New York media personality and sardonic futurist Kurt Andersen weighs in on the Blackstone group and its residing exhibitionist, Steve Schwarzman, at the link below. He cites the usual reasons why people should be mad at Schwarzman - his hyper-ostentatious birthday bash, his notorious Gilded Age behavior, the fact that private equity gains are taxed at only 15 percent - and adds some of his own. He points out that the whole raison d'etre of private equity firms is that they thrive on taking public companies private, and restructuring them beyond the scrutiny of either shareholders or the SEC to make them more profitable. It is easy to see how private equity firms would boom in these times of increased accountability and disclosure among public firms. In light of this fact, Andersen further notes that Schwarzman is hypocritical in the extreme to bring his own firm public, and cynically reflects that Blackstone is sensing the end of the private equity era and is attempting to cash in on "dumb IPO money" while it can. That may be.

Andersen is no friend of the common man. He had his own "subscribers only" Internet info startup Inside.com and made merciless fun of the little people in his novel Turn Of The Century. Hence, it is surprising to hear him sound the populist alarm against the barons of Wall Street. What is even more striking, however, is how other rich dudes view people like Schwarzman. According to Andersen, "The new head of the National Venture Capital Association went on the record last month about Schwarzmania: 'We’re where we are right now because of the unbelievable egos of guys running the private-equity firms like Blackstone. They put big targets on their backs by what I consider stupid actions like throwing these big parties.'" Andersen adds, "some of the more thoughtful members of the high-finance fraternity also worry that the suddenly enormous scale of private-equity control of the global economy is a little scary. In 2001, all the private-equity takeovers totaled $71 billion; in just the first half of this year, the deals amount to more than $600 billion. The handful of largest firms now control a trillion dollars’ worth of companies."

Andersen concludes his essay with an appeal to, of all things, conscience. He urges that we step up taxes on private equity moguls like Schwarzman not just because their gains are currently undertaxed, but because their mode of investing is relatively risk-free and, as such, more parasitical than dynamic. In his words, "The new brouhaha is not about igniting a 'class war,' but about avoiding one by constraining the most grotesque unfairness. It’s a question of grace—noblesse oblige, if you will. Yes, we want to encourage businesspeople to take risks—but private-equity and hedge-fund managers have invented businesses from which real, personal financial risk has been practically eliminated. 'They’re not risking anything,' says my private-equity friend. In fact, don’t we owe it to these postmodern heroes of global business to threaten to tax them fairly... in order to inject some real, invigorating risk into their world?"

"Greed Is Good And Ugly" from New York Magazine