Corruption In Construction Contracts And Costs

Welcome to Gotham City - please pay your bribe before entering:

Four veteran construction executives and their company have been charged with systemically stealing tens of millions of dollars from investment firms, insurance companies and law firms as they built corporate offices in buildings across Manhattan.

The four men, who worked at Lehr Construction Corporation, routinely inflated the cost of mechanical, electrical and other subcontractor costs by 10 percent to 13 percent on office projects, according to an indictment unsealed Wednesday in State Supreme Court in Manhattan.

The Manhattan district attorney’s office raided Lehr’s offices 14 months ago, seizing records, hard drives and a “black book” that they said provided a detailed accounting of the scheme. Prosecutors said the company, which also was indicted, and the senior executives — Jeffrey Lazar, Todd Phillips, Steven Halper and Steven Wasserman — stole at least $30 million from 1998 to December 2010. The men were to be arraigned midday.

The indictments are part of a widening investigation by the district attorney into the city’s multibillion-dollar interior construction industry. It is also the second time in 13 years that executives at Lehr, a construction company that at its peak had roughly $500 million a year in billings, has been charged with fleecing their corporate customers, and the third corruption case involving a member the Lazar family, which founded Lehr.

“This construction company was corrupt at all levels,” said Cyrus R. Vance Jr., the Manhattan district attorney. “Its executives developed — and successfully executed — a scheme to steal millions of dollars from their clients.”

Yikes - with crimes like that, it sounds like Lehr Construction should be the recipient of some no-bid contract action from the NYCDOE.

Student Loan Lenders That Continue To Charge Payments Even After Death

I always tell my seniors to be mindful of what kinds of student loans they take out for college and how much money they take them out for.

"Remember," I say ominously, "there are only two ways to get rid of student loans once you take them out. You can either pay them off in full or you can die."

I mean to be blunt - getting into massive amounts of student loan debt can be a scary thing.

But loan debt is scarier than even I thought, because it turns out that for some loans, death doesn't actually discharge the obligation to pay them off anymore:

In July 2006, 25-year-old Christopher Bryski died.

His private student loans didn't. Mr. Bryski's family in Marlton, N.J., continues to make monthly payments on his loans—the result of a potentially costly loophole in the rules governing student lending.

As the college season nears, throngs of parents and students still are applying for private student loans, long used by students as an alternative to federal loans. But they may be unaware that in cases where the student dies, the co-signers often are obliged to pay off the balance of the loan themselves—a requirement typically not found in federal loans.

Many private student-loan lenders say they have a review process for cases involving disability or injury, and the new Bureau of Consumer Financial Protection will have an ombudsman in charge of private student loans. Yet neither the student-loan legislation passed in March as part of the health-care overhaul nor the financial-system overhaul passed in July requires lenders to discuss with the borrower and co-signer the consequences of a borrower's death or permanent disability, or require lenders to forgive private loans in those cases.

Sallie Mae, Citigroup and Wells Fargo all require co-signers to continue paying loans when the borrower has died or been reduced to a vegetative state.

Amazing - just another example of how this is the banksters' world and we just live in it.

Wall Street Criminals And Robber Barons Pledge "Transformative Change"

Take a look at this hit list of crooks, robber barons and employers of slave labor:

NEW YORK (Reuters) - A total of 40 U.S. billionaires have pledged to give away at least 50 percent of their wealth as part of a campaign by investor Warren Buffett and Microsoft founder Bill Gates.

Gates and Buffett launched "The Giving Pledge" in June to convince hundreds of U.S. billionaires to give away most of their fortune during their lifetimes or after their deaths and to publicly state their intention with a letter of explanation.

Here are some excerpts from letters written by billionaires taking the pledge:

* Laura and John Arnold, hedge fund manager: "We view our wealth in this light -- not as an end in itself, but as an instrument to effect positive and transformative change."

* New York City Mayor Michael Bloomberg: "If you want to do something for your children and show how much you love them, the single best thing -- by far -- is to support organizations that will create a better world for them and their children. And by giving, we inspire others to give of themselves, whether their money or their time."

* Philanthropist Eli and Edythe Broad: "Those who have been blessed with extraordinary wealth have an opportunity, some would say a responsibility -- we consider it a privilege -- to give back to their communities, be they local, national or global."

* Investor Warren Buffett: "Were we to use more than one percent of my claim checks (Berkshire Hathaway stock certificates) on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99 percent can have a huge effect on the health and welfare of others."

* Microsoft founder Bill and Melinda Gates: "We have been blessed with good fortune beyond our wildest expectations, and we are profoundly grateful. But just as these gifts are great, so we feel a great responsibility to use them well. That is why we are so pleased to join in making an explicit commitment to the Giving Pledge."

* Hotel magnate Barron Hilton: "It is my hope that others are inspired by my father's story, and by our family's steadfast adherence to his charitable philosophy."

* Corporate executive Jon and Karen Huntsman: "It has been clear to me since my earliest childhood memories that my reason for being was to help others."

* Banker George Kaiser: "I had the advantage of both genetics (winning the 'ovarian lottery') and upbringing. As I looked around at those who did not have these advantages, it became clear to me that I had a moral obligation to direct my resources to help right that balance."

* Media entrepreneur Gerry and Marguerite Lenfest: "The ultimate achievement in life is how you feel about yourself. And giving your wealth away to have an impact for good does help with that feeling."

* Business Wire founder Lorry Lokey: "There's an old saying about farmers putting back in to the ground via fertilizer what they take out. So it is with money. The larger the estate, the more important it is to revitalize the soil."

* Moviemaker George Lucas: "My pledge is to the process; as long as I have the resources at my disposal, I will seek to raise the bar for future generations of students of all ages. I am dedicating the majority of my wealth to improving education."

* Tashia and John Morgridge, former Cisco CEO: "The more personally involved we have become with the causes we support the more effective we seem to be."

* Peter Peterson, founder of Blackstone Group equity firm: "As I watched and learned from my father's example, I noticed how much pleasure his giving to others gave him. Indeed, today, I get much more pleasure giving money to what I consider worthwhile causes than making the money in the first place."

* David Rockefeller, patriarch of the Rockefeller family: "Our family continues to be united in the belief that those who have benefited the most from our nation's economic system have a special responsibility to give back to our society in meaningful ways."

* Jeff Skoll, former eBay executive: "The world is a vast and complicated place and it needs each of us doing all we can to ensure a brighter tomorrow for future generations."

* Asset manager Tom Steyer and Kat Taylor: "Surely the pleasure we derive from St. Francis' active verbs of consoling, understanding, loving, giving and pardoning far outweigh any selfish and passive pleasures of owning, having, or possessing."

* Media magnate Ted Turner: "I'm particularly thankful for my father's advice to set goals so high that they can't possibly be achieved during a lifetime and to give help where help is needed most. That inspiration keeps me energized and eager to keep working hard every day on giving back and making the world a better place for generations to come."

* Former Citigroup executive Sanford and Joan Weill: "Our Pledge is this: We will continue to give away all of the wealth we have been so fortunate to make except for a very small percentage allocated to our children and grandchildren between now and the time we pass because we are firm believers that shrouds don't have pockets."

Transformative change to these bastards means working people working longer and harder for less money, then getting laid off at forty and working in Walmart stocking shelves or 7/11 making coffee until Social Security retirement comes around - at age 72.

One name on the list I would like to take a closer look at is George Lucas.

Unlike Gates, Broad, Jobs, Bloomberg, et al., you don't see Lucas bashing teachers or talking data collation and test score accountability.

And he doesn't put anywhere near the kind of money the others put into education "reform."

But he does seem to fashion himself an education reformer.

So more on Lucas and his style of education reform in a future post.

Clueless in D.C.

Wow - President Obama is even dumber than I thought.

First, a story from Bloomberg News:

Feb. 10 (Bloomberg) -- President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Now Paul Krugman's reaction to Obama's comments:

Oh. My. God.

First of all, to my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses.

And more specifically, not only has the financial industry has been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability. Don’t take it from me, take it from the rating agencies:

The planned overhaul of US financial rules prompted Standard & Poor’s to warn on Tuesday it might downgrade the credit ratings of Citigroup and Bank of America on concerns that the shake-up would make it less likely that the banks would be bailed out by US taxpayers if they ran into trouble again.

The point is that these bank executives are not free agents who are earning big bucks in fair competition; they run companies that are essentially wards of the state. There’s good reason to feel outraged at the growing appearance that we’re running a system of lemon socialism, in which losses are public but gains are private. And at the very least, you would think that Obama would understand the importance of acknowledging public anger over what’s happening.

But no. If the Bloomberg story is to be believed, Obama thinks his key to electoral success is to trumpet “the influence corporate leaders have had on his economic policies.”

We’re doomed.

We are doomed.

Not only does Obama seem to believe the "free market capitalism" jive that allows these crony capitalists on Wall Street to rig the system, steal from the taxpayer and run the economy like a Reno casino while privatizing profits and shunting losses onto the public, but he wants to take these same values and ideas and apply them to public education.

Meaning crony capitalists will have a new punch bowl to slurp from and more new yummy profits to gobble up while shunting the losses onto the public.

But education, like the economy, will fail to get any better under Obama's stewardship.

10 False "Race to the Top" Assumptions

With the education deformers and public education privatization proponents on the offensive at the city, state and federal levels these days, it is becoming increasingly difficult to beat back their bullshit.

Two new documentaries are coming out celebrating the wonders of the charter movement and exposing the evils of teachers unions.

President Obama has made education privatization and top-down education deform a major component of his Change You Can Believe In agenda.

The state has listed 34 NYC schools that will be either closed, restructured or handed over to charters.

The city has 20 schools it plans to close after a pro-forma meeting by the PEP boards rubberstamps Mayor Moneybags' plans.

Anderson Vanderbilt Cooper and so many others in the media (see this jive at Huffingtonpost here and here for the latest examples) fall over themselves to show how wonderful and innovative the charter movement is but get the basic facts wrong.

Wall Street and the members of the corporatocracy race to hand out money to the charter movement and sit on their boards while charter schools push out traditional public schools from their spaces, steal their resources and take the cream of the crop of public school students, leaving public schools to educate the ELL's, the support service students and the at risk students charters refuse to take.

These are tough times for educators and students in the traditional public school system. It feels like we are on the losing end of the battle and it is coming sooner rather than later.

With the state and city closing or restructuring 46 public schools this year and with the overflow of at risk students from those schools sure to be handed over to the remaining public schools, within a few years you can see how every traditional public school in the city will have been declared "failing" and closed.

We can and will fight this, but right now, the charter movement has all the money, the resources and the political allies.

They have much of the momentum.

But we can get our message out, which is to show how the education deformers are wrong on nearly every point of their "reform" message.

Last October, Marion Brady, a veteran teacher, administrator and curriculum developer, wrote a great piece in the Washington Post that lists the false assumptions the Race to the Top initiative makes.

I want to post it in full. It is essential to list this because it is the truth.

Charter proponents and education deformers don't care about truth, of course. Nor do most of them care about education or students.

This is about opening up another financial windfall for for-profit corporations that already own this country and came close to bringing it down last year with their greed and hubris.

This is about creating good future corporate employees willing to work longer and harder to make much less than their parents and grandparents did.

This is about building a bridge back to 19th century when the work week was 60 hours and 6 days.

This is about the robber barons like Gates, Broad, Bloomberg, Jobs et al. extending their power and hold on the country.

They're not interested in an educated populace.

An educated populace could see through their bullshit.

No, they're interested in owning everything and solidifying their power and position - and what better way to do that then socialize children as serfs, destroy the labor movement completely and use globalization and free trade as a rationale for why Americans must work longer and harder to make so much less while carrying so much more debt.

We must fight this.

Here is Brady's piece:

By Marion Brady
"Race to the Top? National standards for math, science, and other school subjects? The high-powered push to put them in place makes it clear that the politicians, business leaders, and wealthy philanthropists who’ve run America’s education show for the last two decades are as clueless about educating as they’ve always been.

If they weren’t, they’d know that adopting national standards will be counterproductive, and that the "Race to the Top" will fail for the same reason "No Child Left Behind" failed—because it’s based on false assumptions.

False Assumption 1:
America’s teachers deserve most of the blame for decades of flat school performance. Other factors affecting learning—language problems, hunger, stress, mass media exposure, transience, cultural differences, a sense of hopelessness, and so on and on—are minor and can be overcome by well-qualified teachers. To teacher protests that they’re scapegoats taking the blame for broader social ills, the proper response is, "No excuses!" While it’s true teachers can’t choose their students, textbooks, working conditions, curricula, tests, or the bureaucracies that circumscribe and limit their autonomy, they should be held fully accountable for poor student test scores.

False Assumption 2:
Professional educators are responsible for bringing education to crisis, so they can’t be trusted. School systems should instead be headed by business CEOs, mayors, ex-military officers, and others accustomed to running a "tight ship." Their managerial expertise more than compensates for how little they know about educating.

False Assumption 3:
"Rigor"—doing longer and harder what we’ve always done—will cure education’s ills. If the young can’t clear arbitrary statistical bars put in place by politicians, it makes good sense to raise those bars. Because learning is neither natural nor a source of joy, externally imposed discipline and "tough love" are necessary.

False Assumption 4:
Teaching is just a matter of distributing information. Indeed, the process is so simple that recent college graduates, fresh from "covering" that information, should be encouraged to join "Teach For America" for a couple of years before moving on to more intellectually demanding professions. Experienced teachers may argue that, as Socrates demonstrated, nothing is more intellectually demanding than figuring out what’s going on in another person’s head, then getting that person herself or himself to examine and change it, but they’re just blowing smoke.

False Assumption 5:
Notwithstanding the failure of vast experiments such as those conducted in eastern Europe under Communism, and the evidence from ordinary experience, history proves that top-down reforms such as No Child Left Behind work well. Centralized control doesn’t stifle creativity, imply teacher incompetence, limit strategy options, discourage innovation, or block the flow of information and insight to policymakers from those actually doing the work.

False Assumption 6:
Standardized tests are free of cultural, social class, language, experiential, and other biases, so test-taker ability to infer, hypothesize, generalize, relate, synthesize, and engage in all other "higher order" thought processes can be precisely measured and meaningful numbers attached. It’s also a fact that test-prep programs don’t unfairly advantage those who can afford them, that strategies to improve the reliability of guessing correct answers can’t be taught, and that test results can’t be manipulated to support political or ideological agendas. For these reasons, test scores are reliable, and should be the primary drivers of education policy.

False Assumption 7:
Notwithstanding the evidence from research and decades of failed efforts, forcing merit pay schemes on teachers will revitalize America’s schools. This is because the desire to compete is the most powerful of all human drives (more powerful even than the satisfactions of doing work one loves). The effectiveness of, say, band directors and biology teachers, or of history teachers and math teachers, can be easily measured and dollar amounts attached to their relative skill. Merit pay also has no adverse effect on collegiality, teacher-team dynamics, morale, or school politics.

False Assumption 8:
Required courses, course distribution requirements, Carnegie Units, and other bureaucratic demands and devices that standardize the curriculum and limit teacher and learner options are products of America’s best thinkers about what the young need to know. Those requirements should, then, override individual learner interests, talents, abilities, and all other factors affecting freedom of choice.

False Assumption 9:
Notwithstanding charter schools’ present high rates of teacher turnover, their growing standardization by profit-seeking corporations, or their failure to demonstrate that they can do things all public schools couldn’t do if freed from bureaucratic constraints, charters attract the most highly qualified and experienced teachers and are hotbeds of innovation.

False Assumption 10:
The familiar, traditional "core curriculum" in near-universal use in America’s classrooms since 1893 is the best-possible tool for preparing the young for an unknown, unpredictable, increasingly complex and dangerous future.


"Human history," said H.G. Wells, "is a race between education and catastrophe."

If amateurs continue to control American education policy, put your money on catastrophe. It’s a sure thing.

Right now, we're facing catastrophe. Chicago already has it, courtesy of Duncan and Obama and their education deform allies.

New York is getting it courtesy of Bloomberg and Klein and now Meryl Tisch, David Steiner and Barack Obama.

The rest of the country is getting it courtesy of Obama too.

We have to stop Obama and Duncan before it is too late.

We have to stop Bloomberg, Klein, Broad, Gates, et al. from their predatory philanthropy that masks power consolidation as charity.

We have to keep the rationale for the public education system as it has been - to educate informed, intelligent citizens for a democracy, and not the compliant serfs and good corporate employees the education deformers and hedge fund managers want.

It's not too late to do this.

But it's getting later by the day.

State To Close 34 NYC Public Schools

The NYSED has placed 34 New York City public schools, many of them large high schools, on a hit list to be either closed or converted into charter schools.

This is of course the system Arne Duncan and Barack Obama have used in Chicago to destroy public education and turn it into a publicly-funded, privately-operated playground for hedge fund managers.

This is also the strategy they have taken national with their Race to the Top education competition.

I don't think I understate matters when I say that by the time Barack Obama gets finished with his first term in office, most of the New York City public school system will have been destroyed and turned into privately operated charters.

Now we'll see the kind of pushback the state gets on this move to transform, re-engineer and/or close 34 schools in New York City on top of the moves Bloomberg and Klein have made to close 20 schools (some are on both lists), but we're talking tens of thousands of students who will be affected by this "reform" who will be transferring to schools who will of course not receive the extra resources needed to handle them and their educational needs. And then those schools will be transformed, "re-engineered," and/or closed until the only non-charters left in the city will be Stuyvesant, Bronx Science and Brooklyn Tech.

I do not see how people can look at this upheaval and destruction without wondering if the people bringing it about (i.e., Obama and Duncan, the NYSED) know what they're doing.

But so far the plan is going along swimmingly and the only wrench in it was when the Assembly and the Senate could not come to an agreement to lift the charter cap last week.

Once that cap is lifted, I suspect most of those schools that will be closed will be replaced with charter schools run by hedge fund managers

But of course the students considered most at risk will not be in those charters.

They'll be moved to other public schools where the test scores and grad rates will plummet and next year those schools will be closed.

And the cycle will go on until the shock syndrome is complete.

Of course, students will not be receiving a better education, nor will at risk students be getting the help they need.

But the hedge fund managers and the corporate whores in the White House, City Hall, and Tweed Courthouse will be grinning from ear to ear.

And the teachers union?

Well, it will be kinda small since there won't be many unionized schools left.

It's Only Teachers Who Are Accountable

The financial system nearly collapsed last year because people in the financial industry at "Too Big To Fail" institutions like AIG, Citigroup, Bank of America, Goldman Sachs and others took too much risk and needed to be bailed out by hundreds of billions of taxpayer dollars.

Many of those same people are being rewarded with seven and eight figure bonuses this year.

The financial policy makers who helped create this mess - like Ben Bernanke who voted yes on every Greenspan "moral hazard" policy decision and who has been printing money hand over fist to give to the "Too Big To Fail" institutions and Treasury Timmeh Geithner who oversaw the AIG bailout wherein he handed AIG counterparties 100 cents to the dollar on money owed to them for toxic assets they themselves had bought that were worth at best 20 cents and who asked one of those counterparties, Goldman Sachs, to keep this deal secret from the investigators at the SEC - continue to cheerfully make financial policy.

In fact, Obama renominated Bernanke for another four years and the administration said last week that Geithner has the full confidence of the president.

On December 25, 2009, a Nigerian man set his penis on fire trying to blow up a plane over Detroit. The man's father had warned the State Department that he had become radicalized and was a danger to the United States. In addition, the CIA knew he visited radical elements in Yemen and was a danger to the United States. Nonetheless the man bought a one way ticket with cash and bordered a plane in Nigeria without any luggage and flew to the United States with a visa that said he was coming for a "religious ceremony" (a jihadi euphemism for martyrdom.) The attack was only averted because passengers on the plane noticed his crotch was on fire and held him down until the plane landed.

Two days after the incident, Director of Homeland Security Janet Napolitano said "The system worked..." when talking about the incident. Widely ridiculed for that statement, the administration forced her to walk that back the next day when she said "The system actually didn't work..." and Obama himself said there had been systemic failures throughout the intelligence apparatus that kept the Feds from stopping this man before he got on the plane to Detroit.

Nonetheless, Obama said he was not going to be part of a blame game and point fingers at anybody, so nobody was fired, nobody was held accountable for any of this.

Essentially Obama said "Mistakes were made" and left it that.

Now compare the way Obama has treated the "Too Big To Fail" institutions, the people at those institutions who are pulling in seven and eight figure bonuses for 2009, the policymakers who helped create the mess and the people in his government who missed the very obvious signs of a incoming terrorist attack and then afterward brushed aside criticism by saying "The system worked..." with the way he treats teachers and schools that he considers "failing."

You work in a school that used to be a "good school" but had hundreds of ELL's, support service students and other at-risk students dropped on it in the last few years from other schools that were closed, but have received no extra resources to handle the new students - too bad, Obama says your school needs to be closed down, the teachers need to be fired and a non-unionized charter should be opened in its place. Remember, it's only the test scores that matter.

You work in a school that has few resources, an overpopulated building, overcrowded classrooms, and bathrooms being used to hold math classes in because a charter school has been placed on the first and second floors of your building - too bad, Obama says your school needs to be closed down, the teachers need to be fired and a non-unionized charter should be opened in its place. Remember, it's only the test scores that matter.

You're teaching students who come from impoverished families with generations of dysfunctional behavior, mental illness, alcoholism and other addictions, students themselves who are in great emotional pain and act out that pain through angry outbursts in school or by simply never coming to class and you don't have any way to reach them - too bad, it's your fault they're that way and Obama says you're school needs to be closed down, the teachers need to be fired and a non-unionized charter should be opened in its place. Remember, it's only the test scores that matter.

In Obama's America, like in Bush's America, nobody is accountable for anything except for the teachers and the public education system.

Everybody else, including the president who gave himself a B+ for his first year in office (record deficit, 10% unemployment, hundreds of billions in giveaways to the "Too Big To Fail" firms, no major legislation passed, health care reform turned into major giveaway for the health insurance industry, reneged promises on Card Check legislation and DaDT) gets a pass, a "Heckuva job, Janet" pat on the back, or an eight figure bonus for taking the economic system to the point of collpase and needing billions in bailout dollars and continued access to Federal Reserve 0% interest-free loans to survive.

I cannot wait to hold President Accountability accountable come November 2010 and November 2012.

It's time everybody hold President Accountability accountable for not holding all these other crooks and incompetents accountable.

Applying Financial "Innovations" To Public Education

Via Barry Ritholtz at The Big Picture, here are six lessons from the collapse of the economy in 2008-2009 that Economics Nobel Laureate Joseph E. Stiglitz says we haven't learned yet:

1. Markets are not self-correcting, and without adequate regulation, they are prone to excess.

2. There are many reasons for market failures. Too-big-to-fail financial institutions had perverse incentives: Privatized gains, socialized losses.

3. When information is imperfect, markets often do not work well – and information imperfections are central in finance.

4. Keynesian policies do work. Countries, like Australia, that implemented large, well-designed stimulus programs early emerged from the crisis faster

5. There is more to monetary policy than just fighting inflation. Excessive focus on inflation meant that some central banks ignored what was happening to their financial markets. The costs of mild inflation are miniscule compared to the costs imposed on economies when central banks allow asset bubbles to grow unchecked.

6. Not all innovation leads to a more efficient and productive economy – let alone a better society. Private incentives matter, and if they are not properly aligned, the result can be excessive risk taking, excessively shortsighted behavior, and distorted innovation.

Notice number six on the list. Stiglitz elaborates:

While the benefits of many of the financial-engineering innovations of recent years are hard to prove, let alone quantify, the costs associated with them - both economic and social - are apparent and enormous.

Indeed, financial engineering did not create products that would help ordinary citizens manage the simple risk of home ownership - with the consequence that millions have lost their homes, and millions more are likely to do so. Instead, innovation was directed at perfecting the exploitation of those who are less educated, and at circumventing the regulations and accounting standards that were designed to make markets more efficient and stable. As a result, financial markets, which are supposed to manage risk and allocate capital efficiently, created risk and misallocated wildly.

President Obama and Mayor Bloomberg are helping to bring the kinds of financial "innovations" Stiglitz is talking about above to public education.

Neo-liberals like Obama and Bloomberg privilege the "free-market" and want to bring "free-market principles" like merit pay, standardized test tracking and the Race to the Top zero sum competition for funds (12 states win, 48 states lose) to public education in order to shake things up and force what they see as entrenched schools and educators to innovate.

But as Stiglitz notes about the financial markets, if unregulated, they bring short-sighted action and greedy behavior that is harmful to individuals and society as a whole. That's the kind of action we're seeing in public education these days as cities and states try all kinds of unproven innovations, like closing whole swaths of schools in cities like Chicago and New York and reopening them as charter schools.

Mayor Bloomberg has closed over 50 public schools in the last three years. He says more closures are to come in the next four years of his third term. He closes these schools for low test scores and low graduation rates as measured by the Department of Education (some schools with lower scores and rates remain open, however, so the process is not very transparent.) President Obama likes that school closure policy and has institutionalized it as part of his Race to the Top zero sum/winner take all education funds competition.

Leaving aside how some of the most recently closed schools in New York City used to have higher test scores and higher graduation rates before hundreds of at-risk students from other schools were dumped on them, let's note that fear of closure will have all kinds of harmful effects on how schools and educators operate.

You can be sure this year's Regents exams will get extra special attention from the graders when grading time comes. You can also be sure that teachers will feel the pressure from assistant principals and principals. For the ELA Regents exam, essays that should be graded a "2" will get a "3" and perhaps even a "4" if a student is right under a 65 score for the test. With the stakes so high, grade inflation will be rife throughout the system. And merit pay creates the same kind of grade inflation/cheating environment that the school closure policy does, only on the individual level for teachers.

Public education needs to be a collaborative enterprise where teachers help each other and schools work together to educate children. But with the Obama/Bloomberg school closure policies, schools will compete to enroll students who are either at or above grade level while finagling to get at-risk students, ELL students, or support services students off their enrollment lists. Why should a school take a chance having test scores and graduation rates drop and have Mayor Bloomberg order them closed when they can simply exclude "problem" students (as so many of the charter schools do)? On the individual level, why should teachers take on "at-risk" students in their classrooms and risk low test scores when their pay is contingent upon the scores? Even worse, why should teachers take on at-risk students if the safety of their jobs is contingent upon scores, as both Obama and Bloomberg want to do by tying standardized test tracking to teacher evaluations?

As for the data being used to evaluate students and teachers, that too is suspect. Stiglitz notes that "When information is imperfect, markets often do not work well – and information imperfections are central in finance." Well, the same can be said for education. Test scores can be a part of the picture of how a student or a teacher is performing, but they are certainly not the whole part. And considering how easily manipulated the current battery of state tests are, I'm not sure they are even a part of the picture at all. Even Secretary of Education Arne Duncan admits that the tests as currently constructed are imperfect and not a terribly good measure of student or teacher performance. But he also says they're the best we have, so we have to use them. The data fetish itself is a troubling thing these days, but the fact that the data fetishists insist upon using the data even though they admit it is suspect is even more troubling.

Finally, paying students merit pay for test scores seems designed to perpetuate the Wall Street mentality that nothing counts as progress unless it goes up every quarter and pays you a bonus. And I think that's the idea behind all these hedge fund managers and financial wizards getting into the public education sphere. It's simply another revenue grab by the robber barons who already own this country, have already been bailed out by middle and working class taxpayers and make ridiculous amounts of money for the task of moving paper around at the nation's most expensive casino on Wall Street.

You would think that after the hedge fund managers and financial wizards created the worst economic crisis since the Great Depression, they would be shunned from public policy discussions instead of being given a seat at the education reform discussion table and given another taxpayer-provided punch bowl to devour.