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Issue #1717      February 3, 2016

Culture & Life

Education for profit

This country once had lots of government enterprises. Everything from the electronics industry to the construction of locos and rolling stock, to oil refining (even petrol retailing) and production of basic building materials, was the stock in trade of federal or state government enterprises. Along with public transport, interstate airlines and (for a short time, until Liberal Party politicians got their mates in government to kill it) our own tourist industry company (the too successful AAT).

By successfully competing with the private entrepreneurs, these government enterprises forced them to keep their prices down. They are always trumpeting about the superior benefits of “competition”, but in reality bourgeois business types much prefer to avoid real competition, substituting gentlemen’s agreements on keeping prices above certain levels so as to ensure all the big companies can make a profit. (For all their talk about small businesses being the “backbone of the economy”, big companies are not the least bit interested in keeping small businesses afloat, which is one reason 60% of them fail in their first year).

Once upon a time, not all that long ago, private businesses were able to make a profit while sharing the market with government enterprises. In fact, for much of the first century or so of capitalism it depended on investment from governments to provide necessary infrastructure. Private freight companies might make money, but not if they had to build and maintain the actual railways themselves. All the public transport operations in NSW started out as private enterprises that eventually had to be taken over by the government to stop them going under.

More recently, capitalist greed and the shrinking opportunities for making a profit have combined to leave “free enterprise” operators scrambling for the chance to take over the business of all surviving public enterprises. When they were publicly owned and run these were enterprises that were mainly concerned with providing a public service. Now that they are privately operated, their main – in fact their sole – purpose is to make profits. If they fail to do so, they cut out services, raise prices, or close the service down altogether.

That’s one of the benefits of the free enterprise system: you only have to pay lip service to the wishes or needs of the community.

One of the areas of public service that capitalism seized on as a good money spinner has been education, especially pre-school and tertiary education. In NSW the government has shut down a lot of highly regarded TAFE courses and replaced them with a myriad of courses offered by privately-operated, for profit “colleges” whose only qualifications seem to be whatever their owner dreamed up to put on his letterhead.

Now our highways are littered with billboards shouting “Study Now, Pay Later!” TAFE of course was free.

However, not content with leaving their students with a “student loan” debt of $20,000 or even $30,000 for courses, many of their students never actually complete, these free enterprise education companies also expect to soak the taxpayer for providing the services the government-run colleges used to supply for free. Let’s look at how the system works in the USA, the country most admired by those keen privatisers in our federal government.

I found the following information on an American investigative blog called Republic Report which describes itself as “an investigative news blog dedicated to uncovering the corrupting influence of money in politics”.

According to data from the US Department of Education, the five major for-profit college companies received the following largesse in federal student aid. But it is actually less than US taxpayers provided in the past year to each of these colleges – “all of which have been under investigation in recent years by federal and state law enforcement agencies for deceiving their students, lying to government regulators, and other abuses”.

Apollo/University of Phoenix: $1.99 billion
Education Management Corp: $1.47 billion
DeVry: $1.47 billion
Kaplan: $877 million
Career Education Corp: $803 million

On top of that the five companies also received tens of millions per company in federal education aid for military service members and veterans from the Defence Department and the Veterans Administration. And if you think that’s a lot of moolah, consider this: until a few years ago, all of these for-profit college companies were in fact receiving much more in federal aid.

But then the truth about their abusive practices – leaving students deep in debt and still unqualified – finally filtered down to prospective students, and enrolments plummeted.

“University of Phoenix was until recently getting as much as $3.7 billion of Americans’ tax dollars in a single year – 4 1/2 times what the US now proposes to spend to fight global climate change. Corinthian Colleges, which recently collapsed under the weight of numerous charges of fraud and abuse, was receiving as much as $1.4 billion annually, and ITT Tech, which is facing comparable charges and is struggling to survive, has been getting as much as $1.1 billion.

“As a New York Times investigation reported, using Department of Education data analysed by the Centre for American Progress, 152 for-profit colleges under law enforcement investigation took about $8.1 billion in federal student aid last year.

“When you think about all the taxpayer money going to for-profit colleges that scam students and taxpayers, the $800 million we have committed to fight global climate change starts to look pretty small. And the urgency of curbing the abuses of predatory for-profit colleges comes into sharper focus.”

And that is the model that Turnbull and co want us to follow! Presumably not for its educational value, which is scant. Perhaps for its value as an object lesson in how to make money if you don’t care who you trample on.

Yes, that would certainly fit in with the concerns of Turnbull and his ilk.

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