Posts Tagged ‘Economic Issues’

Efficiency is the Enemy Redux

July 30, 2014 Leave a comment

Jason Stanley, a philosophy professor at Yale University, has a powerful essay in today’s NYTimes. The title, “Detroit’s Drought of Democracy” could just as easily been “Efficiency Undercuts Democracy”, for his primary argument is that the decision of MI lawmaker to appoint an “emergency manager” with dictatorial powers is based on the premise that efficiency can only be achieved by assigning unquestioned authority to one individual. While there are other factors at play (e.g. the racism that exists in MI that is manifest in the demographics of communities in that state), Stanley focuses on the creed that efficiency is good… and shatters it completely. Stanley uses the emergency manager’s decision to shut off water to Detroit residents as the example of how efficiency does not result in public well being… but the same logic applies to the takeover of public schools, as noted in my comments to several quotes I gleaned from the essay:  

The discretion inherent in executive power is being exercised to maximize financial efficiency. But there is no obvious connection between financial efficiency and the public good.

The use of part-time staff by McDonalds and Walmart are financially efficient… but not serving the public well. The practice of inversion as noted in earlier posts is financially efficient… but not at all connected to the public good. Privatized schools that hire untrained and low wage teachers to prepare students to do well on standardized tests are financially efficient… but do nothing to help the public good.

The 19th-century French political philosopher Benjamin Constant worried that appeals to the common good were often not made for democratic purposes, but rather served to “supply weapons and pretexts to all kinds of tyranny.” One may suspect Michigan’s appeal to financial efficiency has a similar purpose.

The “reformers” civil rights arguments are an appeal to the common good that are used to justify the privatization of public schools and the governance of those schools by shareholders instead of elected school board.

Singapore is a state that values efficiency above all. But by no stretch of the imagination is Singapore a democratic state. A society ruled by technocrats who make decisions on behalf of the masses is, since Plato’s time, regarded as a system that is opposed to democracy, rather than one exemplifying it.

The technology CEOs value the wisdom of technocrats over the wisdom of practitioners and virtually all CEOs value the fast decision-making that comes from top-down leadership over the messy, plodding deliberations that are a part of democracy.

This is not to deny that the Detroit emergency manager’s policies are efficient for some people. For example, they are efficient for the banks that are being paid back for what look to be ethically dubious loans, as well as for those who stand to benefit from the potentially huge profits of privatizing one of the world’s great freshwater supplies at a time of increasing global water scarcity.

The banks may not benefit from the privatization of schools, but there ARE huge profits that could be made from making schools “financially efficient”… and when the “financially efficient” profit motive trumps the public good, our country is wasting one the world’s greatest untapped resources: our students.

It is simply no surprise at all that a democratic state can be less efficient than some nondemocratic states. In a democracy, someone who would be a good doctor is allowed to be a bad lawyer. Autonomy cannot be subsumed to efficiency in a democracy.

A democratic state accepts some messiness and some inefficiency as a trade off for allowing everyone to have stake in determining the direction the government is taking. And here is the most telling quote:

The chief values of democracy are freedom and equality. The  willingness to subsume freedom to claims of efficiency is one sign of an undemocratic culture.

I drew on this quote in making a comment I wrote, noting the parallel between what is happening in Detroit and what is happening in public education:

This article describes the rationale used by “reformers” to privatize public education. By using standardized tests as the basis for determining which schools and districts are “failing” states proclaimed the existence of an “emergency”. The states and/or mayors then took the authority to govern schools away from locally elected officials and shifted it to mayors and governors many of whom, in turn, gave authority to unelected shareholders of privatized schools. Jason Stanley writes: “The chief values of democracy are freedom and equality. The willingness to subsume freedom to claims of efficiency is one sign of an undemocratic culture.” The willingness to ignore inequality is another sign… and our decision to ignore the impact of poverty on schools and undercutting locally elected is corroding our democracy and not helping our children.

If taking power away from locally elected officials (e.g. school boards) made a difference, Newark NJ, Chester and Philadelphia PA, and Chicago IL schools would be outperforming all schools in the country. By ignoring the inequality of wealth between those urban areas and the surrounding suburbs and exurbs and emphasizing the need for “financial efficiency” we’ve delivered two blows to “the chief values of democracy”.

Inversion Redux

July 29, 2014 Leave a comment

Andrew Ross Sorkin, an NYTimes business writer, posted an article in today’s Dealbook section describing the huge profits banks made by advising corporations on the inversion process, whereby they declare themselves as based in another country to avoid paying US taxes. As noted in yesterday’s blog post amplifying Paul Krugman’s article, this has a major impact on publicly operated institutions like schools. To amplify that for NYTimes readers I offered the following comment:

I’m not a tax expert… but here’s my understanding:
We– the taxpayers— bailed out these “to big to fail” banks and now they are receiving huge sums of money to help large corporations avoid paying their taxes. This, in turn, creates a “crisis” in the government revenue stream that requires the privatization of things like roads, prisons, hospitals and schools to “save the taxpayers” money. Oh… and as a by-product this “crisis” gives the shareholders of those NEW private enterprises more wealth. I, for one, do not believe this is good for our country.

To paraphrase a quote from the 60s, if you aren’t disturbed by these shenanigans you are not paying attention!

Tax Dodgers and Schools

July 28, 2014 Leave a comment

Paul Krugman’s column in this morning’s NYTimes describes the latest development in profiteering:

…the tax-avoidance strategy du jour: “inversion:”… a legal maneuver in which a company declares that its U.S. operations are owned by its foreign subsidiary, not the other way around, and uses this role reversal to shift reported profits out of American jurisdiction to someplace with a lower tax rate.

Readers of this blog should recognize this as the same strategy that corporate tax dodgers use to pit town-against-town and state-against-state in their efforts to race-to-the-bottom on employee compensation… and local and state property taxes.

I believe two underlying principles that “everyone agrees with” make it impossible to change our attitude toward taxation. The first principle, repeated over and over again by BOTH parties in various shades, is the Reagan mantra: GOVERNMENT IS THE PROBLEM. If “everyone agrees” that government is the problem then all taxes are confiscatory and those of us who are being “robbed” by the government taking OUR money have sympathy with the government taking, say, the Koch brothers’ or the Walton’s money… and we don’t begrudge a company for taking steps to avoid paying these onerous taxes.

The second principle is that of shareholder primacy, whereby profit-making trumps any sense of corporate public responsibility. As noted above, this plays out in local and State governments as well as at the Federal level. Pull the curtain back behind any announcement of a corporation locating in a community and you’ll see a sweetheart tax deal.

Both of these principles effect public education. Over the past decades the term “government run schools” was coined, repeated, and entered into the lexicon as evidence that PUBLIC education can’t work because it is run by the government… and we “all know” that government is the problem. And when local corporate taxes are rolled back or limited the burden is shifted to either state sales and/or income taxes or local property taxes and when they start increasing the push back is inevitable… and is often to the detriment of schools, roads, and publicly funded services.

I keep waiting for some politician to make the point that we are all in this together and we need to share in the responsibility for improving our country by paying our fair share of taxes. Doing so would not hurt 99% of the taxpayers…. but for the time being, it appears that the majority of Americans don’t see it that way, in part because no one has taken the time to explain how the system works.