Greed is a tired trope, isn't it? We’ve seen it in movies, read about it in Dickens novels, and watched it play out on Wall Street for decades. But there is a specific, modern brand of financial maneuvering that goes beyond simple "profit-seeking." It’s a systemic hollowing out of American institutions. This is exactly what Gretchen Morgenson and Joshua Rosner tackle in their 2023 book. When people talk about "These Are the Plunderers," they aren't just discussing a title on a bookshelf; they are discussing a brutal post-mortem of the American middle class.
Private equity isn't inherently evil. In theory, it’s supposed to save failing companies. You take a struggling business, trim the fat, inject some capital, and turn it around. Simple. But that’s rarely how the math works out today.
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Instead, we see a "buy it, strip it, flip it" model. It’s a strategy where the winners are already decided before the ink on the contract even dries. If the company thrives, the private equity firm wins big. If the company goes bankrupt—which happens more often than the industry likes to admit—the private equity firm often still wins. They’ve already extracted their fees. They’ve already paid themselves dividends using the company's own credit line.
Why These Are the Plunderers Hits So Hard
The book doesn't just throw around vague accusations. It names names. It looks at firms like Apollo Global Management and individuals like Leon Black. Morgenson, a Pulitzer Prize-winning journalist, knows where the bodies are buried because she’s been tracking the shovel marks for years.
The core of the argument is that private equity has shifted from being a tool of corporate rejuvenation to a tool of wealth extraction. Think of a parasite. A good parasite doesn't kill the host immediately; it just takes enough to weaken it while the parasite gets fat. In the case of companies like Norcross or various healthcare chains, the "host" often ends up in liquidation.
You've probably felt the effects of this without knowing the terminology. Ever wonder why your local hospital suddenly feels understaffed, or why the bill for a routine procedure shot up? Or why a storied retail chain like Toys "R" Us disappeared despite having decent sales? Private equity is often the common denominator.
The Playbook of Extraction
How do they do it? It’s a combination of financial engineering and legal loopholes. First, there’s the leveraged buyout (LBO). This is the "magic" trick of the industry. A firm buys a company using a massive amount of borrowed money. But here’s the kicker: the debt isn't held by the private equity firm. It’s placed on the books of the company they just bought.
Imagine buying a house, but making the house responsible for the mortgage. If you can’t pay, the house gets foreclosed on, but your personal bank account stays untouched.
Then come the "monitoring fees." These are basically invoices the private equity firm sends to the company it owns for the "privilege" of being managed. It’s like a landlord charging you a fee to come over and tell you the sink is leaking. Then there are dividend recapitalizations. The company takes out even more debt—again, on its own books—just to pay a cash dividend to the private equity owners.
By the time the firm is ready to sell the company, it has often been drained of its cash reserves and loaded with so much debt that it has zero margin for error. If the economy dips, the company collapses.
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The Human Cost in Healthcare and Beyond
Morgenson and Rosner spend a significant amount of time on healthcare, and honestly, it’s the most infuriating part of the narrative. When private equity enters the nursing home space, the results are often measurable in lives.
- Staffing levels drop to save on labor costs.
- Basic supplies like bandages or high-quality food are rationed.
- Administrative costs skyrocket to funnel money back to the parent entity.
The authors point to studies showing that mortality rates often rise when private equity takes over a nursing home. This isn't just "business." It's a fundamental breakdown of the social contract. When the goal of a nursing home shifts from "care for the elderly" to "yield 20% internal rate of return for LPs (Limited Partners)," someone is going to suffer. It’s usually the people who can least afford it.
The Pension Fund Paradox
Here is the irony that keeps most of us up at night. The money these firms use to "plunder" these companies often comes from us. Public pension funds—the retirement accounts for teachers, firefighters, and police officers—are some of the biggest investors in private equity.
Pension managers are desperate. With interest rates being historically low for a long time, they couldn't get the returns they needed from "safe" investments like bonds. Private equity firms promised high returns. So, the pension fund for a teacher might be used to buy the very company that ends up laying that teacher’s spouse off. It’s a closed loop of destruction.
Is Regulation Even Possible?
Critics of the book argue that Morgenson and Rosner are too one-sided. They point to successful turnarounds or the fact that private equity provides liquidity to the market. And sure, there are firms that do it "right." There are mid-market firms that actually help small businesses scale.
But the "plunderers" the book focuses on are the titans. The ones with the political sway to keep the carried interest loophole alive. This loophole allows hedge fund and private equity managers to pay a lower tax rate on their earnings than a schoolteacher pays on their salary. It’s labeled as "capital gains" rather than "income," even though it’s clearly the result of their daily work.
Attempts to fix this usually die in committee. The lobbying power of the private equity industry is immense. They aren't just buying companies; they are buying influence.
The Myth of Superior Returns
One of the most revealing parts of the research into this sector is that private equity doesn't always outperform the S&P 500. Once you account for the massive fees—the "2 and 20" (2% management fee and 20% of profits)—the actual return to the investors (like those pension funds) is often mediocre.
So why do they keep doing it? Because the perception of outperformance is enough to keep the money flowing. And because the accounting in private equity is... creative. Since these aren't public companies, they don't have to report their value every day. They can "smooth" the volatility, making the investment look safer than it actually is.
What You Can Do About It
It feels like a problem too big to solve, but the tide is shifting. Awareness is the first step. When "These Are the Plunderers" hit the shelves, it gave a name to a feeling many workers had: that they were being squeezed by a ghost in the machine.
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- Check your own exposure. Look at where your 401k or pension is invested. Many ESG (Environmental, Social, and Governance) funds specifically avoid the most predatory private equity structures.
- Support the Stop Wall Street Looting Act. This is a piece of legislation that has been kicked around Congress for a while. It aims to make private equity firms liable for the debt they put on companies and to end the tax breaks that incentivize stripping assets.
- Localize your spending. Private equity loves chains. They love predictable, scalable cash flows. Small, independently owned businesses are the natural enemy of the "plunder" model because they aren't easily rolled up into a mega-conglomerate.
The reality described in These Are the Plunderers is bleak, but it isn't inevitable. The financialization of every aspect of our lives—from our housing to our healthcare to our jobs—only works if we allow the legal and tax frameworks that support it to remain in place.
If you want to protect your community, you have to understand the math behind its destruction. It’s not just "the economy." It’s a deliberate strategy used by a very small group of people to move wealth from the many to the few.
Moving Forward
- Read the full text of These Are the Plunderers to understand the specific case studies regarding Norcross and the retail sector.
- Follow the reporting of journalists like Gretchen Morgenson at NBC News or the Financial Times’ coverage of "Shadow Banking."
- Advocate for transparency in public pension fund investments at the state and local level. Ask where your tax dollars are being "put to work."