Hedge Fund Titans Hum a Happy Tune as They Target Public Schools

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Blanton Elementary School kindergarten teacher Amy Collins, left with her class on Monday, August 20, 2012 in Lealman, Florida. (AP Photo/The Tampa Bay Times, Scott Keeler)

This post originally appeared at Too Much.

Pharrell Williams has reason to be happy. The singer and music producer has had the world’s hottest pop single over the past six months. His “Happy” has been topping the charts everywhere, from the United States to Lebanon and Bulgaria.

If this bouncy ditty keeps selling, Williams might even end up 2014 as happy as Taylor Swift, the most lavishly compensated musical artist in all of 2013. Swift took home $39.7 million for the year.

A hedge fund manager in 2013 needed to take in $300 million just to make the top 25. Ten years ago, in 2004, an aspiring hedge fund kingpin only had to grab $30 million to enter the industry’s top 25 elite.

But Pharrell Williams, if he should hit that lofty mark, probably still wouldn’t be feeling nearly as tickled and giddy as the over 3,000 power suits who were swaying to “Happy” last Monday.

Those suits — an assemblage that included most of the major domos of hedge fund America — were attending an annual high-powered investment conference in Manhattan. At the conference’s close, reports Businessweek, the attendees all rose as “Happy’s” infectious beat filled Lincoln Center’s Avery Fisher Hall.

What had the hedgies so happy? The rest of us found out the next day. In 2013, the trade journal Alpha revealed, the hedge fund industry’s top 25 earners collected $21.15 billion, a whopping 50 percent over their total the year before.

A hedge fund manager in 2013 needed to take in $300 million just to make the top 25. Ten years ago, in 2004, an aspiring hedge fund kingpin only had to grab $30 million to enter the industry’s top 25 elite.

Numero uno on this year’s hedge fund pay list: David Tepper, with $3.5 billion. Three other fund managers pulled in over $2 billion. Totals this grand essentially make Taylor Swift’s millions look like a paycheck for a Holiday Inn lounge act. Swift averaged $109,000 a day in 2013. Tepper’s daily average: $9.6 million.

But the real enormity of America’s annual hedge fund jackpots only comes into focus when we contrast these windfalls with the rewards that go to ordinary Americans. Kindergarten teachers, for instance.

The 157,800 teachers of America’s little people, the Bureau of Labor Statistics tells us, together make about $8.34 billion a year. Hedge fund America’s top four earners alone last year grabbed $10.4 billion.

Cheerleaders for hedge fund America consider such comparisons unfair. Hedge fund titans, they trumpet, are making a huge contribution to education. They’re investing, for instance, millions upon millions in the charter school cause.

True enough. Hedge fund billionaires are indeed investing colossal millions in charters, educational entities — often tied closely to for-profits — that take in public tax dollars but operate independently of local school board oversight.

Hedge fund manager cash has gone both to individual charter schools directly and into political war chests to support candidates who want to see charter networks expanded. Thanks to this cash, charters have become a major fact of American educational life, with a “market share” that rivals traditional public schools in many big cities.

Many educators consider charters a diversion of badly needed public tax dollars into unaccountable private entities that cream off top students and refuse to take in the most challenged.

Hedge fund flacks hail this growing charter presence as a new window of opportunity for underprivileged kids in failing traditional schools. But many educators consider charters a diversion of badly needed public tax dollars into unaccountable private entities that cream off top students and refuse to take in the most challenged.

Plenty of research reinforces this perspective. One survey of recent studies, released last week, sees a charter school landscape full of “bad education, ridiculous hype, wasted resources and widespread corruption.”

Also in that landscape: plenty of high-return investment opportunities for hedge fund managers. A federal tax break known as the “New Markets” tax credit lets hedge funds that invest in charters double their money in seven years. Charters have become, notes one education analyst, “just another investor playground for easy money passed from taxpayers to the wealthy.”

The final indignity? The families of those kindergarten teachers who make less in a year than the average top 25 hedge fund manager makes in 15 minutes pay a greater share of their incomes in taxes than hedge fund moguls pay on theirs, thanks largely to a notorious tax code loophole — known as carried interest — that Congress has not yet seen fit to plug.

Hedge fund masters of our universe, with this loophole in place, will continue to rake in hundreds of millions and pile those millions into billions. And they’ll continue to use those millions and billions to distort our political process, in education and every other public policy realm they happen to dance into.

That should not leave us happy.

Labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book is: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.
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  • Linvinginbrooklyn

    Mark Naison takes on Teach for America and its corrosive effects on public education. Its all in the EDUCATION NEWS!

  • Jamie Tucker

    I am a Kindergarten teacher, 18 years, and this truly saddens me…..

  • Warren Taylor

    If there were any rationality in the political process, this would not be happening.

  • http://guilt-project.org/forgiveness.html Roman Latkovic

    I would not call them “titans’, rather bloody leeches.

  • GregoryC

    Bill Gates/Gates Foundation is a supporter of Common Cause and Charter Schools, giving billions in funds (to earn billions more no doubt). Frank Biden, the VP’s brother, is Director of the Florida Charter Schools Alliance. The kleptocratic elite are registered both Republicans and Democrats and contribute equally to their campaign-financed (bribes in any other industry or profession) politicians.

    I don’t want my property taxes enriching America’s elite kleptocrats who of course, would never send their own children to public or charter schools.

  • Anonymous

    Ah, the sad cry of a socialist who doesn’t understand why people make different amounts from what the socialist believes they ‘should’.
    A kindergarten teacher is a lot happier than those hedge fund managers, has a whole lot less job stress (not that it is an easy job), didn’t have to work 100+ hours a week for 20 years to get the job, gets actual vacation, and is hopefully doing what they love.
    But, that doesn’t make a good headline…

  • Dienne

    You’re kidding, right?

  • Anonymous

    Ah, the sad cry of the “capitalist” who thinks if you love what you do, you should be willing to do it for peanuts. Hard on the heels of that you justify those astronomical salaries by claiming hedge funders suffer more stress, work harder, and don’t ever get to go to their Swiss ski chalets and private island getaways, not a whit of which is true. Salary in this country has nothing to do with any of the things you list, but only with whether someone CAN compound their money at such an alarming rate. It’s greed and addiction to money that multiplies salaries so far beyond any practical level. That such vast swaths of our society think that’s acceptable shows how shallow and bankrupt our values are.

  • Anonymous

    $ is just a means to other stuff that helps you get to an end (Hopefully, happiness). Anyone who spends their life in pursuit of $ has probably lost sight of that. Anyone who is upset about other people’s choices and financial rewards has definitely lost sight of that.
    Their making a BIIILLLION bucks doesn’t hurt me. Restricting how much they can make will eventually hurt me and my kids as it hurts the economy. (plenty of real-world evidence on this)
    I love coaching soccer, do it 20 hours a week, all for free. I work so I can pay for my house, food, clothing, schooling for kids, and other stuff. I choose to do stuff I love to make me happy. I’m not in a race to out-earn those money managers. I hope you are not either, as that would be the saddest part of this story.

  • Anonymous

    Great article. However, another important component that’s driving hedge fund managers (and other billionaires) to target their support specifically towards charter schools and not neighborhood public schools in low income areas was omitted: They want to see public education in America privatized and charters are privatized schools with very little, if any, regulatory oversight. Charters are also largely non-union and rely heavily on low paid, 5 week trained scabs from Teach for America who won’t make a career of teaching, so pensions don’t have to be paid.

  • Anonymous

    In fact, their making a BILLION bucks does hurt you. That the majority of “our economy” has not grown–i.e., that poor and middle class wealth has stagnated or decreased–while the economy of a sliver of our society has ballooned hurts us all, you included. Their wealth is at our expense. If wealth distribution were similar today to what it was in the 50s and 60s, you’d have a heck of a lot more money in comparison to these hedge funders…and/or they’d have a lot less. Just because someone can work the economic and political system, loopholes, and regulations to enrich themselves beyond any practical purpose does not mean they should. It’s no accident greed is one of the seven deadly sins). And saying so does not make me or anyone else a “socialist,” as if that’s an insult, because the thinkers who questioned the outsized wealth and privilege of the European aristocracy formulated just such ideas in the 1700s. It makes me a person with an ethical perspective.

  • Anonymous

    If economic growth and wealth were Zero-Sum games, then you would be correct. They are not.

  • Anonymous

    If economic growth and wealth were infinite and functioned in a vacuum, then you would be correct. They are not.

  • http://www.opednews.com/author/author24983.html Scott Baker

    You’re ignoring the very real damage of hedge fund billionaire’s rent-seeking behavior, which corrupts every facet of society, from the political – which is how they get these gigunda tax breaks in the first place – to the productive sector – which is starved for funds that now go to useless and even destructive speculation. Yes, the economy is not a zero sum game, but it cannot grow at an infinitely expandable rate either, accelerating no matter how much is vacuumed from the bottom, middle and near top, to the very top that produces nothing but moving money piles around.
    And, as this article makes clear, their “investment” in education, is mostly a bust, producing little more than mediocre for the kids of parents who have the wherewithal to self-select their children into relatively safer and better-funded schools. Another example of this is the recent article in New Yorker magazine, documenting how Marc Zuckerberg wasted $100 million of his fortune, and another $100 million of his multimillionaire friends’ fortunes,on educational imperatives that didn’t work.
    Making a lot of money in one area doesn’t make you a genius in another; it just makes you arrogant.

  • teeky2

    Once Wall Street with its almighty profit motive gets involved in anything, that thing is sucked dry and left for dead a la Bain Capital. Only the Wall Streeters and their best buddies profit, while the majority loses. America’s public schools had a good run, too!

  • FC White

    Another predictably, nonsensical cliche; the idea that there are “No Limits” of any kind, in any way.

    Hey, why don’t we ALL be Billionaires? Why not? There’s a Planet Earth for each and every one of us. Right? And “some other people” will clean our floors, make our meals, and deliver our dry cleaning. Correct?

    So clueless. Such a believer in fairy tales, you “libertarian” morons.