Archives for category: Deregulation

Chris Hughes co-founded Facebook with Mark Zuckerberg. He is no longer part of the company but left with a considerable fortune. For a time, he was publisher of The New Republic. In this essay, which appeared in The New York Times, he says again and again that he really likes his old friend Mark. Great guy. A good, kind person. But dear friend Mark has too much power, and no one should have that much power.

Here is an excerpt.

America was built on the idea that power should not be concentrated in any one person, because we are all fallible. That’s why the founders created a system of checks and balances. They didn’t need to foresee the rise of Facebook to understand the threat that gargantuan companies would pose to democracy. Jefferson and Madison were voracious readers of Adam Smith, who believed that monopolies prevent the competition that spurs innovation and leads to economic growth.

A century later, in response to the rise of the oil, railroad and banking trusts of the Gilded Age, the Ohio Republican John Sherman said on the floor of Congress: “If we will not endure a king as a political power, we should not endure a king over the production, transportation and sale of any of the necessities of life. If we would not submit to an emperor, we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity.” The Sherman Antitrust Act of 1890 outlawed monopolies. More legislation followed in the 20th century, creating legal and regulatory structures to promote competition and hold the biggest companies accountable. The Department of Justice broke up monopolies like Standard Oil and AT&T.

For many people today, it’s hard to imagine government doing much of anything right, let alone breaking up a company like Facebook. This isn’t by coincidence.

Starting in the 1970s, a small but dedicated group of economists, lawyers and policymakers sowed the seeds of our cynicism. Over the next 40 years, they financed a network of think tanks, journals, social clubs, academic centers and media outlets to teach an emerging generation that private interests should take precedence over public ones. Their gospel was simple: “Free” markets are dynamic and productive, while government is bureaucratic and ineffective. By the mid-1980s, they had largely managed to relegate energetic antitrust enforcement to the history books.

This shift, combined with business-friendly tax and regulatory policy, ushered in a period of mergers and acquisitions that created megacorporations. In the past 20 years, more than 75 percent of American industries, from airlines to pharmaceuticals, have experienced increased concentration, and the average size of public companies has tripled. The results are a decline in entrepreneurship, stalled productivity growth, and higher prices and fewer choices for consumers.

The same thing is happening in social media and digital communications. Because Facebook so dominates social networking, it faces no market-based accountability. This means that every time Facebook messes up, we repeat an exhausting pattern: first outrage, then disappointment and, finally, resignation….

Facebook has earned the prize of domination. It is worth half a trillion dollars and commands, by my estimate, more than 80 percent of the world’s social networking revenue. It is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category. This explains why, even during the annus horribilis of 2018, Facebook’s earnings per share increased by an astounding 40 percent compared with the year before. (I liquidated my Facebook shares in 2012, and I don’t invest directly in any social media companies.)…

The vibrant marketplace that once drove Facebook and other social media companies to compete to come up with better products has virtually disappeared. This means there’s less chance of start-ups developing healthier, less exploitative social media platforms. It also means less accountability on issues like privacy.

Just last month, Facebook seemingly tried to bury news that it had stored tens of millions of user passwords in plain text format, which thousands of Facebook employees could see. Competition alone wouldn’t necessarily spur privacy protection — regulation is required to ensure accountability — but Facebook’s lock on the market guarantees that users can’t protest by moving to alternative platforms….

Hughes is especially concerned about Zuckerberg’s “unilateral” power over the speech and expression of two billion people. A fine of $5 Billion is a slap on the wrist. When facing a threat of a fine that large, Facebook’s stock value went up by $30 billion.

Hughes has two recommendations:

First, that Facebook be broken up by compelling it to divest itself of WhatsApp and Instagram.

Second, that the federal government create a regulatory agency to oversee tech companies and assure consumer privacy.

In normal times, policymakers in D.C. might listen and consider such a bold proposal. But these days, given a federal administration dedicated to deregulating everything, Hughes’ ideas will have to wait for new leadership.


Robert Kuttner writes regularly for The American Prospect, where he is co-editor. He is brilliant.


ON TAP Today from the American Prospect
May 1, 2019

Kuttner on TAP

In Which the Superb Tom Edsall Gets One Big Thing Wrong About Unions. New York Times contributing columnist Tom Edsall is a national resource. In column after column, he provides encyclopedic research both scholarly and journalistic, extended interviews, astute insights, and hard questions for progressives on politically urgent topics.


His most recent column, on the political consequences of the decline of unions, is no exception. As Edsall demonstrates, the Republican right’s strategic war on unions has been devastating to Democrats, since union members and union families, with their sense of solidarity and better understanding of how capitalism works, are more likely to vote for Democrats than demographically similar nonunion families.


Edsall was not exaggerating when he wrote that the right has a better appreciation of unions than the left. Thus, the systematic union bashing. In Wisconsin, as Edsall shows, courtesy of Scott Walker’s anti-union crusade, the union share of Wisconsin employees was cut from just over 15 percent as recently as 2008 to just 8.1 percent by 2018.


Edsall ends his piece by wondering why “many liberals and Democrats” don’t get the importance of unions.


The problem in building support for a resurgent labor movement is that many liberals and Democrats do not appear to recognize the crucial role that unions continue to play not only in diminishing the effects of inequality, but in voter mobilization and campaign finance.


And here is where Edsall misses a key part of the story. The problem is not that “Democrats” fail to appreciate unions. It’s that the corporate and Wall Street Democrats who have dominated the presidential wing of the party since Jimmy Carter and Bill Clinton actively loathe unions.


Carter, Clinton, and Barack Obama all had the opportunity and the votes to put serious teeth back in the Wagner Act, in the face of vicious corporate union busting. All decided not to lift a finger on behalf of labor law reform.


All three presidents had progressive labor secretaries. But the real power players were elsewhere.


Most Democrats in Congress get unions. The problem has been the corporate influence on the presidential party and its domination of key positions at Treasury, OMB, and Legislative Affairs. Some of this is about campaign finance, but not all of it.


Edsall brilliantly depicts the class warfare that leads Republicans and their business allies to bash unions. He misses the fact that the same class warfare has infected the Democratic Party. ~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

A Conversation with Sherrod Brown
The senator from Ohio on the Green New Deal, trade, and how to beat Trump in 2020 By ROBERT KUTTNER
The Millennialization of American Labor
A generation of young workers is rebuilding a battered union movement. By KATIE BARROWS, ETHAN MILLER & KAYLA BLADO


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Legislation introduced by an influential Republican state senator would require charter schools to disclose more about their finances. But the bill contains a large loophole that would allow the state’s biggest chains like Basis Charter Schools and Great Hearts Academies to avoid revealing how they spend their money.

State Sen. Kate Brophy McGee, R-Phoenix, said Senate Bill 1394 would accomplish the biggest reform to charter schools since they were created by the Arizona Legislature in 1994.

“It’s an enormous amount of progress, and this is not my last stop,” she said.

She said there’s bipartisan support for the measure, which follows a yearlong investigation by The Arizona Republic that revealed how charter operators have exploited the state’s lax charter regulations to become wealthy from the taxpayer-funded schools.

Brophy McGee acknowledged, however, that her bill would not prevent charter chains from giving large, no-bid management or construction contracts to their founders. Nor would it prevent charter CEOs from paying themselves exorbitant amounts, as Primavera online charter Chief Executive Damian Creamer did by receiving $10.1 million from the school over the past two years.

Democrats, whose past efforts to more tightly regulate charter schools have failed, and Republican Attorney General Mark Brnovich’s Office both said the bill is a step in the right direction. But they said it needs additional work.

Arizona’s 500-plus charter schools are largely privately owned and the choice of more than 200,000 students, or 17 percent of public school students. The state spends $1.2 billion a year funding them.

State law doesn’t prohibit conflicts of interest in charter-school contracts or impose the strict reporting of expenses as it does for district schools. Charter school boards can also be staffed with the friends and relatives of school executives. And there’s no limit on how much money charter schools can spend outside the classroom.

Brophy McGee’s bill, which has not been scheduled for a hearing, could change some of that. It would:

  • Require every charter school to have at least a three-member governing board, with no more than two immediate family members serving. Family members cannot constitute a majority of the board.
  • Prohibit in, certain instances, buying goods or services from a charter owner or family member, governing board member or a related business.
  • Require that any purchase of more than $50,000 be in the “best interest” of the charter school and follow generally accepted accounting principles.
  • Prohibit charter schools from retaliating against an employee who reports violations. Currently, nearly all charter employees can be fired at any time for any reason.

The new procurement regulations, however, would not apply to management contracts between a charter holder and a management company. Charter management companies, popular with major charter chains like Basis and Great Hearts, also would be exempt from the procurement regulations.

Loopholes in the bill

That loophole for charter management companies gives Democrats heartburn, said Rep. Reginald Bolding, D-Phoenix.

Charter operators could avoid the new requirements by simply transferring all or nearly all of their state funding to a management company that runs their schools, he said.

Ryan Anderson, a spokesman for Brnovich, said the attorney general also has concerns about the exemption, as well as language that would require prosecutors to get permission from a charter sponsor in order to investigate wrongdoing.

“We still have a lot of questions,” Anderson said, adding that this is a work in progress.

Brophy McGee said it was not her intent to allow charter operators to avoid procurement restrictions, and she would consider fixing the language. She declined to say whether the Charter Schools Association, which has blocked past reform efforts, or major charter operators with powerful allies in the Republican establishment had inserted the exemption language in her bill.

She said the legislation is a work in progress that ultimately won’t make everyone happy. But, she said, the charter school industry needs more oversight.

Matt Benson, a spokesman for the Charter Schools Association, said the intent of the exemption was “to protect the school brand so that the founder of a charter school doesn’t risk losing control of his/her creation.”

Benson acknowledged the bill may be too broadly worded and that the association will work with Brophy McGee to refine the language. He said the association would oppose any law that requires charter operators to accept open bids for management contracts, as school districts are required to do.

Bolding said the loopholes will allow charter operators to continue self-dealing and enriching themselves. The bill also won’t stop charter operators from using Arizona tax dollars to expand outside the state, he said.

Basis, which has some of the top-ranked high schools in the country, transfers nearly all of its state funds to a management company owned by its founders, Michael and Olga Block.

Basis officials have stated because a closely tied private company, Basis.ed, runs the schools it isn’t required to disclose how much the Blocks or other executives are paid.

Basis has used its Arizona schools as collateral to fund operation of its schools in Texas and Washington, D.C.

The Attorney General’s Office also has expressed concerns that the legislation does not give its office enough additional power to investigate charter schools.

Brnovich wants subpoena power over charters and broader authority for the auditor general to investigate charter finances. Further, Brnovich wants charter schools to segregate public funding from private dollars in businesses related to the charter school.

“The big question is what happens with the public’s money,” said Anderson, the AG spokesman. “The bill does not appear to deal with that issue…We now have difficulty on the civil (enforcement) side on investigating misuse of public money when all money is commingled together.”

Benson said the legislation allows the Attorney General’s Office to investigate procurement related complaints. However, that would not occur for private management companies.

More disclosure?

Bolding said he likes that Brophy McGee’s bill requires charter schools to disclose more information about their finances and governance.

The bill would require charter operators to post on a public website the names of voting members of the governing body, the number of independent voting members, total annual state revenue, as well as expenses, assets and liabilities.

Charter schools already are required by state law to disclose much of that information to the Arizona State Board for Charter Schools. That information is available on the Charter Board’s website.

The bill also would require charter operators to adopt a conflict-of-interest policy and to provide a written statement that describes the services provided by a management company and the cost.

The bill, however, does not require a charter operator to release the actual contract or precise financial expenditures of its private management company. Further, the bill does not require the private management company to disclose how much its executives are paid with public tax dollars.

School districts, which receive less in per-pupil state funding than charter schools, have to abide by much stricter procurement and disclosure laws.

Brophy McGee said she will not seek to have charter management companies disclose financial information, stating that they are private companies and should not be subject to that level of transparency. Republicans in past years have blocked Democrats’ efforts to force charter management companies to comply with state public records law.

The bill also requires the state Charter Board to provide training courses on the state open meetings law, public records requirements, enrollment laws and regulations, applicable procurement rules and discipline.

Charter schools already are required by law to follow the open meeting law and public records requirements. The Republic has found some schools refuse to comply with those laws.

Reach the reporter at or 602-444-8478 or on Twitter @charrisazrep.


Thanks to Guy Brandenburg for directing me to this fascinating post about what happens when private corporations take over government services, in this case, reporting the weather.

Restore Reason writes about the commercialization of weather reporting and draws a parallel with charter schools and vouchers. Please open the link and read the entire post.

I just listened to “The Coming Storm”, by Michael Lewis. I didn’t carefully read the description before diving in, and thought it would inform me about the increasing violence of weather. Rather, I learned about the privatization of weather, or at least the reporting of it, and the Department of Commerce.

Turns out, the Department of Commerce has little to do with commerce and is actually forbidden by law from engaging in business. Rather, it runs the U.S. Census, the Patent and Trademark Office, and the National Institute of Standards and Technology. Over half of its $9B budget though, is spent by the National Oceanic and Atmospheric Administration (NOAA) to figure out the weather. And figuring out the weather, is largely about collecting data. “Each and every day, NOAA collects twice as much data as is contained in the entire book collection of the Library of Congress.” One senior policy adviser from the George W. Bush administration, said the Department of Commerce should really be called the Department of Science and Technology. When he mentioned this to Wilbur Ross, Trump’s appointee to lead the Department, Ross said, “Yeah, I don’t think I want to be focusing on that.” Unfortunately for all of us, Ross also wasn’t interested in finding someone who would do it for him.

In October 2017, Barry Myers, a lawyer who founded and ran AccuWeather, was nominated to serve as the head of the NOAA. This is a guy who in the 1990s, argued the NWS should be forbidden (except in cases where human life and property was at stake) from delivering any weather-related knowledge to Americans who might be a consumer of AccuWeather products. “The National Weather Service” Myers said, “does not need to have the final say on warnings…the government should get out of the forecasting business.”

Then in 2005, Senator Rick Santorum (a recipient of Myers family contributions) introduced a bill to basically eliminate the National Weather Service’s ability to communicate with the public. Lewis asks his readers to “consider the audacity of that manuever. A private company whose weather predictions were totally dependent on the billions of dollars spent by the U.S. taxpayer to gather the data necessary for those predictions, and on decades of intellectual weather work sponsored by the U.S. taxpayer, and on the very forecasts that the National Weather Service generated, was, in effect, trying to force the U.S. taxpayer to pay all over again for the National Weather Service might be able to tell him or her for free.”

It was at this point in my listening that I began to think how this privatization story was paralleling that of education’s. In both cases, those in the public sector are in it for the mission, not the money. In both cases, the private sector only “wins” if the public sector “loses”. In both cases, it is in the interest of the private sector to facilitate the failure of the public sector or make it look like it is failing.

Just as private and charter schools profit when district schools are perceived to be of lower quality, Barry Myers has worked hard to make government provided weather services look inferior to that which the private sector can provide. As Lewis points out, “The more spectacular and expensive the disasters, the more people will pay for warning of them. The more people stand to lose, the more money they will be inclined to pay. The more they pay, the more the weather industry can afford to donate to elected officials, and the more influence it will gain over the political process.”

This is the beginning of a thoughtful post. Please read it.

In 2016, the General Accounting Office—watchdog of the federal government—published a report warning about waste, fraud, and abuse by charter school operators. Every day, there are new reports of shady real estate deals by charter schools, embezzlement, and Profiteering.

In 2016, the NAACP national convention passed a resolution calling for a moratorium on new charter schools until they were accountable, met the same standards as public schools, and stopped draining resources from the public schools, which enroll most students.

Yet Congress just agreed to increase annual funding for new charters to $440 Million in the coming year.

Are charter schools more effective than public schools? No.

Do they take resources and the students they want from public schools? Yes.

Do they threaten the viability of public schools? Yes.

Do they already have the overflowing support of the billionaire class? Yes.

Has the charter industry been riddled with waste, fraud and abuse of public dollars? Yes.

Why is Congress pouring more money into expanding this private sector activity which is neither accountable nor transparent?

Write your member of Congress and ask these questions.

Yesterday we learned that Governor Jerry Brown signed a bill to ban for-profit charters. This sounded great, but there are very few for-profit charters in California other than K12 Inc. Even K12 Inc.’s CAVA (California Virtual Academies) won’t close until their charter comes up for renewal. It can go on ripping off students, families and taxpayers until then.

The fact that the California Charter Schoools Association celebrated the ban is evidence that it will do nothing to curtail the graft and corruption that is commonplace in the California charter industry.

How timely that Steven Singer explains that there really is no difference between for-profit and non-profit charters. They all drain resources and the students they want from public schools, undermining them and threatening the future of public education.

He writes in part:

“Stop kidding yourself.

“Charter schools are a bad deal.

“It doesn’t matter if they’re for-profit or nonprofit.

“It doesn’t matter if they’re cyber or brick-and-mortar institutions.

“It doesn’t matter if they have a history of scandal or success.

“Every single charter school in the United States of America is either a disaster or a disaster waiting to happen.

“The details get complicated, but the idea is really quite simple.

“It goes like this.

“Imagine you left a blank check on the street.

“Anyone could pick it up, write it out for whatever amount your bank account could support and rob you blind.

“Chances are you’d never know who cashed it, you’d never get that money back and you might even be ruined.

“That’s what a charter school is – a blank check.

“It’s literally a privately operated school funded with public tax dollars.

“Operators can take almost whatever amount they want, spend it with impunity and never have to submit to any real kind of transparency or accountability.

“Compare that to a traditional public school – an institution invariably operated by duly elected members of the community with full transparency and accountability in an open forum where taxpayers have access to internal documents, can have their voices heard and even seek an administrative position.

“THAT’S a responsible way to handle public money!

“Not forking over our checkbook to virtual strangers!

“Sure, they might not steal our every red cent. But an interloper who finds a blank check on the street might not cash it, either.

“The particulars don’t really matter. This is a situation rife with the possibility of fraud. It is a situation where the deck is stacked against the public in every way and in favor of charter school operators.”

The Guardian reports here on the collapse of a privatization program in England supported by both the Labor and Conservative parties. The idea sounds very much like our corporate charter chains. If a school was scoring poorly, hand it over to a private “trust” that renames it an academy and takes control of the school.

“Multi-academy trusts” are government-funded, run by private entities, and the schools are no longer locally controlled.

Lots of potential for graft and scandal.

“Wakefield City Academies Trust was in 2015 named a “top-performing” academy sponsor by Nicky Morgan, then education secretary, and handed a £500,000 slice of a £5m fund to improve schools in the north of England. Since then, things have gone awry. The trust has sunk to the bottom of the league tables to become one of the lowest-performing academy chains in the country. And it has been plagued by question marks over its finances.

“In July 2016, the Education Funding Agency investigated the trust. Its draft report, leaked to the TES, found that its interim chief executive, the businessman Mike Ramsay, had paid himself £82,000 over a three-month period. It concluded that the trust was in an “extremely vulnerable position as a result of inadequate governance, leadership and overall financial management”. Later that year, it was reported that the trust had paid almost £440,000 to IT and admin companies owned by Ramsay and his daughter.

“The trust was nevertheless allowed to carry on. Then, in September last year, it suddenly announced it would be looking for new sponsors for all 21 of its schools – but not before it had transferred more than £1.5m of reserves from its schools to its central coffers, entirely permissible in the current system. Some of this was funds raised by parents. It’s not clear whether any of this money will be left when the trust winds up, or whether those schools will see it again.

“The collapse of Wakefield City Academies Trust has sent shockwaves through our area,” says the local Labour MP Jon Trickett, who has for months been seeking answers from the government. “For many parents, it has been disturbing to find that their children’s futures could be threatened by the recklessness of people with very limited educational experience.”

“Wakefield City is one in a series of high-profile failures of trusts forced to give up all their schools. The magazine Schools Week reported just last week that Bright Tribe, the trust with the lowest-performing secondary schools in the country, would also be closing and handing back its 10 schools.

“Are these failures the inevitable consequence of a quasi-market system, predicated on the idea of takeovers? Or a sign of something deeply rotten at the heart of the government’s flagship education policy?

“Academies have been a jewel in the education policy crown for both Labour and Conservative governments in the past 25 years. According to Professor Becky Francis, director of the Institute of Education at University College London, Labour’s academies programme was “focused on the revitalisation of schooling as an engine of social mobility in deprived areas”. She says the idea of bringing in business and philanthropic sponsors – including big names such as the London-based French financier Arpad Busson – “not just for money but for expertise” was controversial from the start.”

We and the Brits have this in common. Both nations have eagerly abandoned responsibility for the quality of education and thrown the schools to the vagaries of the marketplace.

Here is a sickening decision, indicative of Trump-era thinking:

“On Friday, dumped out with the least desirable news of the week came word that a lawsuit arguing that Detroit students were being denied an education had been dismissed.

“Perhaps you remember the case. MT presented a cover story about it last year. With the help of a public interest law firm, a handful of Detroit students charged in federal court that educational officials in Michigan — including Gov. Rick Snyder — denied them access to an education of any quality.

“The lawsuit took pains to illustrate how Detroit’s schools — run under a state-appointed emergency manager — were a welter of dysfunction: overcrowded classrooms, lack of textbooks and basic materials, unqualified staff, leaking roofs, broken windows, black mold, contaminated drinking water, rodents, no pens, no paper, no toilet paper, and unsafe temperatures that had classes canceled due to 90-degree heat or classrooms so cold students could see their breath.

“At times, without teachers or instructional materials, students were simply herded into rooms and asked to watch videos. One student claimed to have learned all the words to the film Frozen in high school. The lawsuit even mentions one eighth grade student who “taught” a seventh and eighth grade math class for a month because no teacher could be found.”

Some state laws describe charter schools as “public charter schools.”

ALEC model legislation describes charter schools as “public charter schools.”

But calling them so doesn’t make them so. You can call a horse a camel, but it’s still a horse. You can pass a law calling a horse a camel, but it’s still a horse.

Peter Greene explains here the essential differences between public schools and charter schools.

Charter schools get public money, but that’s the only thing public about them.

If state legislators truly believed that deregulation was necessary for success, they would deregulate public schools. But they don’t. They keep passing more mandates. But only for public schools.

Greene writes:

“The charter sector has been trying to redefine “public” for years. Identifying charters as public schools solves a variety of marketing problems by giving the impression that charters include features that people expect from their public school. “Oh, a public school,” the customers say. “That must mean that the school will be open forever (certainly all of this year), it is staffed with qualified professionals, and is required to meet any special needs that my child might have. Oh, and as a public school, I’m sure it must be accountable to the public as well.”

“Of course, none of these things are true, but the use of the word “public” is a buffer against having the questions even come up. I mean, who even thinks to ask a public school to guarantee that it will stay open all year?

“”Public” when it comes to schools has been taken to mean “operated by the public, paid for by the public, serving the public, and accountable to the public.” Charter fans would like it to mean “paid for by the public” and nothing else. They would like voters and taxpayers not to think of charter schools as private schools that are paid for with public money. They would like voters and taxpayers absolutely not to think of charters as businesses that allow private people and companies to make money by billing the taxpayer. They would definitely not like the voters and taxpayers to think of charters as schools that are “accessible” to all, but which only serve a select few (like a Lexus dealership). They would certainly not like the voters and taxpayers to think of charters as businesses that are accountable only to their owners and operators– and not transparently accountable to the public. The word “public” is a handy fig leaf to cover all of that.”

DeVos wants to water down the definition of “public” even more, to allow private schools, religious schools, and every sort of entrepreneurial venture to get public money. In her view, the real public schools would be dumping grounds for the kids that the charters and voucher schools don’t want.

If we want to retain any sense of the common good, we must resist at every turn. We must protect the common good and our obligations to our fellow citizens.

Ever wonder why the Koch brothers want to quash environmental regulations? Why they support ALEC, which writes model legislation for states to deregulate corporations? Why they are in an alliance with far-right titans like the DeVos family?

Ever wondered how they made their wealth?

This article, published in 2014 by Rolking Stone, answers your questions.