The corporate “ed reform” movement to privatize public education is quite lucrative – public education spending runs in the billions across the country. So should anyone be surprised that Wall Street has stepped out of the shadows to get in on the action?
Wall Street has already been the funding base for Michelle Rhee and other privatizers but has always presented itself merely as trying to benevolently control people not control people to exploit them. But now Goldman Sachs is creating new financial instruments to finance public education.
Goldman Sachs is making its second foray into an experimental method of financing social services, lending up to $4.6 million for a childhood education program in Salt Lake City. This “social impact bond,” in which Goldman stands to make money if the program is successful but will lose its investment if it fails, will support a preschool program intended to reduce the need for special education and remedial services. The upshot, in theory, is that taxpayers will not have to bear the upfront cost of the program…
“Social impact bonds are an entirely new way of financing things that have traditionally been paid for either through philanthropy or by taxpayer dollars,” said Alicia Glen, head of Goldman’s urban investment group.
Quantifying Wall Street’s “social impact” should prove interesting. And guess what other lucrative public services industry Goldman has gotten into?
Though the effectiveness of this type of financing remains unproved, it has gained a prominent adherent in New York City, which allowed Goldman to invest nearly $10 million in a jail program last year. The city was the first in the United States to test social impact bonds.
Though Wall Street will likely have to hire experts for its jail investments as going to jail is a foreign concept to banksters.
Utah is not the first nor likely last investment Wall Street is making in public education. Goldman Sachs urban investment group also made investments in a charter school program backed by New Jersey Governor Chris Christie and Newark Mayor Cory Booker. [cont’d]