As most of us know when we think about it, a million dollars isn’t what it used to be. Not that I would mind having a million or so, but nonetheless..
People have trouble with big numbers. It’s likely an individual thing, but for almost everyone there’s a large number that is emotionally indistinguishable from much larger numbers. This makes it easy for people to be misled into thinking that something is far more important than it truly is. Dean Baker has commented on this frequently, pointing out that more salient information is passed on when numbers are put in context, usually by expressing them as percentages of a whole. The New York Times actually promised to change it’s ways, but it never did.
Which brings us to the subject of today’s post: the fact that the Obama Administration recently gave a $102 million dollar hand slap to Goldman Sachs owned Education Management Corporation, a for profit “education” company. Like the other “educational” for-profits, EDM’s business plan is built upon fraud.
It recently agreed to pay the aforesaid $102 million to settle a fraud claim brought by the Justice Department. The Department loudly trumpeted its great work, and the press for the most part covered it as a triumph of good over evil. But, in fact, the penalty was a fairly tiny fraction of the billions EDM has gained by fleecing taxpayers and students:
If you read that the DOJ required a loan-forgiveness program from Education Management Corporation, you might think that the Obama administration is seriously cracking down on for-profit education companies. However, the pool of students who will share in “the $102.8 million loan forgiveness program” is so restrictive that Education Management will not be held liable for the plundering of federal and personal loans totaling in the billions of dollars over the past few years. In short, the corporation has profited from its fraud, just as Wall Street financial firms – as BuzzFlash has frequently documented – have engaged in deceitful practices that resulted in profits exceeding government fines.
In fact, the overlap between Wall Street and for-profit firms is actually transparent, since the revenue-seeking firms in question are generally traded on stock exchanges. Furthermore, as The New York Times report points out:
In resolving the federal and state complaints, Education Management, which is owned partly by Goldman Sachs, did not acknowledge wrongdoing. Doing so would have meant that individual students would have had potential grounds to discharge their loans taken out to attend the colleges, potentially costing hundreds of millions [actually billions] of dollars.
Here, then, is a model of how Washington enables fraudulent financial and for-profit educational activity – and how they overlap. Education Management, in which Goldman Sachs has an investment, is allowed to continue to operate, with a lot of its revenue ill-gotten – most of which represents federal loans to students – largely intact.
via Truthout
When you or I break the law, say by stealing a few billion dollars, odds are we’ll go to jail. When banks and corporations break the law, they pay a fine that is piddling in relation to the amount of the profit they’ve made by doing so, and some of the payments they make can be tax deductible. It’s a cost of doing business and often just a tiny part. Yet because the amounts sound so very big, many of us can be convinced that the government has really meted out a punishment. We wouldn’t be similarly snookered if we read in a newspaper that someone stole a thousand dollars and was fined a dollar for doing so.
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