Saturday 23 July 2016

The Clintons' For Profit Partnership

Gary Silverman wrote an excellent article in Financial Times on Bill and Hillary Clinton and their relationship with the for-profit education sector: "The For-Profit Partnership". (Gary Silverman, 21 July 2016). Donald Trump is not the only Presidential candidate with a very hazy business background.
It is difficult for me to understand how, with so much real talent in the United States, we are stuck with these two candidates. This FT article reminds me not only of the revolving door between politics and the private sector, and how influence is peddled and decisions made, but of the simple fact that the political system is broken.
I don't know a single talented and self-aware person today that wants a career in politics. At least among my network, most of us look on politicians as incompetent liars and corrupt idiots, if not rank buffoons.
A brave few of us have gotten involved in politics, and I admire them for it. But they have gotten nearly nowhere, reaping only despair for their efforts.
The characteristics necessary for success in politics are almost the opposite of success everywhere else:
- A politician can lie and slander with impunity: there is no law against it. We almost expect our politicians to be liars.
- A politician can tear down his opponents and criticise everything, without offering any substantial, budgeted solutions. Only sound bytes.
- A politician very often advances in a political party by outlasting rivals. There is almost no tangible success metric in beyond longevity.
- Membership in political parties has fallen to such a low level, that the "democratic deficit" exists not only in Brussels, but in nearly every national capitol. Theresa May's elevation to Prime Minister of the United Kingdom took place by the vote of 150,000 registered Conservative voters. The UK has a population of 64.1 million.
- A key competence of politicians is fundraising, which comes with strings attached. So a politician can raise funds to pay for his/her own career, with the costs borne by the taxpayers and society he/she claims to represent. I can't think of a similar system in any other "real economy" sector, except perhaps Greek and Cypriot public sector unions.
In Greece and Cyprus, it's all about longevity. We have gone beyond first-generation politicians and are now on the third and fourth generation. Politics has become a family business, with massive personal enrichment and entitlement along the way.
Coming back to the Clinton-Trump race. The great tragedy of our time is that "rational" candidates must back one candidate with a deeply compromised past, while "angry" candidates must back another candidate with an equally deeply compromised past. We are asked, like no other time I can remember, to choose the lesser of two evils, but a magnitude of evil which is frankly unpalatable and unacceptable.
I know who I will vote for. But I don't do this out of any sense of hope or allegiance. Merely out of a vague desire that my choice will do less damage that the other. I have no epistemological basis for believing this.
When I reflect that the United States has some of the greatest companies, universities, entrepreneurs, inventors, athletes, singers, writers, artists and museums in the world, it really makes my heart break.
At this stage, I would rather vote for Bruce Springsteen or Bill Gates or Jon Stewart for President, as unqualified or inexperienced as they may be. But obviously I will never be given that chance.
This is what it has come down to. Two very bad choices. One marginally less bad than the other, although this remains to be proven. A broken political system where rank corruption and gridlock have become normal.

For those of you without FT access, I leave a few choice quotes from the article.

For the Clintons, the Laureate connection has been a profitable step in one of the most lucrative post-presidential business careers in US history. After leaving the White House in 2001 in self-described penury, Mr and Mrs Clinton made close to a quarter of a billion dollars, largely by giving speeches, publishing books and consulting.  
The Clintons, by contrast, have profited financially by using their connections to the global elite — including in such highly regulated sectors as for-profit education, finance and healthcare. Big banks such as Goldman Sachs and UBS, which have together paid almost $2m for speeches from the Clintons since 2013, are the obvious example. “

In the realm of appearance, it’s just unnecessary,” says Robert Reich, who served as Mr Clinton’s labour secretary from 1993 to 1997. “It would be one thing if they were financially needy. But from all the accounts I have read that doesn’t seem to be the case. So why take the risk of the appearance of impropriety? Why give ammunition to the vast networks of people looking for ammunition? It’s a complete mystery to me.”  

The Clintons’ income from for-profit education could prove an especially sensitive subject at a time when US student debt exceeds $1.2tn. Critics argue that for-profit operators devote too much revenue to marketing and providing themselves with a return, and too little to teaching. Their case is made stronger by evidence that students at for-profit schools are less likely to pay back their loans or find jobs.  

Tax returns released by Mrs Clinton’s campaign show that she and her husband reported income of more than $22m from interests in the for-profit education industry since 2010.

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