A deep dive into Elizabeth Warren's plan to tame private equity

Yesterday, I published a brief analysis of Elizabeth Warren's plan to close the loopholes that allows private equity to defraud investors, creditors and workers to make billions while destroying the real economy.

Today, I'm going to suggest that you read Yves Smith's analysis of the proposal on Naked Capitalism. Private equity is one of the most politically and economically consequential forces in the USA and the world today, behind much of our inequality, looting, and policy dysfunctions.

Private equity is a bezzle, protected by deliberately dull layers of obfuscation and complexity that allows its practicioners to claim that the reason they seem to be out-and-out crooks is that none of us are smart enough to figure out what they're doing.

Warren isn't buying it. Her proposal builds on the scholarly investigations of Eileen Appelbaum and Rosemary Batt (here's some of Appelbaum's commentary on the proposal) to fashion a series of killing blows aimed at the industry's soft, vulnerable spots, from a two-year ban on dividends after PE acquisitions to giving worker pay and pensions bankruptcy priority, to treating gift cards as consumer deposits for bankruptcy purses.

As Smith says, there's no chance that the current Congress and Senate would pass this, but that's not the point. The point -- as with Sanders' 2016 Medicare for All proposal -- is to shift the political center, normalizing ideas that sound impossible as part of our daily political discourse.

If it's one thing the whole progressive wing of the Democrats have gotten good at in the past four years, it's changing the width of the Overton Window, from Warren to Sanders to AOC. Read the rest