Capitalism's Total Loss of Control. Another Chop-Shop, Private Equity

For those unfamiliar with the term, a chop-shop is where stolen cars are taken to be chopped into pieces for profit. In the same way that a hog is worth more in pork chops, businesses are more valuable when rendered down to fat. I wrote a book on it fifteen years ago; Chop-Shop, the Deconstruction of America, available at Amazon.

In another example of the burden borne by living too long, I have witnessed America's post-WWII financial superiority torn to shreds by its current billionaire class.

We once got along quite nicely without this scavenger class. Millionaires were perfectly sufficient. It now seems that was not enough for those who want it all. I'm not a fan of a wealth tax, never have been, but the performance of the 1% these days certainly makes it a tough call.

Now Private Equity has struck again, this time against an already wounded animal--Health Care.

Back in the day, hospitals were independent organizations and doctors made house calls. Dr. Wayne Fox, our family doctor for thirty years, lived several blocks down the street in Evanston in an upper middle-class home and, when he came to call, he sent a bill and we paid it. Pretty straight forward. When I was hospitalized with a broken arm, St. Francis Hospital did the same. Then came health insurance, and the many attempts at national health care, the concept was finally dead and buried.

The Health Insurance Association of America (1956) which represented approximately 330 insurance companies responsible for over 85 percent of health care in America, and lobbied successfully against government health care ever since. As a result, America now ranks 69th in the world, right below Armenia.

Then along came Private Equity, on little cat feet.

(NHS Support Federation) In late August the release of a report by US senator Chris Murphy (D-Conn) on the destruction of hospitals in his home state of Connecticut, and across the US by private equity companies highlights once again the negative effect of this form of investment. The report documented what happened when three Connecticut hospitals—Waterbury Hospital, Rockville General, and Manchester Memorial—were bought by Prospect Medical Holdings, a company that since 2010 had been owned by private equity firm Leonard Green & Partners.

"Extensive employee testimony in the report told of how Prospect went to extreme lengths to avoid spending money, including delaying and stopping paying suppliers leading to a lack of equipment and disposables for treatment and surgery, and even a lack of food for patients, maintenance of buildings was neglected, which in two instances led to ceilings collapsing. The deterioration of patient care at Waterbury became obvious by 2019, when the report noted that it recorded the highest rates of patient readmission in the state.

"Things got even worse for the hospitals when Leonard Green & Partners decided to sell the land the hospitals were built on to a real estate investment firm. The firm then leased the land back to Prospect at high rates. When Leonard Green sold off its stake in Prospect the report said it left “nothing but debt and destruction” in its wake. Prospect itself filed for bankruptcy earlier in 2025, and the fate of all three hospitals is now “in the hands of a bankruptcy judge in Texas,” the report added."

In 2025, Warren Buffett, a financial genius of international regard, said publicly that "Private Equity Firms Are Typically Very Dishonest."

Which doesn't mean they are not both ubiquitous and very profitable. BlackRock, alone, holds $8.2 trillion in such investments. But they are what I call destroyers of perfectly useful businesses across America, feeding off that destruction and moving on to their next victim.

Private equity (PE) firms use money raised from wealthy individuals and institutional investors like pension funds, university endowments, and sovereign wealth funds, to take over and manage companies.

(PRIVATE EQUITY STAKEHOLDER PROJECT) Once they take control, PE firms pursue aggressive financial-engineering strategies–such as severe cost-cutting, charging excessive management fees, paying themselves debt-funded dividends, and selling off valuable assets–that prioritize extracting short-term value over the long-term stability of the companies they control. These practices can severely undermine the financial viability of the targeted businesses, with workers, consumers, communities, and other stakeholders bearing the brunt of such cost-cutting and revenue extraction.

It's not pretty, and hundreds of thousands have lost their jobs and pension funds in the process.

Ask former presidential candidate Mitt Romney, former CEO at Bain Capital, one of the major offenders.

When $millions are not enough, $billions mount up and take a deep seat in the saddle.