There’s always an ugly rich guy.

There’s always a guy – Vinod Khosla, Tom Perkins, Todd Henderson, Glenn Hubbard and Frederic Mishkin, Dick Fuld… There’s always an ugly rich guy whose greed, aggression, and general dickishness launch him straight up into the news-of-the-world stratosphere for a week or two.

This week it’s $800 an hour consultant and Harvard business school professor Benjamin Edelman, who threatened massive legal retribution against a local Chinese food merchant who overcharged him by four dollars. Now, in the long tradition of God opening a door when he closes a window, embarrassed students at Harvard have started an online campaign in honor of those precious four dollars:

Jon Staff launched a fundraising campaign called ‘Harvard Gives: $4 to Fight Hunger’, encouraging Harvard students to donate four dollars to the Greater Boston Food Bank, in response to an article on, which publicised a dispute between Edelman and the Sichuan Garden restaurant in Woburn.

… ‘In accordance with our community values, we are calling on all Harvard students to flip the script by donating $4 to provide for for those in need’, [the campaign organizer] wrote.

[The organizer also said he hopes this campaign] will remind people that Harvard is a big, diverse place full of almost universally wonderful people behaving well.’

Gregg Easterbrook does the math.

Disbursing about 5 percent a year from an endowment ensures its principal will not shrink over time. At 5 percent, Harvard’s endowment would generate $1.8 billion annually in perpetuity. So how can Harvard possibly need more? That sum equates to $2.6 million per undergraduate per year — almost 50 times the school’s sticker price. Harvard already has ample endowment for every undergraduate to attend free, with vast reserves remaining for other purposes. Yet Harvard is in the midst of a capital campaign, demanding another $6.5 billion.

At least, however, struggling taxpayers get to help generous Harvard donors:

The deductibility of donations to higher education means [Robert Griffin, who just gave Harvard $150 million,] really gave Harvard about $100 million, with taxpayers covering the balance. Ordinary people whose children are buried under student loans, and can only dream of attending Harvard, will be taxed to fund the transfer of another $50 million to the Crimson elite.

The same occurs any time donations from those in the top bracket go to the Ivy League, Stanford, Williams, Amherst — average people are taxed to pamper the children of affluence. Grant Hill just gave $1.25 million to Duke University, his alma mater. Good for him! After the deduction, Hill pays about two-thirds of the announced total. The rest comes from average taxpayers who can only dream of a child attending Duke.

Easterbrook’s recommendation:

[E]nd the deductibility of donations to colleges or universities whose endowments exceed $1 million per enrolled student.

UD calls endowments like Harvard’s…

benddownments. As in bend down (I guess bend over would convey it better) and take it. We already have $32.3 billion, but you still have to pay almost $60,000 tuition and we’re going to dun you for huge donations for the rest of your life, even though

Student tuition at places like Harvard is now almost an afterthought. It runs on a budget of about $4.2 billion a year in spending. Tuition, fees, room and board at the full price of $58,607 for its 6,700 undergraduates would amount to $393 million, or less than 10 percent. And after taking need-based tuition reductions into account, the university collects only about half that projected total from undergrads. So for $200 million a year, Harvard could be totally free to all undergraduate students.

And does it sometimes run through your mind to wonder what just a few … afterthought expenditures from the tens of billions of dollars sitting in Harvard’s funds might do for the… uh… world? Well, shush. It’s all gonna be okay. You’re gonna grow up to be a hedge fund manager with the sort of ego that needs a biz school building at Harvard with your name on it much more than you need to help some obscure village full of suffering people. People who need schools or whatever. Relax.

Harvard: English Only.

A candidate for tenure at Harvard was told, she claims, that her “scholarly work in Spanish did not count toward tenure.”

“A few hundred alumni have formed Harvard Alumni for Social Action, to try to channel 25th-reunion giving to destitute universities in Africa. In three years, we’ve raised $425,000 — a lot for the University of Dar es Salaam but hardly a match for our annual class ‘gift.’ And evidently not enough to win the respect of President Faust, who has begged off meeting the group. Harvard clearly doesn’t like any effort that might divert a dollar away from its Cambridge coffers.”

That was back in 2008, and you can measure how far this effort’s gotten by noting that you’ve never heard of this group but you are starting your morning by reading headlines all over America about the latest hedgie who can’t think of anything to do with $150 million other than feed it to “a $40 billion tax-free hedge fund with a very large marketing and PR arm called Harvard University that has the job of raising the investment capital and protecting the fund’s preferential tax treatment.”

Randy Cohen, the New York Times ethicist, patiently and earnestly lays out here why you should not give to massively over-endowed, massively stingy Harvard. Matthew Yglesias has been on a don’t give campaign for years. Brad DeLong, in a devastating comparison of Harvard and the University of California system, questions “the judgment of those who have tried to satisfy their charitable impulses by giving $15B to my alma mater over the past two generations.”

Gawker gawks. Jordan Weissmann titles a recent piece
Is Harvard So Rich That It Should Literally Be Illegal?

Robert Reich writes:

I see why a contribution to, say, the Salvation Army should be eligible for a charitable deduction. It helps the poor. But why, exactly, should a contribution to the already extraordinarily wealthy Guggenheim Museum or to Harvard University (which already has an endowment of more than $30 billion)?

Even the major news outlets busy panting about the latest hedgie’s hundreds of millions dedicated in significant part to business buildings with his name on them pause to wonder for a sentence or two…

With an endowment of more than $32 billion, the famed Cambridge, Massachusetts, school isn’t hurting for money and has been ramping up its financial aid in recent years.


See, here’s what worries ol’ UD. With the wise words of Tom Perkins about an imminent American Kristallnacht still ringing in her ears, she asks: What will be our Bastille? We already know when it’s likely to occur: July 14, 2014. But where will the storming begin? What will be the epicenter of this violent populist revolt?

Maybe here.


Update: Yglesias weighs in.

[W]hen it comes to these fancy universities the official endowment figures are a drastic understatement of the real wealth of the university. Harvard’s real-estate assets are mind-bogglingly valuable, for example, but not part of the endowment.

There’s something about a 17.5 billion dollar endowment for a school with …

… fewer than ten thousand students that concentrates the mind. The town of Princeton seems sort of amazed, in an ongoing way, about its university’s remarkable tax exempt wealth, and it’s clearly on a campaign to chip away at it.

The latest thing is that a judge has refused Princeton University’s request to throw out a case against it brought by residents and the town in which they claim that a number of buildings on campus should not be tax exempt since they’re non-educational.

Another, broader, charge in the case argues that

the University is not qualified for the tax exemption because it in fact makes money and distributes profits, especially proceeds from patents registered by the University.

Princeton is now lawyering up to defend its exemptions.


Princeton’s got the same problem Harvard (well on its way to a forty billion dollar endowment) does; maybe their lawyers can work together. As one observer points out:

Viewed purely in terms of economics, Harvard is really a $40 billion tax-free hedge fund with a very large marketing and PR arm called Harvard University that has the job of raising the investment capital and protecting the fund’s preferential tax treatment.

The trick is that this hedge fund can’t remit earnings to investors, and has to keep them in the company’s account, renaming these retained earnings as an “endowment”. So how do the insiders extract value from this business? One way is by giving themselves cushy jobs that pay a ton of dough. Those who manage Harvard’s money are well-paid. The prior investment head, Jack Meyer, left after criticism of a compensation plan that paid some investment management professionals more than $35 million each in a single year...

When tax-advantaged non-profits start to accumulate billions of dollars of cash through investment gains, and the insiders seem to be doing very well, it creates legitimate pressure for some legal changes. There is a broad range of alternatives: capital gains taxes on investment income, directly taxing the endowment, placing limitations on employee compensation, and forcing the distribution of a fixed percentage of the endowment are all obvious choices. Sanctimonious talk about “the mission of the university” is not likely to stop this …

Actually, I think sanctimonious talk, done well, can probably hold the line for a school. UD has always privately felt that the switchover from Lawrence Summers to Drew Faust as Harvard’s president had in part to do with the, uh, incompatibility of Summers and sanctimony.

Summers is A-Goin’ Out

Since leaving government, [Lawrence] Summers took a lot of money from Citigroup. As one of the key architects of the bailout, he was responsible for the decision to prop up Citi with hundreds of billions of dollars of public money and Federal Reserve cheap capital rather than breaking Citi up. As Fed Chair, he will be a principal regulator of too-big-to-fail banks including Citi.

At the very least, this looks terrible. He saves Citi management and shareholders, then he gets a nice pile of money from them for not much work, and now he is regulating them again.

… [At Harvard,] Summers’s questioning of the intellectual capacity of women contributed to his downfall, but in many ways it was the least of his problems. Far more serious were his penchant for overruling the Harvard endowment’s professional money managers with impulsive investment decisions that cost Harvard billions, and his involvement in the Andrei Shleifer affair.

… Summers is also vulnerable for his activities since 2010. Harvard has a strict rule requiring that full-time faculty spend at least 80 percent of their professional time on Harvard business. With all of his extracurricular Wall Street affairs, there is no realistic way that Summers could have met this rule. Either Harvard bent its own rules, or the companies on whose boards Summers served were violating their legal duties by using Summers as a marquee name or paying him in the expectation of future IOUs, but not as a true fiduciary…

There’s a recurrent theme here of personal and institutional greed – get-rich-quick credit swaps that turned out to cost Harvard billions, massively self-serving Wall Street “affairs.” It always seemed bizarre to UD that a man this crass and cynical would be placed in front of the Senate for confirmation. What was the Obama administration thinking?

Deregulated Harvard

Hal Scott is the director of the Cambridge, Massachusetts-based Committee on Capital Markets Regulation, an “independent and nonpartisan 501(c )(3) research organization dedicated to improving the regulation of US capital markets.” Though tax records show he spends 30 hours a week on CCMR business – for which he is paid $342,840 annually, he is also employed as the Nomura Professor and Director of the Program on International Financial Systems at Harvard Law School, where he has taught since 1975. (Scott’s Harvard income has not been disclosed, though the New York Times pegged the average full-time Harvard professor’s salary at $191,200 in 2010 — substantially less than what he earns running the CCMR.)

Scott, a crony of Jamie Dimon’s who uses those amazingly generous outside hours (what’s he give Harvard? ten? fifteen?) to fight the Volcker Rule and other attempts to regulate the banking industry, is the very model of a modern law professor.

Because so much is riding on your endowment.

When your university’s endowment is 32 billion dollars, every penny counts. Anything that might threaten it needs to be resisted.

So you can understand why Harvard Management Company representatives refused to appear on a panel with a person critical of their management of the endowment. What if something that person said discouraged people from giving to Harvard? What would become of Harvard if its endowment sank to 30 billion?

University Diaries has already featured the hilarious Kushner family…

… and its expensive, successful effort to get their kid (now President Trump’s son-in-law) into Harvard. (The New York magazine article from which I got the quotation below is mainly about the jail time Papa Kushner has racked up. Money and influence can get you into Harvard, but apparently cannot always keep you out of jail.)

When Jared applied to college, Charlie was determined to get him into the most prestigious schools, and he called in favors to achieve his goal. In 1998, Charlie made a $2.5 million pledge to Harvard. According to The Price of Admission, the best-selling book written by Pulitzer Prize–winning Wall Street Journal reporter Daniel Golden, Charlie asked New Jersey senator Frank Lautenberg to lobby Ted Kennedy to put in a call to Harvard admissions dean William Fitzsimmons on Jared’s behalf.

Alex Pareene, in Salon, reviews this history in light of Trump’s attack on Obama’s Harvard admission.


And baby, I gotta tell you. UD has been covering universities for a long time, and the big affirmative action story is Kushner’s kid at Harvard, Ralph Lauren’s kids at Duke, and scads of other money admits. The Laurens are what’s called a “development family.”

Hauser. Wowzer.

The Harvard Crimson reports the disgraced scientist Marc Hauser (scroll down for all Hauser posts) will teach there next year. The Boston Globe reports that he will not.

The same sort of ineptitude characterized the question of his teaching assignments for last year. He would; he wouldn’t…

Harvard. A thirty billion dollar enterprise that sometimes seems unable to find its own ass with both hands and an ass map.

Arbitrating Ethical Conflicts.

Frank Rich talks Harvard.

Talk about Two Americas. Look at “The Social Network” again after seeing “True Grit,” and you’ll see two different civilizations, as far removed from each other in ethos as Silicon Valley and Monument Valley. While “Social Network” fictionalizes Mark Zuckerberg, it mines the truth of an era — from the ability of the powerful and privileged to manipulate the system to the collapse of loyalty as a prized American virtue at the top of that economic pyramid.

In contrast to Mattie’s dictum, no one has to pay for any transgression in the world it depicts. Zuckerberg’s antagonists, Harvard classmates who accuse him of intellectual theft, and his allies, exemplified by a predatory venture capitalist, sometimes seem more entitled and ruthless than he is. The blackest joke in Aaron Sorkin’s priceless script is that Lawrence Summers, a Harvard president who would later moonlight as a hedge fund consultant, might intervene to arbitrate any ethical conflicts. You almost wish Rooster were around to get the job done.

This blog has complained about people giving hundreds of millions …

… to schools like Harvard that already have hundreds of millions. There are far better recipients, in and outside of education, for that sort of money.

Yet she feels okay about one particular millionish gift to that university. In part this is because it’s not enormous — it’s ten million, which is a lot but not insane. In part it’s because it’s for the humanities (most of the hundred million plus gifts are for business schools, etc.). And in part because, when interviewed, the donor is eloquent on the importance of the humanities.

She’s still not thrilled that he gave so much to rolling-in-it Harvard (Now that Larry Summers is back on campus telling Harvard what to do with its endowment, the university will no doubt start losing tens of millions of dollars again. It can afford to.), but he does have his reasons.

When I went as an undergraduate, I was not permitted any foreign exchange by the [Reserve Bank of India] so Harvard gave me a full scholarship. I have never forgotten that.

And here he is on the larger reason:

I have intentionally chosen to contribute to a field that is universal, and which all students, regardless of their area of study, will benefit from. I would therefore hope that this gift will help show that India is not just concerned with parochial issues, but can give back, globally.

… The humanities encompass a spectrum of disciplines. What it does is teach you not a particular skill or technology but to think and question. Conflict resolution and creating a better world do not come from an improved piece of software or a better engine or technology but from people who can break free from their rigid points of view.

The last time I saw Peretz…

… his name was among those scheduled to speak at a Harvard event celebrating its Social Studies degree. Now the Harvard Crimson reports that Marty Peretz’s name has been removed from that list. (Background here.)

[A Social Studies] standing committee will report its conclusions today about [accepting an undergraduate research fund in Peretz’s name] in an official statement to Social Studies concentrators and the national press.

The smart and gracious thing for Peretz to do at this point would be to suggest that the research fund be renamed Undergraduate Research Fund in Social Studies. He already has another fund in his name at Harvard. This way, he spares the institution embarrassment.

The Robust Exchange of Money

Matt Yglesias detects the specific stink of the Martin Peretz situation. He begins by quoting Harvard’s defense of its celebration of Peretz (background here):

“We are ultimately stronger as a university when we maintain our commitment to the most basic freedoms that enable the robust exchange of ideas,” the statement said.

Yglesias comments:

It’s really too bad that Harvard has chosen to take this tack. Obviously the only person in this conversation who’s questioned anybody’s right to “free speech” or exhibited a weak “commitment to the most basic freedoms” is Peretz himself. Equally obviously, Peretz’s right to be a bigot does not create a right to be honored by prestigious universities. My alma mater is doing a disservice to their brand and to public understanding of the issues by deliberately obscuring things in this manner.

It would be more honest to say that Harvard is a business run for the benefit of its faculty and administrators. The business model of this business is the exchange of prestige in exchange for money. Peretz has friends who have money that they are willing to exchange for some prestige, and Harvard intends to take the money. It is what it is.

As an alum, I’d like to pretend to believe that I find this particular transaction outrageous, but it merely goes to illustrate a point I’ve made before. If you’re a person of some means who wants to make a charitable donation to make the world a better place you have a lot of options available to you. And one of the very worst things you could do with that money is give it to a fancy university. If you’ve specifically decided that you want to make a charitable donation to a provider of education services in the United States, you should find one that has a good track record of serving poor students. There are plenty of charter schools and colleges that fit the bill, but none of them are famous fancy schools with multi-billion dollar endowments.

[T]he reason Peretz’s friends are giving money [to Harvard in his name is that Peretz] has a deservedly bad reputation in many quarters, and in exchange for money Harvard University is willing to try to raise his reputation.

Next Page »

Latest UD posts at IHE