Yesterday no less an authority than Seeing The Forest's Dave Johnson explored the tangled web binding private equity firm Lazard, its "real estate investment fund" Lazard-Freres Strategic Realty Investors Fund II, and the fund's largest asset -- the Atria assisted living facilities business. In discussing my own post about this terrible story, Dave made a point that I myself hadn't considered:
Martin, I think you have it wrong here. Who is Lazard's customer, in this situation?... Lazard's customer is people and companies with a ton of money. They hand the money to Lazard and expect a good return. The seniors under Atria's care are Lazard's product, not their customer! In today's America the vulnerable, elderly, sick and captive are a product to be exploited.
Dave's point was twofold. One, as he said, the primary purpose of Lazard's investment in Atria isn't to provide quality care for the seniors who live at the facilities -- ostensibly, it's to reward shareholders for their investment with high stock prices and cash returns. (Though it's worth noting that Lazard has failed miserably at this goal as well -- more on that shortly.) Two, the seniors who live in these facilities demonstrate what the corporate world sees as their sole remaining value -- they have just enough money to afford a higher class of living than a typical nursing home or state facility, and thus they are prime targets for relentless financial exploitation.
And let's not forget, Atria caters to the upper middle class. Sounds like Atria's residents would even be better off in the nursing home where my mother-in-law lives that mostly takes people who have no money and are on Medicare. At least it's not your own or your family's money that's being ripped off.
This is emblematic of the world we live in -- the world brought to us by the shiny new era of Gilded Age capitalism, where people exist solely to be screwed, ripped off, and tossed aside once every last dollar has been squeezed from them. And worse yet, even the stated aim of this capitalist endeavor--to make shareholders rich -- is a massive failure on that level as well. Remember, not only is Atria paying its workers next to nothing and making its "products" endure brutal conditions, but the stock is severely underperforming, even as Lazard CEO Bruce Wasserstein reaps ungodly levels of compensation and bonuses:
Lazard Ltd. CEO Bruce Wasserstein could be paid up to $89.6 million a year in compensation for his work at the powerhouse Wall Street firm if shareholders approve a new executive pay 'ceiling' tomorrow -- despite the company losing 30 percent of its stock value since the last annual meeting, according to a periodic report sent to investors. (Emphases added.)
This goes beyond even simple greedy capitalism. This is raping and pillaging, slashing and burning a job sector simply to compensate the people at the very top. And it's happening everywhere in the business world you can find it, from assisted living facilities to newspaper chains and beyond. The same situation, over and over again -- CEOs and executives make off with insane, almost comically absurd pay packages while workers are laid off and shareholders watch their investments vanish into the ether.
What makes the Atria case especially egregious is the fact that the management has been deliberately cutting services, cutting wages, reducing benefits, and demanding more from both its workers and the product itself -- the seniors. As long as they demonstrate they have even a little excess cash to spend, they are forced to endure insane rate hikes while the quality of care goes down. And when that cash is gone -- well, who cares? They're all one foot in the grave anyway.
It's stories like this that need to be told, to remind us of the dark side of capitalism, where ever-more-ludicrous levels of wealth are the self-justifying end, and people being turned into disposable capital -- products -- are the means.