Dragas, Kington, and Co: The Effects of Trickle Down Kleptocracy on Public Higher Education

The struggle over the presidency of the elite University of Virginia continues. As I write, some members of the Board of Visitors, the governing body, have called a meeting for next Tuesday, June 26, to reconsider President Teresa Sullivan’s termination. Sullivan has indicated that she would remain as president if certain conditions are met – namely, the withdrawal of rector Helen Dragas. The resignation of vice-rector Mark Kington opens the possibility that a majority may vote in favor of reinstatement.

The release of emails between board members involved in plotting Sullivan’s forced resignation opens an astonishing window into their thinking. It turns out that the prospect of the rapid rise of online education had panicked them into demanding that Sullivan move quickly to cut core curricula and pour resources into this new fad. That was the entire content of their philosophical differences.

Dragas emailed her colleagues about articles in the press, such as an op-ed in the Wall Street Journal that discussed edX, the partnership between Harvard and MIT to create an open-source online system to educate millions of students around the globe. The article is subtitled: “The substitution of technology (which is cheap) for labor (which is expensive) can vastly increase access to an elite-caliber education.” The authors warn, however, that there is no revenue stream or business plan to sustain it.

The Charlotte Hook summarized yet another exchange: “On June 3, Dragas and Kington get an email from UVA alum Jeffrey C. Walker. A founder of J.P. Morgan Partners and a member of the Private Equity Hall of Fame, Walker tells them that with top universities like Stanford already embracing online education, UVA must get on board … ‘Top of the line universities,’ Walker writes, ‘need to have strategies or will be left behind.’ ‘Jeff, Your timing is impeccable,’ responds Dragas. ‘The BOV is squarely focused on UVA’s developing such a strategy and keenly aware of the rapidly accelerating pace of change’.”

While Dragas was pushing the urgency of adopting the technology, Sullivan advocated caution. She told the board: “There is room for carefully implemented online learning in selected fields, but online instruction is no panacea. It is surprisingly expensive, has limited revenue potential, and unless carefully managed, can undermine the quality of instruction.”

David Karpf, a professor at George Washington University, confirmed the need to be circumspect: “MIT does indeed offer free online courses. Stanford and Harvard are following suit. … None of the top schools are replacing their existing curriculum, though. … At the classroom level, online courses are only an acceptable substitute for a small set of learning objectives.”

Why was Dragas so obdurate about getting rid of Sullivan? Her enthusiasm may have come from her many discussions with billionaire hedge fund manager Paul Tudor Jones. Venture capitalists now perceive an opportunity to make money from the financial difficulties facing public universities due to deep cuts in state funding.

All of the individuals involved in the email exchanges believe that market principles should be applied to higher education. As the financial meltdowns from the last decade from Enron to the housing bubble have shown time and time again, financiers act with the zeal of converts and the recklessness of gamblers when investing on the latest financial products, technological inventions, or even the debt of countries. Short term, massive profit regardless of long-term consequences and even the law drives their kind of messianic investing. So much so that,  on  the basis of superficial news reports, Dragas and her co-conspirators bet the UVA campus on e-learning.

The emails give some clues as to the identity of other people involved in the conspiracy: besides developer Hunter Craig, a public-minded individual currently suing the state of Virginia over a property deal, there was Jeff Walker, a wealthy donor associated with J.P. Morgan, and venture capitalist Jeffrey D. Nuechterlein who “was not impressed w Terry’s rather pedestrian answer to my question at the Sulgrave Club about online learning and what UVA was doing given what Stanford and others had announced.”

UVA professor Siva Vaidhyanathan, commenting on board members’ use of business jargon in their emails, considers that: “The biggest challenge facing higher education is market-based myopia. Wealthy board members, echoing the politicians who appointed them (after massive campaign donations) too often believe that universities should be run like businesses, despite the poor record of most actual businesses in human history.” The mystique and power of money convinces them that they are the best people to decide complex questions of academic governance even in public institutions.

Indeed, what we are beginning to see is how the corrupt kleptocracy unleashed by Citizens United is trickling down to every aspect of American life, even those long considered vital to the republic such as education.  As a commenter in the Washington Post  named “Leoxthree” writes: “One of the most persuasive [theories] involves Goldman Sachs and their moves to invest in online universities, hoping to brand them using a reputable university with a physical campus. At least one of the players in this drama [the Darden business school’s Peter Kiernan] was a higher up at Goldman Sachs… Public universities being turned into private investment opportunities, rather than into institutions of accessible higher education, is nothing less than the privatization of the public good.”

Board members are appointed by the state governor for their financial campaign support – Dragas’ appointment seems to have come on the cheap; she contributed just $1000 to former Virginia governor Tim Kaine – and for the likelihood of attracting other well-heeled donors. At UVA this seems to have resulted in a heavy concentration of property developers and financiers.

The university has become dependent on their wealthiest donors, who want to control not only how the university is run, but also what gets taught – no classics or German, for instance – to turn out eager mini-Ayn Rands. The context for the power shift is that the state has progressively reduced funding for UVA to somewhat less than 6% of its operating budget in the current financial year. As David Karpf pointed out: “Revenue problems for public universities are not originating in competition from online learning programs. They’re coming through systematic defunding by state legislatures.” So it’s time for legislators and the public to wake up and decide: who owns education? Defunding higher education will only clone the UVA disaster throughout the country.

The New York Times reported: “Forty-one states cut higher education spending last year, from 1 percent in Indiana and North Carolina to 41 percent in New Hampshire, according to a recent study conducted by the Illinois State University Center for the Study of Higher Education and the State Higher Education Executive Officers group.”

In Florida, state spending on education has dropped by 24 percent and is now at 2003 levels. After approving a $300 million cut to Florida’s public universities in April this year, Republican governor Rick Scott vetoed legislation that would allow the University of Florida and Florida State University to raise tuition. Even in liberal Massachusetts, state funding has been cut from 60% of the UMass budget ten years ago to 40% today.

There is huge wealth in America, but municipal and state governments are not seeing much of it. Federal stimulus funding has been ended, and the recession and tax cuts made in the prosperous ‘90s have starved state budgets to the point that state layoffs directly boost the unemployment figures. The disgusting obeisance to the likes of JP Morgan head Jamie Dimon must stop and the banks made to pay back their handouts from the taxpayers. Student debt must be forgiven.

Better yet, we need to restore the funding of higher education as a public good, and prevent it being plundered for private gain.  But in order to do that, we have to eliminate the right that plutocrats have won to run the country through Citizens United. The first order of business is to restore power where it belongs in a democracy: with the people.


1 Comment

Filed under austerity measures, financiers, Hedge Fund managers, Neoliberalism, political analysis, public higher education, University of Virginia

One response to “Dragas, Kington, and Co: The Effects of Trickle Down Kleptocracy on Public Higher Education

  1. Another nice post today thanks. I really enjoyed reading it very much. Have a great day.

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