In 1972, Mr UD, a graduating senior at Harvard, went to a party Martin Peretz threw for Social Studies concentrators. (Peretz was acting chair of Social Studies while Michael Walzer was on leave.)

“I remember having one conversation with Marty. I don’t remember what we talked about. What I remember is that a group of us got together at one point and cautioned each other not to try putting ketchup on our burgers anywhere near the Rembrandt.”

UD‘s only encounter with Peretz happened a few years ago, at the Harvard Club. Peretz gave a talk at the annual ACTA meeting there, and instead of the short polemical thing about the betrayal of the humanities UD expected, it was a rambling, self-indulgent, insider’s attack on various Harvard faculty members.

He seemed to me precisely the sort of person outsiders assume populate places like Harvard, Yale, and Princeton – a clueless insular snob.

The reality is that very few people at these schools are like this. But Peretz seems to be.

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

Peretz is currently in trouble for some remarkably ill-timed remarks, in The New Republic, about Muslims:

Muslim life is cheap, most notably to Muslims. …I wonder whether I need honor these people and pretend that they are worthy of the privileges of the First Amendment which I have in my gut the sense that they will abuse.

“Privileges?” Mr UD said, reading this. “Marty thinks they’re privileges?”

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

The timing thing involves these statements (Peretz has apologized for the First Amendment remark) coinciding with the announcement of a high-profile We love and honor Marty Peretz event at Harvard. Harvard has issued a We’re distressed of course but free speech thing; but Mr UD points out that you can honor free speech and withdraw your institutional association with an event at the same time…

Anyway. Having seen Peretz in action, UD can’t be surprised that this is his response to the situation.

Reached by phone, Peretz offered the following response to [critical] comments before hanging up: ‘The notion that after teaching 45 years at Harvard and people giving money in my honor that I have to defend myself – please.’

First note the simple illogic of this. People love me! They give money in my name! Plus I taught at Harvard for decades! Clearly I don’t have to defend myself when I dehumanize swathes of humanity.

And then notice his clueless indifference to the whole thing, the way his remark and his hanging up the phone conveys the very worst of this or any country’s smug elites.

As Jack Shafer writes, “The current furor will have no effect on Peretz, whose pride, wealth, and self-image as the big boss has made him deaf to his detractors.”

I’m sure he’s right. But Harvard’s still free to take a stand.

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

UPDATE: People on the Social Studies Committee at Harvard have sent out a petition opposing the Peretz celebration, as well as the research fund being set up in his name.

One Social Studies concentrator points out that celebrating a person whose views on Muslims are largely indistinguishable from those of Glenn Beck isn’t very seemly.

… of the Marc Hauser situation continues.

Now he won’t teach in the Extension School – his courses have been canceled. Which is the right thing to do; but why in the world was he given the courses in the first place?

As with the rash of plagiarism incidents in its law school a few years ago, Harvard has shown itself, in regard to Hauser, to be timid and tone-deaf.

How many billions do you need in your endowment to afford good public relations people?

Harvard has finally, after years, said something official about the Marc Hauser scientific research scandal. Yes, he committed fraud in eight articles, three of which were published, and they’re being retracted as we speak. No, we don’t want to talk about what punishment he’ll receive. Don’t expect him to be fired. Now shush.

Lots of people are speculating about why Harvard’s investment managers have suddenly divested from Israel.

Could be an entirely bottom-line thing, of course. But some suggest that Harvard anticipates Israel invading Iran, and the university doesn’t want its money in an unstable wartime economy.

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

UPDATE: A suggestion that it’s about Israel’s recent upgrading to a developed economy.

Yaacov Heen, Cellcom’s Chief Financial Officer, said the divestment is in response to Israel’s recent reclassification as a developed economy.

… “There are some funds which invest only in emerging markets,” continued Heen, the Cellcom CFO. “So Harvard had to sell our stock because Israel is no longer classified as an emerging market and they no longer have the ability to hold this stock within the emerging markets fund.”

“We have seen a real change in the volume of trade since they reclassified us,” he said. “In the longterm this is good news for us because there is now more money that can be invested in Israel, but in the short-term it means we need to work to find new investors.”

“The problem is that Israel is very small compared to other developed countries so we have to compete on a much higher level,” Heen added. “When we traded against emerging countries it was very easy to compete for investors.”

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

ANOTHER UPDATE: The emerging market thing does seem to have been the reason.

Harvard said the change had taken place because Israel had been part of its emerging markets portfolio but the country’s status had been upgraded to developed market.

The IRS mailed 400 questionnaires to nonprofit colleges and universities in October 2008, seeking data on endowments, compensation and income from businesses unrelated to their missions of teaching and research. It picked more than 30 institutions to audit on the basis of answers and is reviewing an additional 13 that failed to respond, the agency said.

This is all about Senator Charles Grassley’s complaint (he’s the ranking Republican on the Finance Committee) that many extremely wealthy universities, holding billions of dollars, hoard their endowments. Since non-profits get all that money in large part because they get amazing tax breaks, they’re obliged to use it… To spend it, reasonable amounts of it, so that, for instance, students aren’t priced out of an education, or made to take on outrageous debt.

The IRS survey found that 344 institutions had an average spending target of 4.7 percent to 5 percent of their endowments each year on operations.

… Grassley, the ranking Republican on the Senate Finance Committee, said he’s concerned that 5 percent has become a “ceiling” for colleges and that wealthier institutions should be spending more. The finance committee held hearings in 2007 on rising tuition costs and growing endowments at colleges including Harvard University in Cambridge, Massachusetts, and Yale University in New Haven, Connecticut, prompting the institutions to provide more financial aid.

… Forcing universities to spend more of their endowments would discourage diversified investing and push them toward more conservative portfolios, said James K. Hasson Jr., a lawyer at Sutherland Asbill & Brennan in Atlanta, who represents tax- exempt institutions.

“A mandate would remove flexibility and creativity from the tools available to colleges,” Hasson said. “There doesn’t seem to be a crying need for a legal mandate.”…

Right. With a mandate, Larry Summers, when he was president of Harvard, wouldn’t have been able to put together those clever credit default swaps.

… might – under pressure of having fucked up the university but good – be opening up a tad.

It would certainly be interesting to know how they lost ten billion dollars worth of endowment in one year. It would be interesting to know lots of things.

But UD doesn’t really expect the Harvard Corporation to give up its business secrets.

From Hassan Nemazee’s website cv:

– Member of the Visiting Committee of the Center for International Affairs, Harvard University 1998 – 2005

– Member of Visiting Committee on University Resources, Harvard University 1986-2002

– Member of the Middle East Center Advisory Council at Harvard University 1990 – 1994

– Member of the International Affairs Planning Committee, Harvard University 1990-1995

– In 1996 was named a John Harvard Fellow

– Taught seminars at Harvard and also in Japan and Korea in conjunction with Harvard University.

Nemazee will go to prison for twenty years or so because of his Madoff-style fraud.

In addition to seeking to force Nemazee to forfeit $292 million, the indictment seeks his interest in five pieces of real estate, 16 corporate entities and one hedge fund, 14 securities accounts, 32 bank accounts, a 2008 Maserati Quattroporte, and a 2007 Cessna airplane.

“For more than ten years, Hassan Nemazee projected the illusion of wealth, stealing more than $290 million so that he could lead a lavish lifestyle and play the part of heavyweight political fundraiser,” U.S. Attorney Preet Bharara said last week.

“Today’s indictment exposes the brazenness of Nemazee’s schemes and marks the end of his decade of deception.”

The man is virtually a creation of Harvard university:

Around the time George W. Bush joined its board, Harken [oil company, with which Nemazee is connected] received an unusual and sizable cash infusion from the Harvard Management Company, which handles Harvard University’s endowment, the largest in the nation. Robert G. Stone, Jr., a figure with ties to US intelligence and to the Bushes, was head of the Harvard board of overseers that approved financial strategies. Former employees of Harvard Management have recently made highly-publicized charges that the company engaged in Enron-style investment practices. (Prior to going to work for Nemazee and Quasha, Terry McAuliffe had publicly criticized Bush for his financial dealings with Harken, disparaging that company’s own Enron-like accounting. Both Quasha and Nemazee, like Bush, have Harvard degrees, and both have sat on prestigious Harvard committees in recent years.)

Madoff and Merkin got respectability cover from Yeshiva University; Nemazee got that and more from Harvard.

UD awaits details of Nemazee’s financial relationship with Harvard University.

She also awaits Harvard’s public reckoning with its extensive institutional support of one of the nation’s most notorious criminals.

Harvard is not a business. It’s a public trust – protected by nonprofit laws, free of most taxes, recipient of billions of government dollars – and its success shouldn’t be measured in its rate of return on investments.

Boston Globe

From an article in the Boston Globe:

[Jack] Meyer repeatedly warned Summers and other Harvard officials that the school was being too aggressive with billions of dollars in cash, according to people present for the discussions, investing almost all of it with the endowment’s risky mix of stocks, bonds, hedge funds, and private equity. Meyer’s successor, Mohamed El-Erian, would later sound the same warnings to Summers, and to Harvard financial staff and board members.

… But the warnings fell on deaf ears, under Summers’s regime and beyond. And when the market crashed in the fall of 2008, Harvard would pay dearly, as $1.8 billion in cash simply vanished. Indeed, it is still paying, in the form of tighter budgets, deferred expansion plans, and big interest payments on bonds issued to cover the losses.

… Summers pushed to invest 100 percent of Harvard’s cash with the endowment and had to be argued down to 80 percent, financial executives say.

… Harry Lewis, a Harvard professor and a former dean of the college, attributes the failure to address the university’s financial risks to the ancient structure of the Harvard corporation, which functions as its board. “With only the six fellows plus the president, there is inevitably going be a lot of deference to the people who seem to have the most authority, especially if the president is strong-willed,’’ Lewis said. “Whether or not anyone in particular made a mistake in this situation, it shows a fundamental structural problem. The power is just in the hands of too few people with too little accountability.’’

… Amid plunging global markets, Harvard would lose not only 27 percent of its $37 billion endowment in 2008, but $1.8 billion of the general operating cash – or 27 percent of some $6 billion invested. Harvard also would pay $500 million to get out of the interest-rate swaps Summers had entered into, which imploded when rates fell instead of rising. The university would have to issue $1.5 billion in bonds to shore up its cash position, on top of another $1 billion debt sale. And there were layoffs, pay freezes, and deep, university-wide budget cuts.

… No one wants to repeat the black day when university officials had to swallow hard and reveal a $1.8 billion loss…

Future shock.

I could you send here; or I could send you here. 

But the title of this post, a little phrase taken from Lynn O’Shaughnessy’s MoneyWatch column, is really all you need.

Harvard’s many-splendor’d fuck-ups, revealed with its recent release of its annual financial report, are the talk of the town.

The same alumni who a few years ago saw something not quite right about employees of a non-profit receiving thirty million dollars a year now wonder about clawbacks from the compensation of the current group of inept managers. These alumni have written a letter to Harvard’s president. Here are some excerpts:

Since the university is legally required to release the compensation of its highest-paid employees, clawbacks from that compensation should be made public as well… The story of the endowment is one part of a larger problem of investment practices that have brought down much of the world economy. We would like to see Harvard take a lead in addressing these problems… The annual report gives no indication that the compensation system will be seriously re-examined, let alone changed. We continued to believe that no Harvard employee should earn more annually than the President of the University and that multi-million dollar bonuses are inappropriate in non-profit institutions.

The big story out of Harvard University, one UD‘s been following as it has emerged over a number of years, is the importation of the ethos of radical risk markets to the university.

What is that ethos?

Mindless, dissolute greed.

Harvard, a single university, never needed 35 billion dollars in its endowment. It certainly never needed the one hundred billion or so of which Larry Summers apparently dreamed. Why, then, did Summers, and his money managers — to each of whom he paid thirty million dollars a year in compensation — damage and humiliate a great academic institution through reckless money play?

They did it because Harvard, with these people, had the perfect storm: A hubristic president who believed he could do clever things with interest rate swaps, and who thought prudent management meant taking huge amounts of money out of safe places and giving it to greed-crazed investment fund managers.

Unprecedented. A university. A university president. What happened during the Larry Summers presidency of Harvard University was, on one level, the looting through arrogance and negligence of our greatest academic institution.

More importantly, for anyone who thinks and cares about universities, it was the total disappearance of the university as such, and its evolution into a pure case of market gigantism. Deep in the background of Harvard’s money-immensity you can still glimpse moving about a few students, a few professors; but, post-Summers, Harvard’s story is really the story of a great university’s transformation into just another shabby cautionary tale.

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

UD is grateful to veblen for some of the links.

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

Update for those with yet stronger stomachs: UD‘s friend Rita links her to this Crimson article.

Don’t forget. Harvard’s a non-profit. Our tax dollars are supporting this activity.

… wants to open a new law school. First there was California, whose many law schools already graduate thousands of unemployed attorneys. California just opened yet another law school, at UC Irvine, so taxpayers there can spend yet more of their money on law professors who graduate yet more unemployed attorneys.

Now it’s Massachusetts. The Boston Globe points out the obvious:

With state tax revenues plunging, this is a baleful time to entertain the creation of a public law school at the University of Massachusetts at Dartmouth.

… [T]he state’s fiscal picture has become downright bleak… with tax revenues falling by as much as $200 million below projections in September alone. Students interested in a legal education can still turn to eight law schools across the state.

…[The] plan aims to return a portion of the tuition to the general fund rather than hold it in a trust fund managed by law school leaders. But the promise that the school won’t fall back on taxpayers relies on optimistic assumptions about tuition and enrollment levels – and appears unrealistic, especially in tight financial times. A new school could well find itself strapped for operating funds in the same way that the state college system often finds itself. Earning accreditation is neither cheap nor predictable. Significant costs include the need to build a sizable library collection, maintain an adequate student-teacher ratio, and recruit well-paid law professors capable of both teaching and publishing…

Now, multiply-billioned Harvard University, whose law faculty has grown in the last few years to fill its football stadium, could of course see an opportunity here…

I know, I know. Harvard’s so poor now. Only 25 instead of 35 billion in its endowment… But say they’d like to save a little money and spin off a whole bunch of law professors hired in flush times at four, five hundred thousand apiece. They could offer that group not termination but relocation at a lower salary… See where I’m going with this?

The New York Times wrestles with this question.

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

Update: A commenter notes that Cohen has taken the post down. Maybe he’s revising. I don’t know whether it’ll appear again.

… from Eric Alterman, in The Nation:

[If Harvard] allows its faculty to be corrupted by greed and payola, then society suffers as well.

… In 2008 Harvard earned an F from the American Medical Student Association for its lax conflict-of-interest standards on accepting Big Pharma cash…

[New York Times reporter Duff Wilson] tells me that “we [still] haven’t got to the bottom of the amount of influence drug companies and other special interests have on medical education or continuing medical education. As we reported, Harvard Medical’s dean wants to increase, not decrease, the school’s connections with industry.”