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.

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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.

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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.”

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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."

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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"...

Killing public education from the inside

Watch this Bill Moyers' interview with Thomas Frank, the author of The Wrecking Crew. Frank explains how government-haters obtain positions of power within the government and then starve it from the inside. Their type of governing is one which actually wants as many inferior people working in the government as possible, as well as doing everything it can to incapacitate the workers' ability to produce a stellar product. The goal is to maximize government's incompetencies and failures. This keeps them well-supplied with more and more ammunition with which they can continue the kill.

Here’s an excerpt from the program:

THOMAS FRANK: Think of all the crises and the disasters that you've described. And I would add to them things like the, what happened in New Orleans after Hurricane Katrina. And the Madoff scandal on Wall Street. And, you know, on and on and on. The Jack Abramoff scandal. The whole sordid career of Tom DeLay.

All of these things that we remember from the last decade. I mean, some of them that we're forgetting. Like who remembers all the scandals over earmarking, anymore? And who remembers all the scandals over Iraq reconstruction? All that, you know, disastrous, when we would hand it off to a private contractor to rebuild Iraq. And it would, you know, of course, it would fail.

Those things have all sort of been dwarfed by the economic disaster and the wreckage on Wall Street. But I would say to you that all of these things that we're describing here are of a piece. And that they all flow from the same ideas. And those ideas are the sort of conservative attitude towards government. And conservative attitudes towards governance. Okay?

BILL MOYERS: That government is a perversion.

THOMAS FRANK: Government is-- yeah, government is a perversion. And to believe that the federal government can be operated, you know, with all of its programs, can be operated well and do things that are good for the people, is, as you say, is a perversion.

And they look at someone like Barack Obama and it makes them seethe. Because that's, you know, that's what he's trying to do. What conservatism in this country is about is government failure. Conservatives talk about government failure all the time, constantly. And conservatives, when they're in power deliver government failure.

BILL MOYERS: Not merely from incompetence, you say, but from ideology, from philosophy, from a view of the world.

THOMAS FRANK: And sometimes from design.

BILL MOYERS: From design? What do you mean?

THOMAS FRANK: Not always from design, but often. The Department of Labor, for example, the conservatives when they in office, routinely stuff the Department of Labor full of ideological cranks. And people that don't believe in the mission.

And the result is that it doesn't-- they don't enforce anything. Towards the very end of the Bush-era, the Department of Labor had been whittled down. It was a shell of its former self. And at the very end of the Bush Administration, one of the government accountability programs did a study of the Department of Labor. And, I'm smiling, because it's kind of amusing. It was like an old spy magazine prank.

They made up these horrendous labor violations around the country and phoned them in as complaints to the Department of Labor to see what they would do, okay? They responded to one out of ten of these, you know, where they called in as like, "Well, we got, you know, kids working in a meat packing plant during school hours. You know, can you, you going to do anything about that?" "No." Or you look at something like the Securities and Exchange Commission. These guys are supposed to be regulating, you know, the investment banks, okay? Goldman Sachs, Morgan Stanley, that sort of thing. These guys were so under-funded, and not just under-funded, but you had people in charge of it who didn't believe in regulating Wall Street.

BILL MOYERS: So, they made the Securities and Exchange Commission a laughing stock, if you will. They really did.

THOMAS FRANK: Right. Well, there's these horrible stories that came out. Once Bush was out, there was a study done of the SEC, as well. These people didn't even have like their own functioning photocopiers, okay? So, we're talking about the lawyers that are supposed to be protecting us from Wall Street. And they have to go stand in line at Kinko's to do their own photocopying. And they're going up against the best paid, you know, best educated lawyers on planet Earth, who represent the investment banks. And they're supposed to be defending us.

BILL MOYERS: The curious thing about this is that you and I and my audience knows that our ancestors believed that capitalism needed to be supervised. But when the conservatives came to power, they begin to muzzle the watchdog.

THOMAS FRANK: Yeah. Well, or you know, do away with it altogether, de-fund it. Look, the beginning in the 1980s, President Reagan came to office and came to power, and you remember the kind of rhetoric that he used to use in denouncing the Federal workforce. He hated the Federal workforce. And this is an article of faith among conservatives.

There's something called the pay gap that they used to talk about a lot in Washington, D.C. Which is, back in the '50s, '60s, and up into the 1970s, Federal workers were paid a comparable amount to what people in the private sector earned. Okay? So, if you're a lawyer working for the government, you got about as much as a lawyer working in the private sector.

Not as much, because government benefits are considered to be much better. Okay. Under Reagan, you had this huge gap open up between Federal workers and the private sector. I asked around. And I found out a government attorney makes $140,000 a year on retirement. After he's been there all his life. In the private sector law firm in Washington, you'd be making $160,000 starting salary. That's first year. Right out of law school.

BILL MOYERS: So what's the consequence of this pay gap you described? Or, do we get inferior government because of it?

THOMAS FRANK: Absolutely. It keeps the best and the brightest out of government service, unless you're really dedicated to a cause.

But let me go one step further with this, Bill. When I say this is done by design, I'm not exaggerating. And this is one of the more surprising things that I found when I was doing the research for "The Wrecking Crew," is that there's a whole conservative literature on why you want second-rate people in government, or third-rate.

I found an interview with the head of the U.S. Chamber of Commerce from 1928, where he said-- this quote, it's mind-boggling to me. But he really said this. "The best public servant is the worst one." Okay? You want bad people in government. You want to deliberately staff government with second-rate people. Because if you have good people in government, government will work. And then the public will learn to trust government. And then they'll hand over more power to it.

And you don't want that, of course. Your Chamber of Commerce. And I thought, when I first read this, "That's a crazy idea. I can't believe that sentiment." And then I found it repeated again and again and again. Throughout the long history of the conservative movement. This is something they believe very deeply.

BILL MOYERS: It comes out of a definitive way of seeing things, right?

THOMAS FRANK: Yes. And we can summarize that very briefly. That the market is the, you know, is the universal principle of human civilization. And that government is a kind of interloper, if not a, you know, criminal gang. And getting in the way.

Doesn’t this sound exactly like what's been happening to public education over the years?

And once you become aware of the fact that the entire whole public ed deform movement started way back during the Reagan years, and once you catch on to the players who have been pushing it, everything falls into place. Read A History Lesson About the Sandia Report to learn how an important report was suppressed back in the early 1990s to prevent its results from interfering with the master plan.

Of course, when their mansions fall down the hill or their big business venture is about to fail, these people suddenly fall in love with the government. It's totally sick.