Saturday, April 10, 2010

Sunday reading: Privatization in your face (Two short articles + extra credit)

1. Schwarzenegger leads the way with selling off California’s assets and removes those who question him from his path. This is neoliberalism in its true form: the transfer of wealth belonging to the masses (the State) into the hands of a small number of private individuals. Read this article carefully to absorb what is happening here. A local version of this would be if OUSD (Oakland Unified School District) sold its properties off, then turned around to rent back its schools from those new landlords in perpetuity.

2. Schwarzenegger professes his love and admiration for Milton Friedman: economic adviser to Ronald Reagan, Mr. Free-Market, and the neoliberal creator of all this mess. The movement to privatize public education started during the Reagan years.

3. In “The Shock Doctrine: The Rise of Disaster Capitalism” Naomi Klein explains all. It’s happening fast and furious now. And never forget that it was the same extreme free-market faction that originally caused our current economic decline, enabling some of their players to make astronomical profits. The book is meaty, and I bet the forces are keeping their fingers crossed that not enough Americans have the stamina to read it.


1. “Schwarzenegger silences critics of Calif. sell-off” (AP 04/08/2010)

The Schwarzenegger administration has removed appointees from two oversight bodies that must sign off on its plan to sell California state office buildings, replacing potential critics of the move with people who support it.

The appointees—to building authorities in San Francisco and Los Angeles—were replaced quietly in recent weeks as the state began taking bids on the properties, and their removal likely quashes any dissent or independent financial studies that might have emerged as the property sales move forward.

In both cases, the replaced board members had questioned whether the administration's plan is in the best long-term interests of California taxpayers.

Last month, the administration removed two longtime appointees on the San Francisco State Building Authority, just days before the panel was scheduled to review the sale of the San Francisco Civic Center.

It is one of about a dozen properties the state has put up for sale in an attempt to raise money to help close the state's budget deficit. The sell-off was championed by Gov. Arnold Schwarzenegger and approved by the Legislature as part of last year's budget package.

Two more appointees revealed this week that they had been removed from the Los Angeles State Building Authority for asking questions about Schwarzenegger's plan. Marina del Ray developer Jerry B. Epstein told The Associated Press that he had asked the state for a cost-benefit analysis of the plan.

Specifically, he wanted to compare the projected proceeds from the sell-off to the long-term cost of having to rent the Ronald Reagan State Building in downtown Los Angeles. The building is scheduled to be paid off next year.

Instead, Epstein and retired real estate investment manager Rusty Doms received a two-sentence letter from the Schwarzenegger appointee who runs the state Department of General Services saying they were being replaced.

"It's the first time in over 60 years that I've ever been fired," said Epstein, 86, who has served as president of the Los Angeles Board of Airport Commissioners and as chairman of the California Transportation Commission.

He announced the move earlier in the week in an op-ed column he wrote for the Los Angeles Times.

Schwarzenegger's office referred inquiries on the issue to the Department of General Services. Department spokesman Jeffrey Young said the agency simply felt it was time to change appointments to bring in fresh ideas that were "more in tune with DGS's efforts and philosophies and strategies."

"We didn't fire them," he said.

Other cash-strapped states, including Arizona and Connecticut, also are attempting to sell state assets, but California's offering is by far the largest.

The budget bill that gave Schwarzenegger the authority to pursue the sale of state office buildings passed the Legislature last July. The legislation allowed Schwarzenegger to put 11 state properties containing more than a dozen buildings up for sale as a way to raise cash to shrink the budget deficit.

In addition to the Reagan building in Los Angeles and the Civic Center in San Francisco, the properties include the California Public Utilities Commission building in San Francisco and buildings in Sacramento that house the attorney general's office and state Franchise Tax Board.

Real estate firm CB Richard Ellis won the contract to manage the sale and in February began taking offers on the so-called "Golden State Portfolio."

State officials hope the properties will sell for about $2 billion total, but the net amount that will go to the state's general fund will be far less. After paying off the various construction bonds, the state expects to be left with $660 million, which would cover only about 3 percent of California's $20 billion deficit.

"It's like getting a pail of water to help the Titanic not sink," Epstein said.

Epstein and former San Francisco State Building Authority member Don Casper questioned whether the sell-off is in the best interest of taxpayers, especially since many of the buildings would be paid off in less than 10 years, meaning the state would own them free and clear.

The little-known building authorities oversee the state-owned properties in Los Angeles and San Francisco and must sign off on the plan before they can be sold. The Los Angeles authority is scheduled to meet April 15 to elect new authority members.

They were established three decades ago after the state decided that owning its government buildings was a smarter, long-term financial decision than being subject to annual rent increases. Then-Gov. George Deukmejian, a Republican, signed off on the plan as a way to save money and consolidate state offices.

Schwarzenegger's plan marks a return to the days when California taxpayers were beholden to landlords.

"It's a reverse mortgage, because at the end of the day, the state will no longer own the buildings. That means the state will be paying rent forever," Casper said in an interview.

Under the administration's plan, California would sell the buildings and enter 20-year leases with the new owners, who could impose rent increases every five years.

Experts in commercial real estate earlier told the AP that trying to sell such properties in the middle of the worst economy since the Great Depression was folly, ensuring that the state would not get full value.

The first attempt seems to support that logic. Last month, the Schwarzenegger administration rejected all seven bids for the state-owned Orange County Fairgrounds because they came in too low. State officials initially projected they could get between $96 million and $180 million for the Costa Mesa property, but the highest bid came was $56 million.

The recent moves by the Schwarzenegger administration had the effect of silencing dissenting voices.

Mike DeNunzio, a Republican from San Francisco, said he replaced Stan Moy as president of the San Francisco State Building Authority after being vetted by the governor's office. Moy did not return a telephone message seeking comment.

DeNunzio said it was right for the governor to remove Casper, who told the San Francisco Weekly that he had concerns about turning the California Supreme Court into tenants of a commercial enterprise. The court is housed at the Civic Center, one of the properties to be sold.

"With all due respect, Don is the one who made the fuss," said DeNunzio, who said he assured administration officials that he supported their plan. "He concluded whatever the reason, his concern or financial judgment, he would oppose this—and that was not his role. It was beyond his purview."

Casper and Epstein disagree, saying they were acting in the best interest of the public in raising questions about the sell-off.

"It just doesn't make economic sense," Epstein said.


2. Governor Arnold Schwarzenegger today [1/16/2006] released the following statement regarding the death of Milton Friedman:

“Maria and I were so sad to hear about Milton Friedman’s death. Milton and his wife Rose, I have said many times, were not only my dear friends. They have been heroes to me for much of my life.

“Milton was one of the great thinkers and economists of the 20th Century, and when I was first exposed to his powerful writings about money, free markets and individual freedom, it was like getting hit by a thunderbolt.

“I wound up giving copies of his books and ‘Free to Choose’ videos to hundreds of my friends and acquaintances, and later I was lucky enough to meet the Friedmans and we became fast friends.

“A much-beloved Nobel Prize winner and advisor to three presidents and leaders around the world, Milton was kind enough to serve on my Council of Economic Advisors. He was a constant source of inspiration and insight.

“The world has lost a true giant, a tireless advocate for freedom, and I have lost a great friend. Our thoughts and prayers go to Rose and the rest of the Friedman family.”


3. “The Shock Doctrine: The Rise of Disaster Capitalism” by Naomi Klein. Klein might well argue that the situations which arise and compel the government to unload their assets are in fact manufactured by the pro-privatization forces themselves.

"The book traces its origins back fifty years, to the University of Chicago under Milton Friedman, which produced many of the leading neo-conservative and neo-liberal thinkers whose influence is still profound in Washington today."


Extra credit about squishing the little man:

- In the 1950’s and 60’s, the CEO’s of major American companies took home about 25 to 30 times the wages of the typical worker.

- In the mid-1950s, 36% of the United States labor force was unionized.

- By 1980, the big company CEO took home roughly 40 times the worker’s wage.

- By 1989, the unionized United States labor force had dropped to about 16%.

- By 1990, the big company CEO took home roughly 100 times the worker’s wage.

- By 2000, only 13% of our labor force was unionized.

-By 2007, executives at the largest American companies received about 350 times the pay of the average employee.

-The United States is now one of the most economically stratified societies in the western world. A 2008 study found that the top .01% — or 14,000 American families — hold 22.2% of wealth. The bottom 90%, or over 133 million families, control just 4% of the nation’s wealth.

PS: Prop 16 is more of the same. PG&E (private company) concocted the ballot initiative to undercut competition from municipal (state-owned) power agencies. The proposition will require that any attempt to have electric service supplied by a public entity must be voted on by the public, and will require a Two Thirds majority to pass. Basically the proposition outlaws future public power (or community controlled power) in California. PG&E is almost the sole financial support for the proposition.

But, I suppose none of this is any matter. Everyone can now go back to watch “Dancing with the Stars"...


nikto said...

Among America's biggest problems is that, as a people, our "common knowledge" is infested by certain myths that inhibit social progress (just as they were intended to do, for these myths' propagation is no accident).

One of the most venomous of these myths is that "private interests are less-wasteful and more efficient than public institutions"--This, ofcourse, is a A BIG, FAT LIE.

Here's a writeup on how PRIVATE charter schools are exploiting loophols in the law to spend public money like drunken sailors.

Ah yes, but they are *politically
validated* drunken sailors...

nikto said...

I just read a disgusting piece by Phyllis Schlafly, which I refuse to link to, but you can locate via word search quite easily if you should so desire.

The piece is basically a rant against the "freeloaders" who receive government services while committing the sin of being poor.

Schlafly neatly divides America into 2 halves--The ones who work hard and pay taxes, and the low income "takers" who are described as merely "feeding off" the "hard workers".

This is a statement of the most intimate inner feelings of a diehard CONSERVATIVE, who is, no doubt, a strong supporter of the private charter school movement, and unregulated capitalism.

The hypocrisy displayed is far beyond stunning.

So why DO conservatives want to waste taxpayer$ money and impoverish America (via charter school schemes), if they think the poor are unworthy of life?

So, if we follow conservative "ideals" like conservatives propose, America will become destitute, just like the poor people Conservatives HATE.

Methinks the jury is in:

Slam dunk, that one.

And they're doing a pretty good job of it, aren't they?

NYC Educator said...

I just started reading The Shock Doctrine on Saturday. Now I see what this recent downturn in the economy is being used for. Arne Duncan is indistinguishable from the Friedman fanboys and I can't believe I voted for Obama.

The Perimeter Primate said...

I am so glad to hear you are reading the book. I could only get through it in small segments, because I would get so upset.

Yes, I do believe this is what is happening and that the good ol' U.S. of A. is headed for some sort of fascist coup sponsored by corporate oligarchs.

From Wikipedia:

Fascism is a radical and authoritarian nationalist political ideology. Fascists seek to organize a nation on corporatist perspectives; values; and systems such as the political system and the economy. Scholars generally consider fascism to be on the far right of the conventional left-right political spectrum,although some scholars claim that fascism has been influenced by both the left and the right.

Fascists believe that a nation is an organic community that requires strong leadership, singular collective identity, and the will and ability to commit violence and wage war in order to keep the nation strong. They claim that culture is created by collective national society and its state, that cultural ideas are what give individuals identity, and thus rejects individualism. In viewing the nation as an integrated collective community, they claim that pluralism is a dysfunctional aspect of society, and justify a totalitarian state as a means to represent the nation in its entirety. They advocate the creation of a single-party state. Fascist governments forbid and suppress openness and opposition to the fascist state and the fascist movement. They identify violence and war as actions that create national regeneration, spirit and vitality.

Fascists reject and resist autonomy of cultural or ethnic groups who are not considered part of the fascists' nation and who refuse to assimilate or are unable to be assimilated. They consider attempts to create such autonomy as an affront and threat to the nation.

Fascism is strongly opposed to core aspects of the Enlightenment and is an opponent of liberalism, Marxism, and mainstream socialism for being associated with failures that fascists claim are inherent in the Enlightenment. Fascists view egalitarianism, materialism, and rationalism as failed elements of the Enlightenment. They oppose liberalism — as a bourgeois movement — and Marxism — as a proletarian movement — for being exclusive economic class-based movements. They present their ideology as that of an economically trans-class movement that promotes ending economic class conflict to secure national solidarity. They believe that economic classes are not capable of properly governing a nation, and that a merit-based aristocracy of experienced military persons must rule through regimenting a nation's forces of production and securing the nation's independence.

Fascists support a "Third Position" in economic policy, which they believe superior to both the rampant individualism of laissez-faire capitalism and the severe control of state socialism.