… to a university with a hedge fund down the street.

Insanely rich obsessively money-hoarding Harvard (closing in on $40 billion) is jest ’bout fit to burst with all that dough; and some folks – I mean, hah hah, jest some folks, but, still, some folks – been saying that they got themselves so “fat, rich, and stupid” (says here) that they jest don’t know what all to do with it (ain’t like there’s a world of pain out there they might give some of it to or whatever!) so they been handing it out like candy to anyone who happens to work at the investment fund…

And well that plus other shit that tends to attach to the ownership by one university – one anything – of forty billion dollars seems to have embarrassed Harvard to the point where they’re kind of trying to make it all go away by outsourcing their investment activity.

Now UD‘s here to tell you that Harvard’s gonna be disappointed if it thinks that a non-profit which hoards obscene wealth except for what it hands out in twenty-million-dollar a year salaries to its investment managers will be less noticeable to journalists and alumni and the tax-paying public after it moves this activity off campus. UD wants you to know that Harvard’s greed and depravity – and the absurd lengths to which it goes to maintain this greed and depravity – will continue to be front and center, wherever it locates itself.

You remember Shleifer.

Some U.S. neoliberal advisers to Russia in [the Yeltsin] era even served as role models for [oligarchic] corruption. A personal adviser to [Anatoly] Chubais was Andrei Shleifer, a Russian-born émigré and tenured Harvard professor, who ran the Moscow office of the Harvard Institute for International Development, which had the main Russia contract from USAID. Shleifer was prosecuted in 1997, after it was revealed his wife operated a hedge fund that speculated in privileged information based on Shleifer’s official work. Harvard paid fines totaling $26.5 million to settle the case, and Shleifer paid $2 million.

Shleifer must be buddies with a lot of the guys now being blacklisted all over the world. Is there a story there?

She forgot to mention his steadfast defense of Andrei Shleifer, his taking over Harvard’s endowment and promptly losing $1.8 billion, his hedge-fund freelancing while president of Harvard, etc., etc. Summers is a-fucking-mazing.

(Also featuring Jeffrey Epstein, but that’s for a different post.)

[Before Hunter Biden’s legal but unethical activity in Ukraine,] there was already a template… for how insiders in a gas-rich kleptocracy could exploit … a [government] crisis using Western “advisers” to facilitate and legitimize their plunder—and how those Westerners could profit handsomely from it. A dozen-plus years earlier, amid the collapse of the U.S.S.R. of which Ukraine was a part, a clutch of oligarchs rifled the crown jewels of a vast nation. We know some of their names, in some cases because of the work of Special Counsel Robert Mueller’s office: Oleg Deripaska, Viktor Vekselberg, Dmitry Rybolovlev, Leonard Blavatnik. That heist also was assisted by U.S. consultants, many of whom had posts at Harvard and at least one of whom was a protégé of future Treasury Secretary Larry Summers.

Yes, she’s talking about Professor Andrei Shleifer, whose greed cost Harvard millions, but all is forgiven.

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UD wants very badly to see the end of Trump.

Yet she also thanks Chayes for focusing on a particularly disgusting practice.

Scratch into the bios of many former U.S. officials who were in charge of foreign or security policy in administrations of either party, and you will find “consulting” firms and hedge-fund gigs monetizing their names and connections.

So do me a favor and read this first. Everything Frank Rich says there about Ma Ingalls’ rancid hypocrisy in her NYT anti-materialism screed goes quadruple now that Harvard’s been exposed as Mr. Epstein’s main squeeze. Harvard has spent decades sucking up so much money – dirty and semi-dirty and semi-clean and clean – that its endowment alone is $40 billion (Harvard’s wealth goes significantly beyond its endowment, kiddies). It sucks it up and it doesn’t spit it out (see this notorious cartoon); it hoards it. One assumes the goal (why? why is this the goal?) is a $100 billion endowment. Harvard, everyone jokes, is a “hedge fund with a university attached to it”; this non-profit paid each of its fund managers $35 million dollars a year until a few people squawked and it ended up on the front page of the NYT...

Why should Harvard – the world’s most powerful reputation-launderer – give a penny of that shit back? Why should they do anything with what they’re sitting on, you son of a bitch? It’s their money and fuck you.

[His cadre of intellectuals] could also catch Epstein at Harvard, where so many of them taught and where he became so prolific a donor that one whole academic program seemed to be run like his private Renaissance atelier.

Frank Rich, who years and years ago condemned Epstein pal Larry Summers for his hedge fund activities while Harvard’s president, compiles a long list.

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On which, of course, the moral conscience of a nation and the late lamented president of the rapeabilliest and most Baptist campus in the country, appears.

… Kenneth Starr chose to join Jeffrey Epstein’s defense team in 2007, after his moral fulminations against Bill Clinton’s sexual perfidy. His obsessive pursuit of President Clinton made him a folk hero on the right, representing the defense of traditional sexual virtue and the notion that it was under assault by Bill Clinton and the liberal elite. His special-prosecutor exploits propelled him to the presidency of the conservative Baptist Baylor University. During his tenure, the football program engaged in a horrific pattern of sexual abuse that led to the dismissal of the football coach and the removal of Starr after an investigation found “actions by University administrators that directly discouraged some complainants from reporting or participating in student conduct processes.”

It is perhaps coincidental, but Starr has tracked the broader conversion of the religious right from sexual shaming to sexual shamelessness. In an era when Donald Trump has exposed the hollowness of so many values conservatives allegedly hold dear, it is fitting that this Zelig of right-wing sexual hypocrisy has made yet another cameo.

When it comes to university presidents looting their schools, America lags well behind Greece, where the chancellor of Pandio University set the standard by leading (he was only found guilty of failing to note the illegal removal of ten million dollars of university funds, but he seems to have personally benefited from said removal) an extensive conspiracy of robber-administrators. The Greek state gave the school money; the school’s leadership took the money – that seems to have been the straightforward approach – and bought the stuff listed in this post’s headline.

Here in the States, the business of leaders draining millions and billions of university funds is more subtle, more complicated. President Lawrence Summers’ mad insane interest rate speculation cost Harvard one billion dollars but I mean … you know … he meant well. Yeshiva University’s trustees no doubt thought they were enriching the school as much as themselves by their extensive conflicts of interest coupled with avid investments in pieces of work like fellow trustee Bernie Madoff. In the event, they cost the school $1.3 billion.

Not that we don’t boast a few Greek-style university presidents. Karen Pletz, while president of Kansas City University of Medicine and Biosciences, allegedly paid for her Lexus convertible and a series of amazing foreign trips by the simple expedient of removing what these things cost from the university’s reserves and placing those sums in her private account.

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James Ramsey, now routinely described as the disgraced ex-president of the University of Louisville, stands somewhere between high-minded removalists like Summers and flat-out Ferrari larcenists. UL let him, over the years, grow to a big strapping tyrant with his fingers all over every money source available at this public institution in one of America’s poorest states.

I say let him, but as Pandio and other examples suggest, it takes a village to pillage. Ramsey surrounded himself with what one retired UL professor, reviewing the school’s sordid history, calls fellow pirates – people who took as much pleasure in pillaging as he, and who of course had no cause to expose his piratical deeds.

Dennis Menezes, who spent almost forty years at the U of Smell, takes a sentimental journey through some highlights:

Robert Felner, the former education who ended up doing jail time for misappropriating millions of dollars; Alisha Ward siphoning of hundreds of thousands of dollars from U of L’s Equine Industry Program; “Sweetheart contracts” at the College of Business, where administrators continued to receive their significantly higher salaries even after stepping down from their administrative positions, a practice rarely seen at other universities; the disappearance of hundreds of thousands of dollars stolen by Perry Chadwyck Vaughn at the School of Medicine…

At some point the leadership of a university gets so notoriously filthy that career criminals like Felner make a point of applying to work there, thus amplifying the pirate-load. I mean to say that when Menezes tries to puzzle out what makes a university a criminal enterprise, he fails to land on the obvious: Once your university is known to tolerate – nay, encourage – piracy, pirates from all over the world get on board.

The journey to just awful is smoothed by other campus assets, in particular — natch — sports. Let me suggest how this probably works at places like U of L, where, you recall, an entire sports dorm was transformed into a whorehouse for the use of recruits and their fathers. The pattern at sex-crime-crazed places like Penn State, Baylor, and Louisville is for the president to be invisible while the AD, the actual president of the school, does whatever the fuck he and his massive program like. At criminal enterprises like U of L, a president like Ramsey actively takes advantage, let’s say, of all the big scandalous sports noise in the foreground to quietly do his removalist thing.

More than that, enormous sports programs tend to bring quite a few truly scummy and twisted people to a campus and reward those people with enormous salaries and enormous respect (if they win games). Over time the powerful and often scummy sports contingent defines the ethos of the whole university, as in: Jerry Sandusky was EMERITUS PROFESSOR Sandusky at Penn State, I’ll have you know. UD attended a Knight Commission meeting in DC where a coach at a local university stood up and insisted that athletic staff at American universities should have professor status. “They’re educators as much as anyone else. It’s elitist to think otherwise.” So athletics, at many universities including Louisville, certainly does its bit to vulgarize and corrupt everyone, making it much easier for already sketchy people like Ramsey to assume they’re living in a sleaze-friendly world.

UD ain’t saying you must have a big sports program for endemic corruption, but it sure doesn’t hurt.

Anyway. This post is long enough. We’ll be following U of L as they try to decide whether it’s worth suing Ramsey and his pirate crew to get back some of the many millions they removed. We’ll also follow U of L’s difficult effort to find a new president. Would you want to preside over a school suing your predecessor for millions of dollars? Hell, the thing could even end up in criminal court.

… benddownments. As in bend down (I guess bend over would convey it better) and take it. We already have $32.3 billion, but you still have to pay almost $60,000 tuition and we’re going to dun you for huge donations for the rest of your life, even though

Student tuition at places like Harvard is now almost an afterthought. It runs on a budget of about $4.2 billion a year in spending. Tuition, fees, room and board at the full price of $58,607 for its 6,700 undergraduates would amount to $393 million, or less than 10 percent. And after taking need-based tuition reductions into account, the university collects only about half that projected total from undergrads. So for $200 million a year, Harvard could be totally free to all undergraduate students.

And does it sometimes run through your mind to wonder what just a few … afterthought expenditures from the tens of billions of dollars sitting in Harvard’s funds might do for the… uh… world? Well, shush. It’s all gonna be okay. You’re gonna grow up to be a hedge fund manager with the sort of ego that needs a biz school building at Harvard with your name on it much more than you need to help some obscure village full of suffering people. People who need schools or whatever. Relax.

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.

That was back in 2008, and you can measure how far this effort’s gotten by noting that you’ve never heard of this group but you are starting your morning by reading headlines all over America about the latest hedgie who can’t think of anything to do with $150 million other than feed it to “a $40 billion tax-free hedge fund with a very large marketing and PR arm called Harvard University that has the job of raising the investment capital and protecting the fund’s preferential tax treatment.”

Randy Cohen, the New York Times ethicist, patiently and earnestly lays out here why you should not give to massively over-endowed, massively stingy Harvard. Matthew Yglesias has been on a don’t give campaign for years. Brad DeLong, in a devastating comparison of Harvard and the University of California system, questions “the judgment of those who have tried to satisfy their charitable impulses by giving $15B to my alma mater over the past two generations.”

Gawker gawks. Jordan Weissmann titles a recent piece
Is Harvard So Rich That It Should Literally Be Illegal?

Robert Reich writes:

I see why a contribution to, say, the Salvation Army should be eligible for a charitable deduction. It helps the poor. But why, exactly, should a contribution to the already extraordinarily wealthy Guggenheim Museum or to Harvard University (which already has an endowment of more than $30 billion)?

Even the major news outlets busy panting about the latest hedgie’s hundreds of millions dedicated in significant part to business buildings with his name on them pause to wonder for a sentence or two…

With an endowment of more than $32 billion, the famed Cambridge, Massachusetts, school isn’t hurting for money and has been ramping up its financial aid in recent years.

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See, here’s what worries ol’ UD. With the wise words of Tom Perkins about an imminent American Kristallnacht still ringing in her ears, she asks: What will be our Bastille? We already know when it’s likely to occur: July 14, 2014. But where will the storming begin? What will be the epicenter of this violent populist revolt?

Maybe here.

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Update: Yglesias weighs in.

[W]hen it comes to these fancy universities the official endowment figures are a drastic understatement of the real wealth of the university. Harvard’s real-estate assets are mind-bogglingly valuable, for example, but not part of the endowment.

President Credit Swaps is once again on the move!

[W]hen the 58-year-old [Larry] Summers came to the Obama White House, he was worth $7 million; when he left at the end of 2010, he “jumped into a moneymaking spree” at a hedge fund and at Citigroup — a bank rescued by a government bailout — so he could be a gazillionaire by the time Ben Bernake retires and the job is open.

His stuffing of his pockets within hours of leaving the White House job now makes it unseemly for him to lead the Federal Reserve in enforcing the important new regulations from the Dodd-Frank financial reform bill.

He is an exemplar of, rather than a solution to, the obscenely lucrative revolving-door problem mocked by Mark Leibovich in his new book, “This Town.”

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Maureen Dowd, New York Times

One of UD‘s most commonly used categories on this blog is Beware the B-School Boys, in which UD attempts to help you see econ and MBA grads coming. (For details, click on the category’s name at the end of this post.) Two recent instructive cases from Harvard are worth mentioning.

Florian Homm played a little basketball for Harvard when he was an undergrad there, but his big thing was business: econ undergrad; MBA grad. He seems always to have been a cultured crook, an intellectual Bernard Madoff who, after years of hiding from the law, has lately been captured. Bernie crafted crude Ponzis; Florian engaged in portfolio pumping, which takes a finer Italian hand.

As with nutty professor Paul Frampton, the New York Times writer covering Florian’s demise cannot help getting giggly:

Given Mr. Homm’s flair for drama, it was perhaps fitting that he was arrested at the Uffizi Gallery, famous for an exquisite collection that includes works by Michelangelo, Rubens, Tintoretto and Rembrandt…

But it is unclear why Mr. Homm, who is 201 centimeters, or 6 feet 7 inches, tall and something of a celebrity in Germany, would appear in a place where there are many German tourists and he was likely to be recognized.

The seduction of beauty! From Sozzo Tegliacci to the SEC in one shattering second!

But seriously, folks; there’s something about a Harvard and high-style Euro charisma that makes investors unwary… And UD‘s a little worried that you’ll still fall for Florian in his latest iteration:

“The pursuit of happiness is not correlated with the pursuit of money,” [Homm said in a recent interview]… Mr. Homm insisted he was no longer the same person who once owned a stake in a Berlin brothel and lived in a $5 million residence on Majorca with a Russian table dancer. He said he prayed daily and was devoting his energy to charity work.

Okay so I want you to bring a smidgen of doubt to this self-description too, okay? Remember: Beware the B-School Boys.

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Though he seems never to have taken any classes with him, Florian claims to have known and even worked with Harvard’s notorious professor Michael Porter (Porter has said he does not remember Florian). Porter’s now-bankrupt Monitor Group failed to register as a lobbying outfit, did fellatial obeisance to Muammar Gaddafi, and so on and so on. If you didn’t put your money on Florian, maybe you’re tempted to put it on Porter, who remains a Harvard professor, and is not being chased by the SEC. Maybe you’re tempted to make him your business strategy consultant.

Beware!

[Porter’s] picture of CEO-superdeciders helps justify their huge compensation and the congratulatory press coverage, and yet [it] has little foundation in fact or logic. The strategy business … lasted so long in part because it supports and advances the pretensions of the C-suite.

Porter’s strategy theory is to CEOs what ancient religions were to tribal chieftains. The ceremonies are ultimately about the divine right of the rulers to rule — a kind of covert form of political theory. [One observer says] it is “like a ritual rain dance. It has no effect on the weather that follows, but those who engage in it think that it does.” … [Monitor was] doomed from the outset. Its embarrassing debacle marked the beginning of the end of the era of business metaphysics and the exposure of the most over-valued idea on the planet: sustainable competitive advantage.

This blog has followed the remarkable multitasking of Harvard University’s last president (while president of Harvard, Summers did “consulting work for [a] hedge fund, Taconic Capital Advisors.”) Frank Rich writes:

That the highly paid leader of arguably America’s most esteemed educational institution …would simultaneously freelance as a hedge-fund guy might stand as a symbol for the values of our time. At the start of his stormy and short-lived presidency, Summers picked a fight with Cornel West for allegedly neglecting his professorial duties by taking on such extracurricular tasks as cutting a spoken-word CD. Yet Summers saw no conflict with moonlighting in the money racket while running the entire university.

But this is nothing, really. What Charles Ferguson, in his book Inside Job (based on the film) documents is the way in which

Over the past 30 years, significant portions of American academia have deteriorated into “pay to play” activities. These days, if you see a famous economics professor testify in Congress, or write an article, there is a good chance he or she is being paid by someone with a big stake in what’s being debated. Most of the time, these professors do not disclose these conflicts of interest, and most of the time their universities look the other way.

Half a dozen consulting firms, several speakers’ bureaus and various industry lobbying groups maintain large networks of academics for hire for the purpose of advocating industry interests in policy and regulatory debates. The principal industries involved are energy, telecommunications, healthcare, agribusiness – and, most definitely, financial services.

What tends to get attention are medical school professors’ conflicts of interest, and of course political science professors shilling for people like Gaddafi. Time to pay a little attention to econ.

Felix Salmon reviews Lawrence Summers’ Harvard presidency (get all the details you want by typing any phrase from his sentence into this blog’s search engine).

He forgets to mention his fabled multi-tasking. As Frank Rich wrote in the New York Times: “That the highly paid leader of arguably America’s most esteemed educational institution … would simultaneously freelance as a hedge-fund guy might stand as a symbol for the values of our time.”

But anyway, everyone’s talking, today, about Summers’ use, in a recent interview, of the word asshole to describe two notorious Harvard students – the Winklevoss twins:

If an undergraduate is wearing a tie and jacket on Thursday afternoon at three o’clock, there are two possibilities. One is that they’re looking for a job and have an interview; the other is that they are an asshole. This was the latter case.

So there’s a wee wumpus this morning about a treasury secretary and a university president and all calling someone an asshole. Who cares. But what this does do is allow me to share with you one of my favorite scientific articles. It originally appeared in the Journal of Irreproducible Results, and has been collected in a book called Sex as a Heap of Malfunctioning Rubble.

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Title: THE AH GENE: Implications for Genetic Counseling

Excerpts: “[We wish to discuss] evidence supporting the existence of a gene (henceforth called the AH gene) that predisposes an individual to chronic behavior in an obnoxious, boorish, selfish, overbearing, and generally offensive manner…. [T]he percentage of adults in the United States exhibiting chronic AH behavior is about 32% (95% confidence interval, 27-37%)… [Being] a carrier of one of … three genotypes is strongly associated with exhibiting chronic AH behavior (i.e. with being phenotypically a “real AH”)… [It] can be argued that almost all of the world’s problems are due to some degree to the influence of the AH gene….”

Conflict of interest at universities is one of those things. It’s what Samuel Beckett called a tragicomedy.

Universities make a big fuss about COIs paperworkwise, and hotairwise, but at any given time significant numbers of faculty members in med and business schools and economics departments are way out of compliance with COI and disclosure policies. They’re consulting here, they’re consulting there, they’re consulting everywhere.

Their model, their king, their god, their guru, their gold standard, is the last president of Harvard. As Frank Rich notes:

[Lawrence] Summers [did] consulting work for [a] hedge fund, Taconic Capital Advisors, from 2004 to 2006, while still president of Harvard.

That the highly paid leader of arguably America’s most esteemed educational institution … would simultaneously freelance as a hedge-fund guy might stand as a symbol for the values of our time. [Summers was] moonlighting in the money racket while running the entire university.

If it’s good enough for the president of Harvard, it’s good enough for me!

These guys are very competitive. As long as they’re not making the five million or so Summers made from his one-day-a-week consulting job, they’re going to keep at it.

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Columbia University has its share of non-disclosing and possibly conflicted professors, but, as the title of this post indicates, it has lax COI policies.

Two of its COI-challenged professors have starring roles in the documentary film The Inside Job, however, and seeing as how the film won an Oscar and all, a lot of people have watched it, and Columbia, says one administrator, is embarrassed. So on Friday the faculty senate’s going to gather and watch the film (the filmmaker, Charles Ferguson, will be there to answer questions afterwards). And almost certainly Columbia will, shortly after that, alter its COI policies.

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UD thanks Roy for the link.