Debt is a permanent feature of most of our lives. Yet the socialization of risk debt represents isolates individuals, locking us in the private misery of our dealings with banks and creditors. Medical debt, student debt, consumer debt, foreclosures -- these social forms mark so many personal failings and moral obligations, we are told. Debt, in other words, not only insures our continued servitude to the corporate pursuit of dwindling private profits. It also serves to alienate us from one another, and foreclose the possibility of collective resistance. Debtors’ Assemblies, then, are a first step in fighting back to reclaim our stolen futures. Please join us Wednesday, October 24th from 5-6 in front of California Hall for the first in a series of weekly Debtors’ Assemblies to learn more about the many forms of debt and discuss ways to resist debt’s claim upon our lives. Robert Meister will speak briefly at the beginning of the first assembly.

Fantastic interview on austerity at the UC. Covers all the bases: Bob Meister's "They Pledged Your Tuition," construction bonds and rating agencies, pepper-spray cop, the Davis Dozen, student debt...

 

The following article by Joshua Clover was just published in College Literature: A Journal of Critical Literary Studies. A PDF of the article is available here. We recommend reading it next to the latest piece from Nathan Brown, "Administrative Totalitarianism at the UC and the Necessity of Direct Action by Faculty."

The autumn of 2011 offered extraordinary images of police brutality against students (and not students alone) on University of California campuses. Two stand out, both seemingly following on from the national Occupy movement. On November 9, students attempting to ‘occupy’ a grassy area at the edge of Berkeley’s famed Sproul Plaza, next to the Mario Savio Steps, were batoned by riot police summoned to campus by Chancellor Robert Birgeneau, first during the day, and then again that night when Occupy Cal returned. In no small part because a couple of professors were among the beaten, the event became a national news story. This would pale in comparison to events on the Davis campus nine days later, when a low-key tent occupation on the quad — Occupy UC Davis — was broken up by riot police summoned by Chancellor Linda Katehi from three jurisdictions. The images of one corpulent and distressingly nonchalant officer disbursing military-grade pepper spray to the faces of a couple dozen seated students would swiftly become one of the iconic images of the year, not just for the campus or the university but globally.

In train, there has been considerable discussion of removing the Chancellors who either authorized such actions or were too incapable to command the situation adequately. There has also been a perhaps more consequential debate around the presence of police on college campuses, regarding either their presence per se (for those familiar with the internationally and historically common situation of police-free universities), or in terms of their increasingly militarized form. And these changes in campus dynamics — toward the heavy hand bearing advanced weaponry — have prompted concerns about the implications for the intellectual and academic pursuits of the university, and what we might expect to develop from here.

I want to argue as directly as possible that grasping this new security regime as primarily pertinent to campus intellectual climate is misguided. While this line of inquiry is no trivial matter, it confuses and obscures core issues.

The confusion comes from two entangled commonplaces regarding these dramatic events (and others like them in kind, if not in media saturation). The first is the assumption that we can identify in each case a two-part sequence of cause and effect, in which students protest and police overreact disastrously. The second (with evident implications for the question of academic freedom tout court), is that this to-and-fro is to be conceived exclusively as a freedom of speech issue.

These assumptions form a unity. In this understanding, students first protest, as students are wont to do. The question arises as to the limits of protest, and to what extent certain actions — in this case, politicized camping — count as protected speech. ‘Time, place, and manner’ provisions are invoked; the police are summoned, heavy with tools. Orders to disperse are given, no dispersal is forthcoming, and then the intolerable thing happens, and everyone scrambles to understand and manage the aftermath.

There can be no doubt that these ‘overreactions’ are judiciously calculated to produce a chilling effect on student struggle. As with the endless nuisance charges levied against student (and other) organizers, they are designed to exhaust resources, both inner and material. And further there can be no doubt that this chilling effect spills over to the entire campus. In this sense it is certainly reasonable to consider the implications of these actions for free thought and intellectual exploration.

But there are also good reasons — better reasons, I believe — not to shift the debate onto the terrain of thought, ideas, expression, and so forth. It has suited all sides to allow that this drama revolves around First Amendment issues. Under considerable internal and external pressure, both Chancellors conceded that in these cases, the riot police may indeed have curtailed what really should be protected rights of speech and assembly. Katehi insisted (twice; she is in the habit of using the same formulaic language in multiple press releases) that: “Our campus is committed to providing a safe environment for all to learn freely and practice their civil rights of freedom of speech and expression” (2011a, 2011b); her counterpart at Berkeley, Chancellor Birgeneau, extolled the same virtues. Meanwhile, students did not hesitate to pillory both administrations for having failed the Bill of Rights, while dismayed if still-timorous faculty demanded that Birgeneau “respect freedom of speech and assembly on the Berkeley campus” (UC Berkeley Academic Senate 2011).

The fantasy at play here is that what has gone wrong somehow concerns the excessive assertion of First Amendment rights by students, or conversely, the excessive limiting of same by the administration. The logical remedy is inevitably discovered to be a rebalancing of these matters, extending adequate protections to ‘protest’ and ‘expression’ as abstract ends in and of themselves.

The underlying reality is radically different. What must first be recognized is that in neither case did we see the abstract two-part motion, protest/repression. The unity of each event is considerably more concrete: administrations must deploy force to implement austerity policies. The initiating acts were not student protests but university policies designed to assure that the costs of running an educational system increasingly devolve to students, who are at once ever more compelled to pursue higher education for competitive advantage in a forbidding employment landscape, and concomitantly less able to afford the same without increased debt and workloads.

This misrecognition of the sequence of substantive events is compounded by another, whereby the campus protests are presented as arising from the charisma of Occupy Wall Street and the ensuing national movement over the course of the preceding months. As the Occupy movement has not made a significant issue of education, and as students (especially at purportedly elite or top-tier universities) are often thought to be cushioned at least temporarily from the buffets of the economy (especially the employment market), the inference is frequently drawn that the campus variants of Occupy are lacking real content of their own, and are thus reducible to protest for the sake of protest.

What is forgotten is that the Occupy movement, doubtless inspired by 2010’s ‘Arab Spring’ and Europe’s ‘Movement of the Squares,’ has its local roots in recent US campus organizing, specifically the anti-privatization campaigns of 2009-2010 on UC campuses. They have been ongoing if uneven, and characterized throughout by police violence. The shock over recent events at Berkeley and Davis this November must be taken with a grain of salt. After all, only two Novembers before, both Chancellors called riot police from multiple jurisdictions onto the same campuses to break up anti-privatization occupations. Both times, the police attacked non-violent protestors, and lawsuits are still pending. In short, we are looking at a clearly defined confrontation that has been in progress for some time, on the concrete terrain of economic crisis — not a timeless confrontation between academic freedom and policing, on the abstract terrain of rights.

So we might say that a mistaken assessment of the sequence of events, both this November and over the last few years, allows for a misrecognition of the fundamental issue.This seems perhaps a neutral slippage; aren’t rights good for everyone? However, this reflexive motion — in which future political organizing and action turns on itself to address the formal conditions of previous actions rather than the preceding causes — in actuality serves the university administration admirably by displacing the debate into the arena of form rather than content. The administration can offer a remedy, with tonalities of magnanimous self-correction: they can promise to be more thoughtful and diligent about respecting the right to protest, and thus seem to slip out of their position in the struggle, that is, as enthusiastic co-authors of the privatization process. They themselves turn to become a context, not a class antagonist.

This is indeed precisely what has happened. One suspects there will be some payouts to injured students, and that a cop or two will be pastured. And the matter will be tentatively resolved, despite the economic content remaining entirely unaddressed; thus, the administration wins by ‘losing.’

One can see that this movement has become a substantial quagmire for the professoriat within this political cycle: what is sometimes called ‘the articulation trap.’ It is a double truism of the faculty member’s position, especially the professor’s, that she is not identified clearly with either side of the current struggle between the economic interests of students and administrators; at the same time, her job’s basic supposition (especially in the humanities) is that position-taking is itself an action. These two factors supply a powerful if implicit determination toward intervening not by entering into the content of this struggle, but by offering, at a remove, often-eloquent assessments that tend toward seemingly neutral ethical (or pseudo-ethical) categories like rights and freedoms. I fear we professors are quite often guilty of looking for our car-keys under the streetlight — that is, participating in this particular antagonism in the ways we are best equipped for, rather than in the ways that the conditions and goals demand.

In thinking about campus militarization, UCSC professor Bob Meister provides an extraordinarily useful account of the relation between campus securitization and securitization of university economies, as they have recently developed. In his talk on “Debt, Democracy, and the Public University,” he sets forth the cruel historical developments through which William Bratton was retained to lead the investigation into the pepper spray incident, and what it reveals about “the link between the privatization of public universities, the financial services industry and the national security industry” (Meister 2011). Meister observes that:

Since 9/11 the US defense industry of the Cold War has morphed from being mainly in the military hardware business into a new role as global provider of security services that enables government and corporations throughout the world to outsource intelligence, policing, background checks, construction of secure sites and various operations that may need to be deniable — as well as the public relations efforts necessary to support such deniability.

Most Americans do not know that there is a huge domestic market for services provided by the defense industry....The fastest growing market for the defense and security services industry is in the area of local government and public agencies that feel threatened by political protests, such as the Occupy movement, and that have reporting and other obligations under the Patriot Act. Former LA Police Chief William Bratton was hired to build this market for Kroll Security by its parent company, Altegrity, a defense contractor that is itself now owned by a private equity firm that also invests in both for-profit higher education and financial services (Meister 2011).

While the specifics of such connections inevitably vary from place to place and situation to situation, the systemic logic is plain enough. Heightened campus security is inextricably linked to heightened campus securitization in its two main forms: the decision of universities to pursue a certain line of investment strategies which move money away from educational services and into capital projects; and the corresponding decision to cover those educational costs by shifting burdens to students at a rate which can only be financed though student loans, concomitantly providing profitable investment for banks laden with otherwise fallow capital. The rise in tuition and indebtedness within the context of economic crisis simply is the militarization of campus; they are one and the same.

It is impossible to conclude other than this: even if one does adhere to the belief that the matters of intellectual freedom, free speech, and free assembly are fundamental to this unfolding political economic sequence, the place where such things will be arbitrated is not on their own terrain — the terrain of formal rights — but elsewhere. The necessary arena in which such rights might be protected presently and for the longer durée is the arena of direct antagonism between, on the one side, those fighting against backdoor privatization and austerity programs on campus, and on the other, those who implement and enforce them. This is not a rhetorical struggle, and moreover, the retreat into the sphere of articulation risks affirming the misrecognition of the struggle’s character. Such formal rights are far less an enabling condition for this struggle than an outcome of its material content.

Professors: stand with your students, literally. It is the best thing to be done for academic freedom; it is the least you can do for them.

The Wall Street Journal reports on the UC Berkeley administration's disastrous plans for financing the renovation of the football stadium. In short, the brilliant idea was to raise $270 million from the sale of seats, presumably to its hyper-rich, 1-percent alumni. As one might expect, things didn't quite work out as our highly-paid financial managers imagined: only $31 million (about 11 percent of the total) was raised over a period of three years, leaving us about $240 million in the hole.

Wonder who's going to get stuck footing the bill...

Although its $321 million price tag would make it one of the most expensive renovations in college sports history, the university said the project would be funded privately, largely through long-term seat sales and naming rights.

But three years into the fund-raising effort, a projected $270 million from the sale of seats has failed to materialize. At the end of December, the school had collected only $31 million in the first three years of the sale. Now it has become clear that the university will have to borrow the vast majority of the money.

In recent interviews, university officials acknowledge that if revenue projections fall short and won't cover the bond payments, the shortfall "would have to come from campus."

The idea that money for the football stadium could come from campus funds, which include student fees, is an admission likely to stir outrage at a school that's already facing possible double-digit tuition increases. "It is disconcerting that the university may be gambling with student fees and other academic funds to cover a massive financial commitment for a football stadium," said Cal computer-science professor Brian Barsky.

(...)

The nearly half-billion-dollar Cal athletic project encompasses a $321 million renovation of Memorial Stadium that opens Sept. 1 and $153 million for a new multisport training facility. That's far more than Stanford University spent building a new stadium in 2006.

In public pitches for the project starting in 2006, university officials talked about raising hundreds of millions through an "Endowment Seating Program" that was to endow all 29 of Cal's varsity sports and more yet by selling naming rights to various components of the stadium. The official name will remain Memorial in honor of war veterans. But the economic downturn hindered sales and by November 2010, [Sandy] Barbour [Cal's athletic director] had posted online a letter to fans saying she was "heartbroken that the program's intentions will, in all likelihood, not be fully realized."

The total bonded debt for the project, including the training center, will be $447 million. That's apparently an unprecedented amount of borrowing for a college-sports project, far above the $220 million that Minnesota borrowed to build a new stadium in 2009, the $200 million that Washington has borrowed for its stadium renovation and the $148 million that Michigan took out to add luxury seats that opened in 2010.

The Daily Cal reports:

The California State Treasurer’s Office sold $860 million worth of University of California 100-year bonds, which will be used to fund capital projects at the university, to 70 large investors Tuesday.

The money raised from the sale of the bonds — which mature over the course of a century and pay about 4.9 percent semiannual interest rates in May and November — will be used for long-term UC capital projects approved by the UC Board of Regents, according to UC spokesperson Dianne Klein. The bonds will also fund individual capital projects at UC Berkeley, UC San Diego and UCLA, including a portion of the repair of Memorial Stadium, according to Klein.

(...)

UC bond sales are part of standard operating procedure and take place a handful of times each year, but this sale was unprecedented because of its 100-year maturation period combined with the large value of the sale, according to Tom Dresslar, director of communications at the treasury.

The 100-year bonds were designed to appeal to institutional investors, including insurance companies, hedge funds, banks and pension funds, whose interests span multiple generations, according to Klein.

The university is the real world. One positive effect of these bond sales is that they reveal -- if there were still any doubt -- the many and intimate ways in which the UC is tied to the world of Wall Street finance. These ties are the result of a series of conscious decisions made by UC administrators and the Regents to transform the university into a profit-oriented, revenue-generating institution. State funding has decreased, but the shift toward this privatized model, in which the university increasingly generates unrestricted revenues through student tuition hikes (themselves backed by student loans) on one hand and the exploitation of workers on the other, is not, or not only the result -- it is also a cause.

The Daily Cal article unexpectedly pulls a Meister and does a good job of outlining the economics of UC bonds by going back to a 2009 sale of $1.05 billion in construction bonds:

In August 2009, the UC announced that proceeds from approximately $1.05 billion in federal stimulus “Build America Bonds” sold to the public would help fund about 70 capital projects on all ten UC campuses.

In a press release following the 2009 bond sale, Moody’s, a ratings agency, explained the appeal of UC bonds in a shaky economy, since the university has the ability to raise its revenue by increasing student tuition despite state budget cuts.

“In-state tuition has increased dramatically,” the press release stated. “And the out-of-state market remains a comparatively untapped resource that could provide additional growth in tuition revenue should State funding be cut further.”

But they don't look as carefully at the bond report for the current sale, rated AA+ by Fitch. The first thing that becomes apparent is just how happy the bond raters are with the UC's financial managers:

WEAKENED STATE FUNDING: Recent reductions in state appropriations, and the potential for additional cuts through the intermediate term, are mitigated by UC's limited reliance on state operating support. Timely measures consistently taken by UC's 26-member regents and highly experienced management team during times of state fiscal stress provides further rating stability.

As Bob Samuels has been arguing for years, the UC gets its "marching orders" from the bond raters. Fitch is down with the UC's "highly experienced management team" because they've done exactly what Fitch wanted them to do. As students and workers at the UC, however, we aren't so happy with their tenure because we viscerally understand that we're the ones getting screwed. The university is being run for them, not for us.

The other thing that's useful about these bond reports is their honesty. They tell us what the UC administration is really thinking about doing, without funneling it first through an (admittedly flawed) public relations machine. Again, Fitch is happy with the UC's plans for dealing with the likelihood of future budget cuts from the state. In fact, Fitch thinks these budget cuts are a good thing because they increase the university's "operating autonomy." What this means essentially is less restrictions on what the UC can do with its revenue -- while state funds are restricted, meant to cover the university's instructional costs, private funds are not, and can be used for anything from capital projects to paying debt service on previous construction bonds. Fitch tells it like it is:

Appropriations declined a total of $750 million to about $2.27 billion for fiscal 2012, including a mid-year $100 million cut resulting from the state's ongoing revenue shortfall. UC took numerous steps over the past few years to offset the loss in state funds, including significant student fee increases, staff reductions and other cost savings initiatives. On a combined basis, these measures have enabled UC to close about 26% of the total fiscal 2012 budget gap (approximately $1.1 billion).

While the governor's fiscal 2013 budget proposal, currently under review by the state legislature, recommends no further cuts to UC, Fitch believes that state funding for higher education will face continued pressure going forward. The budget proposal is dependent upon various revenue generating ballot measures subject to voter approval. Should these measures fail to gain approval in November, the proposal calls for a $200 million appropriation cut to UC effective Jan. 1, 2013.

The university's management team continues to explore various options to offset reduced state aid, including working with the state on a potential multi-year funding agreement which would provide UC longer term stability in state support in exchange for increased operating autonomy. Options being considered under this agreement include specified general fund increases through fiscal 2016; an increase in the state's share of employee retirement plan contributions, both subject to voter approval of the above-mentioned ballot measures; and more regular, less dramatic increases in tuition.

UC continues to benefit from one of the most diverse revenue streams in higher education, and Fitch notes positively its low and declining reliance on state aid as a revenue source (12.1% in fiscal 2011). The university's other significant funding sources include revenue derived from the operation of its five medical centers (27.1%), grants and contracts generated by its substantial sponsored research activities (24.5%), and student-generated revenues, including tuition, fees, and auxiliary receipts (16.6%).

Straight from Wall Street to the UC: another round of construction bonds, another set of marching orders.

The other day, we wrote a brief post on the renovation of Lower Sproul Plaza at UC Berkeley, reading it (following Bob Meister's now classic exposé) as yet another capital project funded by UC construction bonds that are, for their part, backed by student tuition. Mostly we were interested in the way UC administrators imagined their accountability to the students who increasingly "foot the bill" for pretty much everything the university does, and we didn't get into the technical details of the project because, well, we aren't so great with that kind of stuff.

Fortunately, it turns out we didn't need to. After a brief back-and-forth in the comments of that post, Zach Williams has written an incredibly useful and detailed investigation into the funding mechanisms for this particular project. Think Charlie Schwartz with a killer instinct. Williams's analysis is not only useful for understanding this particular case, but more generally it serves as a framework or methodology for understanding UC capital projects, for seeing through the obscure complexity of these financial deals. This complexity offers the UC administration another rhetorical weapon to be deployed in its war on students and workers. We're going to post the conclusion here, but we highly recommend reading the full post:

The Lower Sproul renovation is funded, almost entirely, by payments from the students, despite University protestations to the contrary. . . .

13 million is from campus funds -- some of which is sourced from student fees, though not student tuition.

200 million is externally financed. This 200 million in financing is backed by two sources:

1. 112 million in special student fees, proposed and approved by the students themselves.
2. A General Revenue Bond

So, half of that external financing (which is, if you recall, nothing other than a general revenue bond, though it may be a federally subsidized one) will be financed by . . . another general revenue bond. The rest will be footed by a sort of ‘complicit in one’s own domination’ decision by the ASU to help turn a basic safety retrofit into a project to increase space for students, student organizations, and student run revenue streams.

And that general revenue bond will be financed by student fees. Quite clearly, none of the 35% of funding from grants is going to this capital project. Rather, it will be financed entirely from auxiliary and student fees. And the bulk of auxiliary fees are . . . oh, right, student fees.

So, let’s list no bullshit sources of revenue for this project.

1. Student fees (campus funds)
2. Student fees (special student fee)
3. Student fees (registration fees)
4. Student fees (auxiliary fees from housing, dining, parking, and so on)

We talk a lot here about construction and debt, about the UC administration's addiction to using student tuition -- and the promise of future tuition increases -- as collateral to finance the sale of construction bonds. That's classic Meister. But it's important to remember that the UC's corporate management uses tuition in other ways as well. Remember, for example, how a couple days ago the state government asked the UC to loan it $1.7 billion, while the UC regents are once again raising student tuition at the exact same time? (The regents just officially approved the 9.6 percent additional tuition increase, on top of the 8 percent that had already been approved. So tuition will officially increase by 17.6 percent this fall.) Bob Samuels explains:

As we get ready for another large tuition increase, and we read about the elimination of several UC degree programs, the bond rating agency, Fitch, has re-affirmed the university’s strong fiscal standing. While the bond raters have been wrong in the past, we can still read the latest analysis of UC’s fiscal health as indicating the real priorities of the administration.

Since the UC has decided to help reduce its pension liability by selling about $1 billion of commercial paper (debt), it has asked to have its financial status rated. As I have argued in the past, due to the UCs high level of debt, it is dependent on getting a high rating from the bond raters so that it can receive a low interest rate, and one result of this dependency on debt is that the bond raters can tell the university how they think the system should structure its finances. Moreover, even though the bond raters pretend to be neutral and free of any ideology, they covertly push the same agenda that we find in the World Bank and the International Monetary fund. This agenda pushes for the privatization of public entities, a taking on of huge debts, and the deregulation of markets. The plan for the UC set out by Fitch is thus in many ways the global plan being pushed by conservatives and bond raters.

In reading the summary of Fitch’s report, we learn that the university has received a high rating because of, “UC's substantial level of balance sheet resources and liquidity; diverse revenue base, which enables the system to weather temporary weakness in any one funding source; and manageable debt burden, despite the expansive, capital intensive nature of its operations.” In other words, UC has many different revenue streams, and although it has a high level of debt, over $14 billion, it has the resources to take care of its financial obligations.

According to Fitch, one of the main signs of UC’s fiscal health is its ability to constantly raise tuition: “Recent reductions in state appropriations, and the potential for additional cuts through the intermediate term, are partially mitigated by the university's still considerable, though now more limited, ability to raise tuition and fees, and its overall limited reliance on state operating support.” In other words, the UC should not worry too much about losing state funds because it has shown a willingness to raise tuition. In fact, this same logic of privatization is driving the state’s reduction of funding for the UC; since the Democrats believe they cannot raise taxes, they cut the UC, which they know will turn around and raise tuition.

Not only does the state feel comfortable reducing the university’s funding, but they are planning to borrow another $1 billion from the UC system, and the reason why the administration will accept this deal is that the university will turn a profit by lending money to the state. This deal make sense on paper because due to UC’s high bond rating and the state’s low rating, the state has to pay a higher interest rate to borrow money, and if the UC lends money, the state can improve its bond rating, and the UC can profit from the difference between its low interest rate and the state’s high interest rate.

What is left out of this equation is that students are paying 6.8% to take out their loans, and these loans not only allow the UC to raise tuition, but the money generated from tuition can be leant to the state at something like 5%, which is better than the 2-3% the UC gets from putting tuition dollars into its Short Term Investment Pool. If we connect the dots, we see that students are lending money to the state, so that the university can bring in more money, but the end result is that the students will have to pay for this interest deal.

The UC administration and the regents, as dettman put it yesterday, "are simply another mechanism by which the state plunders the middle class to feed the rich."

A few months ago, we wrote about a number of construction projects that are on the horizon at the UC and specifically about the way these projects are funded. As usual, the UC sells its highly rated construction bonds to raise the capital to carry them out. And ever since Professor Bob Meister published his now-infamous essay "They Pledged Your Tuition," we've known that student tuition, along with the promise of future tuition increases, are critical to the university's ability to maintain its high bond rating. As he wrote in the fall of 2009, "since 2004, UC’s highest priorities have been set by bond raters, and not by the State of California."

To be fair, sometimes there are other sources of revenue, but these cases are the exceptions. One of the examples we cited in the earlier post was the development project in Lower Sproul Plaza at UC Berkeley. The reason it came up at the time was that, even before the project had gotten underway, it had already gone $10 million over budget. Funding for that project comes, as the Daily Cal reported, from "contributions from the campus, the UC Office of the President and student fees approved . . . in the 2010 ASUC General Election." As we wrote at the time:

In other words, not only are students paying directly for the project -- after all, we voted for it! Democracy in action! -- we're paying for it indirectly as well, through tuition increases that have already taken place (that money goes into the general fund) and the promise of future tuition increases that the UC now owes the bond raters.

Today, the Daily Cal reports that this same construction project, which will take many years to complete, is already showing a negative cash flow. The article draws on a presentation given by an outside consulting firm, Brailsford & Dunlavey, which is based in Washington, DC. (It's not entirely clear how much the firm is charging for its services, but it's possible that we might be seeing a repeat of the scandalous Bain & Company contract worth $7.5 million.)

The consulting firm's presentation is noteworthy, though not in the sense that Messrs. Brailsford & Dunlavey were hoping for. For example,

A deficit as high as $800,000 may occur between 2019 and 2022, after an expected bump in revenue due to increased student fees in 2018, according to the presentation.

Either the consultants are privy to information about future tuition increases that the rest of us aren't or they're just making shit up (in which case why is UC Berkeley hiring them?). It's important to remember that privatization is not a response to immediate crisis but a long-term strategy. Tuition hikes, it appears, are plotted out years in advance. While they are adjusted to take immediate political concerns into account (like state budgets, for example), these adjustments are little more than slight deviations here and there from the original projections. [Update 7/12 10am: Our mistake. The comment below is correct on this point, that the fees in question are not actually tuition but rather the student fees approved in the vote. However, this doesn't change the fact that the construction project is still financed through multiple sources, including the sale of construction bonds backed by student tuition as collateral. In any case, you can find the schedule for increased student fees for the project here. Further update 7/14 12:39pm: For a full discussion of what the vote actually approved, and why the earlier comment isn't exactly right, check out the comment from Zach Williams below.]

But most important are the comments from Assistant Vice Chancellor for Physical and Environmental Planning Capital Projects Emily Marthinsen:

“If the students are footing the bill for things that are not only the students’ responsibility, then those things have to be very defensible,” Marthinsen said.

If the students are footing the bill... From her isolated office in the A&E Building, Marthinsen can't understand the full implications of her words. Because what Meister shows us is that as students we foot all the bills: "Because UC pledges 100% of tuition to maintain its bond rating, it has also implicitly assured bond financiers that it will raise your tuition so that it can borrow more. Since 2004, UC has based its financial planning on the growing confidence of bond markets that your tuition will increase." Defensibility, furthermore, performs an interesting function here. What administrators find defensible is obviously not defensible for the rest of us -- students, workers, faculty, those of us who use the university. But beyond that, the logic of defensibility is the logic of the liberal technocrat, the enlightened bureaucrat who cannot be held accountable for decisions and as such offers little more than explanations and well-formulated "defenses" -- at best -- that lock the rest of us into decades of debt.

From our perspective, however, the administration's drive toward privatization is simply not defensible. There is little use in appealing to their hearts or letter-writing campaigns or attending glossy presentations by highly-paid consultants. These are the administration's bureaucratic fortresses, sites designed specifically to be highly defensible. And paradoxically, our participation only makes them stronger.

Summer means no students -- for the UC administration, that means the absence of one of the largest obstacles to their privatizing designs. There's a similar logic in the UC regents' decision to hold their meetings at UCSF Mission Bay. It is a highly strategic space: not only is it extremely out of the way and difficult to get to from Berkeley, but it's also located in what is essentially a post-industrial wasteland, with little else around to provide cover. After thousands protested the meeting at UCLA in November 2009 to approve the original 32 percent tuition hike, it seems the regents decided to retire to less accessible locations.

Summer vacation is the temporal version of UCSF Mission Bay. It's not surprising that it was in July 2009 that the regents voted to give UC president Mark Yudof "emergency powers" due to the "state of financial emergency," which gave the administration unilateral authority to impose austerity measures. Especially as "shared governance" becomes less and less of a reality, we should expect more and more executive decisions to be made and policies to be approved at this time of the year.

The title of this article in the Santa Cruz Sentinel is right on: "During Serenity of Summer, UCSC Implements 'Painful' Cuts."

SANTA CRUZ -- UC Santa Cruz's wooded campus is relatively serene in the early days of the more quiet summer session.

Beneath the tranquility though, the campus is set to execute another round of cuts including laying off roughly 50 non-academic employees in what has become an annual occurrence since 2008.

The layoffs go into effect on Friday, July 1, the start of the new fiscal year. In addition to layoffs, workers are seeing their hours (and pay) cut back. As expected, these cuts will primarily affect non-academic workers. (While there are no layoffs on the academic side of things, 40 more faculty positions that are currently empty, and 120 teaching assistantships for graduate students, will be permanently eliminated.) While UC spokespeople talk about how much much their work is valued, they acknowledge that the student-as-consumer is the primary target.

"After years of reductions in state support, we've gotten to the point where every corner of the campus has been impacted by these cuts," UCSC spokesman Jim Burns said. "It's also true that units farther from the classroom have been particularly hard hit -- not because the campus doesn't value those areas and the people working in them. But because we have tried to the extent possible to reduce cuts to the academic areas in an effort to protect student access to the courses they need."

Much like the tuition increases, however, these poverty wages are not a function of the so-called financial crisis. Rather, it's a function of a class war that's been occurring for decades:

During her two decades at UCSC, [custodian Rosario] Cortez has held several second jobs, including other custodial positions and a job at a bread factory. Currently she works five days a week at UCSC, eight hours a day, where she earns about $2,200 a month after taxes, then makes and sells tamales on the weekends for extra income.

Cortez's sentiments were echoed by Ernesto Encinas, a cook at UCSC who cares for his 86-year-old mother and 14-year-old son.

"Everyone I know has a second job," Encinas said. "There is no rest with the wages we make here. You can't make ends meet with just the one job with the way cost of living keeps rising. Any little change in our income can be devastating."

With these cuts comes not a decrease in the amount of work expected but precisely the opposite: speedup. Custodians, for example, are required to clean more areas during a single shift. Administrators get around this in a curious way -- by telling workers, apparently, to "clean less," that is, to do a worse job at cleaning more areas. It's a recipe for disaster -- especially in the context of ongoing layoffs, this amounts to an incredibly difficult balancing act for the workers. On this note, check out what an asshole Jim Dunne, the director of UCSC's physical plants department, is:

"I have heard [the complaints]," Dunne said. "We often only have a few months to implement changes and rework how we do things. We are making a lot of effort to communicate to custodians what that redesign is, but adjustment takes time. It is a difficult situation for both sides. Custodians take a lot of pride in their work. When you tell them to clean something less, that's hard for them."

Yeah, that's the only thing that's hard for them.

If they ever doubted it before, UC administrators now understand that the best time to implement austerity are the summer months. Summer evacuates much of the potential resistance -- with students and faculty mostly away, the only thing standing in the way are the workers, precisely those hardest hit by the cutbacks. It also functions usefully as a time barrier -- one of the administration's most effective tactics is simply to wait protesters out. (Look at what's happened with the last two hunger strikes at UC Berkeley.) Finally, summer marks the point at which many veteran student protesters graduate and move on. For anti-austerity protesters, it will become increasingly important to incorporate the summer into strategic thinking. This does not necessarily imply a need for stable organizing structures, which contribute their own problems, but it does indicate the need to directly address and even intervene in some way during these months. After all, the success of the walkout on September 24, 2009 depended on the work that was done by students, faculty, and workers before the school year had even begun. This does not necessarily have to take place on campus. It could also mean looking to other organizing bodies outside the spaces of the university that are attempting to build capacity for resistance against austerity.

If fall is the moment of attack, and after the fall the moment of reflection, then before the fall is clearly the moment of preparation. But maybe it's time to rethink this calendar?

On May 17, UC President Mark Yudof delivered the keynote address at the annual meeting of the American Law Institute (ALI) in San Francisco (via). His talk, titled "Whose University? The Decline of the Commonwealth and Its Meaning for Higher Education," is available both in text form as well as in the video above. Those of us willing to subject ourselves to the torture of watching the full speech in the video, however, will discover that what Yudof actually said diverged in some fairly significant ways from the original script. What we want to do here is think through and analyze Yudof's invocation and mobilization of this highly specific language of protest, on which, as the title of the talk suggests, his entire argument turns.

Consider the following passage, which sets up the rest of the talk. We've edited the passage based on the video, striking out the words that were not said and adding in italics those that were inserted. It begins at about 11:05 in the video:

Now, during the many demonstrations against fee increases, students and their allies have consistently taken up the chant: "Whose university? Our University!" In my day, and admittedly when the dinosaurs roamed the earth, the battle cry was "make love, not war," a call to arms which I personally find more alluring. [Laughter]

But I do get the point the current students are trying to make -- that is, that they have a stake in the administration's decisions administration, they have a stake in the university, they have a stake in the decisions the legislature, the board of regents, and others make.

Still, the more I ruminate over the question "Whose university," the more I realize that this chant actually frames a more profound societal question, one with implications far beyond the University of California, or even public education in general.

It's a question for American society as a whole -- how to distinguish between the "public good" versus the "private good," and how to strike a balance between the two. A balance that navigates at least in my judgment a course between JFK's noble call and the rhetorical stance of some politicians that government is never the solution, only the problem.

Apart from his stale jokes, there are a couple things to notice here in the way Yudof frames the meaning of the rhetorical question and answer "Whose university? Our university!" As in the case of the protesters who chant these words, the question for Yudof is a rhetorical one -- the speaker already knows what the answer is. Tensions emerge at the seams, that is, over the path of the lines that we, with these words, attempt to trace between friends and enemies. What is at stake, in other words, is the meaning of the word "our" and, by extension, of its opposite, "them." Solidarity is how we define friends and enemies.

With this in mind, take a look at the gap between the prepared speech and the actual remarks. Yudof invokes the slogan, and goes on to claim that he understands where the students are coming from: "I do get the point the current students are trying to make." What they want is to have a stake in -- and here the speech diverges from the text -- not the "administration's decisions" but the decisions of the administration, the university, the legislature, the board of regents, and so on. In moving away from the prepared text, Yudof expands the political horizon of the students' supposed demands. How do we read this expansion? A generous reading might suppose that Yudof is acknowledging the call, for example, to "democratize the regents," that is, situating the protests within a broad political context and recognizing just how far-reaching these demands can be. (But we know what Yudof actually thinks about democratizing the regents: "I don't like it much personally speaking.")



Notably, one of the institutions that students supposedly want to have a stake in is not like the others: the administration, the university, and the board of regents constitute the governing apparatus of the UC, but to invoke the legislature is to shift the domain of struggle away from the space of the university. While seemingly expanding the political horizon of possibility, this move at the same time attempts to close the door on a set of tactics and strategies that have proven useful to students, workers, and faculty who see the UC administration as a necessary target in the struggle over public education and against austerity.

It is this move, furthermore, that enables the rest of Yudof's speech. The co-optation of the protest slogan allows him to push "far beyond the University of California, or even public education in general" to "American society as a whole." What he's driving at, in other words, is a more general question of political economy that focuses on the relationship between public and private goods. For Yudof, this argument serves a useful purpose because it situates politics firmly within the realm of the state and within the strategy of the vote. Politics is thus reduced to little more than a question of persuasion, of campaigning, of donations -- similarly, it is isolated within the relatively homogeneous field of political parties, all of which, it turns out, are down with austerity.

Yudof has other reasons for abstracting the conflict to an oversimplified discussion of public and private goods -- because his proposal is to sketch out a "balanced" approach or middle ground. This "hybrid university," as he calls it, occupies an uncomfortable position between the two poles. Uncomfortable because of its instability, oscillating from private to public and back again throughout the talk. But these are rhetorical hues -- the hybrid university that Yudof outlines ends up resembling a corporation more than anything else. He declares, for example, that universities must "look at their operations with a 'private' sensibility. They should establish realistic priorities, eliminate weak programs, adopt money-saving IT services, and aggressively reduce waste." Not only must it adopt corporate practices, but it must also be seen and imagined through a corporate, economistic lens:

[T]he university maintains a critical role in this state's wealth creation. Because if the pie doesn't grow, it's difficult to realize the ambition of bridging the divide between our private and public sectors.

So, in order to preserve these missions, public universities must be able to depend on a three-part funding base -- one of student-family contribution, private support and state funding.

The equilibrium of the "hybrid university," balanced between private and public funding, is undone: the "three-part funding base" has overturned the dual foundations that Yudof originally seemed to propose. It is now two parts private (the student-family debt burden along with corporate investment) to one part public (state funding). As Bob Meister has observed, however, the UC administration has a vested interest in shifting away from state funding, which comes with certain restrictions regarding how it can be used:

[A]lthough tuition can be used for the same purposes as state educational funds, it can also be used for other purposes including construction, the collateral for construction bonds, and paying interest on those bonds. None of the latter uses is permissible for state funds, so the gradual substitution of tuition for state funds gives UC a growing opportunity to break free of the state in its capital funding.

In attempting to shift the location of "Our university!" to the broad terrain of democracy and the "American public in general," Yudof constructs a unified "we" that seeks to conjoin the administration with the protesters, blurring and diffusing the tensions between these structurally opposed positions. Against this "we," presumably, stands the "them" of the state. But we know that those who run the UC are the state: Yudof himself was appointed by the Board of Regents, each of whom was directly appointed by the governor, commonly in return for political favors. Sacramento is everywhere. Yudof's "we" thus serves to confuse and disrupt our lines of solidarity. In the end, it is the UC administration that is to be held responsible for the tuition increases, for the layoffs, for programs eliminated, at the same time as they increase their own ranks and salaries. They are austerity; they are our enemies.

Austerity, of course, is implemented at the barrel of a gun. Behind every fee increase stands a line of riot cops. It goes without saying that Yudof is well aware of this. Returning to his speech at ALI, we find the following paragraph early in his prepared remarks:

I've been forced to preside over the furlough of employees, myself included, and a 40 percent increase in tuition. I've faced a variety of demonstrations -- a rich cornucopia of folks exercising their free speech rights. It's certainly given me a new perspective on my First Amendment course.

But what he actually says is this (starting at 9:10):

I've been forced to do some things which I daresay have not been popular with the faculty, the staff, and the students. I've presided over furloughs of virtually all of our employees, including me -- that really hurt, they celebrated my furlough days at the office; a 40 percent increase in tuition in three years; and I've found . . . that I always had an enthusiasm for the First Amendment. I taught a course on it, Constitutional Law. What can I say: California is a rich cornucopia of folks exercising their free speech rights. [Laughter] It's certainly given me a certain perspective on the Constitution: if I ever go back to law teaching, which I expect, I'm going to start with the Second Amendment, that's my plan. [Laughter] And I may deal with quartering of soldiers, I don't know, Letters of Marque and Reprisal, there are all sorts of things I could deal with. [Laughter]

This is lawyerly humor of the pathological variety -- it's no wonder the lawyers in the audience crack up. Yudof's response to the protests is not, as he suggests in the earlier passage, to "ruminate" on the students' demands, but to rhetorically draw his gun and quarter his soldiers (UCPD) on university grounds. This is the kind of leadership that ends in Jared Kemper pulling his gun on unarmed students at the UC Regents' meeting in November 2010; and police surveillance and infiltration of student groups across the UC system.


And those Letters of Marque and Reprisal?

In the days of fighting sail, a Letter of Marque and Reprisal was a government license authorizing a private vessel to attack and capture enemy vessels, and bring them before admiralty courts for condemnation and sale.

What we have here, in other words, is a declaration of war. But this war takes a very specific form: the state-sponsored and -authorized expropriation and privatization of enemy (in this case public) goods. In this little bit of improvisation, Yudof reveals, if not the administration's strategy of counterinsurgency, then certainly the violent logic of austerity in its clearest form. Behind heavily-armed and militarized agents vested with the full juridical authority of the state, austerity advances slowly but steadily.

* * *

What we mean when we shout "Whose university? Our university!" has little to do with the legislature or the American public in general. It has to do, as one might expect, with the university. It is our demand that those work at and use the university, those who make it run, those who schedule, teach, and take the classes, those who advise and provide support, those who maintain its spaces -- in short, everything but the bloated administration -- are the ones who should run the university. "We" face off against "them"; they are the management, the administrators. In the end, they will be abolished, as we have no need for their dismal cutbacks, their prefabricated capital projects, their rules of conduct, or their police. They are useless to us.

WHOSE UNIVERSITY? OUR UNIVERSITY!

First, this article from last Friday that our compañeros at thosewhouseit caught as well. In it, UC President Mark Yudof declares that tuition could double if no tax increases are incorporated into Governor Jerry Brown's budget:

UC President Mark Yudof had a simple message to deliver Friday morning when he testified before the state senate's budget committee: If the legislature opts for an all-cuts budget to fill its remaining $15.4 billion deficit, "all bets are off" at the University of California.

If the $500 million cut already made to the university earlier this spring were to double to $1 billion under an all-cuts budget, Yudof said the 10 campus system would be put on a path that could lead to a mid-year tuition increase next January, employee layoffs, program closures throughout the university and -- ultimately -- a doubling of tuition to $20,000 a year.

[...]

Friday's committee meeting marked the first time Yudof has publicly acknowledged what the consequences of a $1 billion cut could look like, though Gov. Jerry Brown had predicted in April that tuition could rise to $20,000 or $25,000 under an all-cuts plan. Yudof agreed, saying to the committee that he had looked at the numbers until he was "blue in the face" and that "the governor is not far off in his prediction."

At this point, it's hardly news that the state has cut funding for higher education -- they've been doing it for decades. But this isn't about speaking out against cuts. It's about positioning. Yudof testified to the state senate's budget committee that "the system can absorb the initial $500 million cut" -- the one that has already been programmed into the UC budget for this year -- "but if the state increases the size of the cuts the university will have little choice but to raise tuition 'geometrically' and cut services." In addition to erasing the violence of austerity ("Don't worry about it, we'll be fine... as long as you only cut $500 million." Um, really?), this strategy charts a path of rhetorical retreat. Obviously this isn't a rousing defense of public education. But it leads to another danger: every time the budget is cut, it's a "disaster"... until the cuts go through. At that point it becomes the new normal. In effect, it represents an attempt to limit political struggle to a relatively minor question about what's currently on the table -- everything else simply disappears.

Now take a look at this article published in today's paper. It reports on the results of an audit of UC finances that shows the system's increasing liabilities relative to its assets. Of course, the UC administration isn't having any of it. UC spokesperson Steve Montiel, always ready for a vapid soundbite, tells the paper that "financially, the university is pretty strong." Thanks, Steve. But then we get this:

The report also states that capital spending -- funding that goes towards long-term assets that help in the production of future goods and services -- throughout the UC continues at a "brisk pace" in order to provide the facilities necessary to support the university's teaching, research and public service mission and for patient care.

Facilities include academic buildings, libraries, student services, housing and auxiliary enterprises, health science centers, utility plants and infrastructure and remote centers for educational outreach, research and public service.

[...]

Additionally, in 2010, $2.8 billion of debt was issued to finance and refinance facilities and projects at various UC campuses, though the report did not specify those projects.

Wherever there's a budget crisis, there's capital projects. The Daily Cal does an interesting job of translation here, with that little clause to tell us what "capital spending" is: it's spending, they say, that leads to accumulation. Another way of saying it would be it's spending that transfers the burden of debt from the university to the student. As Bob Samuels recently wrote, "In this modified credit swap, students are forced to take out subprime student loans, often charging 6 per cent interest, so that the university can borrow money at a reduced rate." And then there's that short sentence at the bottom on construction bonds, the debt issued by the UC to engage in further construction projects. Another $2.8 billion. And as usual there's little transparency -- no mention of where that money is going. Will it be used to pay for important renovations? Or new stadiums and laboratories? All we can do is guess, but at this point we have little reason to trust the UC administration's word on any of this. [Update Wednesday 5/11: The Chronicle just published a relevant article on the UC's maintenance backlog: "the university predicts it will need nearly $2 billion over the next five years to address capital renewal and deferred maintenance." There's not much analysis in the article about why this is the case, but it does note: "Money for capital projects at UC or CSU is often earmarked for specific projects, such as the $321 million bond for renovation of Cal's Memorial Stadium. None of that money can be used, for example, to repair the stairwell at the life sciences building." But presumably the administration could sell bonds dedicated to repairs -- the real question is why they don't. But in reality it's not much of a question at all.]

Once again, Steve Montiel: "'We've got great ratings services. The university has really high ratings from many ratings services,' Montiel said. 'I don't know there is any need to reduce liability.'" What ratings is he talking about? Bond ratings. As Bob Meister wrote back in October 2009,

Why haven’t you been told that UC has been using your tuition as collateral to borrow billions of dollars? The obvious reason is that tuition increases are justified (to you) as a way to pay instructional expenses that taxpayers refuse to pay. If that’s why they’re being imposed, it’s natural to assume that tuition increase will be used to minimize cuts to education. But when UC pledges your tuition to its bond trustee (Bank of NY Mellon Trust), it’s really (legally) saying that your tuition doesn’t have to be used for education, or anything in particular. That’s why it can be used to back UC construction bonds, and why the growth in tuition revenue, as such, is enough to satisfy UC’s bond rating agencies (S&P and Moody’s), whether or not UC can pay its bills. The effect of UC’s pledge is to place a new legal restriction on the use of funds that it must first say it could have used for anything, including education. Thereafter, construction comes ahead of instruction.

Some of UC’s new, and self-imposed, constructions costs will come off the top of its annual budget, despite this year’s “extreme financial emergency.” When UC chose t0 take on $1.35B in new construction debt for 70 projects in August 2009 -- one month after imposing employee furloughs that “saved” $170M -- it committed to spending $70-80M in extra interest payments for years into the future -- they’ve just released the interest rates for each new bond series. Earlier in the year, UC had already issued $.8B in tuition-backed bonds in spring 2009, only some of which were for refinancing older projects at lower interest rate. It’s thus likely that the interest due on new projects funded during 2009 alone will have eaten up more than half of UC’s “savings” from the furloughs. Would the furloughs have been “unavoidable” if UC were not secretly planning to incur additional interest expenses for new bond-funded construction?

Note that the graphic above shows that $2.5 billion of the UC's short-term liabilities are classed as "securities lending collateral." We're not entirely sure what this means, but it might refer to the $2.8 billion in construction bonds mentioned by Montiel. Why the $300 million difference?

Now that we once again have the UC administration's obsession with construction over instruction in mind, take a look at another article out of today's Daily Cal. This one is about the ongoing process of developing a plan for renovating and redesigning Lower Sproul Plaza at UC Berkeley, a project that's budgeted at $223 million. And guess what:

As the exact design of the new Lower Sproul Plaza continues to form, an estimate of the cost for the current design is over budget by about $10 million.

The money for the project comes from a number of sources: "contributions from the campus, the UC Office of the President and student fees approved . . . in the 2010 ASUC General Election." In other words, not only are students paying directly for the project -- after all, we voted for it! Democracy in action! -- we're paying for it indirectly as well, through tuition increases that have already taken place (that money goes into the general fund) and the promise of future tuition increases that the UC now owes the bond raters.

This isn't about budget cuts -- it's about priorities.

For a long time now, we've been talking about -- and attempting to fight -- the UC's obsession with capital projects. Back in fall 2009, Bob Meister wrote that the UC was selling bonds (i.e. borrowing money) to launch new construction projects while at the same time proclaiming a financial crisis in order to justify raising student tuition. As Meister (and Bob Samuels) have shown, the tuition increases in fact have far more to do with maintaining good bond ratings, and thereby feeding the capital projects beast, than they do with paying for instructional fees.

Now there's a new kind of capital project. And, as usual, the UC is borrowing money to get it off the ground -- despite earlier promises to the contrary. And, again as usual, what's going to be used to repay those loans? Student tuition. As the Chronicle of Higher Education reports,

In the midst of a budget crisis, the University of California plans to borrow at least $2-million to pay for a controversial project to build online courses rather than relying entirely on outside grants or donations, as university leaders had previously said.

The pilot project, which seeks to offer up to 20 online undergraduate courses by next January, is one of the system’s most ambitious efforts to reshape itself during a historic decline in state support. Leaders hope to eventually expand enrollment and make money by offering fully online undergraduate degrees.

To reduce concerns about the project’s expense, university officials have said it would be supported entirely by external sources, and the project received a $750,000 grant from the Bill & Melinda Gates Foundation last week.

But Daniel Greenstein, a vice provost and the project’s co-founder, said on Friday that finding enough outside support had been a challenge. The university has secured the option to borrow $7-million to help pay for the project and may spend $4-million to $7-million of that money over the next several years, he said.

In order to repay what it borrows, Mr. Greenstein outlined a new plan to offer the online courses to people not enrolled at the University of California, as well as to undergraduates. Tuition from those students will pay the loan back, he said.

[Update Tuesday 9:44 am]: The Daily Cal gets to the story too. There's an interesting tactical possibility in law professor Daniel Simmons's comments:

In a memo confirming the senate's original approval of the project last May, then-chair Henry Powell wrote that the Academic Senate "does not endorse the redirection of existing funds" for the project and that the senate approval is "contingent on the procurement of external funds."

"The whole idea was originally sold a year and a half ago with promises of the ability to raise a great deal of money from external sources," said current Academic Senate Chair Daniel Simmons. "It turns out that those external sources weren't very interested in the program being proposed."

Simmons said that while the senate's role in resolving budgetary issues is ultimately just advisory -- with the final funding discretion residing with UC President Mark Yudof -- it does decide whether to approve the program's courses for UC credit.

Only a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.
--Milton Friedman

Naomi Klein's book The Shock Doctrine: The Rise of Disaster Capitalism lays out an important argument for understanding how neoliberal reforms -- which are often incredibly unpopular -- are implemented. Because these policies generate so much resistance, Klein argues, governments are generally unable to pass them through democratic means. What they do instead is take advantage of moments of crisis -- financial collapse, military coups, even so-called natural disasters -- to push through legislation that fundamentally restructures economies in ways that benefit the rich at the expense of the poor. This is what Milton Friedman is getting at in the infamous quote above.

It's always important to remember, however, that these crises are not natural but actively produced. This is especially the case with economic crises. There is a tendency to talk about the financial crisis, for example, as if it were out of our hands. Even when the banks' illegal, manipulative, and exploitative practices are noticed and criticized, politicians across the political spectrum continue to talk about appropriate responses in terms of inevitability. There is no other choice. Our hands our tied. They love the phrase "difficult choices." In his State of the State address, California Governor Jerry Brown used the expression, and went on: "Do I like the choices we face?" he asked rhetorically. "No. I don't. But after serious study of the options left us by a $25 billion deficit, the budget I have proposed is the best I can devise." In the wake of his recent budget proposal, President Obama did the same and added a little something extra about "sacrifice." These are extremely common references, tropes of our current political discourse.

Obviously this is also the case with the "state of fiscal emergency" declared by UC President Mark Yudof and the UC regents in 2009. It was this crisis that UC officials used to justify the 32 percent tuition increase the forced through in November 2009. Far from natural or unavoidable, however, both the crisis and the tuition hike were planned and produced. Not only did those responsible for the UC's investments lose $23 billion in 2008-2009, but as Bob Meister has demonstrated convincingly the UC committed itself to raising student fees long before the so-called financial crisis hit:

To people in the financial world, it’s already obvious that UC committed itself to raise tuition and cut budgets when it decided in 2004 to secure its bonds. Most of my UC colleagues -- faculty, students and staff -- nevertheless find it unthinkable that UC would actually raise tuition and cut instruction in order to fund construction. People understand that UC wants to build. What’s unthinkable is that UC would still want to build rather than protect its programs and people when other great universities, including Harvard, indefinitely postponed new construction when their endowment income fell.

In fact, it turns out that the UC actually benefits from reductions in state funding, at least as far as its bonds and capital projects agenda are concerned. State funding cannot be used as bond collateral, but student tuition can.

Not only are current reductions in state funding a drop in the bucket of UC’s total endowment -- and nothing compared to the growing revenue of the university’s profit-generating wings -- it is also the case that UC administration has powerful motives to both collaborate with the continuing divestment of state funding and to divert its own resources from spending on instruction. . . . "I’m here today to tell you," said [UC Berkeley graduate student Annie] McClanahan, "that when students and their parents have to borrow at 8 or 10 or 14% interest so that the UC can maintain its credit rating and its ability to borrow at a .2% lower rate of interest, we the students are not only collateral, we are collateral damage."

Something similar is happening right now in Wisconsin at the state level, where the new governor has used the specter of massive deficits to attempt to destroy the state's unions. While his proposal includes some budget cuts,  what is most striking -- and most damaging -- is the attempt to eliminate or at least severely curtail the ability of public employees unions to engage in collective bargaining. Educators are obviously a huge target, and in response teachers and students across the state have staged massive walkouts and work stoppages. Once again, as Brian Beutler has shown, not only the budget crisis story but the budget crisis itself -- the entire basis of the political intervention -- is completely manufactured:

Wisconsin's new Republican governor has framed his assault on public worker's collective bargaining rights as a needed measure of fiscal austerity during tough times.

The reality is radically different. Unlike true austerity measures -- service rollbacks, furloughs, and other temporary measures that cause pain but save money -- rolling back worker's bargaining rights by itself saves almost nothing on its own. But Walker's doing it anyhow, to knock down a barrier and allow him to cut state employee benefits immediately.

Furthermore, this broadside comes less than a month after the state's fiscal bureau -- the Wisconsin equivalent of the Congressional Budget Office -- concluded that Wisconsin isn't even in need of austerity measures, and could conclude the fiscal year with a surplus. In fact, they say that the current budget shortfall is a direct result of tax cut policies Walker enacted in his first days in office.

The point, then, is not that there's no crisis, that there's nothing wrong. Rather, what's important to remember is simply that disaster capitalism and economic austerity are not a inevitable response to disaster, "natural" or otherwise. Indeed, they are not a response at all: the production of crisis is not exterior to, but a necessary component of, economic shock. The shock doctrine actively generates crisis in order to create the appearance of the accident, the natural, the unavoidable.

---

More info on the Wisconsin protests is at The Burnt Bookmobile (we found our way there via occupyca). Among other things they've posted the text of a communiqué that was circulating at the takeover of the capitol building the other day:

Crisis isn’t simply what happens to us. We aren’t victims with no agency who desire a return to a capitalism that works. We understand that capitalism is working. This is what it does. But what do we do? How do we escape the order of established politics and protest and enter into resistance? How do we render the world which alienates us inoperative and become a force capable of being the contradiction that tears it apart? How shall we become the crisis?

We propose: Choose to be partisans in this war which has already started. Block the economy, strike, occupy, and sabotage.

We respond to Scott Walker, his policies, and what he represents, but we must become a force that makes all positions of power obsolete. It will then no longer matter what politicians think or do. It will only matter what we do.

[Update Sunday, 5:19pm]: I missed this yesterday. In this video, Naomi Klein discusses the shock doctrine in the context of what's happening in Wisconsin. Take a look at the video and note the underlying assumption of Klein's formulation here: "Lo and behold you have a budget crisis, you exaggerate the extent of the crisis, and you say, 'We don't have any alternative but to push through these very unpopular measures.'" What she is suggesting, in other words, is that crisis is external to these political games. Crisis just is -- what the politicians do is exaggerate it. But, as the case of Wisconsin demonstrates, crisis is made, at times in carefully calculated ways.

[Update #2, Friday 2/25]: Even Paul Krugman's on board now.

In the Bay Guardian's new article on student debt. First, here's some of the data on debt:

Today, the majority of college students take out loans to finance their education. Around 62 percent of public university students graduate with student loans, as do 72 percent of students attending private nonprofit institutions, and 96 percent of students attending for-profit institutions such as the University of Phoenix or the Academy of Art University, according to TICAS. Nationally, students graduate owing an average of $24,000, not counting debt associated with advanced degrees.

While young people must invest more than ever before to obtain higher education, the return on investment isn't showing signs of improvement. The expected median income for UC graduates has stayed the same over the last decade, even as the cost of tuition has ballooned.

And now, Meister:

While diminished public funding has been used to explain the need to raise tuition, Meister has published numerous essays suggesting that the root cause of rising tuition costs at UC goes deeper than that, and he has gone so far as to publicly encourage students not to accept higher tuition without first demanding financial information.

Meister previously served on the UC budget committee and has observed the institution's evolving financial policies for years. He doesn't seem surprised that tuition is going up, regardless of what condition the economy is in or what amount of public funding is available because, as he puts it, "the universities will cost as much as they can." UC had long sought to boost revenue by raising tuition, he noted, yet its leaders feared a rollback in state funding in response. But that changed under Gov. Arnold Schwarzenegger, who agreed to increase state support only on condition of that UC in turn require students to contribute more.

Around the same time that Schwarzenegger provided this new incentive to raise tuition, UC pooled its various revenue streams into a consolidated general revenue fund, Meister said, a departure from the old way of keeping separate accounts. This new fund, which included all non-state revenue and funding that wasn't legally required to be used for certain purposes, could be pledged entirely as collateral for bonds for new construction projects, greatly increasing the institution's borrowing power and boosting its revenue with the addition of new facilities.

To maintain its stellar bond rating, UC had to ensure an increase in revenues, according to Meister's explanation, and to do that, UC ratcheted up the one source of revenue it had full control over: tuition. Meister laid bare this financial play in a 2009 open letter to students, titled "They Pledged Your Tuition." Since it was published, a small corps of student activists has become deeply engaged in studying campus finance documents and airing criticism of financial policies.

Just before the Nov. 17 protests at UCSF Mission Bay, Meister published another open letter, this one addressed to UC President Mark Yudof. This one contemplated, "Why they think they can increase revenues regardless of how fast the economy grows ... and regardless of whether the income of graduates is stagnant."

His answer is somewhat surprising: "Their ability to raise tuition is a function of the growth of income inequality," he told the Guardian. In the letter, Meister charges, "In the 21st century, when almost all income growth has been in the top 1 to 2 percent of California's population, UC is still marketing income inequality to students as its most important product. It now expects all students to pay more for an ever-shrinking chance of reaping the ever-growing rewards that our economy makes available to the few. Your plan to increase revenue through tuition growth is feasible, of course, only because the federal government still allows students to borrow more for education despite the greater likelihood that they will not be able to repay -- student loans may be the last form of subprime credit available in our economy."

His theory highlights a paradox. "Being in the have-not category is increasingly worse," he explains, "and so they are willing to take on more debt, which actually dampens their prospects for income growth."

The question now is what will happen under Gov. Jerry Brown, who is likely to take a different stance toward rising tuition than Schwarzenegger but nonetheless is expected to unveil harsh cuts to education as a way to address a $26 billion budget deficit.

Reclamations is back with issue 3. Table of contents (with links) is below the fold:

From the email, an open letter to Boalt law school Dean Christopher Edley:

No More Futile Discussion With Administrators. Action. Disruption. Reclamation.

Dear Dean Edley,

We sincerely hope that in the moments leading up to tomorrow's UC Regents meeting, you took time to pause and consider the real human impact of the Law School's privatization program. Before we came to Boalt, we considered ourselves to be human beings and were attracted to this school in our capacity as such. Now we know that everything we were told about Boalt is an empty promise and that we are in fact nothing more than biological collateral for federal loan dollars being spilled into ill-conceived expansion projects that have little to do with the quality of our or anyone else's education.

As you write to invite us to another Student Town Hall, we submit that our participation within this institution is now, just as it has been, barely a courteous formality. The one hour meeting offered by the law-school administration, we are told, provides “an opportunity for the community to discuss the overall state of the law school as well as student fees.” At least you are honest enough to concede that nothing we say at the Town Hall will have any effect on how the law school is actually run.

There is nothing to ‘discuss’. If privatization is a certainty, then so is insurmountable student debt, the evisceration of workers’ rights, the subordination of human need to the logic of the market. This is a future we will not accept. Privatization in an economy with rapidly decreasing real wages and insurmountable loan debt is guaranteed student death. We refuse to die. Since the administration has already implemented its project of privatization, our only choice is to halt its progress and work to destroy the process itself. So on November 16 and 17, 2010 we will.

Bob Meister's back with a new article that rips apart Yudof's "Blue and Gold" plan. Enjoy the whole thing. Here we've posted just the part dealing with B&G.

You have also recognized that financing higher education through increased personal debt is a growing problem for many students. That’s why you argue that UC tuition increases will not deter attendance provided that the Blue and Gold program, which relieves families from paying tuition, is available to a wider income band. Much of the press and the public seem to have bought your claim that higher tuition can actually make UC more accessible by extending UC’s Blue and Gold program to families with annual incomes of up to $80,000. But the high tuition burden still falls disproportionately on those just above this cut-off, so you mitigate this obvious problem by giving students a one-year reprieve on tuition increases if they are otherwise eligible for aid and if they come from families with incomes of $120K or less, after which they will simply have to borrow more. You then claim that higher tuition would leave the majority of UC students (55%) with undiminished or improved access. This claim is based on two assumptions: first, that the incomes of UC graduates will continue to grow -- and to grow much faster, than those of other Californians, much as they did during the high tech boom; and, second, that Blue and Gold means that most UC students on financial aid will need to borrow less in order to attend.

According to your own, internal, financial aid studies, both of these assumptions are false. The first assumption is false because the income of UC graduates has not increased at all for the past ten years, and neither has the willingness of most students who borrow to take on greater debt. As a consequence of their growing debt-resistance, UC has a growing middle income access problem -- it seems that students in the income band that takes on the greatest proportional debt are also transferring down within the Master Plan scheme -- and that 70% of Community College transfer students now go to for-profit institutions. So, we now have a Master Plan that seems to operate in reverse.

The SF Chronicle reports on what Bob Meister's been saying all along: the UC is using student fees to pay for construction projects that benefit, well, the football team.

This spring, workers poured the concrete floors for a 142,000-square-foot, four-story Student Athlete High Performance Center that will house lockers for the UC football team and meeting rooms adjacent to seismically unstable Memorial Stadium.

The project is being paid for with $135 million in bonds. Campus financial officials planned to pay off those bonds with donations, but the gifts never came in and the stock market has tanked.

Now, UC Berkeley's department of intercollegiate athletics is responsible for paying off the center's bonds. There's a problem, though. The department has no money and last year it had to be loaned millions of dollars from campus general funds.

Athletics is supposed to be self-supporting, and these loans effectively take millions of dollars away from other parts of the school, said Brian Barsky, UC Berkeley computer science professor and a critic of university spending decisions. With the athletics department already heavily subsidized, Barsky doesn't see how it can pay off its staggering future debts.

Students and their parents will have to bail out the department in the form of registration fees, Barsky said.

It turns out our friend from JP Morgan, Nathan Brostrom, is the one who came up with the plan for this building.

Nathan Brostrom, now UC's executive vice president for Business Operations, created the financing plan during his time with UC Berkeley.

Simply put, it was designed to get the campus a building for free. First the school would borrow money to build the center. The same amount of money would be raised in donations simultaneously. Next, the donated money would be put to work in the stock market where it would make enough in returns to pay off what was borrowed.

Financing buildings using the stock market is a practice usually done in the private sector and at private universities, but UC has recently adopted the tactic and planned to fund additional buildings this way. Brostrom said when the plan works, a building gets built for free and the gift fund functions as an endowment, creating even more cash for operations.

"There is a certain amount of market performance risk, but over the last 60 years our analysis has shown this model works out, even with declines like last year," he said, adding, "obviously, I'm not going to guarantee performance."

Heckofajob, Brostrom.