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"...

Predatory Pseudo-Philanthropy

The accurate term for the highly manipulative spending which Bill Gates, Eli Broad, and the Walton family are engaging in is “predatory pseudo-philanthropy.” It is the logically evolved and naturally-conceived outcome of the predatory capitalist approach of these billionaire CEOs.

With predatory pseudo-philanthropy, non-profit foundations are set up to operate as vehicles with which the CEOs can acquire control of public institutions. It is these foundations which allow them to maneuver their power, and permit them to exert great influence and take possession of the functioning at the top levels, all under the guise of some sort of "generosity" to chronically under-funded, urban public school systems.

In the realm of public education, the foundations make tremendous “gifts” of money and personnel to school institutions (at local, state, and federal levels). The “giving” is their pathway to control. Foundations admit this goal outright and call it "venture philanthropy." The unsuspecting American public has been fooled into believing these astronomically wealthy individuals are simply being nice and are incapable of doing any wrong. What the American public believes is wrong.

All this reminds me of a friend who was repeatedly sexually abused by her father when she was a girl. As a woman she still could not throw out the beautiful riding saddle he had given her -- even though its presence repulsed her. As a child she had loved riding horses, and his "gift" made it easier for him to get what he wanted from her. Such is the essence of pure manipulation.

John Perkins (“Confessions of an Economic Hit Man”) explains the mindset of these CEO-types and the nature of their predatory capitalism in his new book, “Hoodwinked." Here are some excerpts:

"The guiding philosophy for this particular form of capitalism [the one promoted by Milton Friedman] is an uncompromising belief in the privatization of resources, the granting of unfettered powers to corporate executives, and the encouragement of debt so extreme that it results in contemporary modes of enslavement – for countries and individuals alike.

Based on the assumption that the CEOs running our most powerful corporations constitute a special class of royalty who, unlike normal people, do not need to be governed by regulations, it totally altered geopolitics."

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"We have accepted the cancer, the predatory mutant virus of capitalism, as the norm."

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"It is a system that evolved through the subterfuge and economic cunning of people who freely move back and forth between corporations and the U.S. government (collectively, the corporatocracy)."

On the model’s policies and techniques:

"…the abandonment of laws that force corporations to adhere to strict environmental, social, truth-in-advertising, and other standards that protect the rights of the general populace; assumption of larger amounts of personal, corporate, and governmental debt; privatization of utilities, prisons, and other “public” institutions; increased police surveillance under the guise of “homeland security”; and the use of public lands to serve corporate interests."

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"Members of the corporatocracy are a, “… club of CEO powerbrokers of business and finance who dine with the like of senators, members of congress, regulators, and presidents [and others]."

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"The ruling elites—the members of the corporatocracy, “… are not chosen by the people, do not serve limited terms, and answer to no one…They wield tremendous influence in the halls of both local and national governments. Almost no politician gets elected without money that flows through them and their stockholders. They control the mainstream media, either through direct ownership or advertising budgets."

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Lobbyists are “one of the most effective political weapons in the corporatocracy’s arsenal. These men and women make sure that politicians draft laws that support corporate needs, even then those laws countermand campaign promises and disregard pubic opinion.”

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"Communications networks work in tandem with the lobbyists. Corporatocracy dominance of the mainstream media has grown steadily, paralleling the rise of Friedman capitalism. In 1983, fifty corporations controlled that vast majority of all news media in the United States. By 1992, that had been reduced to less than thirty. In 2004, only six huge corporations … owned most of the industry…In both their news reporting and their editorials, they promote “free trade” agreements, privatization, and the other polices that have led to the current crises."

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"Members of the corporatocracy are not part of a conspiracy, but they are characterized by an obsession with winning. They will invest vast amounts of money to get their way."

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"We often justify the unscrupulous actions of the modern robber barons because they contribute money to philanthropy and the arts."

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"... the Bill and Melinda Gates Foundation has been severely criticized for investing its endowment in companies that are accused of contributing to poverty in the very Third World countries where that foundation’s stated goal is to relieve poverty.”

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"As a young founder and CEO, Gates had a reputation for brutally beating down competitors. He and Microsoft have been attacked in many countries for business practices that at best are morally questionable and at worst illegal."

Read more about the corporatocracy's takeover of urban public education:

• Power Hoarding Billionaire Buddies
• Under Seige
• Gates-Induced Wariness
• The Scheming Called "Venture Philanthropy"
• Is it Fiction, or Not? Not.
• Our Omnipotent's Dream

Geoff Berne & the Privatization of Public Education

In his new piece for CounterPunch, Geoff Berne explains how the privatization of public education was conceived and is actively being helped along by the Obama administration and Arne Duncan.

As with military manufacture, military contracting, and prison management, the federal government's education agenda under the leadership of Sec. of Education Arne Duncan is dead set on a policy of transferring the administration of public schools to private businesses. The Secretary has given evidence that his chosen means for accomplishing this handover is through putting mayors at the helm of entire (mainly urban) school systems, allowing them to replace elected school boards with appointed councils of businessmen and retired military that then go on to bring in for-profit corporations to manage the schools, drawing on budgeted money previously intended for public systems.

Duncan’s Race To The Top, a strategy of having states compete in a horse race for funds for education reform, makes clear that only states making concrete efforts toward privatization will get the coveted funds…

In these initiatives Duncan has set for himself the roles of midwife, epigone, and chief factotum for the privatization doctrines first laid out by the “father of modern school reform,” fellow-Chicago luminary Milton Friedman in a 1955 essay that he later incorporated into his landmark book Capitalism and Freedom in 1962. Friedman called for a wholesale “denationalization” of public education: instead of public funds going to school systems parents would receive vouchers on these funds to pay for “educational services” for their children at for-profit and not-for-profit schools that would be operated by entrepreneurs and managers who’d be free to set teacher compensations as low as a dog-eat-dog market for teaching jobs would bear.

In true survival-of-the-fittest purism, Friedman believed that parents should, if they decide to have children, be prepared to pay for their education.

In a prescient prophesy of the state of education today, Friedman depicted that the downfall of public schooling would be smoothly accomplished by being brought in a piecemeal fashion, with the mushrooming privatized sector coexisting with the shrinking and declining public sector for a transitionary [sic] period of time. “Since governmental units . . . would continue to administer schools, the transition would be gradual and easy.” An educational regime change would be accomplished before people realized it had happened.

Though at present only 20 states have established vouchers-type subsidies for private schools, Friedman smelled victory for his idea of free-market education reform in an interview conducted for Reason Magazine in 2005 on the 50th anniversary of his 1955 vouchers essay, and two years prior to his death, stressing as proof that the tide has turned in privatization’s favor the capitulation of the teachers unions. Their “dam is buckling,” he waxed proudly, “and will shortly break . . . The basis of the National Education Association's and the American Federation of Teachers' power is crumbling.

At present, the privatization process, with its union-disabling subtext, is being promoted to the public as a rescue effort to “turn around” schools in impoverished and struggling urban neighborhoods, ASAP. States are being pressed, as in Wisconsin, to give mayors of major urban centers powers to effect the same transformation Duncan presided over in Chicago, where mayoral control under Richard Daley Jr. has existed since 1995 and where Duncan made a name for himself by closing 75 schools and replacing them with smaller, business-run schools shorn of union contracts and community governance…

In this way, state adoption of mayoral control for just the main urban school districts is used as a wedge and foot in the door for what American business and the foundations that speak for them hope will be the privatization of all of American education. For when mayors need management for the schools that have been put under their direction, they make appointments from the business community and/or turn to ready-made education management corporations that are there waiting for their call. Why should what works for the urban schools not work for suburban, small-city, and rural schools?...

In other words, education privatization is not just about mayors “turning around” underperforming urban districts. It’s about opening, ultimately, the whole education sector to for-profit management. However, first the public has to be sold on the need for “turn around.” First the public has to be whipped into a frenzy over a crisis in the schools, that is, the urban schools, a crisis requiring urgent “reform.” And then in the name of reform, the way is paved for business to be brought in on a white horse as reformers.

In the guise of reformers, celebrity tycoons from the world of business, opportunistic social advocacy personalities, and ambitious officials seeking to make a name for themselves as advocates for corporate interests have been the leading players in the new world of investment and career opportunity in privatized education.

Regardless of having no professional training as pedagogues or published works or other credentials as education theorists, researchers, or analysts, barons of finance for no discernible reason other than their Brobignagian wealth have been elevated to the status of venerated education mavens and saviors of our children's futures.

Prominent in this category are entrepreneurs like Microsoft's Bill Gates who, notwithstanding his record of epic business success, happens to have dropped out of college (Harvard) in his sophomore year rather than go to the top of the educational stepladder that is held out as model and paradigm for America’s schoolchildren. Secretary Duncan, an administrator whose advancement came from endearing himself to Chicago’s corporate community by his policy of shutting down public schools and opening charter schools, has no hands-on experience as an educator other than a period of time spent working in his mother’s tutoring school. Charter school minority advocate Al Sharpton, whose "action organization" has been the beneficiary of generous residuals he has received for his public appearances at the White House and around the country in support of opening charter schools that would supposedly put minority children on a college prep track, himself dropped out of Brooklyn College in his sophomore year.

Two illustrious business names who have been ceded a national megaphone on the subject of education in spite of having zero credentials in education are former financier Michael Milken and real estate-nursing home entrepreneur Eli Broad.*

As is now all but forgiven and forgotten, Milken parlayed a career of reaping high returns from low-yield junk bonds, and from buyouts that created almost a one-man recession by throwing whole workforces of “bought” companies out on the streets, into a fortune that has made him, today, the 458th richest man in the world. Still his only experience as an educator came in three years of community service teaching math to minorities in Los Angeles in fulfillment of a ten year sentence for securities and financial reporting felonies of which he served 22 months in federal prison.

By 1999, only three years following his release from prison, Milken had amassed an empire of companies catering to every possible facet of the education industry that looked as though it might someday rival his former scale of operations as a financier. Today he heads a foundation purporting to set the standard for the training of quality K-12 teachers, all armed with math skills and fluent in the use of computer technology, and dispensing money incentives for recruitment of teacher talent. Yet other than the conferences his foundation sponsors for the purpose of affirming the superiority of private to public education, there is no evidence either in public utterance or on the printed page that this towering Colossus of the age of education profit seeking that is upon us has a holistic educational philosophy of how one actually inspires a young person to want to read, study, and achieve.

Eli Broad, who rose from the status of 19 year old prodigy in the field of accounting (“the youngest in Michigan history”) to founder one of the nation’s biggest networks of assisted care facilities, has devoted a significant portion of the $5.8 billion net worth that has made him number 42 on the list of 400 richest Americans to the cause of totally privatizing American education.

To this end Broad has contributed $10.5 million in startup funds to the Green Dot charter schools network in Los Angeles and in 1999 he and his wife Edythe joined the ranks of family foundation scions Bill & Melinda Gates and Michael and Lowell Milken with their founding of the Eli and Edythe Broad Foundation. A flagship program of the foundation is the Broad Superintendents Academy that identifies and trains, executives with experience of leading large organizations for service as administrators, and even places them, in urban school districts. But is there any evidence either in public utterance or on the printed page that beyond his credo that American education needs to be run more “like a business” this indisputably wealthy and successful individual has a conceptual clue about how to cultivate and motivate the mind of a child?

These may be what used to be called Captains of Industry (and Finance), they may be builders of unparalleled monopolies in the fields of software, finance, real estate, insurance, etc. — world straddling economic players in the mold of the (for a time) successful businessman that Theodore Dreiser portrayed in The Financier and The Titan — but they do not fit the profile of “educators.” As far as education is concerned, they are “barbarians at the gates,” untrained and uncouth in the arts of shaping the lives and intellects of children. Yet here they are, the nation's prime movers in the raging battle to replace public education with a system in which the schools are outsourced to for-profit businesses, businesses that are not accountable to government financial oversight and free from union contracting that protects the job security of teachers.

*On this point, I believe Mr. Berne is mistaken. Broad made his initial fortune in real estate (Kaufman & Broad, now KB Homes), then he founded SunAmerica, which sells retirement plans and is a subsidiary of the insurance company AIG.

WHAT EXPLAINS THE PASSIVITY OF AMERICANS?

WHAT WILL IT TAKE TO SHAKE THEM FROM THEIR SLEEP?

And here is Jerry Bracey explaining more of the same.