The damage Wall Street inflicted on our educational infrastructure is growing.
March 13, 2012 |
The damage to our educational infrastructure is growing, according to Catherine Rampell's chilling report in the New York Times. As state funding has dwindled, public colleges have raised tuition and are now resorting to even more desperate measures — cutting training for jobs the economy needs most.
She describes how badly needed engineering and nursing school facilities are being cut to the bone even though these two fields are begging for trained college graduates. At the same time, Rampell reports that state higher education tuitions are rising, programs are being cut and students are stumbling out of college under a mountain of debt. As she correctly points out, the economic health of our society is based on our investments in education.
Economists have found that higher education benefits communities even more than it benefits the individual receiving the degree. Studies show that an educated populace leads to faster economic growth and benefits the poorest workers the most. Much of the post-World War II economic boom, for example, has been attributed to increased college enrollment courtesy of the GI Bill.
But if this is so obviously true, why are we cutting back on higher education?
The answer, not mentioned in her excellent article, is painfully obvious: Wall Street is the cause of those dwindling funds and is presently fighting to make sure those dollars are not restored any time soon. Here’s how:
1. The crash of Wall Street’s casino is causing the collapse of state and local revenues. Before financial amnesia sets in we must continually remind ourselves that the economy crashed because of Wall Street’s reckless gambling.
Through a series of “financial innovations,” Wall Street turned toxic mortgages into AAA-rated securities and thereby puffed up an unsustainable housing bubble, and milked it dry.
As it was collapsing, Wall Street also found ways to bet against the bubble and make billions more.
Wall Street then opened the public vault and helped itself to trillions of dollars of bail-out funds and low-interest loans.
Along the way the financial system froze, which in turn crippled the real economy sending more than 8 million workers to the unemployment lines.
State taxes crashed and college budgets were slashed, and they still haven’t recovered.
Big government didn’t cause this crash, nor did fiat money or leaving the gold standard (sorry, Ron Paul). It wasn’t the fault of poor people or even reckless home buyers. No, this crash was born and bred on Wall Street.
2. Wall Street is lobbying hard to shift the national conversation to debt reduction and away from higher taxes on the financial elite.
In a saner and fairer world, Wall Street would be paying for the damage it caused. The super-rich and their financial transactions would be taxed to close state and local budget deficits caused by Wall Street greed. It’s a no-brainer demand for anyone who wants America to thrive. The development of a highly educated workforce is the best and only way back to a full-employment economy.
But Wall Street understands that if the Occupiers continue to frame the debate, we might actually get legislation that forces the super-rich to pay up. So Wall Street is doing all it can to shift the debate back to deficits. They and their political flunkies warn us each day that we’ll soon become the next Greece unless we tighten our government-bloated belts. Their lapdog rating agencies are attacking the soundness of US government bonds to spread the fear of spiraling debt. It’s a full-scale assault to reduce funds for Medicare, Medicaid, Social Security and public education. And even the Democrats are not immune.
You’ve got to admire Wall Street’s gall. To deflect the conversation from Wall Street reparations, they instead want the 99 percent to pay for the damage created by high finance!
3. Wall Street wants more student indebtedness.
As tuitions rise, so do student loans. Sally Mae, once a government-sponsored agency, is now a giant private financial company that seeks to profit from federally backed student and private loans. Other Wall Street lenders are also eager to cash in on this growth industry. That last thing these companies want is for tuition costs to stabilize or, god forbid, go down.
4. Wall Street siphons funds away from the real economy.
The downward economic pressure on state and local funding continues even as the economy stumbles along. One big reason for the protracted jobs crunch is that Wall Street continues to engage in unproductive activities, some of which actually serve as a hidden tax on the rest of the economy.
When it engages in high frequency trading that takes place in nanoseconds, it extracts pennies from millions of trades each day. By the end of the year between $8 billion and $20 billion are extracted from our pension funds and 401ks and put into the bonus pools of Wall Street banks and hedge funds.
The epidemic of insider trading crimes turns our financial markets into volatile, rigged games, further bloating Wall Street at the expense of goods and service producing industries on Main Street.
Our banks are bigger than ever and continue to siphon away billions of dollars of capital because everyone knows they are far too-big-to-fail.
These unproductive activities are suppressing state and local economic activity and badly needed tax revenues. As long as it remains business as usual on Wall Street, students will pay with higher tuitions and fewer educational opportunities.
5. Wall Street lives in another universe, light years from everyday student concerns.
Perhaps the gravest concern relates to the ways in which the Wall Street elites are increasingly isolated from the day-to-day realities of struggling students and their families. When you make a million dollars an HOUR, as some of the leading hedge fund managers do, you are totally immune from the ravages of educational cutbacks.
For the denizens of Wall Street, the luxury economy is booming again.
Their kids don’t have to worry about student loans.
Their schools won’t suffer cutbacks.
Their families, snuggled away in their gated communities within their gilded suburbs never have to see what a society looks like when educational opportunity collapses.
Because they don’t experience the day-to-day consequences, they continue to engage in elite-driven class warfare without ever admitting it. If they don’t see it, they will never accept any accountability for the damage they are causing. The growing isolation of the super-rich means that “shared sacrifice” is a cruel joke. Students and their families will make the sacrifices, while Wall Street continues to grab the greatest share of our nation’s wealth.
Why we need Occupy Wall Street more than ever:
When America’s youth rose up to demand justice from Wall Street, they struck a raw nerve that resonated throughout our country. Not only did they nail the right target — Wall Street — but also they developed the right framework: the 99 percent versus the 1 percent. For a few months this past fall, these imaginative demonstrators changed the national conversation away from Wall Street’s focus on debt, to Wall Streets culpability. In doing so they opened the door to a national fight-back movement by students against their own indentured servitude. The possibility was there to protest against the mountain of student debt and educational cutbacks caused by the Wall Street-induced crash.
Let’s hope the Occupiers are alive and well, and will soon recapture America’s imagination. Perhaps then we will force the political establishment to do the obvious: slap a financial transaction tax on Wall Street and use the funds for free public higher education for all.
|Les Leopold is the author of
The Looting of America: How Wall Street's Game of
Fantasy Finance Destroyed Our Jobs, Pensions, and
Prosperity—and What We Can Do About It