Professional leagues, and hedge funds, with educational institutions attached.

At one time, trading a scholarship for athletic performances made sense. There wasn’t much money available in college sports even in the revenue producing sports of football and basketball. But as TV money seeped into the industry, coaches were paid more and more money and colleges felt they needed to spend more money to get the best available coaches to recruit and instruct. State legislatures approved astronomical raises for coaches and in many states where public colleges are part of the college sports industry, the football or basketball coaches are the highest paid public employees… Millionaire coaches like Syracuse’s Jim Boeheim bristle at the idea of paying college players even though the industry is flush with money from television and marketing partners…

College sports are not-profits. The industry has a blanket antitrust exemption that allows schools who play in college football bowl games to skip paying taxes from bowl game earnings. Yet NCAA members are getting billions from TV, and hundreds of millions alone from the Final Four weekend. At the same time, players are no longer content with missing out on their earnings. Dr. Harvey Schiller may have predicted the future for the industry, becoming a professional entity because there is too much money at risk for it not to happen.

The professionalization of our academic McDonalds (billions and billions sold) continues, with increasingly insistent arguments being made against the maintenance of non-profit status for athletics money, and for endowment money. Because it’s the same thing, isn’t it? Athletics and endowment?

If Harvard University generates a thirty-five billion dollar endowment (a number of other Ivies are not far behind), all of it in very significant ways protected from taxation… And if because of this astronomical profit people like Harvard investment managers get multiple millions in salary each year from the institution, and people like coaches get multiple millions in salary each year from the institution, but very little of the billions left over are spent for academic purposes (Harvard notoriously hoards its endowment; revenue sports players aren’t paid), why should we be surprised that communities surrounding McDonald’s schools are constantly challenging their tax exempt status in court? That Felix Salmon’s much quoted statement has it that Harvard is “a hedge fund with an educational institution attached“?

All of this is a small element of the immense income inequality debate in America today. CEOs like Gilead’s John Martin taking home almost $100 million each year are the real attention-getters in this debate. Yet America’s John Martin problem is a straightforward one: It is about capital markets and unlimited greed. Easy to grasp that.

And of course most of the people in this country have no trouble – applaud, in fact – one man or woman pulling in any amount imaginable for themselves. Ten years from now, Martin’s yearly compensation with be five hundred million. Bravo! Job well done. No upper limits, and people who question upper limits are jealous losers who have to be restrained by the state or the next thing you know it’s Kristallnacht.

Fine, okay, but does the same psychology pertain to high-minded non-profit universities becoming greedy billionaires? Even in America, there’s some vestigial sense that universities are different from John Martin. That sense could grow, could come to understand itself more clearly. And if that happens, there’s trouble ahead for the most profitable McDonald’s franchise-holders in the land.

Two Morally Compromised, Cosmically Rich, and Sincerely Generous People…

… are the subject of this post.

Michael Milkin, as Ryan Chittum points out in the Columbia Journalism Review, “pleaded guilty to six counts of securities fraud, paid $600 million in fines, was sentenced to 10 years in federal prison, and spent 26 months behind bars. He was also banned for life from the securities industry…”

“SAC Capital Advisors L.P., the hedge fund of Steven A. Cohen… was fined a staggering $1.8 billion by the federal government for insider trading activities,” notes Adam Asher. “Eight of the fund’s former employees have been slapped with criminal charges, all of whom have either pleaded or been found guilty. SAC Capital — recently rechristened Point72 Asset Management — is no longer allowed to manage outside money …”

Milken has just given UD‘s George Washington University fifty million dollars for its school of public health; Cohen remains on the board of trustees of Brown University. Chittum is annoyed that Milkin’s history is being “airbrushed.” He thinks “journalists shouldn’t deep-six who Michael Milken was, no matter what he’s done since.” Asher, a Brown University student, thinks Cohen should be off the board. “I find it hard to imagine there isn’t at least one other person on Wall Street who can offer comparable financial counsel — someone who hasn’t been fined nearly $2 billion by the federal government.” But “I have no illusions about the impact of this piece.”

I think Chittum’s right to be indignant that a man who hurt many people and profited handsomely from it, a man who significantly damaged the public’s trust in our financial system, gets a pass because, years later, he has become a major donor to excellent causes. But I don’t (as I said in an earlier post) think GW should turn his money down. I think that routine acknowledgement of Milken’s misdeeds should accompany – however subtly – his presentation to the world.

As to Cohen – lordy, lordy. I’ve been for ages amazed at his retention on Brown’s corporation. Asher writes:

Since the investigation first became public, it has always been taken as a given that Cohen would remain on the Board of Trustees so long as he wasn’t sitting in a jail cell — and even then, I’m not sure he would have gotten the boot.

**************
UD thanks Roy.

Even in the context of spectacularly corrupt Illinois…

… Chicago State University, bankrolled almost exclusively by taxpayers (it has vanishingly few students, and is losing them at a rate of about 20% a year, so it’s certainly not getting much in tuition), stands out. I guess it stands out because it’s a university, and most of us continue to assume that universities have more dignity or whatever than other public institutions.

It may be because of this moral/emotional over-investment of ours that a Chicago judge and jury have recently come down so very hard on outrageously corrupt and inept CSU. As Jodi Cohen reports, having found in favor of a whistle blower –

[James Crowley was] awarded $2 million in punitive damages and $480,000 in back pay after a jury decided last month that he was fired in retaliation for reporting alleged misconduct by university president Wayne Watson and other top officials.

- the judge has now decided to increase Crowley’s award.

Circuit Court Judge James McCarthy decided to double Crowley’s back pay, as allowed under state law. Crowley had been earning $120,000 a year when he was fired. McCarthy also Tuesday ordered Chicago State to pay $60,000 in interest on the back pay. That brings the total payout to just more than $3 million.

The judge will rule following a hearing set for May on whether Chicago State should also pay Crowley’s attorney’s fees, and on terms of reemployment.

“It is quite clear from the verdict that Mr. Crowley is to be given his employment back,” the judge said.

The term slam dunk comes to mind. The sentence Someone is really really pissed. comes to mind.

Yet why (as UD has asked more than once before on this blog) does CSU exist? Why has it not been folded into another university? Why has it not been shut down? CSU is as much of a scandalous tax syphon as any for-profit school-for-scandal.

Josh Marshall on why he decided against becoming a professor.

… [I]t is important to understand that every incentive in academic life is geared against engagement with the world outside of academics. There’s no other way to put it. This has perhaps changed slightly in the intervening 15 or 20 years – with the Internet being a major part of that. But I suspect that’s more people acting in spite of these incentives and reacting to the increasingly straightened [Update: SOS thanks her Nabokovian reader, johnshade, for pointing out that Marshall needs to straiten this word out] job opportunities in the profession…

All the incentives of academic life drive against having the time, the need and in many cases the ability to communicate with a larger public. In some cases, that’s as it should be. In others, it’s about the straitened nature of academic life, specialization driven by bad job prospects, an over-abundance of Phds, and a deep, deep conventionality driven by risk aversion rooted in those other factors.

Dunned.

After seven months on the job, the president of Youngstown State leaves for another gig.

Dunn has a history of applying to presidencies, according to media reports. He was named president of Murray State University in Kentucky in 2006. He applied for several presidencies beginning in 2010 and his relationship with the university’s board of regents deterioriated.

Restless soul!

[T]rustees were unaware Dunn was seeking another job. Other trustees told the Southern Illinois University student newspaper The Daily Egyptian that they were blindsided and unhappy by Dunn’s actions.

To which UD can only say

And no more turn aside and brood
Upon Dunn’s bitter mystery;
For Fergus rules the brazen cars,
And rules the shadows of the wood,
And the white breast of the dim sea
And all dishevelled wandering stars.

A Judge has Thrown Out a Massive Sex Abuse Case Brought Against…

… Yeshiva University because “the statutes of limitations have expired decades ago, and no exceptions apply.”

The lawyers for the plaintiffs will appeal.

The Uses of the University.

Ex-Yeshiva University trustee Bernie Madoff knew it, and current Yeshiva University trustee Zygi Wilf knows it. Universities are sunny places for shady people. They shed moral legitimacy. When we hear a person’s an officer and a benefactor of universities we get all warm and runny inside. Good man! Hip hip!

Universities also shed intellectual legitimacy. Let’s say you’re peddling a dietary supplement that probably does jack shit. You however wish to claim it cures all human ills so that you can become a billionaire. You need to give someone at a university – or in a governor’s mansion – enough money to get some legitimate studies of the thing going.

Yes, yes, I know what you’re saying. Catch-22. If it’s a legitimate university, the results won’t go your way.

But you’re only saying that because you lack imagination. The point is to smuggle your guys into the university. Look what Novartis did in Japan! Look what Star Scientific – the diet supplement guys – did at Hopkins!

Earlier this year, Star Scientific disclosed a federal investigation of its securities transactions, and several of the company’s shareholders have subsequently filed lawsuits in federal court — and this month in Richmond Circuit Court — alleging that the company misled its investors about scientific research on Anatabloc.

The lawsuits have focused on the company’s statements about research by two scientists who work at the Johns Hopkins University School of Medicine.

The research looked at anatabine’s potential for treating certain types of thyroid disease, but Star Scientific’s stock price took a hit after Johns Hopkins University said the researchers were acting as consultants for the company and not on behalf of the university.

Fine, Catch-23. You might get caught. But a few bad outcomes don’t mean that there aren’t universities just sitting there waiting for you to use them to legitimate your crap. Not all universities are like the University of Virginia which despite the free wheewheewheewhee in a private jet some of its scientists got courtesy of Star Scientific still said no:

According to the indictment, researchers from the University flew by private jet with Virginia’s first lady to a Maryland symposium hosted by Star Scientific in July 2011. It also details a meeting between [the head of Star Scientific] and “senior UVA administrators” in November of that year to discuss UVA “taking the lead role” in seeking state grants to research Star Scientific’s top product. Bob McDonnell allegedly supported the proposal, but the University eventually declined, as evidenced by a string of correspondence months later.

One e-mail included in the indictment has Maureen McDonnell complaining to a staffer: “Gov wants to know why nothing has developed w studies after [Williams] gave $200,000.”

I mean put it together, people! You know you’re gonna get the grants because the governor’s gonna make sure you get them. Win-win! But no – some fuckwits at UVA decide to care about wasting their time and whoring themselves instead of doing actual research. Gawd.

Wow! The ol’ six and six!

And you wonder why people have problems with the way some American universities are run.

Donald Pope-Davis resigned as DePaul’s provost today after six months in the position…

Pope-Davis will teach and conduct research as a tenured professor in the psychology department in the College of Science and Health following a six-month sabbatical

Yes, all that meeting and greeting and sitting around learning things was so exhausting. Six months on; six months off. That’s the ticket.

Frank Rich Manages a Three-fer

It’s … good news, I guess, that Bill Clinton is not involved with Trump University. But this is just the latest example of the land mines Clinton has been planting in his wife’s path for the presidency, should she indeed decide to run. As the [NY] Times reported in a major investigation, there are a lot of questions and there is not a lot of transparency about how the Clinton Global Initiative operates. And that’s the nonprofit Clinton arm of Bill Clinton’s post-presidency. His other business dealings have been profuse and often murky, and every single one of them is going to be investigated by the press if a Hillary Clinton campaign goes forward. The Bloomberg piece [on Clinton's heading up a for-profit ed venture] does not find any illegality in this instance, but the sleaze factor is considerable. Clinton serving as the “Honorary Chancellor” of a diploma mill that rips off young people — and doing it in a financial partnership that includes the hedge-fund titan Steve Cohen, whose SAC Capital Advisors is ground zero for insider-trading criminality — does not pass the smell test.

Trump, Laureate, and Brown University’s highest-profile trustee, Steve Cohen. The story of today’s university, all in one short paragraph.

From the Annals of Trump University

As the New York attorney general’s suit against Trump University proceeds, University Diaries revisits the history of this storied campus.

[T]he New York State Department of Education sent letters to both Trump and [an associate] notifying them that Trump University was in violation of state law by calling itself a “university” when “it was not chartered as such” and because it had not been properly “licensed” by the state.

… Trump University could avoid the “licensure” provision of the state law if it were to re-incorporate outside of New York State and if it ran no physical seminars in the state. But “Trump University failed to abide by any of these conditions,” the attorney general wrote.

[Eric] Schneiderman claims the “university” continued to use 40 Wall Street … as its principal corporate address, including in numerous advertisements. It furthermore conducted “at least fifty live programs in New York between 2006 and 2011.” Schneiderman noted that “Trump University LLC” was finally renamed, on May 20, 2010, “The Trump Entrepreneur Initiative LLC.”

In his deposition [a Trump associate] admitted that the failure to comply with the stipulations was “an oversight” and something he and Trump “forgot” about.

How’re we playin’ in Vegas?

West Virginia’s national image is shaped more by [West Virginia University's] football program than anything else. One of my long-time traditions is to take an annual vacation in Las Vegas. For years, if I wore a West Virginia hat or other garb, I’d be greeted with “You guys are good” … During a recent trip, the comments were a virtually unanimous: “You guys are no good.”

There’s no retort to that. They’re right.

If it wasn’t for bad news, Yeshiva University wouldn’t have no news at all…

… If UD can alter that song a bit… Not that it’s surprising, in a new news sort of way, that Yeshiva’s current president long knew and did nothing about sex abuse allegations at that university’s high school.

[I]nternal documents obtained by the [Jewish Daily] Forward indicate that, in fact, [Richard] Joel, who arrived at Y.U. in 2003, was told both before and after he became president about allegations against Rabbi George Finkelstein, the former principal of a Y.U. high school — and that he declined to intervene in the first instance or respond in the second… “I spoke with [a former student making a charge against the school's principal] a bit,” Joel explained in a 2004 email to a colleague, describing a complaint … made to him years before he took up his post at Y.U. “[I] told him to get on with his life, that I didn’t see a case and that Finkelstein was out of the education business.”

Sensitive, huh?

Well, Yeshiva will also soon be out of the education business.

Once again, Stanley Fish makes sense.

“Narrow” is an adjective the academy should not shun but embrace, for if academic activity cannot be narrowly defined, it loses its shape and becomes indistinguishable from political rallies and partisan exhortation. This of course is what the [Israel] boycotters want. [Extremely broad definitions] do not enhance the academic enterprise or add a heroic gloss to the concept of academic freedom; rather they destroy both by emptying them of any specific content.

Howard’s Yardfest –

Putting Syracuse University’s Orange Madness to shame.

Inequality

From William Galston’s review of Tyler Cowen’s book, Average Is Over:

There’s nothing we can do, says Mr. Cowen, to avert a future in which 10% to 15% of Americans enjoy fantastically wealthy and interesting lives while the rest slog along without hope of a better life, tranquilized by free Internet and canned beans.

Bread and circuses is not the policy of a republic, but rather of an empire entering moral senescence. Nonetheless, Mr. Cowen seems untroubled by his hyperpolarized vision.

The kindest description of his stance is moral indifference: “It will become increasingly common to invoke ‘meritocracy’ as a response to income equality,” he writes, “and whether you call it an explanation, a justification, or an excuse is up to you.” While allowing that some might consider extreme socioeconomic inequality unjust, he revives the neoconservative canard that relatively well-off academics lead the charge against such inequality because they envy the status privileges of the wealthy. He seems not to have considered the possibility that his depiction of our future might fill them with justified revulsion.

Over the course of writing this blog about universities and professors, UD has encountered the neoconservative canard about envious academics again and again. A few years ago, Jonathan Chait gathered a few of many examples in a Los Angeles Times column titled Envy Them? No. Tax Them? Oh Yeah. Greg Mankiw, Chait noted, thinks that academics concerned about staggering personal wealth in the context of rising inequality are simply caught up in “the politics of envy.”

What’s depressing is that even highly credentialed conservatives such as Mankiw equate any discussion of class inequality with “envy” of the rich. The accusation is actually bizarre. Liberals want to make the rich pay higher tax rates not because they hate them. (In fact, as conservatives love to point out in other contexts, many liberals are rich.) It’s because somebody has to pay for the government, and the rich can more easily bear higher rates.

Paul Krugman echoes Chait.

To show concern over the growing inequality is to engage in the “politics of envy.”

But the real reasons to worry about the explosion of inequality since the 1970′s have nothing to do with envy. The fact is that working families aren’t sharing in the economy’s growth, and face growing economic insecurity. And there’s good reason to believe that a society in which most people can reasonably be considered middle class is a better society – and more likely to be a functioning democracy – than one in which there are great extremes of wealth and poverty.

Reversing the rise in inequality and economic insecurity won’t be easy: the middle-class society we have lost emerged only after the country was shaken by depression and war. But we can make a start by calling attention to the politicians who systematically make things worse in catering to their contributors. Never mind that straw man, the politics of envy. Let’s try to do something about the politics of greed.

Krugman and Chait were writing in 2005. That Cowen can happily continue the canard suggests that it will be very difficult to kill. You can call it a canard; you can call it bizarre; you can call it a straw man. It will keep coming at you.

What UD has tried to do in some of her writing here is, as Krugman suggests, look in a different direction: the politics of greed. She has been intrigued by this statement from Robert Hughes about the art market:

[T]he present commercialisation of the art world, at its top end, is a cultural obscenity. When you have the super-rich paying $104m for an immature Rose Period Picasso – close to the GNP of some Caribbean or African states – something is very rotten. Such gestures do no honour to art: they debase it by making the desire for it pathological.

****************************

A certain amount of envy toward the rich is normal. It is to be expected. Indeed, that envy can be an engine, a motivator, a thing that helps our economy of entrepreneurs hum along. The politics of envy crowd, however, wants to scare us into believing that this emotion is becoming pathological, even violent, a threat to the republic. Lawrence Kudlow writes that the envious are really saying

“How dare they be successful earners and investors… Should we go out and shoot [the super-rich] for their success?”

Eric Cantor also seems to have in mind French revolutionaries using envy of the rich to trigger civil war:

There are politicians and others who want to demonize people that have earned success in certain sectors of our society. They claim that these people have now made enough, and haven’t paid their fair share. But, pitting Americans against one another tends to deflate the aspirational spirit of our people and fade the American dream.

I believe, with Galston and Krugman, that the greater menace lies in the “moral senescence” of a country of “great extremes.” Senescence, not riots. As Robert Reich remarks, “If you give up on democracy, you are basically saying to the moneyed interests, the powerful people and institutions of society Take it all… Then we are a hundred percent plutocracy.” This is why, on the subject of universities, I dwell on obscene endowments and the universities who pay each of their money managers $35 million a year to make their endowments grow toward… what? They are already in the tens of billions. The hundreds of billions? It’s why I talk about universities who honor trustees like Steven Cohen, a man with a personal fortune of nine billion dollars, and a man in constant trouble with the SEC.

Next Page »

Latest UD posts at IHE

Archives

Categories