Passing through the eye of a needle

Private equity firms have been squirming in the limelight. Paying less tax than your cleaning lady when you take home millions was never a strategy for scoring opprobrium from the great unwashed. Bad press was ever a problem.

Private equiteers indeed need better PR. But they have had a few trumps to play. For a start, there's a decent case to be made for the economic gains private equity firms make: they are drivers of corporate efficiency. They often invest for the long term. And rarely, are they the asset-stripping vultures Britain's union leaders would have them to be.

But hedge funds...

According to an article in the Guardian, Hedge funds deserve far more scorn than private equiteers. The top 25 hedge fund managers, as Alpha magazine points out, took home an average of $570 million dollars last year. Ergo, implies Julia Finch, they are the real bad guys.

Stopping short of a Marxian critique of capitalism itself, I'm pretty sure the Guardian are wrong on this one. Hedgies may well earn the real mega bucks, but the reason why private equity chiefs are deserving of more scorn (if any) is the fact that private equity has a far more direct impact upon employment and the welfare of a great many workers (one in five in the UK).

Private equity firms have (admittedly rarely) destroyed pension funds and aggressively cut jobs - and for those reasons they bare scrutiny. But the only identifiable crime of the hedge fund manager seems to be that they earn lots. Finch makes no effort to deploy a more sophisticated argument -- as she may well have done -- about the threat unregulated and maverick fund managers play to financial stability. Instead it just boils down to bashing the rich.