Hedge fund managers supply the millions that enable charters to thrive. They are big givers to charters, and they are big givers to political candidates who support charters. The hedge funders’ political arm is called “Democrats for Education Reform,” even though their agenda looks like the traditional GOP agenda of privatization, choice, and competition.
Bill Moyers explains the hedge funders’ love of charters in this article.
Understand that this tiny slice of the financial elite is making obscene amounts of money:
“In 2013, the trade journal Alpha revealed, the hedge fund industry’s top 25 earners collected $21.15 billion, a whopping 50 percent over their total the year before.
“A hedge fund manager in 2013 needed to take in $300 million just to make the top 25. Ten years ago, in 2004, an aspiring hedge fund kingpin only had to grab $30 million to enter the industry’s top 25 elite.
“Numero uno on this year’s hedge fund pay list: David Tepper, with $3.5 billion. Three other fund managers pulled in over $2 billion. Totals this grand essentially make Taylor Swift’s millions look like a paycheck for a Holiday Inn lounge act. Swift averaged $109,000 a day in 2013. Tepper’s daily average: $9.6 million.
“But the real enormity of America’s annual hedge fund jackpots only comes into focus when we contrast these windfalls with the rewards that go to ordinary Americans. Kindergarten teachers, for instance.
“The 157,800 teachers of America’s little people, the Bureau of Labor Statistics tells us, together make about $8.34 billion a year. Hedge fund America’s top four earners alone last year grabbed $10.4 billion.”
Think of it: four guys raked in more than 157,800 kindergarten teachers!
Not to worry: the hedge funders love education. They love it so much that they are investing in charter schools to compete with public schools. As public funds are diverted to privately-run charters, some of those kindergarten teachers may lose their jobs.
What’s in it for the hedge fund guys? A fun hobby; power; a chance to call themselves “civil rights leaders” (not too many to be found in the big cities’ exclusive clubs); and, yes, a chance to make money. Those who invest in charters can double their money in seven years, thanks to a federal program called the Néw Markets Tax Credits.
Put it all together, and the love affair between hedge fund managers and charters makes good sense and bad public policy.