Thread by @matthewstoller

1. I'm reading @ewarren's plan to deal with private equity, which is, like much top-tier management consulting, basically a disease vector for monopolization and fraud. The backlash is fascinating. medium.com/@teamwarren/en…

@ewarren 2. Private equity, or what used to be called corporate raiding or leveraged buy-outs before that got a bad name in the 1980s, was a combination of two trends. Financial deregulation in the 1970s and management consulting of the 1960s.

@ewarren 3. Mitt Romney was an early innovator around PE. He came from Bain, which was a consulting firm. Here's Bain today, helping companies find ways to innovate around raising prices instead of productive techniques.

@ewarren 4. What private equity does is borrow lots of money, buy a company, and then borrow against that company to pay itself fees. Often they steal the pension, the land, or other assets owned by the corporation. It's just piracy.

@ewarren 5. It's also a national security crisis. When I interviewed manufacturers for this article, one of them told me how the "LBO boys" systemically bought and shipped factories all over Ohio to China. theamericanconservative.com/articles/ameri…

@ewarren 6. The philosophy that @ewarren, and @BernieSanders, and in many ways @realDonaldTrump (though he's a fraud) is *producerism.* That is, value comes from creating and building things. The philosophy of PE is what @Chris_arnade calls front row, or controlling those who make.

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 7. The pushback largely follows that line. If you see value in how financiers have taken over production, @ewarren's plan makes no sense. If you see only predation, then @ewarren's plan is the only thing that makes sense.

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 8. Here's Steven Pearlstein: "Unfortunately, Warren’s fixes for these problems... would pretty much guarantee that nobody invests in or lends to private equity firms."

That's the point! washingtonpost.com/business/econo…

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 9. Here's Aaron Brown in Bloomberg. "A 100% tax on fees doesn’t mean PE funds will work for free; in fact, they won’t work at all."

That's the point!
bloomberg.com/opinion/articl…

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 10. He thinks financiers are doctors, drawing this analogy.

"If you strip doctors of all assets if a patient dies, you won’t improve healthcare; you’ll make surgeons and oncologists switch to cosmetic dermatology."

@ewarren thinks PE funds are murderers.

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 11. What @ewarren is proposing is a profound restructuring of the philosophy of the American political economy, a return to excellence in production as the goal instead of excellence in manipulation. And yes, that's what we used to do in the 1950s and before.

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 12. Much of the elite class does totally useless make-work. If @ewarren wins, what will happen with the hundreds of thousands of people at consulting firms, banks, PE firms, and universities who only know how to manipulate or collecting rents?

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 13. The entire bargaining framework will change radically if we take on finance in a real way. It will be quite ugly. The dollar will lose its status as a reserve currency, because it will have to in order for us to become a producer instead of an importer of last resort.

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 14. We'll see yacht foreclosures and layoffs at top tier firms. Right now, bc Obama/Trump didn't prosecute white collar criminals, elite law firms are laying off their lawyers. That'll be happening across the entire elite political class. law.com/newyorklawjour…

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 15. People who make and create will have their bargaining power increase radically, which will mean wage growth across the bottom and middle tier. It'll be really jarring, bc we aren't used to a producer-focused economic order anymore. But it is what we need to do.

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 16. This is the kind of backlash we'll see. Yes, @ewarren, clothed with authority from voters, will make decisions about what kind of activity is productive and what kind isn't. Financiers have been making those decisions and they will lose their power.

https://twitter.com/Tracinski/status/1155485460543737856?s=20

@ewarren @BernieSanders @realDonaldTrump @Chris_arnade 17. I don't mention it because government is a productive and vital center of democracy. We need a radical expansion of public power, as well as much higher pay for public servants and much lower pay for bankers, management consultants, CEOs, etc.

https://twitter.com/Tracinski/status/1155485738307338241?s=20