Look, I’m not an economist, although I know a few. Like millions of other fellow citizens who live in this house of capitalism, I’m feeling the pressure of prices and I’m looking for causes, consequences and solutions.

Now if you think that I’m about to jump on Karl Marx’s bandwagon you can forego that thought. His goal was to create a classless society where the benefits of property and wealth were equally shared by all. That’s just not realistic, and there’s plenty of historical evidence to prove it.

One goal of capitalism is to build wealth through profitable enterprise. It’s hard to argue against that notion, as profitable enterprises can lead to economic advancements and innovation. Think of some stalwarts of our economy like the Ford Motor Company, IBM, Microsoft, Amazon, Pfizer, Walmart, AT&T and ExxonMobile. These companies aren’t the “Disturbance in the House of Capitalism” I’m alluding to. The problem lies elsewhere.

Raising tariffs on imported goods is, in my view, a bad inflationary idea. It’ll likely raise prices and inflation, but it’s a legitimate macroeconomic tactic. However, it doesn’t qualify for the type of disorder I’m concerned about. Here’s one that probably does qualify.

Based on 2022 data released by the IRS and reported by Americans for Tax Fairness, 26 of the richest billionaires paid an effective federal income tax of 4.8 percent between 2013 and 2018. The average American paid an effective rate of almost 3 times that, 13.3 percent. The average wealth of the top ten billionaires in the U.S. in 2024 is $141,000,000,000. To put this into perspective, if this average billionaire had $141 billion of compulsory spending over a lifetime of 90 years, they’d have to spend $1.566 million a year to meet that obligation. Folks, I have no problem upping their income tax to the average the rest of us have to pay. As disordered and unfair as this disparity is, it’s still not the concern that provokes me to write this column.

My concern has to do with what has come to be known as private equity and venture capital firms. Each of these kind of firms are tailored for the wealthy. If you wanted entrée into one of these high-flying private equity firms, it would cost you somewhere between 10 and $25 million. Venture capital firms require lesser buy-ins, but you’re still looking at hundreds of thousands, if not millions of dollars. Okay, the rich have always had their enclaves, so what’s the problem here? Let me explain.

Private equity firms invest in both private and public companies. Venture capital firms tend to invest more in new and emerging companies. Maximizing profits to pass on to wealthy investors is paramount. These firms typically buy controlling interest in companies, and then do everything to maximize profits. There’s the rub. How so-you say? It’s also typically at the expense of workers.

Once you have a controlling interest in a portfolio of companies, your primary allegiance is to investors, not the original intent, or guiding principles of the company or companies you have amalgamated. Their MO typically manifests itself in laying off employees, cutting benefits, cutting wages and merging with other companies for economies of scale. These strategies can accrue to the benefit of wealthy investors, but often at the expense of workers, families and their communities.

I was recently in Breckenridge, Colorado. Breckenridge is a beautiful ski and summer resort town. That said, Breckenridge is now part of a conglomerate known as Vail Resorts, a portfolio of 42 mountain resorts across the United States and four other countries. While at one time it was owned by a private equity firm, Apollo Global, the firm took the company public in 2003. The amalgamation and its effects remain. Residents of Breckenridge, Keystone, Beaver Creek, Crested Butte, among others in the portfolio, have expressed deep anger at the firm because operations are understaffed, leaving long lift lines and underfunded facilities.

Stephen Dubner of the popular Freakonomics books and radio puts it this way about private equity firms: “They say they make companies more efficient through savvy management. Critics say they bend the rules to enrich themselves at the expense of consumers and employees. Can they both be right? (Probably not),” he says.

While one estimate by the Private Equity Stakeholder Project puts private equities’ contribution to the U.S. at about 6.5 percent of GDP, the flip side of that is that their studies have also shown that employment can decline by 4.4 percent within two years of a private equity acquisition and that workers’ income can drop by 1.7 percent. Some industries, like retail and restaurants, have seen a net decline in employment due to private-equity buyouts.

Congress’s Joint Economic Committee (CJE) also cites research by the same Private Equity Project that shows that these firms control a significant share of private hospitals, especially in the South. “Recent research has estimated that 40 percent of hospital emergency departments in the U.S. are staffed or managed by private equity-owned companies.” Their investment in healthcare increased from $5 billion to $100 billion between 2000 and 2018 according to the same research.

CJE research has pointed to concerning trends in the quality of care provided at PE-owned institutions. Healthcare establishments ranging from private physician practices to nursing homes owned by PE firms have been associated with potential overprescription of procedures, shortages in medical equipment and poorer quality of care outcomes, higher rates of mortality, reduced compliance with Medicare standards of care, greater incidence of negative outcomes for patient health, and lower ratios of nurses to patients in their care.

The bankruptcy of PE-owned hospital chains can lead to a series of closures for hospitals that many families depend on for medical care. Another associated study found that hospitals under private equity ownership in 2018 tended to be in lower-income and rural areas. PE hospitals were also associated with lower patient satisfaction scores and were understaffed relative to non-PE-owned hospitals, with a lower ratio of employees-per-occupied beds.

Big money, through devices like private equity and VC firms, wants to make big returns, often on the backs of workers and those in need of healthcare.

Winston Churchill famously said, “Democracy is the worst form of government, except for all the others.” You could say the same thing about capitalism. Private equity firms are a disturbance in our economic house, a disturbance that disproportionately impacts lower-income level families, but also disturbs the well-to-do in places like Breckenridge and Vail, Colorado.

Bill Sims is a Hillsboro resident, retired president of the Denver Council on Foreign Relations, an author and runs a small farm in Berrysville with his wife. He is a former educator, executive and foundation president.