… Harvard’s tragic billions in endowment losses, and its hiring freezes.
She’s too fucking disgusted.
She will, however, let Leon Botstein do her talking for her.
From his interview with UD’s friend Scott Jaschik at Inside Higher Ed:
… The Bard College president has for years been telling anyone who would listen that endowment growth in higher education was irresponsible and encouraged all the wrong strategies. He has called for colleges to spend the money they raise, rather than stocking it away.
“Institutions should not be banks. They are not good at it, and they are no better than anybody else. It should come as no surprise that as investing vehicles, there was a certain amount of arrogance and hubris,” he said. “There was much too much time and money spent on getting richer and richer without being clear about why.”
As a result, he said, the wealthiest universities have “endless tiers of overlapping management” and lack a tradition of making tough choices. “Instead of figuring how to cooperate [within universities], wealth let everyone do their own thing. Creativity was that you never subtracted, you added.”
The idea that university presidents at such institutions are publicizing their losses and announcing major cuts clearly offends Botstein. “These places are enormously rich. It’s like a rich person saying ‘I was worth a billion dollars and now I’m only worth 750 million.’ They are still rich.”
The reason this issue matters so much, Botstein said, is that leading universities are “trying to be even less risk averse” and are “learning the wrong lesson” from what’s going on. Many wealthy institutions are announcing hiring or salary freezes and doing so largely across the board, assuming equal value for most or all programs and justifying the approach by pointing to losses of 25 or 30 percent or more in their endowments.
“They are crying over money which was excessive to begin with, made faculty risk-averse, because they were like trust fund children. Their patrimony is being threatened. Rich is not better.”
Hiring freezes make no sense, he said. “This is the time to hire the best talent.”
Institutions should be going through programs, eliminating some, but building others — and spending their endowments to make institutions more creative. Operating on the assumption that endowment growth or losses matter “is a tragedy that makes everyone risk averse,” he said….
December 10th, 2008 at 7:38AM
That’s awfully good. I was especially struck by “They are crying over money which was excessive to begin with, made faculty risk-averse, because they were like trust fund children. Their patrimony is being threatened. Rich is not better.”
December 10th, 2008 at 10:44AM
One issue is lost money. I don’t think recent losses should be treated as a failure in the long-term scheme of things, since Harvard’s accounts are still far ahead of where they would have been if Harvard didn’t have a sophisticated investment operation.
The other issue is the question whether Harvard should function as an appendage of a large, tax advantaged hedge fund. Botstein may have a point in this regard.
December 10th, 2008 at 3:55PM
I wonder…
Is Harvard’s current wealth more or less than the ACTUAL donations that generated it?
I assume that much of the money came from interest accrual and other such money generation schemes. BUT, in the end, have they LOST anything that was actually GIVEN to them?
I’m sure this would be nigh-impossible to determine though.