Even Hoover Thought Capitalists Were “Damn Greedy”

Two news stories ballooned my blood pressure this last weekend. A Star Tribune story indicated that Minnesota K-12 public education will take another financial hit next year because the current economic downturn might cause a deficit of around $380 million. We already have many districts with huge class sizes talking about cutting teachers, buildings, and programs or sponsoring tax referendums to make up the deficits.
On the other hand, a story in the New York Times revealed that elite private prep schools are pocketing huge endowments from their wealthy patrons. In the last ten years elite school enrollment has grown 11.6 percent but the average endowment per student has increased by 93.5 percent. As an example, New Hampshire’s Philips Exeter Academy charges $36,500 in tuition, room and board, but spends $63,500 annually to educate each of its 1,000 students. Exeter had a $500 million endowment in 2002 but with gifts from alumni super-rich it has doubled to $1 billion in just five years. The average per-pupil cost for public schools is $8,809 in the latest stats.

Independent and private secondary day schools now spend $20,233 per student while private elementary schools spend $14,300 per student. Private boarding schools for middle and high school students now spend an average of $37,566 per student.

What is the message of these great disparities? It is a graphic indicator of the tremendous wealth disparity in the United States and the destruction of the middle class. A survey by Philips Exeter Principal Tyler Tingley supports this conclusion. In 1980 40 percent of American families could afford the tuition at Exeter; by 2004 that number had declined to just six percent.

Elite Schools Are “Forced” To Hire Their Own Endowment Money Managers

Exeter’s endowment has assets of $1 million per student, but that is matched by at least 25 other private prep schools in the country.  Many of these schools have such large endowments they have hired full-time money managers to manage their money.

Students live a very luxurious life at elite prep schools. Exeter’s 619-acre campus has two Olympic-sized swimming pools, two hockey rinks, and the largest secondary school library in the world. Students can eat made-to-order omelets for breakfast. Oh—and yes, the student-teacher ratio is 12 to one. We have public high schools in Minnesota that have 35 to 45 students in chemistry and physics classes.

Philips Academy in Andover, Massachusetts, where George W. Bush went to prep school, has a world-class art gallery. There is no evidence that Lurch ever visited the gallery or the library. Some elite prep schools have their own golf courses.

Exeter Director of Admissions Michael Gary says, “Private school is a luxury, and rich families want the best facilities. All too often fund-raising is about the buildings and the sports facilities. The schools need them to attract wealthy families.”

“Inexcusable, Irresponsible, And, I Think, even Immoral”

Some time ago Stephen R. Lewis, the retired president of Carleton College (an elite private college in Minnesota), wrote to the New York Times when the newspaper was running a series about the super-rich in this country. Coming from generations of Republicans, he decried the policies of the Bush administration, particularly the tax cuts which benefited the rich and super-rich: “The tax cuts that were proposed by this administration…. provided a huge windfall to the wealthiest Americans—of whom, along with the president, the vice-president, and most if not all of his political appointees and financial backers, I am fortunate to count myself. Those tax cuts created an unsustainable deficit for our federal government.

“It is inexcusable, irresponsible, and, I think, even immoral, that the president should take the position that taxes should not be raised on people like him, and me, and the others who have been blessed by good fortune, to help this country pay for the costs of rebuilding after Katrina (not to mention paying for the misbegotten war in Iraq).”

My note: A recent story in Harper’s Magazine about the New Orleans school system described a desperate situation: “New Orleans public-school students, many of them with special emotional and physical needs, almost all of them poor African-Americans, are dumped into the pre-Katrina system: no extra money, overcrowded classrooms, with more guards than teachers.” Was it Lurch who said “I won’t forget you” while standing in Jackson Square?

Lewis continued his critique: “The further folly of saying the citizens of this country, especially the most fortunate among us, should not help pay for the costs of the disaster that was wrought by Katrina, and exacerbated by government myopia, ineptness, and patronage appointments at all levels of government, is a national disgrace.

“Those of us who have benefited the most from the American experiment should be paying our part through an increase in taxes. I am ready to do my share…If we fail to finance the deficit through an increase in taxes on those who have benefited most and who have the greatest ability to pay, all of our heirs will suffer. Our children and grandchildren should not have to bear the costs of the choices we make today. That’s certainly not how my parents raised me to behave.”

This statement was made by a real compassionate conservative. It was not the incoherent ramblings of selfish, arrogant Bushes and Bushies, or the cruelty of a Ronald Reagan who once said, “We were told four years ago that 17 million people went to bed hungry each night. Well, that was probably true. They were all on a diet.” He added another stunner: “Homeless people like to sleep on grates.” No, nor was it the stupidity of Herbert Hoover, who remarked during the Great Depression during a period of 25 percent unemployment: “Nobody’s actually starving. The hoboes, for example, are better fed than they have ever been.”

“Business Is Not A Philanthropy”

But some businessmen don’t give a hoot about a sense of community, the middle class, or even their own country. In 1899 during the first Gilded Age Henry Osborne Havemeyer, president of the sugar trust, outlined the ideology of unrestrained capitalism: “Business is not a philanthropy…I do not care two cents for your ethics. I don’t know enough of them to apply them…as a business proposition, it is right to get all out of a business you can.” Another businessman added: “Just how many of these others do I have to benefit? I understand I am not the keeper of my brothers, at least not all of them, but why should I keep any of them?”

Most of the businessmen with this attitude are Club for Growth and Business Roundtable types today who vote Republican. Why don’t they study the facts of actually running a business in the right climate? Using Department of Commerce statistics we find that Democratic administrations averaged 4.4 percent increases in real gross domestic product since 1950 while Republican administrations averaged only 2.8 percent over the same period. The George W. Bush administration has the second worst record in this period, at 1.6 percent, beating out the Jerry Ford administration at 1.5 percent. The Republicans have been lousy in economic growth even if they increased lobbyists in Washington to 34,785 from 16,342 in 2000.

In 1991, as Bill Clinton was running for the presidency, he said, “The Reagan-Bush years have exalted private gain over public obligation, special interests over the common good, wealth and fame over work and family. The 1980s ushered in a Gilded Age of greed and selfishness, of irresponsibility and excess, and of neglect.” Only the super-rich have done well over the last three decades (the top 1 percent now have 20 percent of the nation’s wealth) while the rest of society has faltered and the middle class has shrunk precipitously.

We now enroll fewer children in Head Start than we did in 2002, although we have millions more in poverty.

New college loan rules and the failure to stop illegal acts make it more difficult for college students to attend. As an example, the loan company Nelnet was overpaid $278 million by the government because they billed the government at an illegal rate. But the government is not going to collect the overpayment because Nelnet agreed not to collect at the illegal rate anymore! Figure that one.

Worldwide there are 9.5 million millionaires. Care to guess what they gave to charity?  Less than one percent of their assets. Their assets increased 11.4 percent last year!

We now average over 750,000 homeless per night in the U.S.

Each family of four owes $46,000 on the Iraq War alone. It’s an interesting side note that each insurgent killed in Iraq required 250,000 bullets.

One out of 20 homes in Las Vegas is in foreclosure as are whole blocks of homes in Chicago. It’s expected that before the subprime disaster is over two million homes will be lost through foreclosure.

It is clearly evident that capitalism, like the Roman Empire, will be destroyed by its own internal greed. This country is becoming less and less fair while Wall Street thinks only of itself, refusing to accept any regulation of a winner-take-all system. A couple of years ago Pope Benedict blessed million-dollar Ferrari autos in St. Peter’s Square. He didn’t bless any Ford minivans. This brings to mind the economist who used Bibilical terms to describe our present situation: “Blessed are the young for they shall inherit the national debt.”