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.
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UD is grateful to veblen for some of the links.
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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.
October 17th, 2009 at 1:07PM
Are you and Peter thinking of sleeping with the fishes?
October 17th, 2009 at 2:02PM
Also, offshore investments! “Would there be totally legal and proper things that an investment company with a Cayman subsidiary would be doing? There could be. Could there be illegal [things]? Definitely. Are there some things in between? Yes.”
http://www.thecrimson.com/article.aspx?ref=527831
October 18th, 2009 at 12:32AM
On this one hedge, Harvard lost more money than the entire operating and maintenance budget of Northern Illinois University, where we might put more students on probation in a year than Harvard admits …
October 18th, 2009 at 10:48AM
Rita, that line jumped out at me, too. What the hell is "in between": legal but improper?
November 22nd, 2009 at 8:23PM
[…] “What Summers did could in no way be considered a hedge, under any common definition of the term. He was indulging in interest-rate speculation… I think it’s fair to say that no previous Harvard president would ever have considered … 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 …This Blog […]