Separate But Equal?

Courtesy of Flickr Creative Commons

In a op-ed last week in the Times, columnist Joe Nocera, in an article titled “Why We Need For-Profit Colleges,” comes to the defense of the embattled institutions, which have been increasingly up in arms since Secretary of Education Arne Duncan announced in June new steps to protect students from what the department terms “ineffective career college programs.”

“There is nothing inherently wrong with the idea of for-profit education,” Nocera writes. “The for-profits have flaws, but so do nonprofits, with their bloated infrastructure, sky-high tuition, out-of-control athletic programs and resistance to change. In a country where education matters so much, we need them both.”

I agree.  And I don’t, on the face of it, disagree with any of Nocera’s arguments for why this is so.

However, I do find some fault with Nocera’s assertion that for-profits and non-profits are essentially “separate but equal” institutions, both of them with inconsequentially different flaws.

For-profit institutions contend the new rules are unnecessary and unfair, and would limit educational opportunities for the primarily low-income and minority student bodies that make up the bulk of their enrollments.

While I hesitate to suggest for-profit institutions are either overplaying their victimhood or being deceptive outright, something about their argument that their works are, above all else, for the greater good of students generally—and students of color and low-income students specifically—smacks of disingenuousness to me.

According to Education Department figures, “students at for-profit institutions represent 12 percent of all higher education students, 26 percent of all student loans and 46 percent of all student loan dollars in default.”

If those numbers aren’t staggering in and of themselves, also consider the fact that for-profit institutions and their various advocates have spent an estimated $12 million to combat Duncan and the Education Department’s push for greater oversight of their industry since 2010.

Those hardly seem like the discretionary resources of a cash-strapped, systemically neglected public university or community college to me.

Unlike public K-12 schools, where teachers argue (justifiablly in some cases, admittedly) that a lack of resources, coupled with years of systemic neglect and mismanagement, should temper the degree to which they’re ultimately judged with regard to student performance, for-profit colleges and universities, given their most recent largesse, seem to have a wealth of resources at their disposal.

As Duncan has said: “We’re asking companies that get up to 90 percent of their profits from taxpayer dollars to be at least 35 percent effective. This is a perfectly reasonable bar and one that every for-profit program should be able to reach.”

Couple this with the fact that these institutions, which remain in the distinct minority as a share of the total number of post-secondary institutions across the country, receive, by themselves, 26 percent of all the financial aid (in the form of Pell Grants and other forms of support) issued by the federal government, and it’s hard to see their plight as being one and the same with that of public universities and community colleges, or feel sympathy for their claims that they’re being picked on unfairly by Duncan and the Obama administration.

On their website, the Association of Private Sector Colleges and Universities, an advocacy group for the interests of for-profit colleges and universities, states that its “core values” include, among other things, a “dedication to integrity, accountability and excellence in career and professional higher education.”

Those are undoubtedly respectable ideals I think for any education institution to pursue. But at a time when student loan defaults continue to rise, I believe it’s imperative that APSCU and its members not only embrace the value of accountability in its literature but earnestly live up to it in practice.

If APSCU and its constituents believe so genuinely in the education they’re offering their students, this should be a policy they can readily get behind. To be sure, if you’re already rigorously vetting your own processes for inefficiencies or areas where student interests might be better served, the new rules will merely have a placebo effect. If not, however, it will, if as effective as advertised, unmask those who seek to prey upon the most valuable yet vulnerable resource our society has: our young people.

We’ve already seen what can occur when institutions implicitly invested with the public’s trust take their eyes off the ball in the name of ever-engorged profit margins. Now, many experts believe that higher education student loan defaults may be another potentially disastrous bubble waiting to explode. I believe it would behoove us to not drop the ball twice.

What Answer Would Our Founding Fathers Choose?

In an August op-ed entitled “What is the stock market telling us?” in the Washington Post, Liaquat Ahamed writes:

When the stock market zigs and zags its way to a 12 percent loss in three weeks, wiping out $2.5 trillion in wealth, it is clearly sending a message. But what, exactly, is the market telling us? The most obvious answer is that it is simply agreeing with Standard & Poor’s, which in its Aug. 5 decision to downgrade U.S. government debt from a AAA rating to AA+ decried Washington’s “political brinksmanship” and said that the recent debt deal “falls short” of what is needed to bring U.S. finances under control. The implication of such an answer is clear: To turn things around, the administration and Congress will have to act more vigorously on the deficit, either by raising taxes or cutting spending.

Ahamed, who was awarded the 2010 Pulitzer Prize for History for his book Lords of Finance: The Bankers Who Broke the World, then goes on to provide an articulate and, I believe, thoughtful analysis of why he thinks austere spending cuts, given the precarious state of the moribund economic recovery, is not only inadvisable but could potentially push us back into the throes of another recession.

What Ahamed conspicuously fails to do, however, is discuss the former of the two options he claims government must earnestly consider if it’s to help the stock market—and, more important, ordinary Americans—regain their faith is the financial system: tax hikes.

Taxes, it seems, have become a topic about which the vast majority of Americans—in red states and blue states alike—refuse to speak of, the very thought of a shortfall in businesses’ bottom lines or workers’ bi-weekly paychecks arousing in them an incomparable sense of dread on the one hand and antipathy on the other.

Indeed, it appears the very suggestion of shared sacrifice, though undoubtedly a founding principle upon which our nation was based—as evidenced by the many ordinary and extraordinary Americans who stood together, fought together and ultimately died together on battlegrounds too numerous to mention in order to secure our nation’s freedom from British rule—has become antiquated.

That’s why I was heartened to learn that in Florida last month, an informal South Florida Sun-Sentinel poll asking the question “Would you take a pay cut to save co-workers’ jobs?” found that, of 1,373 total respondents, almost half (46%) said, “Yes. It’s the right thing to do.” Surprisingly, only 13% of respondents said, “No. People need to stand on their own merit.”

Courtesy of Sun-Sentinel
At a time when seemingly everyone appears to accept at face value the Darwinian rugged individualism of an undoubtedly mythic Wild, Wild West that posits that those who can’t survive by their own devices alone must somehow be deserving of the misfortunes that befall them, I was taken aback by the striking sense of oneness exhibited by those who responded to the poll.

Despite the fact that the article, by Sun-Sentinel reporter Marcia Pounds, goes on to detail the unenviable tribulations of municipal workers forced to take a pay cut—”For me, it’s going to be devastating,” one gentleman comments—respondents still overwhelmingly chose to put the well-being of their co-workers above their own self-interests.

While gratifying, however, the article and poll left me with a gnawing question: What’s stopping the American people by and large from making the same sacrifice?

While the present debate facing our nation seems to consist of an increasingly vitriolic back and forth surrounding who should have their taxes raised—Should it be the well-to-do? Should it be the middle-class?—I’d like to suggest for a moment that we consider the one option that has been sorely missing from the debate, the same option missing from Ahamed’s op-ed in the Post.

We should raise taxes on everyone.

Why? Perhaps we should ask the 46% of respondents who took the Sun-Sentinel poll and declared, in no uncertain terms, that shared sacrifice was, quite simply, “the right thing to do.”

“There is no overnight solution,” New York City Mayor Michael Bloomberg said in his weekly radio address on Friday, referring to the present state of the economy. “The only way you solve this problem is that everybody pays a little more and everybody gets a little less.”

I agree. And I think the founding fathers would as well.

The bigger they are…

You know what they say about things that sound too good to be true: they probably are.

In recent days, the trouble experienced by many in the economy, from the average American to institutional investors, can best be seen in the persistent drubbings being taken by many large cap stocks, or “blue chips.” Once thought by many industry insiders to be the market’s equivalent of the “smartest guys in the room” because of their long-term growth potential and seemingly indefatigable ability to surmount the most treacherous economic headwinds, some of the U.S.’s largest companies (as expressed by the Dow Jones Industrial Average) have shown that even the most stalwart companies have had to take their medicine.

While the Dow rallied today, closing up 44.73 points, or 0.40 percent, the picture for the index is a lot less rosy if you look back over its trajectory since the year began. Indeed, for the last six month’s, the Dow has taken a -5.68 percent tumble.

And if you think it’s just the U.S.’s biggest and baddest feeling the heat, think again.

Indeed, this Monday saw both London’s blue-chips down 1.6pc and Tokyo’s “first section”—Japan’s version of blue chips—down 3.73 points, or 1.82 percent. And in Mumbai, the Sensex, the Dow’s Indian equivalent, has begun experiencing spasms of its own, weighted down by concerns over the European debt crisis and skepticism about the U.S.’s resolve in getting it’s economy back on the rails, according to analysts.

According to Shanu Goel, Senior Research Analyst at Bonanza Portfolio:

“Concerns over US economic growth led to negative sentiments. The measures proposed by Barack Obama failed to infuse confidence in global investors as they resorted to selling amid concerns of global recession.”

And the markets in Israel aren’t doing much better, as blue chips there fell to a two-year low, falling below 1,000 for the first time since 2009. Said Tamir Fishman portfolio manager Adi Stern:

“The market hates uncertainty and question marks. It isn’t a sweeping panic, but total turnover [in Tel Aviv] wasn’t low yesterday.”

Of course, all of this is not to say the roller coaster ride that even large caps stocks have seemingly become given the economic downturn isn’t ultimately worth the price of admission. It’s just that under the current circumstances (After all, who would have imagined Lehman and AIG would go kaput?) and taking into account the paranoid gyrations of the markets, it’s advisable that you pack some Dramamine and expect a few bumps along the way, no matter how supposedly blue the stock.