Tuition fees at US Davis since 1992 have increased a staggering 534 per cent [EPA]

San Pedro, CA – The viral video of Lt John Pike casually pepper-spraying a line of peacefully seated student protesters has deep resonance for the Civil Rights generation. It’s impossible to escape comparisons to Bull Connor ordering the use of fire hoses on the black youth of Birmingham on May 3, 1963. Pike sprays the students’ faces as if they were cockroaches, many have said. The youth of Birmingham were sprayed with such force that some were knocked over like paper dolls. But it was segregation that was about to fall. The UC Davis students face a much more formidable foe, not least because it is harder to define. But their sacrificial courage holds the promise of helping to change that.

The details may differ between Davis and Cairo, but the underlying struggle is fundamentally the same: It is not just youth against age, freedom against repression, innocence against cynicism, hope against fear, dreams against nightmares – it is all that and more. But it is also something historically much more specific. It is the neo-liberal promise against its own grim reality, represented in the street battles in and around Tahrir Square, as well as the pepper-spraying of docile students at UC Davis.

How does it come about that this is the example that America sets for the world? How does a purported liberal democracy become a police state? The drama at Davis provides two paths towards answering that question.

First is the bizarre bifurcation of America’s First Amendment freedoms, with one virtually unlimited form for 1%, who really don’t need any protection, and another, carefully constricted form for the 99%, who really do need it. For the 1%, “money is speech”, an absurd proposition that effectively transforms democracy into plutocracy. But for the 99%, actual speech, along with the closely-linked right of assembly, is subject to all sorts of restrictions as to “time, place and manner”. Tents may cost money, but that doesn’t make them speech. Don’t be ridiculous. We’re not talking about the kind of money that the 1% has.

Sticks over carrots

The second answer is a bit messier one. It has to do with the gradual recasting of a social democratic state – with a broad ethos of shared struggle, shared prosperity and a bedrock foundation of common dignity – into a neoliberal state with a runaway individualist ethos that ultimately tends towards psychopathy. Despite the stories they tell themselves, neoliberal elites are actually much closer to elite conservatives than they are to their own self-imagined liberal base. Their public rhetoric may still carry occasional echoes of FDR and LBJ, even Martin Luther King. But the privatising logic of how they think of policy is vastly more similar to that of Ronald Reagan, or the far less visible figures who worked busily in his shadow.

In his 1999 book, Lockdown America, Christian Parenti explains how he set out to try to understand why America had come to lock up so many of citizens – mostly black or brown – in such a short time. He began with the notion of “prison-industrial complex”, but found the idea insufficient to explain the scope of the changes he observed. Instead, he identified an overall shift in the very nature of how capitalist America organised itself. Put simply, prior to the early 1970s, American capitalism sought to seduce the masses. But then, he wrote, the “crises of over-production, declining profits and the domestic challenge of racial and class rebellion required a move away from the politics of the carrot toward the politics of the stick”.

For decades now, increasingly paramilitary police forces have been deployed against communities of colour, particularly the young, though others suffer less regularly as well. Nonetheless, the promise is that those who keep their heads down, study hard and get into top colleges will largely escape the sort of raw brutality that Lt Pike casually unleashed on the UC Davis campus that day. Obviously now, it’s not a promise that can be kept. For once it is decided that human dignity is conditional, the dignity of everyone is in peril.

California’s fading dream

Behind the headline-grabbing brutality of the pepper-spray video lies a decades-long story of the gradual privatisation of California’s public college and university system – even as resources shifted to building a massive prison system instead. On the one hand, students face skyrocketing tuition costs – up more than 1,000 per cent in just over two decades, if current plans go forward – while tax increases on the wealthy are anathema. A 50-state study in 2009, “Who Pays?” found that California’s 1 per cent paid taxes at a rate a quarter lower than its poorest 20 per cent did. On the other hand, students are ruled over by overpaid operatives of the 1%, whose orientations are utterly divorced from the spirit of public service.

Exhibit A on the latter point is UC Davis Chancellor Linda Katehi, on whose orders the riot police were deployed. Katehi is both a member of the 1% and an overt supporter of police repression on campus. Although she has tried to disavow any responsibility for the pepper spraying of students, it has quickly emerged that she was a co-author of a report used to justify the recent repeal of a 1974 law, banning the police from Greek universities. That law was passed following the overthrow of a military junta. The repeal came just in time, earlier this year, to help suppress Greek protests against the imposition of harsh austerity measures.

As for her economic status, Katehi was hired in 2009 at $400,000 per year plus substantial benefits. That’s the same base pay as the American President, and well more than double the pay of California’s governor, who makes less than $175,000. Katehi holds numerous patents and her husband also teaches at UC Davis – more than enough to place her solidly in the 1%. Her salary represented a massive 27 per cent increase over the pay for the previous chancellor – the very same year that student fees were being hiked by 32 per cent, while classes were being cut. The reasoning was… well, it’s not reasoning, really. It’s just how things are done within the 1% – a procedure based on comparing pay for the heads of various different colleges, public and private, including Johns Hopkins, Yale and the University of Chicago.

This makes perfect sense, considering the governing body behind her, the UC Board of Regents. It’s a veritable Who’s Who of the 1% in California. The Chair is Russell Gould, a former Senior VP of Wachovia Bank; Vice Chair is Sherry Lansing, former Chair and CEO of Paramount Pictures. Others include Richard C. Blum, president of his own investment firm and husband of US Senator Dianne Feinstein; Eddie Island, former VP for McDonnell-Douglas; Norman Pattiz, founder and chair emeritus of Westwood One, America’s largest radio network company.

Now UC Davis is a very good school, but even UC Berkeley isn’t Yale. It’s not so much a question of educational quality – it’s a question of founding mission and purpose… which are not very well served by the sorts of people sitting on the Board of Regents, none of whom has a distinctive educational background. The UC system is part of a three-tiered college system – universities, state colleges and community colleges – that according to California’s 1960 Education Master Plan is supposed to provide affordable higher education to every high school graduate in the state who wants a public college education. Indeed, technically, it’s supposed to be tuition-free. But student “fees” now make a mockery of that. The 32 per cent fee increase mentioned above was just a tiny fraction of the enormous fee increases since 1992 – roughly 1/16 of the 534 per cent total increase in dollars through 2009 – or 1/10 of the total when adjusted for inflation. It’s now even higher, and current plans would jack that increase up to more than 1,200 per cent over 1992 levels in just the next few years.

Fee hikes haven’t been smooth. They’ve skyrocketed in stages as public funding from California’s state budget has plunged in a series of successive budget crises. But the dynamics are more complicated than first meets the eye, as UC Santa Cruz politics professor Bob Meister explained back in 2009. There are actually incentives for university officials to welcome state budget cuts, explained Meister, President of the Council of UC Faculty Associations. State budget money comes with strings attached, prioritising education. But money from student, ironically, has no such restrictions, and hence is perfect for empire-building, he explained.

“How does UC sell $1.3bn in construction bonds immediately after declaring an ‘extreme financial emergency,’ slashing funds for teaching and research and cutting staff and faculty pay? By using your tuition as collateral,” Meister wrote online at KeepCaliforniasPromise.org. “Higher tuition lets UC borrow more for construction even while it cuts instruction and research.” And this is only the beginning, he explained.

“UC’s most recent (post-“emergency”) construction bonds are just the beginning of a long-term (10-15 year) plan to borrow very much more against very much higher tuition in order to fund individual projects that no longer have to be approved by the state or paid for out of each project’s own revenue.”

In short, rather than the university existing to serve the students, it’s the other way round. From the Board of Regents’ point of view, the students are – above all else – a revenue stream to secure Wall Street funding. Hardly a surprise, really, when you consider the makeup of the Board.

Neoliberal markets gone awry

But that’s only a part of the picture. At least two other broader frameworks need to be considered, both illuminating neoliberal economics. First is the existence of a higher-education bubble. While not identical to a classic asset bubble, since education as an asset cannot be sold, other key components are clearly in place: The accelerated inflation of college costs reflects the same dynamics of over-investment as classic asset bubbles (such as housing), while the rapid build-up of student debt reflects declining returns from renting the value of one’s educational asset.

Asset bubbles in general are connected to neoliberal economics, since downward price pressures on wages are an inherent part of the neoliberal model, regardless of propagandistic denials. With wages declining, or stagnant at best, asset-holding of one sort or another remains as the only credible option for economic advancements. The lack of alternatives then results in over-investment, driving up asset prices into a bubble. The housing bubble was a classic example of this, but the underlying logic is quite general.

The second, related framework is that of overvaluing private services and undervaluing public options. Neo-liberals like to claim that they are really no different from social democrats, or New Deal liberals, so far as values and goals are concerned. It’s only that they favour “the use of private means for public ends”, as Ed Kilgore put it – a position often cast as “pragmatic” and “non-ideological”. But this justification generally doesn’t hold up to sustained scrutiny. It’s not just that private means are so ripe for corruption, it’s also that these market enthusiasts tend to misread how markets actually work.

In a very saavy post last April, “On Public Funding of Colleges and Towards a General Theory of Public Options”, Mike Konczal first summarised the neoliberal argument at its best:

“One of the general principles of a neoliberal approach to providing goods is that it is better to give people cash to spend among private providers of a good rather than the government provide these goods themselves at a discount. Giving people cash fosters competition, innovation and choice, while the government providing goods directly at a discount will likely lead to stagnation, dependency and wasted resources.”

But then he observed that this only applied to perfectly competitive markets, which generally don’t exist. In the real world, private providers tend to get most of the value, as more money available drives up the price much more than it increases supply. That’s a big reason why college costs inflate relative to other costs, as mentioned above. Konczal went on to quote from “Public Options: The General Case” by JW Mason:

“Conversely, when public funds are used to reduce tuition at a public university, they don’t just lower costs for students at that particular university. They also lower costs at unsubsidised universities by forcing them to hold down tuition to compete. So while each dollar spent on grants to students reduces final tuition costs less than one for one, each dollar spent on subsidies to public institutions reduces tuition costs by more.”

In short, real-world markets favour the non-market approach as more efficient! This really shouldn’t be so surprising, considering how much Medicare drives down prices, for example. Whatever the field, private oligopolies will capture massive unearned rents, unless there’s at least a vigorous public option to compete with them, and force their prices back down to genuinely competitive levels. The last thing in the world that private oligopolies want is a competitive-free market.

If one looks again at the Board of Regents, one sees that it’s packed with oligopoly capitalists, well insulated from the rough-and-tumble of the idealised competitive marketplace that conservatives rhapsodise over. Both the actual capitalists and the idealised marketplace are far removed from everyday reality – as far removed as any theocracy on Earth.

Indeed, market fundamentalists are like any other fundamentalists: sacrificing the lives of their young in the self-deluded service of their gods. And that’s the real bottom line behind the pepper spray video, and pepper spray nation for which it stands.

Paul Rosenberg is the Senior Editor of Random Lengths News, a bi-weekly alternative community newspaper.

You can follow Paul on Twitter: @PaulHRosenberg

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.