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Saturday, January 10, 2004

Money Blindness

"Luxury is morally repugnant, and its incompatibility with democratic ideals, moreover, has been consistently recognized in the traditions that shape our political culture. The difficulty of limiting the influence of wealth suggests that wealth itself needs to be limited. When money talks, everybody else is condemned to listen. For that reason, a democratic society cannot allow unlimited accumulation. Social and civic equality presuppose at least a rough approximation of economic equality." Christopher Lasch


I used to know Benazir Bhutto a little, when she was Pakistan’s Prime Minister. Whenever I met her handsome husband, I was charmed -- he was a bit of a lightweight (most people look lightweight next to Benazir), but he was also amiable, chatty, funny, very human.

Like Benazir, Asif Zardari grew up in unimaginable wealth. “Before I got married, I had my private polo team and led a privileged life,” he says in a recent interview from the prison where he’s lived for the past eight years. “As a child I was spoilt by my parents as an only son. They indulged my every whim and I grew up in luxury.” When he married his country’s ruler, Zardari’s wealth shot up to truly stratospheric heights, and along with being in possession of hundreds of millions of dollars, he was now staggeringly powerful and well-connected.

In his pursuit of yet more money, Zardari behaved with such flagrant corruption during his wife’s tenure that it was easy for the succeeding regime to toss him into the prison which may hold him for the rest of his life. Naturally he and his allies argue that this is a political outcome - his website portrays him as a political martyr to the cause of his wife’s party - but while politics are obviously involved, Zardari’s own perplexing avarice made it possible for what has happened to him to happen.

I say perplexing because I truly do not get it. Why, already controlling hundreds of
millions of dollars (and other forms of currency), would you take a risk - a risk that will turn out to ruin your life and the life of your family - in order to control twenty or so million more?

Since we are taught in modern American culture to medicalize rather than to moralize, let me call the disability that brought this man low money blindness. Like snow blindness, money blindness involves the inability to see things clearly, due to some ambient radiance. Money blindness sufferers cannot perceive money - its value, its meanings, its consequences, its limits, its equitable distribution - because of the glare it gives off.



Many of America’s university presidents and other high-ranking administrators are
beginning to run into legal and ethical difficulties of Zardari’s sort, though of course on a more modest level; and, just as Zardari did damage to the institutions of his country and not just to himself, university presidents are beginning to do truly serious damage to the university as such, because of their particular form of money blindness.

One notable American university president with a long-established case of money blindness is John Silber, who, though no longer its head, is nonetheless running Boston University into the ground (see the Daniel Goldin debacle). Silber’s disciples (including my university’s president -- see below) include the notorious John Diamandopoulos, a character blessed, eighteenth-century style, with a perfectly fitting parodic last name. Once president of Adelphi University, Diamandopoulos ran into trouble, the Boston Globe reports, when a student group called the Committee to Save Adelphi

complained that Diamandopoulos's compensation - $523,636 in salary and bonuses in 1994 - was excessive. Silber was the only university president being paid more at the time. ...Diamandopoulos became best known for his perks at Adelphi. By 1996, he was earning $837,000 a year in pay and benefits. He had reportedly received $360,000 in travel expenses for annual trips with his wife to Greece, a Mercedes-Benz, and a Manhattan condominium worth $1.3 million - with an option to buy it for $905,000. According to The New York Times, when the crisis led to a meeting of the board of trustees, Diamandopoulos allegedly began taking out trustees and billed Adelphi $546 for a dinner with Silber....Three weeks ago, Diamandopoulos and the trustees were forced to pay a settlement worth about $4.3 million to the university - including $1.45 million from an insurance claim. Diamandopoulos was ordered to return almost $650,000 cash and $90,000 rent for his apartment, and he and his fellow trustees were ordered to repay $225,000. The other trustees independently were ordered to return $800,000, Ahearn said; a breakdown of their individual expenses was not available.
Diamandopoulos was also ordered to relinquish his rights to deferred compensation, a sabbatical, and the Manhattan apartment - perks worth $765,019. The trustees, including Silber, resigned in February 1997, and the new board replaced Diamandopoulos.

But those were the old days; today, Diamandopoulos’s compensation would earn him the pity of a number of university presidents.

The Globe recently reported that “Four university presidents earned more than $800,000 in salary and benefits during the 2002 fiscal year and three grossed more than $1 million including compensation from serving on other boards. The presidents of Rensselaer Polytechnic Institute, Vanderbilt University, University of Pennsylvania and Rockefeller University were ranked as the four most highly paid university presidents according to statistics published in the Chronicle of Higher Education. ...Shirley Ann Jackson, president of Rensselaer Polytechnic Institute in Troy, N.Y., received the highest compensation of any university president in the 2002 fiscal year for a total annual university compensation of $891,400. In addition to this compensation which includes $490,000 in salary and $401,400 in non-cash performance-based compensation accrued over three years, Jackson also receives $39,915 for expenses including housing and car allowances and as much as $591,000 in annual pay for membership on various corporate boards. Added together, Jackson received $1,120,915 in salary plus her non-cash performance-based incentives in the 2002 fiscal year.”

To get a sense of the humiliation undercompensated university presidents now endure, consider Brandeis University President Jehuda Reinharz, who was, notes the Globe, “ranked 36th on a list of 42 research university presidents, ... receiving $340,632 during the 2001-2002 fiscal year, a two percent salary increase from the 2000-2001 fiscal year. Additionally, Reinharz received $32,962 in fringe benefits such as health insurance, and $231,985 in allowances for housing, car, fitness, tuition for dependent children and a non-cash supplemental retirement benefit that is earned only after contract completion in 2009. When added together, during the 2002 fiscal year Reinharz received a total of $373,605 in cash and benefits.”

“In a time of ... rising tuition costs,” this article continues, “some question the extravagance of these salaries. Again according to the Chronicle, the average tuition percentage increase for first-tier ranked schools was 4.8 percent during the 2002-2003 fiscal year. Meanwhile, the median compensation for a president of a private doctoral research university rose by approximately eight percent in the 2001 to 2002 fiscal year.”

Patrick M. Callan, president of the National Center for Public Policy and Higher
Education, is quoted in this article saying,"It's pretty hard to convince people that we're concerned about the rising costs of colleges, and yet we're paying these salaries." No shit, Sherlock.

The situation gets more interesting in the case of public universities. These are under
various legislative constraints in showering their leaders with gold (indeed a number of
state legislatures have capped university president salaries lately - some presidents, for instance, can’t make more than the governor of their state), but more and more public universities are getting around this problem by having private groups and donors cough up large supplemental funds. Can we, all by ourselves, figure out who these donors overwhelmingly turn out to be?



Once you decide that the university is a corporation like any other, subject to exactly the same market laws, you can’t do anything about this. Only if you think the university is in some significant ways different from a corporation can you begin to argue against the perfectly crass, perfectly recognizable, perfectly accepted market mentality at work here. Only if you think that part of the distinctive leadership of an intellectual institution should involve the embodiment of extra-market values can you even begin to take this one on.