It was either Mark Twain or Rod Stewart who once said that every picture tells a story … don’t it? But while a picture is still worth 1,000 words and all that other good stuff, sometimes that actual story isn’t exactly what we think it is. Consider a photograph of young Denver Post journalist Elizabeth Hernandez, sobbing on a colleague’s shoulder, that went viral after she and her colleagues were told that 30 people on their already emaciated news staff will be losing their jobs in the coming weeks — the latest blow to the ever-shrinking American newspaper industry.
Hi, @rgay. I'm the journalist crying in this @washingtonpost column (https://t.co/OrjTojqDCk ) on cuts to the @denverpost newsroom by a greedy hedgefund trying to destroy newspapers. Know anyone who likes democracy and has the means to buy us from our owner?— Elizabeth Hernandez (@ehernandez) March 17, 2018
I know, I know … you’ve heard this story a million times as the agony known as the 21st century has unfolded. The internet is killing American journalism. No one reads newspapers anymore, and there’s no real way for anyone to make money from the nano-pennies earned from every online click (unless you’re a massive vampire squid like Facebook or Google), and so the money to pay young and once enthusiastic journalists like 25-year-old Elizabeth Hernandez just isn’t there. Too bad.
The only problem is that this is not the real story of why Hernandez — No. 1 on the layoff list since she was just hired back at the Post three weeks ago, by editors who had no clue that a financial neutron bomb was about to go off — and her colleagues wept. While the bigger problems of modern journalism are as true in Denver as everywhere else, the real problem at the Post is the shady financial shenanigans of the vulture capitalists who bought the paper’s parent a few years back, stripped it down like a Pittsburgh steel mill, and left a major American city with a tiny Alamo-like band of journalists surviving to report on its civic life and keep an eye on its politicians.
Critics have accused the New York-based hedge-fund, Alden Capital, that now owns the majority stake in Digital First Media (the owner of not just the Post but other struggling newspapers from Boston to Oakland) of running a “harvesting strategy” aimed at keeping the newspapers in the black but extracting those profits rather than investing them back into community journalism. Most recently, Alden’s harshest critics — including the union representing journalists at the Post and disgruntled shareholders — have accused the hedge fund of using trickery to siphon money to cover other bad investments in businesses, like a pharmacy chain, that have nothing to do with newspapers. (Alden Capital has remained mum about these allegations so far.)
“It’s disgusting to know that our owner doesn’t care about the local community and doesn’t care about it’s employees — that we have no value to them,” Hernandez told me this week by phone from the newsroom where she’s still covering important Colorado stories like raging wildfires … for now. Hernandez has long wanted to be a journalist and even went to school in Colorado, far from her native Las Vegas, with dreams of ending up at a paper like the Denver Post, which has won nine Pulitzer Prizes, most recently for its 2012 coverage of the Aurora movie theater mass shooting.
I know there’s not a lot of sympathy for newspapers these days, but this isn’t a story about journalism. It’s a story about vulture capitalism, and about how 10 years after America’s addiction to risky finance — which largely profits Wall Street insiders at the expense of working people — crashed and nearly burned down the global economy, we’ve done nothing to address the fundamental problems. Hedge-fund billionaires continue to siphon good money from the economy for high-risk ventures that either make them rich — at a tax rate lower than their executive assistant pays — or crush the dreams of good people like Elizabeth Hernandez. Often both.
Most people don’t follow the Denver Post but everyone knows about Toys R Us, once the go-to Christmas Eve joint for those of us who raised little kids in the 1990s but now on the brink of total liquidation and the loss of 33,000 middle- and working-class retail jobs, with faint hope that a buyer might salvage a few of its once-busy stores. Yes, Amazon and online shopping is weighing down big-box retail, and, yes, the managers of Toys R Us did a lame job of keeping pace. But the real reason that Toys R Us has failed is (wait for it) vulture capitalism, as the chain’s Wall Street owners (including Mitt Romney’s former employer, Bain Capital) borrowed way too much money to make its 2004 purchase happen, leaving the retailer in a lurch when sales stagnated.
The three Wall Street firms borrowed 80 percent of the $6.6 billion they needed to buy Toys R Us; experts say that company still accounts for a sizable 20 percent of U.S. toy sales and thus could have muddled through (and kept those 33,000 folks on the payroll) were it not for that debt. And other large retailers are in the same boat. Wrote Jeff Spross in The Week:
In short, how Bain, KKR, and Vornado treated Toys ‘R’ Us is how Wall Street treats American businesses writ large. And if inequality is dragging down the profits of retailers and other industries, then these cannibalistic practices are the other half of the feedback loop: driving inequality ever higher, and depriving Americans of the jobs and incomes they need to consume. In other words, we are all Toys ‘R’ Us. And the vultures are hungry.
Here’s where the bigger picture gets complicated. The broader American economy is doing OK right now, with unemployment relatively low — and there’s enough churn in retail right now that other, better-run chains like Costco will be able to hire some of the folks getting pink slips at Toys R Us. But those salad days won’t last forever, and when Wall Street ends its bull run we’ll be looking at those empty, decrepit big boxes strewn across the American suburbs and be begging for these jobs back. In a perfect world, our politicians in Washington would rein in the abuses of vulture capitalism.
We live in a far from perfect world. When he was running for president and pretending to be a populist, Donald Trump promised his supporters that he would make hedge-fund billionaires finally pay their fair share of federal income taxes. Trump said — correctly! — that they were “getting away with murder.” So you’ll be shocked, shocked to learn that Trump and his GOP allies dropped that issue in order to get a tax overhaul through Congress in 2017.
Luckily, we have the Democrats — and their ability to filibuster bad legislation in the Senate — to at least protect the tougher regulations on the financial industry that were passed largely by their party in the immediate aftermath of the 2008 fiscal collapse. Right? Wrong. Earlier this month, 17 Senate Democrats crossed the aisle in order to join Republicans in siding with America’s largest banks over their middle-class consumers. While that particular bill didn’t address the sins of vulture capitalism, what’s clear is this: Despite a financial meltdown and populist unrest among the American electorate, Washington is still in total thrall to Wall Street.
And this conversation — about income inequality and fundamental unfairness in the U.S. economy — is the one that we seemed to be starting to have during the 2016 election, only to be rudely interrupted by the follies of the American Erdogan now in the Oval Office. Some folks are trying to change that — just this week a town-hall meeting on inequality was led by Senators Elizabeth Warren and Bernie Sanders, two of the tiny minority willing to do political battle with the vultures. In the coming months as voters sort through a record number of congressional hopefuls, it’s important to ask them how they’ll protect the jobs of cashiers at Toys R Us and young journalists like Elizabeth Hernandez.
“I did not expect at age 25 to be face of the downfall of journalism,” she told me. “This is all I ever wanted to do.” She deserves her dream job, and the citizens of Denver deserve a watchdog. That can still happen, if we ever get serious about shooing away the vultures.