The deliberate pepper-spraying by campus police of nonviolent protesters at UC Davis on Friday has provoked national outrage. But the horrific incident must not cloud the real question: What led comfortable, bright, middle-class students to join the Occupy protest movement against income inequality and big-money politics in the first place?

The University of California system raised tuition by more than 9 percent this year, and the California State University system upped tuition by 12 percent. The UC system is seriously contemplating a humongous 16 percent tuition increase for fall 2012. This year, for the first time, the amount families pay in UC tuition will exceed state contributions to the university system.

University students, who face tuition hikes and state cuts to public education, find themselves victimized by the same neoliberal agenda that has created the current economic crisis, and which profoundly endangers democratic values.

The ideal that California embraced in its 1960 master plan for higher education, that it should be inexpensive and open to all Californians, is being jettisoned without much debate. The master plan exemplified the thinking on education and democracy typical of Founding Fathers such as Thomas Jefferson. In 1786, Jefferson wrote from Europe to a friend:

Preach, my dear Sir, a crusade against ignorance; establish and improve the law for educating the common people. Let our countrymen know that the people alone can protect us against these evils [of tyranny], and that the tax which will be paid for this purpose is not more than the thousandth part of what will be paid to kings, priests and nobles who will rise up among us if we leave the people in ignorance. …

That is, Jefferson believed that the alternative to publicly funded education was the rise of an oppressive oligarchy that would manipulate the ignorant majority.

While the bad economy and the peculiarities of California governance have provoked the state’s budget crisis, the defunding of public higher education has unfolded progressively across the country for two decades. From 1987 through 2007, state support declined by about 9 percent overall per student across the United States; for the flagship research campuses, the decline was around 13 percent. The last three years have seen especially deep cuts.

The increasing privatization of higher education is part and parcel of the neoliberal agenda, which seeks to subordinate everything to soulless markets. As Henry A. Giroux writes: “In England and the United States, universities and businesses are forming stronger ties; the humanities are being underfunded; student tuition is rising at astronomical rates; knowledge is being commodified; and research is valued through the lens of an audit culture.”

Market fundamentalism is notoriously more interested in process than in outcome, in “efficiency” than in higher ethical values. Those who might applaud the end of the state universities and their transformation into private institutions neglect their essential role in the formation of cultural capital and in promoting social mobility, not to mention in keeping America strong against global competitors (the number of Ph.Ds produced annually is a common index of competitiveness).

The assault on publicly funded higher education is wrapped up in the discontents that provoked the Occupy Wall Street movement. Inexpensive state universities are central to the ability of young people from disadvantaged backgrounds to move up in the world. The United States used to be known as a society where those at the bottom could hope to get ahead, and where being born with a silver spoon in your mouth was no guarantee of lifetime prosperity. Now, upward mobility has gotten harder, the rich more often stay rich, and Europe is the land of opportunity. European state support for institutions of higher education is key to that mobility. The United States of America, born in a rejection of an aristocracy by birth, is increasingly a land of hereditary oligarchs.

Not only is a more rigid class structure implied by the decline of public support for state universities, but more fixed race boundaries are, as well. State universities are the most important vehicle for minority students in attaining a degree. While 800,000 minority students attend public universities, fewer than 200,000 can be found on private campuses. If the state universities become as expensive as the privates, the impact on minorities could be severe. It should be noted that the choices made by California are not “natural” or “inevitable.” Maryland dealt with the recent crisis in a progressive way by freezing tuition and raising the corporate tax rate to create a Higher Education Investment Fund.

Why have so many state legislatures betrayed their original commitments to American education? Some have preferred to keep state taxes on the wealthy and on corporations low rather than to keep up with demand for places at state universities. Others have different priorities.

A year and a half ago, then-California Gov. Arnold Schwarzenegger complained that California was spending nearly 11 percent of its budget on prisons and only 7.5 percent on the university system. He noted, “Thirty years ago, 10 percent of the general fund went to higher education and 3 percent went to prisons.” The spike in penitentiary spending is artificial, and does not reflect crime trends. Since the early 1990s, crime in the state has fallen, whereas the prison population has skyrocketed.Stiffer penalties have been set even for victimless, nonviolent, drug-related crimes. California is also one of those states with a “three strikes and you’re out” law, which fills prisons with petty shoplifters while setting more lenient penalties for massive white-collar embezzlement. The Legislature has removed judges’ discretion in releasing prisoners early for good behavior. The clout of the California Correctional Peace Officers’ Union and what has been called the “prison-industrial complex” has played a big role in pushing irrational legislation that has swollen the prison population.

Nationally, the emphasis on supposed law-and-order issues and the epochal mistake of a “war on drugs” that has criminalized a largely inoffensive and medically useful substance like marijuana have gone hand in hand with a militarization of law enforcement. That is, the defunding of higher education in favor of an enormous gulag dovetails with a rise in the paramilitary repression of the population as one of America’s premier industries.

Not only are UC Davis students being hit with massive tuition increases to pay for the penitentiaries and their policing, they are also being treated like unruly inmates by a militarizing police force. In the meantime, the country is taking giant strides toward the future Jefferson feared, of poorly educated citizens at risk of being manipulated by rising oligarchs.

Juan Cole’s column appears every other Tuesday on Truthdig. He is a celebrated Mideast scholar and the Richard P. Mitchell Collegiate Professor of History at the University of Michigan.