Gordon Gee's Draw Check Scheme

Ponzi Austerity at West Virginia University

I’ve been rewatching the original Justified. I intend to watch the reboot, maybe. But, like Raylen Givens flipping a U-turn on US-421, every time I try to leave, Harlan County lures me back.

An underlying premise of the early seasons of Justified, subtle enough that I missed it ten years ago, is that the flourishing criminal enterprises in Harlan are sustained by “draw checks.” Almost every local has some form of government income: a military pension, a farm subsidy, social security, disability, medicare, or unemployment.

And the criminal syndicates - Bennetts and Crowders and Givenes, but also the Florida Gun Thugs, the Detroit Cartel, the Dixie Mafia, Black Pike - are motivated to perpetual violent conflict, in part, by this pool of draw check capital, which can be siphoned through racketeering, confidence games, pill mills, underground casinos, prostitution, and simple counterfeiting, as when Coover and Dickie Bennett continue cashing the draw checks of a man they murdered.

The logic is so simple, the show never really feels the need to articulate it. Organized crime is drawn to Harlan by the prevalence of social welfare, which, in the American context, is always implicitly a signature of economic depression, and thus of a population of ideal marks. It is easiest to separate desperate men from their money.

As Justified itself never loses sight of, in the scramble for draw checks, there is no such thing as a legitimate business. Violence and larceny come to town in the form of real estate developers, extractive energy corporations, and healthcare startups. Nearly every pot grower, meth cook, smuggler, and hired gun is chasing the impossible dream of a “straight life” on the back of corrupt sheriffs and bought judges, real estate investment and regulatory arbitrage. The plan, epitomized by Mags Bennett in Season 2, is to skim as much as possible from the poor people of Harlan County, then move north with a nest egg before depression and desperation becomes desolation and death.

If you follow the Appalachian range 300 miles north, you arrive in Morgantown, home of West Virginia University, which this past week announced its plan for “Academic Transformation,” a euphemism for cutting hundreds of full-time faculty and dozens of academic programs.

As Dan Bauman shows, this “Academic Transformation,” led by WVU President Gordon Gee, is but flimsy cover for the catastrophic failure of Gee’s last big idea, begun upon his hiring in 2014, a delusional plan to grow WVU’s enrollment by 25% through a combination of international recruiting, online degree programs, and campus expansion. Gee’s administration spent hundreds of millions on these projects, a sizable proportion borrowed at high interest rates, and most of it paid out to real estate developers, construction companies, tech entrepreneurs, and consulting agencies. In just under a decade, Gee increased WVU’s debt load by 55%, and shrunk enrollments by 15%.

The “Academic Transformation” is thus a plan to make the university’s employees, students, and West Virginians at large pay for a spending spree that benefits banks, billionaires, venture capitalists, and private equity. It’s a draw check scheme that would make Mags Bennett blush. And its not over yet.

In 2015, Yanis Varoufakis, heterodox economist and Greek finance minister, coined the term Ponzi Austerity to describe what was happening to his country as a result of the Eurozone Debt Crisis. You can read the details in And The Weak Suffer What They Must? (2016) and Adults In The Room (2017), but the fundamental truth was that the alleged “bailouts” of Greece by the Troika (European Commission, European Central Bank, International Monetary Fund) were actually just ingenious vehicles for saving investment banks that were teetering on the brink of insolvency in the aftermath of the 2008 global meltdown.

German law (and political norms) impeded the kind of “quantitative easing” and “direct capital injections” which had taken place in the U.S. and U.K., but German Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble exerted outsized influence over the Troika. The terms of the “loans” made to Greece treated the investment banks as preferred creditors, and each “bailout” almost instantly became a balloon payment which helped keep these banks afloat. These terms also authorized the further carpetbagging of Greece, “privatizing” public goods and services like airports and seaports, then selling them off at discount rates to investors (including those banks) for whom they would generate much-needed income.

In the process, unemployment in Greece skyrocketed, tax revenues plummetted, and under these austerity conditions, Greek was inevitably unable to continue meeting its debt obligations, and was thus, as designed, forced to negotiate yet another bailout, under more Carthaginian terms, exacerbating the problems for everybody but the well-heeled recipients of this second-hand government largesse.

I believe we should recognize Ponzi Austerity as not an isolated facet of the Eurozone Debt Crisis, but as process integral to Too Late Capitalism: the redistribution of public funds to private capital, but through an intermediary, whose sole purpose is to warehouse an un-repayable debt, preventing it from dragging down the corporate balance sheet, but also shielding governments from being accused of giving away “free lunches,” “corporate welfare”…or violating their own laws.

Ponzi Austerity is necessary because the perpetual growth that rationalizes neoliberalism cannot be sustained without raiding public coffers and public goods, even though the advocates for this system continue to claim “free market” independence from the state as its main advantage.

In Morgantown, the draw check scheme that Gordon Gee executed from 2014 is 2023 is prequel to yet another, one that is already underway. Immediately upon announcing the complete elimination of the Department of World Languages, Literatures, and Linguistics at WVU, Gee announced that his administration was exploring partnerships with EdTech to deliver remote language instruction. Leaving aside for now the ludicrous supposition that all WLL does is language instruction, we can see that EdTech, unable to sustain its delusional promises of growth on merit alone, is the intended beneficiary of the next round of Ponzi Austerity.

Bailing out EdTech will certainly cost way more than WVU’s language and literature faculty, who were better than cost-neutral. So we’ll be back here in a few years, killing off another discipline for their draw checks.

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For more on this topic, please subscribe to The American Vandal Podcast, where, on August 21, we’ll release our episode on “Austerity in The Age of Abundance.”