The student protests of the 32% fee increases approved by the University of California Board of Regents this week are notable for many reasons, not least because they are one of the few mass responses to widespread applications of the "Shock Doctrine" in the wake of massive budget cutbacks at the state and local level. First a quick review of how massively irresponsibility in drafting the stimulus set the stage for this event--and many similar cutbacks that have gone relatively unnoticed. Then, on the flip, a look at the fee hikes in historical perspective as part of a long-term process of privatization.
As I argued back during the stimulus debate, the failure to use federal dollars to help close state budget gaps was a terrible mistake. First off, every dollar taken out of state spending roughly offsets the stimulative effect of every dollar spent by the Federal government--meaning that until you've closed the state budget gaps (either actually or virtually), every dollar of stimulus spending accomplishes roughly nothing. I say "roughly," because the stimulative effect of spending a dollar can very tremendously, as shown in this chart from a Feb 4 diary:
So, $100 billion to extend the Bush tax cuts forever instead of assisting state governments would cost the economy roughly 700,000 jobs. If the $100 billion were used for temporary across-the-board tax cuts, it would "only" have cost about 230,000 jobs.
But making matters even worse than the massive loss in jobs saved or created alone, the state budget culs have wrecked havoc with all manner of state and local agencies and the services they provide. In many cases, the loss of continuity of service is itself quite costly, although ways of measuring these costs are partial and pimative at best. But one thing is quite clear--when the cost is cut-backs in higher education, that cost will continue to be paid for years, if not decades into the future in the form of lost productivity in a less educated and less cretive workforce--at the every least.
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