Ben Stein has been very public about his distaste for private equity, and his latest love letter to his pen pal of discontent hits on all the familiar arguments. Stein says that PE money is largely the result of smoke and mirrors, and that milking money from taking a company private is a complicated web of collusion between management, accountants, the banks and fund managers.
PE gurus even get to shirk the spectre of the IRS, thanks to favorable congressional treatment (especially from the G.O.P., which PE is railing against these days in the form of Obama and Clinton funding) and the upheld legitimacy of carried interest as capital gains instead of regular income from the ongoing operations of a business. Stein argues that this is unfair to the I-bankers, who pay real taxes. Geesh, when can those I-bankers ever catch a break?
Stein, then takes an unexpected turn into the depths of human insight. Stein’s metaphysics of market analysis, from the New York Times:
I THOUGHT about all of this, and then I thought of something that shook me: I might be wrong. I might be wrong about every part of it. I don’t think I am, or else I would not write it. But I could be wrong. The fact that my words appear in black and white in a major newspaper does not make them automatically true. The fact that I have a lifetime of education and experience in this field does not guarantee that I am always right.
That fact that Ben Stein is smarter and more awesome than you are does not mean his arguments are. Ben Stein is but a man. If you prick Ben Stein, does he not bleed, or at least ooze a bit? After his self-doubt, Stein probes the soul of the financial media.
After all, I am just a person. So are all of us who write for newspapers. So are the people at CBS and “Marketplace” and at Fox and at Yahoo. So is everyone. We have grudges we may not even be aware of. We have envy. We have class and religious resentments. We wake up some mornings feeling great and some mornings feeling terrible. We have the myriad influences of childhood, family, friends, environment. These all affect what we write and what we believe. We’re not oracles or vessels of divinity except to the extent that all children of God are.
What Is This Thing Called Private Equity? [New York Times]