Tax Avoidance Lets the Wealthy Set the Policy Agenda

In June, ProPublica released the data: “In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes three years in a row. ProPublica has obtained a vast trove of Internal Revenue Service data… (which) provides an unprecedented look inside the financial lives of America’s titans, including, Warren Buffet, Bill Gates, Rupert Murdoch and Mark Zuckerberg… Taken together, it demolishes the cornerstone myth of the American tax system that everyone pays their fair share and the richest Americans pay the most.”

When these facts were published, and after Republicans in Congress balked at funding President Biden’s infrastructure plan with increased taxes on the wealthy and on corporations, the Center on Budget and Policy Priorities’ Chuck Marr seized the moment as an opportunity to explain how it has come to be that these people and many others pay so little to support the basics of our society: “The main federal tax is the individual income tax, which accounts for roughly half of all federal revenue and which tens of millions of middle-class people pay throughout the year as employers withhold taxes from their paychecks. To a great degree, however, the income tax is essentially voluntary for the nation’s richest people. Much of their income comes in the form of gains in the value of their stocks and other assets, and they can avoid taxes on those gains if they hold on to these assets rather than sell them. When high-income households do pay tax on their income from their assets—such as capital gains and dividends—they pay at tax rates that are far lower than the tax rates they would pay on wages and salaries. These tax breaks, which policymakers have expanded in recent years, help to widen the enormous gaps in income and wealth between the nation’s richest people and everyone else. The top 1 percent of households in terms of income receive the vast majority of capital gains and a large chunk of dividend income, and they are reaping most of the benefits of a new deduction, enacted in the 2017 tax cut law, for what’s known as ‘pass-through’ income, which the owners of partnerships and certain other businesses report on their individual tax returns.”

There are two primary consequences of the fact that wealthy Americans pay almost no taxes.

First: There is a shortage of public revenue to pay for the basics society desperately needs—infrastructure repair, public schools in poor communities, and adequate child care.

Today Republicans in Congress balk at paying for President Biden’s desperately needed national infrastructure plan to repair what everyone agrees are rapidly deteriorating bridges and roads and old water systems where hundred-year-old pipes break deep underground and where in too many places water is carried in lead pipes. The American Families Plan, which would help our society’s poorest children in myriad ways, is deemed unaffordable. And at the same time across the states, where Republican-dominated legislatures have adopted tax cuts, the shortage of federal funds has been magnified as old infrastructure and poorly funded schools proliferate.

In Ohio last month, for example, when the Ohio Legislature argued about the 5 percent income tax cut the Republican-dominated Ohio Senate wanted to include in the new state budget,  Policy Matters Ohio’s’ Wendy Patton demonstrated that only the wealthy would benefit: “Nearly half of the tax reduction would go to those in the top 5%, who are paid more than $221,000 a year. The top 1% percent, who have income of at least $526,000, would average a cut of $1,712 and receive a quarter of the tax reductions. The tax reductions in the Senate bill come on top of huge tax cuts the richest Ohioans have received over the past 16 years. While lower-and middle-income Ohioans on average saw little change or paid more in state and local taxes, the top 1% received more than $40,000 a year in tax cuts.”  After a long debate and much pushback, the new Ohio budget includes only a 3 percent tax cut, but the primary beneficiaries will be the wealthy.

Tax cutting has become a trend in many more states than Ohio. In The Wolf at the Schoolhouse Door, education historian  Jack Schneider and journalist Jennifer Berkshire write: “Almost every state reduced spending on public education during the Great Recession, but some states went much further, making deep cuts to schools, while taking aim at teachers and their unions… Moreover, states including Arizona, Kansas, Michigan, and North Carolina also moved to permanently reduce the funds available for education by cutting the taxes that pay for schools. In Wisconsin, Governor Scott Walker… took aim at education through Act 10… (which) made $2 billion in cuts to the state’s public schools. Though Wisconsin, like many states, already capped the amount by which local communities could raise property taxes to fund schools… Walker and the GOP-controlled legislature imposed further limits, including restricting when and how local school districts can ask voters for additional help funding their schools.” (The Wolf at the Schoolhouse Door, pp. 35-36)

Second:  When they don’t pay taxes, the extremely wealthy can invest their money privately through philanthropy in ways that distort our institutions according to their own theories and whims. 

Charitable foundations no longer operate by responding when worthy organizations submit applications to fund needy projects. Instead staffs at large foundations influence policy according to their and their funders’ theories and priorities.  They pay for their own research studies to prove their theories, they buy media coverage, and, in education, they make grants to the school districts which agree to try out their experiments.

Last week, California teacher blogger Tom Ultican provided an update on what has happened to the late Eli Broad’s public school leadership program aimed to form school leaders through business principles instead of education theory. Here is a bit of background behind Ultican’s recent post. In December of 2019, a little more an a year before his death in April 2021, Eli Broad donated $100 million to Yale University’s School of Management. The gift came with a quid pro quo: Yale University’s School of Management now houses the Broad Superintendents’ Academy and Broad Residency in Urban Education. What this means is that mega philanthropist, Eli Broad, with a background as an accountant who bought a life insurance company which he turned into a retirement savings business, purchased a prestigious institutional home for a school superintendents’ training program he alone devised.  Eli Broad’s personal philosophy of education management now has the imprimatur of Yale University even though there is no academic, peer-reviewed research endorsing Eli Broad’s theories of education management.

Ultican reports that The Broad Center at Yale School of Management has just “enrolled its first cadre of 17 fellows into the ‘Fellowship for Public Education Leadership program.'”  Although many of the staff at The Broad Center have previously worked as public school leaders or staff from state departments of education, they are likely to have completed the program themselves as Broad Residents in years past. Some were leaders in privately managed Charter Management Organizations or state departments of education which created state takeover agencies to manage struggling public schools. Ultican concludes: “Significantly, the late Eli Broad chose a business institute instead of an education school to continue his training program. The Broad Center at Yale School of Management appears to be in complete fidelity with the late Eli Broad’s privatize the commons ideology.”

Also last week, Chalkbeat‘s Matt Barnum reported on a new collaboration of some of America’s richest education philanthropists “aimed at dramatically improving outcomes for Black, Latino, and low-income students.”  Certainly that is a worthy purpose, but the philanthropists who are leading this effort are not aiming to invest in reducing class size, hiring guidance counselors, creating school orchestras, or restoring the school libraries that have been cut in lean times: “The Advanced Education Research & Development Fund… is already funded to the eye-popping tune of $200 million from the Bill and Melinda Gates Foundation, the Chan Zuckerberg Initiative (CZI), and the Walton Family Foundation… AERDF (pronounced AIR-dif) says its focus will be on what it calls ‘inclusive R&D,’ or bringing together people with different expertise, including educators, to design and test practical ideas like improving assessments and making math classes more effective. Still, the ideas will have ‘moonshot ambitions,’ said the group’s CEO Stacey Childress…  The organization emerged from work that began in 2018, when CZI and Gates teamed up to invest in R&D. That resulted in a project known as EF+Math, which funds efforts to embed lessons in executive functioning—a set of cognitive skills related to self control and memory—into math classes. ‘These executive functioning skills allow you to focus on what’s important, ignore distractions, let you think flexibly to solve problems and keep track of ideas,’ said Melina Uncapher, the program’s director. ‘Perhaps not surprisingly, they’re strongly related to math skills’… The other project that AERDF announced Wednesday is called Assessment for Good, and will focus on creating better student tests that shift from focusing on students’ deficits to their strengths.”

Notice that the aim here is to change the focus of standardized testing, not to reduce our nation’s overreliance on standardized test scores that these same philanthropists have promoted for a quarter of a century. And it is important to remember that decades of sociological and educational research overwhelmingly blame poverty and growing economic inequality along with economic and racial segregation—not the lack of students’ executive functioning—for the struggles of groups of students whose test scores have lagged.

AERDF is merely a new way for mega-philanthropists to focus microscopically on technical research without addressing the rising inequality in which they are complicit.  If they paid taxes on their vast incomes, the states and the federal government would have more revenue to address the problems that simply stare us all in the face: class sizes of 40 students; shuttered school libraries; a shortage of guidance counselors; absence of school bands and orchestras; school newspapers that stopped publishing when there was no money to hire a journalism advisor; reliance on outdated computer technology; and urban schools that lack the academic enrichments suburban children take for granted—challenging literature, civics, advanced math, and lab science classes.

In Winners Take All: the Elite Charade of Changing the World, Anand Giridharadas considers what it means when the wealthiest individuals cease to pay their fair share of taxes for the public good and instead attempt to shape society according to their personal priorities via philanthropy:

“What is at stake is whether the reform of our common life is led by governments elected by and accountable to the people, or rather by wealthy elites claiming to know our best interests.  We must decide whether, in the name of ascendant values such as efficiency and scale, we are willing to allow democratic purpose to be usurped by private actors who often genuinely aspire to improve things but, first things first, seek to protect themselves. Yes, government is dysfunctional at present.  But that is all the more reason to treat its repair as our foremost national priority.  Pursuing workarounds of our troubled democracy makes democracy even more troubled. We must ask ourselves why we have so easily lost faith in the engines of progress that got us where we are today—in the democratic efforts to outlaw slavery, end child labor, limit the workday, keep drugs safe, protect collective bargaining, create public schools, battle the Great Depression, electrify rural America, weave a nation together by road, pursue a Great Society free of poverty, extend civil and political rights to women and African Americans and other minorities, and give our fellow citizens health, security, and dignity in old age.” (Winners Take All, pp. 10-11)

Billionaire Power? Two Decades of Education Policy Are a Cautionary Tale

Anand Giridharadas’s NY Times analysis of the recent Democratic candidates’ debate is the week’s most provocative commentary.  Giridharadas, author of the recent best seller about the role of venture philanthropy, Winners Take All: The Elite Charade of Changing the World, devotes his recent column to The Billionaire Election:

“The Democratic debate on Wednesday made it clearer than ever that November’s election has become the billionaire referendum, in which it will be impossible to vote without taking a stand on extreme wealth in a democracy. The word ‘billionaire’ came up more often than ‘China,’ America’s leading geopolitical competitor; ‘immigration,’ among its most contentious issues; and ‘climate,’ its gravest existential threat… With the debate careening between billionaire loathing and billionaire self-love, Mr. Buttigieg warned against making voters ‘choose between a socialist who thinks that capitalism is the root of all evil and a billionaire who thinks that money ought to be the root of all power.'”

As someone who has been watching billionaire-driven, disruptive education reform for over 20 years, I find it fascinating that the role of billionaire power has become a primary issue in presidential politics. If you haven’t been paying such close attention to the education wars, you might not realize that policy around education and the public schools has for two decades been the locus of experimentation with the power and reach of billionaire philanthropists seizing a giant public sector institution from the professionals who have been running the schools for generations.  The billionaires’ idea has been that strategic investment by data wonks and venture philanthropists can turn around school achievement among poor children.

All this fits right in with America’s belief in the enterprising individual, and an attack on public institutions by far-right ideologues.  Disruptive education reform also arose chronologically with the development of big data, which fed into the idea of management efficiency, once tech experts could manipulate the data and help entrepreneurs more efficiently “fix” institutions to raise achievement.

The other part of the story, of course, is that school teaching is not a glam job. You don’t become a celebrity by teaching second grade, or supporting students trying to conceptualize algebra, or helping five sections of fifteen-year-olds every day learn how to read Shakespeare’s Julius Caesar. Teachers work on behalf of children; they are not known for their individualism or for competing to be successful. But the business stars—particularly when they are also tech entrepreneurs—have become marketplace celebrities. And so we have given them a chance.

Mike Bloomberg himself brought the experiment to New York City when he got the state legislature to grant him mayoral governance. He hired a well known attorney, Joel Klein, as his schools chancellor.  Without a a bit of training or experience in education, they took over the schools, opened district-wide school choice in a school district serving over a million students, opened charter schools, colocated charters into buildings with public schools and other charters, tested everyone, rated and ranked schools by test scores, and closed the “failing” schools. It was all about technocratic management and attacks on the teachers’ union.  Many of the charter schools were “no-excuses” experiments with children walking silently in straight lines—schools with high suspension rates to create a rigid culture of obedience.  After Joel Klein left to work with Rupert Murdoch on a tech venture, Bloomberg hired socialite Cathie Black to run the city’s schools.  Black was a magazine publisher at Hearst.  She had no advanced degree and no education experience or training. Unable to show any feeling or empathy for the 1.1 million children enrolled in NYC’s public schools or their parents, Black lasted in the position from January until the first week of April in 2011.

Bloomberg was one of the billionaire, ed tech leaders, but there were lots of others:

  • Bill Gates and the Gates Foundation brought us a bunch of experiments that eventually petered out: small high schools, the Common Core, incentive pay for teachers based on their students’ test scores. And Gates money seeded the vast charter school experiment in New Orleans after the 2005 hurricane.
  • The Walton Family Foundation has spent more on charter school expansion than any of the other billionaires.
  • The Edith and Eli Broad Foundation just bought a place in the Yale School of Management for the Broad Superintendents’ Academy that has for years been training school leaders with business management principles.
  • Mark Zuckerberg (the Chan-Zuckerberg Initiative) has promoted so-called “personalized” learning in which the software is programmed to tailor online instruction “personally” according each child’s needs and rate of learning.

Arne Duncan filled the U.S. Department of Education with staff from the Gates Foundation and the New Schools Venture Fund and formalized all the competitive, business-tech theory into a Race to the Top, which was going to reward success and punish so-called “failing schools” with mandated quick turnarounds—firing principals and teachers, charterizing or privatizing schools, and finally closing schools.

It is time to remember several things about the reforms brought to us by the tech billionaires, for these same lessons may apply to the way, if elected, billionaires would “reform” the country just as they “reformed” the schools.  In the first place, No Child Left Behind, the federal program that encapsulated all this ed-reform theory, didn’t raise test scores.  Neither did it close test score gaps between wealthy children raised in pockets of privilege and poor children.

And the turnaround strategy created a mess in the cities where it was tried.  Year after year, New York City qualifies as the nation’s most segregated school district, because marketplace school choice promotes racial and economic segregation.  In Chicago, where Gates money enabled Arne Duncan to launch Renaissance 2010 before he took the same ideas to the U.S. Department of Education in Race to the Top, University of Chicago sociologist Eve Ewing describes the human collateral damage when technocrats forgot about the role of human institutions in real communities. In the Bronzeville neighborhood of Chicago’s South Side, Ewing documents community grieving for the destruction of neighborhoods when schools were closed:  “The people of Bronzeville understand that a school is more than a school.  A school is the site of a history and a pillar of black pride in a racist city.  A school is a safe place to be.  A school is a place where you find family.  A school is a home. So when they come for your schools, they’re coming for you. And after you’re gone they’d prefer you be forgotten.”  Ewing continues: “It’s worth stating explicitly: my purpose in this book is not to say that school closure should never happen. Rather, in expanding the frame within which we see school closure as a policy decision, we find ourselves with a new series of questions…. These questions, I contend, need to be asked about Chicago’s school closures, about school closures anywhere. In fact, they are worth asking when considering virtually any educational policy decision:  What is the history that has brought us to this moment?  How can we learn more about that history from those who have lived it?  What does this institution represent for the community closest to it?  Who gets to make the decisions here, and how do power, race, and identity inform the answer to that question?” (Ghosts in the Schoolyard, pp. 155-159)

Mike Rose, the education writer and professor who has educated future teachers during an entire career writes about the kind of education policies the billionaire technocrats have never understood. After a trip across the United States observing excellent teachers, Rose writes about what classrooms look like when teachers know how to nurture and respect human connections with and among our children:  “The classrooms were safe. They provided physical safety, which in some neighborhoods is a real consideration. But there was also safety from insult and diminishment….  Intimately related to safety is respect, a word I heard frequently during my travels.  It meant many things: politeness, fair treatment, and beyond individual civility, a respect for the language and culture of the local population… Talking about safety and respect leads to a consideration of authority. I witnessed a range of classroom management styles, and though some teachers involved students in determining the rules of conduct and gave them significant responsibility to provide the class with direction, others came with a curriculum and codes of conduct fairly well in place.  But two things were always evident.  A teacher’s authority came not just with age or with the role, but from multiple sources—knowing the subject, appreciating students’ backgrounds, and providing a safe and respectful space. And even in traditionally run classrooms, authority was distributed. Students contributed to the flow of events, shaped the direction of discussion, became authorities on the work they were doing. These classrooms, then, were places of expectation and responsibility.”

Do we really want the billionaires to be able to direct their philanthropy, however well-intentioned, privately to shape public institutions with the money they are not paying in taxes?  Giradharadas concludes his recent column with that very question: “Do we wish to be a society in which wealth purchases fealty?  Are we cool with plutocrats taking advantage of a cash-starved state to run their own private policy machinery, thus cultivating the networks required to take over the state from time to time, and run it in ways that further entrench wealth? Just this week, Mr. Bezos, the founder and chief executive of Amazon, announced his creation of a $10 billion fund to fight climate change.  Once, such a gift might have been greeted with unmitigated gratitude. But now, rightly, people are asking about all the taxes Amazon doesn’t pay, about its own carbon footprint, and about whether any mortal should have that much power over a shared crisis.”

Skepticism Grows About High-Stakes, Test Based School Accountability and Privatization

Nick Hanauer’s confession that neoliberal, “corporate accountability” school reform doesn’t work is not entirely surprising to me.  After all, No Child Left Behind was left behind several years ago.

And Daniel Koretz, the Harvard University expert on our 25 year experiment with high stakes, test-based accountability, says: “It’s no exaggeration to say that the costs of test-based accountability have been huge. Instruction has been corrupted on a broad scale. Large amounts of instructional time are now siphoned off into test-prep activities that at best waste time and at worst defraud students and their parents… The primary benefit we received in return for all of this was substantial gains in elementary school math that don’t persist until graduation.”(The Testing Charade, p 191)

Nick Hanauer is a smart venture capitalist who has been paying attention, so it isn’t so surprising he has noticed that we still have enormous gaps in school achievement between the children raised in pockets of extreme privilege and the children raised in the nation’s very poorest and most segregated communities. Because he is an influential guy, however, I am delighted that Hanauer published his confession in The Atlantic:

“Long ago, I was captivated by a seductively intuitive idea, one many of my wealthy friends still subscribe to: that both poverty and rising inequality are largely consequences of America’s failing education system… This belief system, which I have come to think of as ‘educationism,’ is grounded in a familiar story about cause and effect: Once upon a time, America created a public-education system that was the envy of the modern world…  But then, sometime around the 1970s, America lost its way.  We allowed our schools to crumble, and our test scores and graduation rates to fall.  School systems that once churned out well-paid factory workers failed to keep pace with the rising educational demands of the new knowledge economy.  As America’s public-school systems foundered, so did the earning power of the American middle class… Taken with this story line, I embraced education as both a philanthropic cause and a civic mission… All told, I have devoted countless hours and millions of dollars to the simple idea that if we improved our schools… American children, especially those in low-income and working-class communities, would start learning again… But after decades of organizing and giving, I have come to the uncomfortable conclusion that I was wrong.”

Hanauer—along with Bill Gates, the Waltons, and other philanthropists—has continued to invest heavily in the growth of charter schools.  The Washington Post‘s Valerie Strauss interviewed Hanauer last week about his recent confession: “In 2009 or thereabouts, I had an awakening. A friend sent me the IRS tax tables that showed the changes in income distribution that had occurred over the decades I had been working on education. The story those numbers showed was devastating.  When I graduated from high school in 1977, the top 1% of earners got less than 8% of national income. In 2007, 30 years later, that number had increased to 22.86%.  Worse, the bottom 50% of Americans’ share of national income had fallen from approximately 18% to 12%.  I was horrified by these trends, and frankly, shocked.  I had put so much work and so much faith in the Educationist theory of change, and all my work had amounted to nothing…. Nevertheless, I was under pressure to keep grinding on the same stuff in the same way, only harder.  You get a lot of strokes in the community for working on public education, and I did.  I was ‘the education guy.’  But it just didn’t feel right.”

Strauss describes how the priorities of hedge fund leaders, venture capitalists, and giant philanthropies dovetailed with the education priorities of the Obama administration, “which launched a $4.3 billion education initiative called Race to the Top.  It dangled federal funds in front of resource-starved states if they embraced the administration’s education priorities.  Those included charter school expansion, the Common Core, and revamping of teacher evaluation systems that used student standardized test scores as a measure of effectiveness….”

Barack Obama jumped on the education “reform”  bandwagon early, back in June of 2005, when, as the junior Senator from Illinois, he spoke at the launch of Democrats for Education Reform. In his, 2011, history of education “reform,” Class Warfare, Stephen Brill describes the players in the effort to lure Democrats into embracing corporate accountability for schools.  DFER was launched by a bunch of New York hedge fund managers when Obama was in New York City raising money to run for a second Senate term: “While in town he helped Boykin Curry, John Petry, and Whitney Tilson launch a group they had created called Democrats for Education Reform (DFER). Obama had agreed to be a guest at a party they had put together for people who shared their interest in school reform and wanted to get involved. Curry, Petry, and Tilson had chipped in a little of their own money plus some from a few friends, to start DFER.  The fourth member of their board was Charles Ledley, another value investor friend… Curry, Petry, and Tilson were immediately smitten with Obama, who seemed to talk about education reform as if it was no big deal for a Democrat to be doing so.  He recalled visiting a successful Chicago school where one teacher had complained to him about what she referred to as the ‘these kids’ syndrome that prevailed at traditional inner-city public schools, which, she explained, ‘was the willingness of society to accept that ‘these kids’ can’t learn or succeed.’… Obama… spent part of his talk extolling charter schools and what they demonstrated about how all children could learn if they had good teachers in good schools.” (Class Warfare, pp. 131-132)

Obama was, of course, merely articulating what had become the conventional wisdom among wealthy hedge funders, philanthropists, and even Democratic politicians. The term, “conventional wisdom,” was defined by economist, John Kenneth Galbraith as, “the ideas which are esteemed at any time for their acceptability.” The “corporate school reform” conventional wisdom—about the failure of traditional public schools as the cause of a wide achievement gap between white children and children of color and between wealthy children and poor children—had been cast into law in the No Child Left Behind Act, passed with bipartisan support and signed by President George W. Bush in January of 2002.  The law was designed to pressure staff in low scoring schools to raise expectations for their students or their schools would be sanctioned with a cascade of ever more punitive consequences.  No Child Left Behind’s strategy was neither to increase public investment in the schools in the poorest communities nor to ameliorate child poverty.

Last week, after Hanauer published his admission that he no longer supports school reform based on high stakes, test-and-punish accountability and the reliance on privatization as a turnaround strategy, former President Barack Obama responded.  Valerie Strauss quotes the response to Hanauer tweeted by President Obama: “This is worth a read: a thought-provoking reminder that education reform isn’t a cure-all.  As a supporter of education reform, I agree that fixing educational inequality requires doing more to address broader, systemic sources of economic inequality.”  In his response to Hanauer, Obama doesn’t fully reject the school turnaround strategies embedded in his administration’s Race to the Top and School Improvement Grant programs, but he admits that he has himself done some rethinking.

It is significant that Nick Hanauer, one of America’s financial and philanthropic glitterati, is openly questioning corporate, accountability-based school reform ideas, and it is also a good thing that former President Obama, who promoted such policies, is listening.  But it should concern us all that the ideas and biases of the wealthy have such inflated influence on public policy these days. How did it happen that those who have shaped the conventional wisdom about education blamed the professionals in the schools instead of listening to school teachers?  And how did policymakers miss an enormous body of academic research that has shown for half a century that poverty and inequality are a primary cause of gaps in school achievement?

In November of 2016, in a brief from a leading center of academic research, the National Education Policy Center, William Mathis and Tina Trujillo warn about Lessons from NCLB: “The No Child Left Behind Act was replaced by the Every Student Succeeds Act (ESSA) with great fanfare and enthusiasm. Granting more power to states and curbing what was seen as federal overreach was well received.  Nevertheless, the new system remains a predominantly test-based accountability system that requires interventions in the lowest scoring five percent of schools.  The new law… shows little promise of remedying the systemic under resourcing of needy students.  Giving the reform politics of high-stakes assessment and privatization the benefit of the most positive research interpretation, the benefits accrued are insufficient to justify their use as comprehensive reform strategies. Less generous interpretations of the research provide clear warnings of harm. The research evidence over the past 30 years further tells us that unless we address the economic bifurcation in the nation, and the opportunity gaps in the schools, we will not be successful in closing the achievement gap.”

School reform, according to the theories of venture capitalists, hedge fund managers, and giant philanthropies, is emblematic of the sort of policy—driven by elites— that Anand Giridharadas warns us about in his, 2018, book, Winners Take All: “What is at stake is whether the reform of our common life is led by governments elected by and accountable to the people, or rather by wealthy elites claiming to know our best interests. We must decide whether, in the name of ascendant values such as efficiency and scale, we are willing to allow democratic purpose to be usurped by private actors who often genuinely aspire to improve things, but first things first, seek to protect themselves… We must ask ourselves why we have so easily lost faith in the engines of progress that got us where we are today—in the democratic efforts to outlaw slavery, end child labor, limit the workday, keep drugs safe, protect collective bargaining, create public schools, battle the Great Depression, electrify rural America, weave a nation together by road, pursue a Great Society free of poverty, extend civil and political rights to women and African Americans and other minorities, and give our fellow citizens health, security, and dignity in old age.” (Winners Take All, pp. 10-11)

New Book Defines Neoliberalism, Challenges Elite Charade of Changing the World

Betsy DeVos, our current U.S. Secretary of Education, is easy to peg.  She’s an education libertarian who has been known to declare, “Government really sucks.” She believes in the glory of private markets and has an added commitment to religious education and using government money to help parents pay for it.

But how do we accurately name and fully explain to ourselves the thinking of people like Arne Duncan and Barack Obama, Bill and Hillary Clinton, and the people who call themselves Democrats for Education Reform? These Democrats want to divert public tax dollars away from the traditional public schools—which continue to serve over 50 million American children—to unregulated private contractors called charter schools. How did school privatization become bipartisan, with conservative Republicans like DeVos favoring vouchers and Democrats enthusiastically supporting charters? Turning so-called “failing” public schools over to Charter Management Organizations, if you will remember, was one of the “remedies” of the bipartisan, Bush-era No Child Left Behind Act, and of Race to the Top, the project of Obama-era Democrats.

In his new book, Winners Take All: The Elite Charade of Changing the World, Anand Giridharadas helps us out here.  While much of the book focuses on current trends in the philanthropic sector, Giridharadas also defines the values that have become a new kind of conventional wisdom about public policy in our now alarmingly unequal society.  Giridharadas provides the data depicting the incomes of the rest of us next to those in the top One Percent and the top .001 Percent.  He describes the kind of inequality that separates the rich and the poor but leaves the rich with all the power when it comes to framing solutions to unequal healthcare, for example, or a public education system that has, following residential trends, become increasingly segregated by economics as well as race—schools with radically unequal funding that provide radically disparate access to opportunity.  Giridharadas does not explore these social and economic challenges in themselves, nor does he suggest solutions. Instead he chooses to delineate all the ways powerful elites have assigned themselves responsibility for solving the problems—and to describe the injustice that follows when the voices of the rest of us are absent from the conferences at Davos or Aspen.

Giridharadas defines neoliberalism, a term that gets thrown around all the time these days but is infrequently explained. Giridharadas adopts the simple definition of anthropologist David Harvey: Neoliberalism is “a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade… (D)eregulation, privatization, and withdrawal of the state from many areas of social provision tend to follow.  While personal and individual freedom in the marketplace is guaranteed, each individual is held responsible and accountable for his or her own actions and well-being.  This principle extends into the realms of welfare, education, health care, and even pensions.”  Giridharadas adds, quoting from the thinking of political philosopher Yascha Mounk, that we have entered a “new age of responsibility in which responsibility—which once meant the moral duty to help and support others—has come to suggest an obligation to be self-sufficient.” (pp. 18-19)

All this has created a new ethos on many college campuses, particularly on campuses where the business and investment sectors are underwriting centers to promote “social innovation” and “social entrepreneurship,” or where students are becoming interns or fellows in financial firms, which push students to imagine their futures and do well by doing good: “Change the world. Improve lives. Invent something new. Solve a complex problem. Extend your talents. Build enduring relationships.” (p. 24) And the way this can happen, students are told, is by going to work for business or the financial sector to address alarming inequality and its many challenges or applying for a grant from a huge foundation whose endowment has exploded as massive untaxed profits have accumulated.  Giridharadas continues: “Nowhere is this idea of entrepreneurship-as-humanitarianism more entrenched than in Silicon Valley, where company founders regularly speak of themselves as liberators of mankind and of their technologies as intrinsically utopian.” (p. 47)

Giridharadas names today’s ethos “marketworld”:  “Marketworld is an ascendant power elite that is defined by the concurrent drives to do well and do good, to change the world while also profiting from the status quo.  It consists of enlightened business people and their collaborators in the worlds of charity, academia, media, government, and think tanks. It has its own thinkers, whom it calls thought leaders, its own language, and even its own territory—including a constantly shifting archipelago of conferences at which its values are reinforced and disseminated and translated into action.  MarketWorld is a network and community, but it is also a culture and state of mind. These elites believe and promote the idea that social change should be pursued principally through the free market and voluntary action, not public life and the law and the reform of the systems that people share in common; that it should be supervised by the winners of capitalism and their allies, and not be antagonistic to their needs; and that the biggest beneficiaries of the status quo should play a leading role in the status quo’s reform.” (p. 30)

What about the role of government, which most of us think of as the institution protecting the rights of individuals and marginalized groups and providing oversight to protect society from the inevitable negative externalities of capitalism?  Instead in MarketWorld, it is believed that government and the private sector can work together in a “win-win” for everybody:  “People typically think of government and market working in opposition to each other—and regulation being the tool by which government constrains the market… This new ideology believes that government is an investor in capitalism. The government works not as a check on capitalism but for capitalism—to make capitalism successful, to ensure that the conditions for its success are in place: that there is a decent education system to produce the requisite number of workers, that trade agreements get written so as to allow companies to buy from and sell to far-off places; that the infrastructure allows trucks to get produce to the supermarket before it rots; that the air is clean enough that people live long and (more important) productive lives.” (p. 48)

The example from education, of course, is the diversion of billions of dollars from the states’ public education budgets over a twenty year period to unregulated, private contractors called charter schools. The neoliberal justification has been that charters embody the business school values of innovation and disruption. The charter school sector is among America’s biggest experiments with social entrepreneurship paid for by government.

The Nobel Prize winning economist Joseph Stiglitz sums up the overall economic problem that is the focus of Giridharadas’s book: Powerful businesses and giant philanthropic foundations have found ways to pretend to address the economic catastrophe we face today in American society.  But there is no way, according to Stiglitz, that this arrangement can possibly address the problems that derive from inequality: “Like the dieter who would rather do anything to lose weight than actually eat less, this business elite would save the world through social impact investing, entrepreneurship, sustainable capitalism, philanthro-capitalism, artificial intelligence, market-driven solutions.  They would fund a million of these buzzwordy programs rather than fundamentally question the rules of the game—or even alter their own behavior to reduce the harm of the existing distorted, inefficient and unfair rules. Doing the right thing—and moving away from their win-win mentality—would involve real sacrifice; instead, it’s easier to focus on their pet projects and initiatives..”

Stiglitz, the economist, explains that eliminating inequality will inevitably require changing the system itself in a way that challenges today’s One Percent.  After all, we’ll need to address, for example, what businesses pay and how they treat their employees and increase taxes (which will incidentally reduce the endowments and power of today’s mega-philanthropies): “In order to really have an economy with the greatest opportunity for all, the kind of economy they seem to champion, the MarketWorlders would have to pay high levels of corporate and personal income tax, offer decent wages to their workers, allow unions, fund public schools (instead of pet charter projects) and support some form of single payer health care and campaign finance reform. One simply can’t arrive at a more economically equal reality when the rungs of the ladder are so far apart.”

Giridharadas’s book works best as a descriptor of a dangerous ethos at work among the powerful. In his preface, however, he challenges the power of neoliberalism: “What is at stake is whether the reform of our common life is led by governments elected by and accountable to the people, or rather by wealthy elites claiming to know our best interests. We must decide whether, in the name of ascendant values such as efficiency and scale, we are willing to allow democratic purpose to be usurped by private actors who often genuinely aspire to improve things, but first things first, seek to protect themselves… We must ask ourselves why we have so easily lost faith in the engines of progress that got us where we are today—in the democratic efforts to outlaw slavery, end child labor, limit the workday, keep drugs safe, protect collective bargaining, create public schools, battle the Great Depression, electrify rural America, weave a nation together by road, pursue a Great Society free of poverty, extend civil and political rights to women and African Americans and other minorities, and give our fellow citizens health, security, and dignity in old age.” (pp. 10-11)