Don’t Demonize Private Equity

Elizabeth Warren really wants to be president. With the populism dominating the Democratic Party these days, it isn't a surprise that she actively attacking successful Americans. But, unlike attacking billionaires and "the corporations" attacking private equity is especially dangerous.

As I wrote in my op-ed on USA Herald, private equity is a critical tool for channeling capital to underperforming companies and helping them to become producers of value.

Sure, many PE firms make large profits. But that is to be expected in a challenging, capital intensive and risky business and those profits are essential in private equity attracting capital from less risky investment vehicles.

When a private equity firm cuts jobs or closes facilities or sells of business units or assets, it is intending to make the company healthier, leaner and more profitable. Unprofitable businesses consume value, they do not create it. Creating value is what drives the economy so that politicians like Elizabeth Warren can then redistribute and destroy it with government programs.