Tag Archives: financing

The Assault Continues….

File under: Surely you jest.

The latest, widely-reported “initiative” from former Governor and current President of Purdue Mitch Daniels is an “innovative” method of financing college educations: have private individuals “invest” in a student in return for a portion of that student’s eventual earnings.

The impetus for this brilliant idea, according to Daniels, was concern over student loan debt. How this would improve the situation is unclear; owing your “patron” is unlikely to be any less burdensome–or less costly– than owing the bank. (If we were really interested in addressing student debt, we’d pass Elizabeth Warren’s bill and lower interest rates, or follow Germany’s example and provide free public education through college.)

And echoes of feudalism aside, this does raise a few questions. Who, for example, is going to “invest” in a philosophy degree? (Oh, I forgot: Mitch and his pal in Wisconsin, Scott Walker, don’t value a “search for truth” or a liberal arts education. They’re all about “job training” and generating more worker bees…)

Young people used to pay for their passage to the New World by promising to work for a certain number of years for an employer who would finance the voyage. This was called “indentured servitude.”  Indentures couldn’t marry without the permission of the employer,  and their obligation to labor for their “owner” was enforced by the courts. Owners could buy and sell indentured servants’ contracts and the right to their labor.

This raises some fascinating possibilities: while it’s unlikely the proposed contracts to finance an education would include a right to approve marriages, could the “investor” require the student to choose a job that paid more rather than a lower-paid one that the student preferred?

Could the investor “sell” the contract at a profit if the student did well and the negotiated percentage of her income represented a better-than-anticipated return on investment?

Could the investor require his “investment” to abstain from smoking, drinking and other risky behaviors that might threaten the duration of the student’s work life?

Actually, this bizarre proposal suggests that America is overdue for a discussion of what constitutes an investment–and especially about the difference between public and private investments.

Believe it or not, Mitch, that philosophy major is a good public investment, even if it doesn’t make much sense to the rich guy looking for a kid who’ll be his annuity.

 

 

Audacious in Chicago

This morning’s New York Times reports that Rahm Emmanuel will announce a 7.1 billion-with-a-b infrastructure improvement plan for Chicago. Improvements will be made to everything from the water system to the airport, from public transportation to parks. The improvements will be financed primarily through a public-private investment trust, details of which Mayor Emmanuel is supposed to announce later today.

I found this paragraph particularly interesting:

Some public-private partnership projects have been criticized as giveaways to the private businesses that take them over — including two prominent cases in Chicago itself, the privatized Chicago Skyway and the city’s parking meter system, which obligate the city to leases that span generations. Mr. Emanuel says that the city has learned an important lesson, and that “I am not leasing anything,” or selling off the city’s assets, he said in an interview. “I’m using private capital to improve a public entity that stays public.”

Great cities are places people want to live. As former Mayor Hudnut repeatedly reminded us, livable cities are first and foremost “cities that work.”

Most of us don’t want to live in housing that is unkempt and run-down, but we also understand that we aren’t improving our situation if we sell the stove to pay for new carpet.

In order to build a great city–especially in these days of fiscal hurt–its leaders need vision, and the audacity to insist that investment in the public square is both necessary and important. The audacity to refuse to sell off public goods to private profiteers.

The audacity to defend and maintain great urban spaces for the generations of citizens who will enjoy them.