Introduction

THE POLITICAL RIGHT AND THE BUSINESS SECTOR in the United States have long sought to radically transform public education into a private industry. Nearly twenty years ago, BusinessWeek and The Economist described public education as a more than $600 billion opportunity ripe for the taking, comparing it to the defense, entertainment, and agriculture sectors.[1] By 2013, Forbes was salivating over the “Charter School Gravy Train [that] Runs Express to Fat City,” even while noting the unimpressive performance of charters.[2] Valerie Strauss of the Washington Post explained “Why Hedge Funds Love Charter Schools.”[3] It turns out it isn’t the curriculum; it’s the tax credits and real estate profits. By 2015, McKinsey and Company, a major force globally in promoting public school privatization and “innovative” educational finance schemes, had declared public education in the United States a $1.5 trillion sector that was growing 5 percent per year.[4] For the network of right-wing think tanks, such as Heritage, Hoover, and the American Enterprise Institute (AEI), that have steadily promoted the transformation of public education into a private industry, the big haul has long been the replacement of schools themselves with private for-profit schools or privately contracted educational services.

In several of my prior books, I have detailed the failures of corporate school reform to achieve conventional measures of academic success promised by privatization proponents, let alone to provide for critical and public forms of education.[5] I have contended that corporate profiteering in public education needs to be understood in part in terms of the broader financial uses of public education for the private sector and ruling-class people. Privatization, contracting, and commercialism represent a ruling-class pillage of the public sector for short-term gain and a change in how public education historically created profit for industry. Within the industrial economy, public education served to a great degree to reproduce the labor force by teaching knowledge and skills for work wrapped in class-based ideologies. Public education in the industrial economy largely reproduced social relations for capitalist accumulation.[6] The conditions for profit largely came from making workers with not just knowledge and skills for production but the discipline and docility to submit to production arrangements that would allow surplus labor to be extracted from the worker. In other words, public education helped set the stage for the worker to be short-changed by having her undercompensated labor contribute to the overcompensation of the owners of the production process. This industrial era swindle involved a long-term investment in making exploitable future workers. In the postindustrial economy, public schooling has increasingly become a means for capitalists to generate short-term profit through privatization, contracting, and commercialism.

While the neoliberal restructuring of public education has been steadily advancing since the 1980s, the central and most visible approaches to fully privatizing the public education system today are charter school expansion, vouchers, scholarship tax credit schemes, and “unbundling” of the school into discrete private contracted services.[7] For-profit charters allow private management companies to run schools for profit, benefiting by reducing costs and pocketing the difference between tax money and expenses. Vouchers give parents tax money to “shop” for private schooling. Scholarship tax credits or “neovouchers” incentivize parents to opt out of the public schools by funding the parents to use private schools (a significant expansion of neovouchers was packaged into the 2017 Republican tax law). Early proponents of privatizing public schooling, Chubb and Moe, along with the Hoover Institution’s Education Next Magazine, urge citizens to abandon the very concept of the public school as outdated. Instead, citizens should embrace the consumption of private, discrete educational services. School, in this dream, looks like cable TV services. If parents want, say, art, music, or math, they will need to pay for what their children consume. Of course, part of this vision involves shifting control and ownership over schooling to technology companies where curriculum can be mass-produced, standardized, homogenized, and hence “delivered” more cheaply. While right-wing think tanks have been pushing this vision, technology companies, such as Google, Facebook/Chan Zuckerberg Initiative, Microsoft, and Apple, have moved quickly to institutionalize it.

In the United States, the big privatization schemes have recently gotten a boost with the election of Donald Trump and his appointment of longtime privatization activist Betsy Devos as secretary of education. The administration sees vouchers, for-profit charters, deregulated for-profit universities, and deregulated student lending as central to the Trump education agenda. However, there is another, far less examined dimension to educational privatization: “innovative” finance schemes. Far from being minor or secondary privatization projects, the schemes I discuss in this book represent potentially trillions of dollars of public money for the private sector to grab. Impact investing is estimated to be a $500 billion to $1 trillion sector; charter school municipal bond issuance represents a possible trillion dollar debt bubble in the making; and the privatization of higher education lending, charter school real estate investing, and commercialization of student data and personalized learning are truly massive sectors.

I began to write this book prior to Trump’s election, when the terrain of educational privatization appeared slightly different. Since the 1990s, Republican and Democratic administrations have largely supported test-based accountability paired with privatization—especially charter school expansion. Obama’s educational policy was seen by many education scholars as indistinguishable from George W. Bush’s educational policy. The expected election of Hillary Clinton to the White House in 2016 promised a mildly less enthusiastic treatment of charter schools. While vouchers and scholarship tax credits would have likely made little progress, a Clinton administration would have likely seen the aggressive expansion of stealth forms of privatization packaged not through a right-wing celebration of the magic of markets but rather through a lens of efficiency, innovation, accountability, and public–private partnership. That is, it would have likely continued the new direction of educational privatization characterized by “innovative” finance schemes. Some of the most significant forms of this “innovative” educational finance are subjects of the chapters of this book: (1) social impact bonds; (2) higher educational lending privatization and student income loans; (3) charter school real estate, tax credit, and municipal bond schemes; and (4) so-called philanthrocapitalist educational technology schemes to pass off school profiteering as charity while commercializing student data and privatizing school services through technology.

Organizationally, chapters 2–5 expose the swindles, reveal the lack of empirical evidence for them, and, more importantly, skewer the unjust values and troubling assumptions behind these schemes.

The second chapter reveals five myths that proponents use to justify social impact bonds. Social impact bonds allow banks to profit by funding social service provisions that would otherwise be directly provided by government. Banks cherry-pick already successful programs yet justify their profit taking and inflation of public service costs under the guise of measurable accountability, innovation, and corporate social responsibility.

The third chapter examines the privatization of student loan debt and the radical new form this is taking. Student income loans make students into indentured servants by tying loan repayment to future earnings. Student income loans are part of a legacy of privatizing student lending begun under the Clinton administration. Yet by transforming student loans into investment securities, they promote the vocationalization and instrumentalization of higher education.

Chapter 4 details the rise of philanthrocapitalism and its educational projects. Philanthrocapitalists like the Chan Zuckerberg Initiative, Emerson Collective, and Omidyar Network pose as philanthropies yet are actually private limited liability companies that acquire and start for-profit companies and can extract wealth with no public scrutiny, oversight, or accountability. These LLCs have moved heavily into technology-based educational contracting, personalized learning, and adaptive learning technologies and are shifting ownership and control over teaching from public school teachers to for-profit technology companies.

Chapter 5 exposes charter school real estate schemes that allow real estate investors to profit in a number of ways: by acquiring school buildings and leasing them at high rates to their own charter schools; by offering charter school municipal bonds and making charter expansion profitable by inflating a potential trillion dollar debt bubble. With a focus on charter profiteer Andre Agassi, this chapter also considers how celebrities, athletes, and musicians who largely lack educational expertise and educations themselves have come to legitimate charter-based privatization. The discussion considers how the cult of personality and a commodified image are now integral to public-sector privatization.

Regardless of which party won the White House, “innovative” educational finance as a form of privatization appears deeply entrenched in large part because the values, assumptions, and ideologies upon which it depends continue to be taught and learned, most significantly the continued propagation and postcrisis restoration of neoliberalism as both economic doctrine and cultural ideology. Not only are these innovative educational finance schemes stealth forms of educational privatization and public service privatization—forms that remain largely unknown to most citizens—but they are also promoted by investors and ideologues as falsely assuring a triumphant private-sector approach to public service provision through values of innovation, efficiency, accountability, cost savings, and, hence, responsibility. However, as the chapters that follow illustrate, these privatization schemes redistribute wealth from the public to the rich, inflate the costs of services, play accountability shell games, and function as disingenuous public relations for banks, corporations, and profiteers, suggesting that only through the profit taking of the rich can public services flourish or survive. In short, these schemes are swindles based on lies. Yet they have been legitimated by being aggressively promoted by established philanthropies like Rockefeller and Bloomberg, dominant investment banks like Goldman Sachs and Bain, democratic politicians like Deval Patrick and Rahm Emanuel, “innovative start-up” investment companies like SoFi, celebrity investors claiming their profit seeking as philanthropy like Andre Agassi and Mark Zuckerberg, and elite universities like Harvard. Another dimension that unifies these reforms is a contradiction with regard to facts, knowledge, truth, and education.

How should we make sense of the contradiction between “innovative” educational finance schemes that claim to be grounded in empirical data and numerically quantifiable measures but are in fact empirically unsupported and yet supported rather by market metaphors and faith in markets? Yes, aforementioned neoliberal ideology goes a long way in helping to explain market fundamentalism, as does the hard work of profiteers. However, there is more to explain with regard to a contemporary crisis of truth, fact, evidence, and education.

Chapter 1 sets the stage for examining the swindles of “innovative” educational finance by detailing the contemporary crisis of fact, evidence, and truth that makes the swindles possible. This contemporary crisis of fact is characterized by a contradiction in educational policy and practice between, on one hand, an endlessly espoused imperative for empirical data (data-driven teaching, data-driven leadership, data-driven policy) and, on the other hand, the pursuit of policies that are unsupported by empirical data and rely instead on market metaphors and baseless assertion of truth. This contradiction with regard to knowledge, fact, truth, and education I call the “alienation of fact.” I explain this contradiction through the legacy of positivist ideology and a hostility to theory: positivism treats truth as a collection of facts that speak for themselves and do not require theory or context. The legacy of positivism makes facts appear almighty yet unmoored and estranged. This contradictory understanding of facts explains the mistaken faith in data “driving practice” in multiple fields, including policing, education, journalism, and technology. The positivist legacy represents antipathy for comprehension of how theories undergird facts, organize facts, and make facts meaningful through practices of interpretation. Facts appear omnipotent and ungrounded, a mystical inexplicable force. In such a context, theory, argumentation, and evidence are replaced by an aura of authority that is frequently grounded through reference to decontextualized numbers, essentialized bodies, institutional authority, and cults of personality. If fact comes with no theory or history, then fact appears as the result of emphatic assertion. As I discuss in the first and last chapters, this contradiction around fact and the positivist legacy explains not only the emergence of these swindles of innovative educational finance and the lie of disinterested objectivity and neutrality at the center of the testing, standards, and accountability movement in education. The alienation of fact also explains the contemporary broader crisis of truth found, for example, in the rash of conspiracy; the capacity of politicians to dismiss empirically verifiable truths as “fake news”; the problem of allegedly disinterested, objective, and neutral journalism; the authoritarian tendency of equating the authority of a truth claim with the social authority of the claimant. The alienation of fact helps explain how public-sector pillage is increasingly interwoven with the recent tendency of politics to ground assertions in numbers, bodies, and essentialized identities—false guarantees of certainty due to their association with materiality. The false guarantees of material grounding have a particular attraction when evidence, argument, and theory have been wiped out and fact appears to come from nowhere. I contend that rising material precarity amplifies the collective demand for definitive explanations just as the alienation of fact undermines people’s use of knowledge for agency. As a consequence, people are turning to irrational social explanations that appear to be grounded specifically in forms that falsely promise certainty and solidity—especially numbers and bodies.

What these discussions of the ideologies of neoliberalism and positivism highlight is just how much these economic schemes are not natural developments but depend on cultural values that are produced and taught through mass media, education, policy think tanks, and other educative institutions. I hope that by exposing some of the swindles of innovative educational finance schemes, scholars, citizens, and cultural workers will oppose these stealth forms of privatization and defend democratic public spheres. These economic schemes are undergirded by cultural and political values that are always in play, always have to be taught and learned, and hence always are subject to contestation and struggle. This project contributes to fostering cultural and political values that are less exploitative and more democratic, less extractive and more in common, less individualizing and more collective, less hierarchical and more egalitarian, less private and more public.