April 18, 2012

Headlines  
States scrutinize for-profit colleges
Infrastructure privatization leading to inefficient pricing
Diane Ravitch: I don’t understand Michelle Rhee
Right-wing ALEC retreats on most controversial issues
IL: Opinion: Why I am voting against the Infrastructure Trust

States scrutinize for-profit colleges
Rhode Island is considering whether to approve a for-profit osteopathic medical school, as Kentucky leads 22 other states in investigating the for-profit education industry…While some for-profits have attracted federal attention in recent years for higher borrower default rates and questionable marketing practices, states are only more recently taking a harder look at the sector, according to a report released last week by the American Association of State Colleges and Universities. Jack Conway, Kentucky’s attorney general, is leading a multi-state investigation into the business practices of for-profit colleges. Additionally, he has sued three for-profit colleges in his state, charging violations of consumer protection laws and illegal student recruitment practices. Illinois Attorney General Lisa Madigan also brought suit against the for-profit Westwood College this January, according to the report. A ruling issued in 2010 by the U.S. Department of Education stressed the role that states must play in approving for-profit colleges, but the AASCU report found that state regulatory agencies are often lax in their oversight of for-profit colleges. Stateline

Infrastructure privatization leading to inefficient pricing
As I wrote at the beginning of the month, putting infrastructure into private hands leads to inefficiently high monopoly pricing. A great example of this fell into my lap today in the form of a press release from Swedish engineering firm Skanska bragging about their participation in the Elizabeth River Crossings project between Norfolk and Portsmouth in Virginia. There are a lot of ins and outs to this, but the basic shape of things as detailed on the project’s Frequently Asked Questions page is that a private company is going to refurbish an existing tunnel and build a replacement for another tunnel and in exchange will collect tolls on the roads for 58 years.Now the problem here, as I said in my previous post, is that while America would do well to engage in more tolling of congested roads it’s very socially inefficient to be tolling on non-congested roads. As Josh Barro pointed out in response this is a special case of the general problem with monopolies and there are two reasonable solutions. One would be competition and the other would be regulation. In this case since we’re talking about two different parallel tunnels across the same river there’s room for at least a limited amount of competition. Or there would be, had the state not elected to parcel this out as a single contract. That leaves us with regulation. But of course the same Virginia Department of Transportation that failed to create competition has also failed to create a sound regulatory scheme. The rates will “for cars using either the Downtown or Midtown tunnels will be $1.59 (off peak) and $1.84 (peak)” and then starting in 2016 “will escalate by a factor equal to the greater of changes to Consumer Price Index or 3.5 percent.”*  Virginia is creating a predatory monopoly that will prey on the wallets of off-hour shift workers for no good reason. Slate

Diane Ravitch: I don’t understand Michelle Rhee
A friend in Alabama went to an event sponsored by Rhee’s organization, StudentsFirst. Rhee’s representative told the 20 or so people at the meeting: “Alabama’s charter legislation will not allow for-profit operators to manage charter schools. Period.” Except that her statement is not true. The Alabama legislation says that after the charter is awarded to a nonprofit, it may turn full management and instructional responsibility over to a for-profit operator. It cannot be a spirit of civic generosity that motivates for-profit corporations to lobby the Alabama legislature to pass the bill. Why would Rhee’s representative be so misinformed, or why would she seek to mislead?..Her organization allegedly has raised more than $200 million and is well on its way to raising $1 billion. This money will be used to attack teachers’ unions; to strip teachers of any job protections; to promote vouchers, charters, and for-profit organizations that manage charter schools; and to fund candidates who want to reduce spending on public education and privatize it. I have heard rumors about big-name donors to Rhee, but can’t verify them. StudentsFirst does not release the names of its contributors. Let me add that I find offensive the very concept of “StudentsFirst.” The basic idea is that teachers are selfish and greedy and do not have the interests of students at heart. So students need a champion to protect them against their venal teachers, and Rhee is that champion. Supposedly, Rhee and her allies — assorted billionaires, big corporations, wealthy foundations, and rightwing governors — are the only people who can be trusted to care about our nation’s children. Washington Post

Right-wing ALEC retreats on most controversial issues
Apparently in response to the corporate exodus, and to the contradictions between ALEC’s stated mission and its policies, the organization issued a press release today stating they are “eliminating the ALEC Public Safety and Elections Task Force that dealt with non-economic issues” and that they would be “redoubling our efforts on the economic front.”… Wisconsin Gov Scott Walker was a proud ALEC member when he was in the state legislature, and introduced several ALEC bills approved by the Criminal Justice Task Force. Since becoming governor, he has continued to push these ALEC-supported “criminal justice” efforts…During this period of growing prison populations, then-Representative Scott Walker introduced several bills between 1997 and 1999 that would allow private prisons in Wisconsin, including one to privatize state prison operations (see the ALEC bill here), and another allowing private corrections companies to open prisons in Wisconsin to house inmates from other states (see the ALEC bill here). Walker noted in 1998 that CCA wanted to expand into Wisconsin. While those bills did not pass, some inmates were contracted-out to private prisons in other states, and CCA has registered lobbyists in the state ever since. AlterNet

IL: Opinion: Why I am voting against the Infrastructure Trust
Chicagoans angered by the consequences of privatizing city parking garages and meters better hold onto their wallets.  Mayor Rahm Emanuel’s Chicago Infrastructure Trust Ordinance, scheduled for a vote at tomorrow’s City Council meeting, could make those previous deals look like child’s play.,,Yesterday I voted against sending this ordinance out of the Finance Committee.  The convoluted “smoke and mirrors” financial arguments deserve far more scrutiny than possible in the few days aldermen had for review. Too many questions remain open about the true public benefit, return rates, escape clauses, employment opportunities for residents (especially women and minorities), whether the city might do some of the projects more cost effectively on its own.  Exactly who are these private “partners” coming to our “rescue?”  Aren’t some of them re-constituted entities of firms whose greed contributed to the nation’s economic meltdown?   As with the parking meters I also voted against, I see too little transparency, accountability, oversight or evidence to justify a leap of faith into what could prove another bottomless pit of financial risk for Chicago taxpayers. NBC Chicago

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