club that meant richer profits for them
and fewer for everyday investors.” Explain how that works.

GRETCHEN MORGENSON:  This was an amazing case. It was brought by
shareholders or maybe debt holders; I think it was shareholders. But
anyway, they turned up some amazing documents in the discovery where
they had emails between these big powerful firms that everyone thought
were competing to buy companies, KKR, et cetera. The emails showed
them to be very chummy. They would say, oh, well, we’ll stand back
on this deal. We won’t do this deal. We’ll let you take this deal.
You give us the next one.

So it became clear when you have this kind of acquisition, if you have
more bidders – If you have two bidders, three bidders, five bidders
– The people who own the company who are selling it are going to get
a better price because those bidders are going to bid up the price of
the company. If you only have one bidder, they’re not competing with
anyone else and they’re not going to be raising the cost of the
acquisition. So what happened was the shareholders ended up getting
less because the other firms had decided not to compete and not to bid
up the price.

It was collusion that people had not understood was happening on a
regular basis, and it was shocking. They ended up paying a lot of
money to settle the case. But it was a real eye-opener about how they
are working together to make sure that they don’t have to pay too
high a price and that there won’t be tough competition.

CHRIS HEDGES:  Isn’t that illegal? Sorry to be so naive.

GRETCHEN MORGENSON:  DOJ didn’t think so.

CHRIS HEDGES:  Oh, really?

GRETCHEN MORGENSON:  Did not bring a case.

CHRIS HEDGES:  Okay. I want to talk about utilities. I wrote a book
called _America the Farewell Tour_, it opens in Scranton,
Pennsylvania, which had declared bankruptcy, and they were stripping
city parking, sewers, and anything they could sell off, which made
things worse. It was a temporary fix but rates skyrocketed. You write
about Bayonne; Talk about how they’re cannibalizing basic services
that were once managed by cities, communities, and the government.

GRETCHEN MORGENSON:  You remember the idea that took hold in the
’80s about privatization; That the government doesn’t know how to
run anything and we should privatize all of these organizations and
services. The private sector knows what they’re doing and they’re
going to do a better job – We know that that’s not the case, but
in any case, these private equity firms do understand that there is
money to be made buying into these kinds of utilities that are
necessities. We are not talking about frivolous items, we’re talking
about water.

So Bayonne, New Jersey, like many cities in the Northeast, had a
decrepit water system. Pipes were bursting and needed help. Along
comes KKR and they say, we’ll help you out. We’ll buy this,
we’ll give the money to you that you need to refurbish. Let’s make
that happen. They did the deal, you can well imagine that the people
on the KKR side of the table were pretty shrewd operators, and the
people on the water utility side of the table were probably not as
shrewd.

What ended up happening was that for the people of Bayonne, New
Jersey, which is a working-class town, not a wealthy town, their water
rates skyrocketed. And again, it was a situation where this very small
group of financiers wind up winning, gaining enormous amounts, and
everyone else winds up paying the freight.

CHRIS HEDGES:  When you write “skyrocketed”… A 2021 report by
the Association of Environmental Authorities, a public utility
nonprofit, said “The average annual bill for privately-owned water
systems in the US was 60% higher than that of publicly-owned systems.
And in privatized arrangements, low-income households spent 1.55% more
of their income on water.” So these rate hikes are staggering.
They’re very, very high and crippling.

GRETCHEN MORGENSON:  Crippling. Crippling. And it’s not like you
can say, okay, well, let’s not drink any water today. Let’s not
use water to cook our food, wash our clothes, or do our dishes. It’s
not a frivolous item.

CHRIS HEDGES:  Let’s talk about the social cost. We’ve talked in
a microcosm, but what’s it doing to the national economy? How is it
affecting us globally?

GRETCHEN MORGENSON:  The first thing, and the most important
30,000-foot view, is it expands the wealth gap in this country, it
blows that out. So people who are in the lower echelon, the disparity
between the rich and poor in this country, is not healthy. It’s
unsustainable.

CHRIS HEDGES:  Is it unsustainable because in essence, they’re
cannibalizing everything?

GRETCHEN MORGENSON:  Well, it is unsustainable because you can’t
keep extracting money from the middle class and poor people to become
billionaires; That’s a recipe for disaster. Capitalism is supposed
to, in theory, benefit a wide array of people. It’s supposed to
provide prosperity for people to enhance their economic situation.
Have a good job. Be able to –

CHRIS HEDGES:  But when it’s regulated.

GRETCHEN MORGENSON:  – When it’s regulated. Right.

CHRIS HEDGES:  When it’s not regulated… You have a term in the
book, “a-hole capitalism.”

GRETCHEN MORGENSON:  Right. Right. Me, me, me. Right? I, me, mine,
capitalism. Where I don’t care about everyone else. It’s all about
what I want and what I can get for myself. So it’s the wealth gap in
this country that has blown out and I believe these entities are
contributing mightily to that. Then, when you get lower down, that’s
the 30,000-foot view. When you get lower down, you have these
situations where people are personally affected by this.

Whether it’s because the tax base in their town disappears because a
company goes bankrupt – That means the taxpayers have to make up the
difference – Whether you’re talking about a nursing home where
people die more frequently, whether you’re talking about pensions
that are depleted because of this, meaning your retirement is going to
be less prosperous than you had hoped it would be; These are the
stories that you don’t hear about Chris, and that’s why this is
important to know.

All the business press lionizing these people and talking about their
deals and how they’re this billion and that billion, you never hear
about the people on the other side of the transaction. And that’s
wrong because there are people on the other side of the transaction
and their stories and their voices are important.

CHRIS HEDGES:  Well, that’s been the great failing. The failing of
the presses, that we’re not telling those stories. Reading your book
and seeing that line you have in the book about how people know
something is wrong, but they don’t know what exactly is wrong, I
read that as a huge factor in the rise of a figure like Trump. I
don’t know how you feel.

GRETCHEN MORGENSON:  Yes, I agree 100%. They don’t understand
finance. And yes, the financiers make it complex for a reason. They
hide behind the complexity. They hide behind the secrecy. They hide
behind the fact that you don’t know that they own the companies.
I’m not blaming people for not understanding it, not knowing what
the problem is, because it is hidden from view and they do that on
purpose.

But it is pernicious and it is impacting people. It’s causing job
losses, it’s causing reduced pensions, it’s causing increased
costs for taxpayers, which all contribute to this sense of unease
about my future. Am I going to have enough money to retire? Am I going
to have enough money to send my child to college? There’s an unease
going on that these people are contributing to.

CHRIS HEDGES:  You make a point in the book with the surprise bills
from the emergency room. The average, if I remember it, was about $600
or something. Well, since they don’t know these bills are coming,
these families living on the edge are completely wiped out. This has
catastrophic effects and these predatory practices are bleeding,
especially with the working, poor, and the lower working class, which
you make very clear in the book.

And that has political consequences when it’s not addressed. And
it’s largely not addressed because under our system of legalized
bribery, in essence, these people own the political class. Not only
own the political class but – Especially during the Trump
administration – A lot of these private equity people were in the
administration.

GRETCHEN MORGENSON:  Steve Schwarzman was at Trump’s right hand in
many photographs. He was his business advisor. Financial expert.

CHRIS HEDGES:  One crook advising another. Great. All right, thanks.
That was Pulitzer Prize-winning journalist, Gretchen Morgenson, author
of _These Are The Plunderers: How Private Equity Runs and Wrecks
America_. I want to thank The Real News Network and its production
team, Cameron Granadino, Adam Coley, David Hebden, and Kayla Rivara.
You can find me at chrishedges.substack.com.

CHRIS HEDGES is a Pulitzer Prize–winning journalist who was a
foreign correspondent for fifteen years for _The New York
Times, _where he served as the Middle East Bureau Chief and Balkan
Bureau Chief for the paper. He previously worked overseas for _The
Dallas Morning News_, _The Christian Science Monitor_, and NPR. He is
the host of show _The Chris Hedges Report._

He was a member of the team that won the 2002 Pulitzer Prize for
Explanatory Reporting for The New York Times coverage of global
terrorism, and he received the 2002 Amnesty International Global Award
for Human Rights Journalism. Hedges, who holds a Master of Divinity
from Harvard Divinity School, is the author of the bestsellers
_American Fascists: The Christian Right and the War on America_,
_Empire of Illusion: The End of Literacy and the Triumph of Spectacle_
and was a National Book Critics Circle finalist for his book _War Is a
Force That Gives Us Meaning_. He writes an online column for the
website ScheerPost [[link removed]]. He
has taught at Columbia University, New York University, Princeton
University and the University of Toronto.

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