The following is a transcript of the video above, from our webinar “Remaking the Economy: Escaping Corporate Capture.” View the full webinar here.

Hannah Appel: I’m going to talk about corporate capture in our work at the Debt Collective in two areas: one, around student debt and how we fund higher education and actually all public education in this country; and two, around housing. And I’m going to link them through pension funds. So, the first example: right now, in the [University of California] system—but [also] true in any nominally public system—the UC system was called public in the past because it used to be funded by tax dollars.

So, this of course goes to [fellow panelist] Arlene [Martinez’s] work, too. But there was a tax revolt. There was a lot of organizing by wealthy people and corporations in the late 70s throughout the 80s. Now folks refer to it as the “neoliberal tax revolt.” And that withdrew a ton of taxes from all public services except, note, incarceration. We’ll get to that. But it withdrew a ton of tax dollars from public schools.

And so very slowly over time, any nominally public system in higher education has gone from…majority tax-funded, to majority tuition-funded. But are students actually paying tuition? No. They’re going into debt. Except [for] the wealthy kids at these public schools…[students] and their families are going into debt.

That’s not even the corporate capture part, even though it was part of a corporate tax revolt that caused that. Here’s the corporate capture part…[this is] true of K–12 education—public K–12 education—and higher ed. Because of this tax fall, a shortfall in tax revenue, they’re getting all this tuition money through debt. They’re getting paid by the federal government.

While [public universities] call themselves public, they are completely captured by the for-profit logic that is driven by the bond market.

But what do the universities do? They go to bond markets to raise money, right? So, the University of California system has billions of dollars in outstanding debt, so the rich people and corporations, instead of redistributing their money in taxes, now they’re actually able to profit off of their investments in the UC system.

So, what used to be redistribution from the few to the many via taxes, now that UC funds everything from their dorms to their research and development through bond money, now it’s actually wealthy investors, and notably, pension funds, who are funding them.

And so, what does that mean? That means that the UC system has to please Moody’s and it has to please Standard & Poor’s—these are the people who rate bonds.  

So if you go read Moody’s higher education rating system, what does it tell the University of California and all other public schools? “You have to always be able to raise tuition so you can guarantee to us that you can repay these bonds. You also have to minimize your unionized labor so we know that you can have precarious professors who can be fired at any time. You also have to continue to maximize whatever revenue generating potential you have. Is that your sports teams? Is that developing real estate? Is that not only raising tuition but also having fancy dorm options and stuff like that?”

So, while the University of California system and all the other nominally public systems can continue to call themselves public, they are completely captured by the for-profit logic that is driven by the bond market and institutionally, specifically driven by Moody’s and Standard & Poor’s. Because if your students go on strike, if your workers go on strike, if there is unrest, what happens? Your cost to borrow goes up.

They’re incentivized to have as few unionized workers as they can. They’re constantly incentivized to have as many high-paying students as they possibly can, so getting students who pay more from out of state, getting students who pay more as international students.  

That’s one example of corporate capture and higher education that is driving the student debt crisis. The related example—the UC system’s pension funds just bailed out Blackstone. Blackstone is a huge corporation invested in many things, among them real estate. And they bailed out what’s called a REIT, Blackstone’s Real Estate Investment Trust. Kali [Akuno] was talking about Airbnb [during this webinar]. It’s the same thing. The University of California laments the housing crisis, that none of their students and none of their workers can afford to live around any of the campuses across all 10 campuses in California, and yet they literally invest in driving up the cost of housing.