david (isaac) backer

When I was young, I got the impression very early that I should go into science and be good at math. It’s actually one of my earlier memories: if I could be good at science, math, or things like it (computers, etc) then I’d be smart and successful. Bottom line: I could make money.

I get angry now when I remember this structural hoodwink. Such bullshit. There’s been various waves of emphasis on science, technology, engineering, and mathematics (STEM) in United States curriculum policy. One of the biggest was during the Cold War after the Soviet Union launched its satellite Sputnik and won the space race. The existence of a strong communist presence in the world had a significant impact on US domestic policy in a number of ways (cf. the Brown v. Board of Education decision, which wouldn’t have happened with out pressure from the communist world).

One of these impacts was funding for science education, specifically to develop the population’s knowledge and skills to make sure capitalism won against communism. That legislation was called the National Defense Education Act.

This Cold War mentality was also helpful in the 1980s when the Japanese car industry gave the US rust belt a serious run for its money. In the midst of an inflation crisis and stagnating production (the famous stagflation moment), Reagan got elected and whipped everyone up into a frenzy about losing our place as a global superpower. A Nation at Risk was published, and, lo and behold, it also called for more funding for science, technology, engineering and mathematics. The Cold War was still happening, but this ideology persisted.

Even since the ‘end of history’ (which has been over for a few years now, lol), while the terrain has changed, this Cold War idea about STEM persists in myriad forms. It’s kind of like what Antonio Gramsci said about the old dying while the new cannot be born. Calls for STEM education are a residual ideological practice left over from another time preventing society from moving on.

The problem stems from jobs

While the rhetoric about STEM is about American hegemony, the material conditions undergirding that rhetoric are STEM jobs. That is, if American students get better STEM education, they’ll get STEM jobs at STEM firms and America will lead the STEM market and thus the world.

But in this (post)neoliberal American economy, which is really an aging and ever-more-rickety ‘globalized’ economy over-reliant on finance, firms aren’t exactly sticking to the plan. Shockingly, they’re more interested in keeping wages as low as possible while producing just enough to keep shareholders happy. And how do they do that? By hiring people from other countries.

Rachel Rosenthal wrote a good piece in Bloomberg titled “Big Tech Wants You to Believe America Has a Skills Gap.” Turns out foreign temporary workers on H1-B downs make up 10% of the tech workforce. Rosenthal contrasts this with the fact that there’s never been more American students graduating with STEM degrees. They’re also getting higher scores than ever before.

The numbers don’t lie: there’s no shortage of people to fill STEM-type jobs, but companies don’t hire them. So we should take any discourse about STEM, jobs, and the threat to American hegemony with a grain of salt.

And it should taste pretty salty, because that’s not all. American firms are incentivized to hire non-American workers because they can pay them less. Rosenthal bases her reporting on a study by the Economic Policy Institute that finds:

• Sixty percent of H-1B positions certified by the U.S. Department of Labor are assigned wage levels well below the local median wage for the occupation. While H-1B program rules allow this, DOL has the authority to change it—but hasn’t.
• Major U.S. firms use the H-1B program to pay low wages. Among the top 30 H-1B employers are major U.S. firms including Amazon, Microsoft, Walmart, Google, Apple, and Facebook. All of them take advantage of program rules in order to legally pay many of their H-1B workers below the local median wage for the jobs they fill.

What does this look like in terms of savings for firms? Rosenthal cites a shocking number from DC:

companies in the D.C. metro area got a 36% discount from the median wage level for the most common certified H-1B occupation (a category of software developers) in the wage bracket for entry-level positions, a difference of $41,746 per employee in fiscal 2019. The discount came to 18%, or $20,863, for the second-lowest bracket. This can amount to billions of dollars of potential savings for employers.

If you could get a 36% discount on your most expensive cost (labor), would you take it? Companies in DC did. And they saved a ton of money.

Coming back to the STEM education ideology, the proof is in the pudding: calls for STEM education are bullshit, but a specific kind of bullshit. It’s a bullshit that sounds good for politicians playing to their bases, probably older middle class-types who are stuck in Cold War politics, still ginned up from tax revolts during the stagflation crisis, and don’t really look into the details.

Socialists should know better. The truth is the opposite: there are a lot of students studying STEM, they’re more successful at this than ever, but there aren’t enough jobs for them when they graduate. Why? Companies have an incentive not to give American graduates jobs because it’s cheaper to hire temporary foreign workers, which federal policies encourage. Firms can and do save a lot of money by not hiring STEM graduates from the US.

Don’t get me wrong, this isn’t an anti-immigration argument. What I’m saying is that the whole STEM ideology in education–that we need to focus on STEM, better STEM programs, more STEM funding, more STEM graduates, etc– is basically a dead muscle in a gangrenous limb on the dying body of globalized, neoliberal, finance capitalism.

School funding is a mystery. It’s complicated. It’s very difficult to find explainers that cover the entire terrain quickly and in simple language, setting out where all the money comes from and in what form. Here’s my attempt using Philadelphia as a case study.

Schools have to pay for salaries, benefits, curricular material, facilities infrastructure, school food and other costs. They do this in two ways: grants and loans.

A grant is money that you don’t have to pay back later. It may come with certain limitations and requirements, but it comes and that’s that. For school districts, the grants come from taxes the school district collects. The district, county, state and/or federal government collects the taxes (typically from real estate, but not exclusively) and directs the funds to the budget.

But grants are often not enough to cover all expenses and they come in slowly. For schools, this slowness is especially problematic since school budgets are made yearly and on a schedule. Principals need to know what money they have to work with each school year, and districts have to communicate that by a certain time. The state entities can’t collect and distribute tax revenue that quickly. 

For districts with low property values and high need student populations—both urban and rural—this gets very tricky. But for every district, wealthy or not, there are one-time projects (usually related to school buildings and facilities infrastructure) that require a lot of money up front. You can’t pay for these projects with grants since they’re so different than your regular operating costs.

Enter loans. Rather than a grant, borrowers get a line of credit that they have to pay back with interest over a certain period under certain conditions. For school districts, loans tend to come in the form of bond issuance. The district sells bonds to bondholders looking for ‘steady’ investment opportunities in the bond market. This bondholder class pays money up front and the district pays it back over time with interest. Banks underwrite the process and take fees, as do consultants.

(The great thing for bondholders is that the interest payments are tax free. They can park their money there and make it back with interest and pay no taxes on it.)

But districts pay the bonds back with their regular revenue, which, again, comes from property taxes. This is a local affair. In Philly less than 10% of district funding comes from the federal government. Half comes from the city and the other half comes from the state. The city is run by centrists and progressives, who are sympathetic and want to fund the schools more in principle. But for the city to fund schools with grants it has to tax more, whether real estate or soda or whatever. There’s very little breathing room there—the population is largely poor and taxing is unpopular. Either that, or they have to go to the state government.

The state is run by conservatives who disdain the city in particular and government grants in general. They live in a libertarian fantasyland shot through with racism, backed by capitalists in the same lifeworld. The governor is centrist and sympathetic but doesn’t have a lot of wiggle room due to the conservatives controlling congress. Very few grants forthcoming there. 

Of course, there’s always the federal government. But on average, the federal government provides less than 10% for any school district’s budget. We’ve seen some pretty good spending plans from Biden’s administration thus far, but nothing close to what’s necessary to make districts like Philadelphia whole. 

In the current crisis, with big budget shortfalls, most people at the helms of apparatuses like school districts will do cuts. But they’ll still need revenue for capital projects and for filling gaps in operating costs. So for revenue, that leaves loans and other investments. The districts will go to the bond market and sell bonds, get loans, and figure out how to pay them back with interest. Right now, the School District of Philadelphia devotes 8% of its yearly budget to paying back the loans it took out years before. And that’s an improvement!

So those are the big takeaways: grants that come from local property taxes, state taxes, and federal spending programs and loans that come from the bond market.

I’m no economist. I don’t have formal training. What I know about economics is from studying with groups and on my own (going through CORE-ECON for instance, which I highly recommend), but also from experiences in the classroom. Teaching is kind of like setting up and managing a tiny society and grades are a kind of money/commoditization of educational work.

I have an idea I want to work out a little more in this vein. It has to do with a formula at the center of capitalism and trying to come up with an alternative based on a teaching experience I had.

Me me me

So far as I understand it, the thumping heart of capitalist economics is a concept that Yanis Varoufakis calls the equimarginal principle. The idea has a bunch of different names depending the textbook you read. I want to give it a more funny and down-to-earth name, and the best I’ve got so far is the me me me formula.

The idea is that every one makes decisions based on what has utility for them, what’s beneficial given the resources available. It says that the reason you do anything is because, if you spent one more second not doing it, it wouldn’t be worth it. Value is therefore at the margins when it comes to the me me me formula: the cost of not doing a thing. You get a certain amount of benefit from not doing a thing. As soon as you benefit from doing it, you do it. As soon as doing it doesn’t benefit you, you stop.

By ‘margin’ economists don’t mean like marginalized peoples, in the sense of excluded or oppressed. Rather, they mean the margins of the accountant’s book: the last column where you see the differences when calculating gains and losses. It’s not a center-periphery concept. It’s a rational calculation concept. By saying value is at the margins, the me me me formula is saying that value is a calculation of gain and loss.

I’ve used this example before, but I finally understood this idea when I thought about my old roommate and how he made tacos. He liked to take corn tortillas and hold them over the open flame on the oven. When I started doing this, I realized that if I held the tortilla over the flame for too long it gets burnt. And it happens quickly. So there’s a point at which holding it for one moment too long means the taco is ruined. When heating up taco shells the benefit to me is at the margins, when I calculate the cost of not removing the tortilla from the open flame.

This is economics remember, so we’re talking about decisions that make a material difference like working, spending, saving, etc. Economists use the formula for individuals, businesses, and whole countries. I’m calling this the ‘me me me’ formula because it’s extremely individualistic and defines value in terms of personal value. But this doesn’t just mean individual people, it means individual entities that exist in group contexts. A big firm makes decisions based on what’s marginally valuable. A country makes decisions makes on what’s marginally valuable. But also individual people when buying stuff, selling stuff, going to school, etc.

The thing is, individualism isn’t a liability for the formula. Capitalists see it as a strength. One of capitalism’s big lies is that everyone collectively benefits in society insofar as individual entities can pursue their self-interest according to the me me me formula. The best way of distributing resources is if everyone can make their own decisions about what benefits them. Thus the ideology of free markets, competition, and individual choice (which sounds like neoliberalism, and it is, but, as someone recently tweeted about, this idea is really as old as neoclassical economics). Economics treats this idea like it’s a natural truth that humans barter, truck, and exchange. The me me me formula, to them, is what it means to be rational.

Ever since I learned about these ideas, I wondered if there were other formulas out there that could supplant the me me me formula. I’ve also been wondering if I maybe figured one out when I was a high school teacher.

Stay with the group

When I was teaching high school and studying classroom discussion, I came upon a formula for assigning number grades during discussion that felt consistent with my socialist values. The formula put every discussion participant in relation to each other and calculated grades based on their distance from the average number of turns taken. If someone took a lot of turns, they’d get points off. If they didn’t take any turns, they’d get points off. People who took the exact average number of turns got 100%.

Could this be the basis for a more cooperative, socialist formula beyond the me me me formula? Trying to think of a name for this idea, I think ‘stay with the group’ is pretty good. The stay with the group formula means that individuals make decisions to do what benefits them, but benefit in this case means doing a thing that’s neither more nor less than the average of what everyone else is doing. Being rational means calculating your distance from the average and trying to get close to that. Value is in the variance rather than the margin. The vision of society here is that everyone benefits when everyone tries to hit that sweet spot to do neither more nor less than everyone else.

Again, I’m not an economist and I don’t have proper training. I’m not sure if someone’s thought of this before or if there are implications of the formula that I’m not thinking of. I’ve applied this formula more systematically to school funding to make a cooperation index for regions of districts in the United States. It works pretty well. But how far could we take this formula? Could it be an alternative anthropology?

It’s probably a hair-brained, delusional thing. I think a lot of people try to do economics by themselves and it doesn’t come to much. I haven’t found many economists to talk about it with, but when I have talked with them about it they usually say “hmm, maybe something’s there.”