But can he? The problem with – call it the Squeak Assumption – is that, as economists remind us, one’s perception of one’s financial condition has everything to do with what other people in your immediate world earn.

A few years ago, several of Harvard’s money managers resigned in protest because instead of making the industry standard for their job description (with bonuses and all, around thirty million a year at that time), they were stuck (because of alumni protests about over-compensation) at around ten, fifteen million. A few years ago, a University of Chicago law professor with a household income of close to half a million dollars cried poor in the national press.

If Steven Cohen, whose personal worth is between eight and ten billion dollars, sits on your board of trustees, you, as president of Brown University, are going to be challenged to maintain your self-esteem. No one likes to be poor.

If you want to understand why the new president of Rutgers, Robert Barchi, is, like a total idiot, continuing to engage in flagrant, self-serving conflict of interest, and thereby adding one more outrageous scandal to the ten others going on at that university, you have to understand what I’m trying to tell you. You have to try to put yourself in Barchi’s shoes. In his corporate-board world, clearing one million dollars a year is the absolute minimum, the barest acceptable situation. One million dollars is in fact for Barchi squeaking by. If Barchi has to drop his corporate money-for-nothing and suddenly plummet to $800,000 a year, this is what his world will look like to him:

One walks along a very rough path of the river bank, in between clothes posts and washing lines, to reach a chaotic group of little, one-storied, one-roomed cabins. Most of them have earth floors, and working, living and sleeping all take place in the one room. In such a hole, barely six feet long and five wide, I saw two beds—and what beds and bedding!—which filled the room, except for the fireplace and doorstep. Several of these huts, as far as I could see, were completely empty, although the door was open and the inhabitants were leaning against the door posts. In front of the doors filth and garbage abounded. I could not see the pavement, but from time to time I felt it was there because my feet scraped it…

Unless you understand Barchi’s world, from Barchi’s perspective, you cannot possibly understand how he came to assume the presidency of a university barely recovering from years of financial corruption and immediately set about securing his corporate board memberships.

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3 Responses to ““Rutgers pays Barchi $744,000 a year if he hits his bonus marks, along with a house, a car and other perks. Surely he can squeak by on that.””

  1. Ani Says:

    This is funny and perceptive. Acknowledging the psychological needs at work here, do you think it is possible to maintain a structure in which mostly wealthy trustees work with presidents paid like low to mid-level executives rather than CEOs? I support reducing the pay of presidents; I just wonder if that is possible with boards like universities now have, and which we want to defer to (or at least treat like an able peer) someone who at least nominally skews toward the academic side of things.

  2. Margaret Soltan Says:

    Ani: I don’t really see a solution to it. Universities will tell you that they need sheer personal wealth to be their major criterion when choosing trustees because they need the money these people will give them. Contemporary university trustees are like diplomats – increasing numbers of them have been given a job almost solely because of their financial generosity.

    In principle, the university’s president should have the same attitude toward them that she has toward the coaches of her football and basketball teams: It’s the way of the world that the coaches will make four million while she’ll make $500,000; it’s the way of the world that trustees will be multimillionaires.

    But in reality (as economists tell us) as trustees become more and more wealthy (since this is becoming the sole criterion, why not shoot for the moon?), presidents are going to feel more and more impoverished. Time spent with the trustees will introduce the presidents to a world of private jets blah blah blah — a truly different world from the world the president has known.

    I’ve covered several cases of university presidents explaining that they have to have corporate board gigs and chauffeurs and enormous compensation packages because in order to ATTRACT the very wealthy to the university, the university’s representative – the president – must herself be (or at least exude) great wealth. It makes the university look classy – the sort of place rich people will want to invest in.

    Myriad are the forms of rationalization here.

    As you may know, I’ve predicted that in a few years coaches will double as the presidents of many universities. This will solve the money disparity problem.

  3. tony grafton Says:

    I have always enjoyed the fact that while faculty members’ outside earnings are in theory capped (as long as they are actually reporting them, of course), presidents, who are working for us 24/7, can accept board memberships that pay more than their salaries and the trustees rejoice. Obviously, they have more spare time than we do . . . I agree, let’s make coach the president and then he or she can make the trustees suit up for volleyball.

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