Columnists who don’t understand private equity

Yvette Kantrow, executive editor of The Deal, riffs Tuesday on Time columnist Joe Klein and New Yorker columnist Malcolm Gladwell for blaming many of the country’s ills on private equity.

Kantrow writes, “That world, in case you’re wondering, is ‘a particularly shady and opaque precinct of Wall Street where gazillions have been made through leveraged buyouts that have caused nothing but pain in the middle-class neighborhoods of America.’ Klein provides no examples, of course. That private equity is a near-criminal enterprise is an idea much of the media accepts on faith. Indeed, Klein rolls out Rattner and ‘Private Equity World’ as one of the reasons voters are ‘rebelling against expertise this year.’ (Don’t ask.) He explains that too many recent presidents have populated Treasury with people like Rattner — ‘financiers who gained fame by making deals rather than by making products’ — and ‘disastrous chicanery’ has ensued. Hank Paulson and Bob Rubin are his two big examples, but he throws in Tim Geithner too, noting, that ‘he never was a Wall Street dealmaker, but he comes from that world.’

“How so, Klein never explains. But he praises George W. Bush’s hiring of Paul O’Neill as his Treasury secretary because O’Neill ‘came from the world of manufacturing.’ (He was Alcoa‘s CEO.) Geithner’s sin is that he never made anything or worked for a company that has. The message: Making is good; dealmaking, bad.

“It’s not surprising that during a recession the media would romanticize manufacturing, with its imagery of ordinary people earning a livable wage as they produce something useful at the local plant. But the notion that Wall Street somehow has a monopoly on ‘disastrous chicanery’ is laughable, as big corporate scandals from a few years ago — Tyco, Adelphia, Enron, WorldCom — make clear. The media’s memory, however, is short. Indeed, the same sort of reverence for manufacturing CEOs in which Klein indulges runs through a takedown of Rattner by yet another big-cheese columnist, The New Yorker’s Malcolm Gladwell.”

Read more here.