02 May 2009

Harvard Flunks

This is an interesting story about what is going on financially at colleges and universities across the Nation. It would seem the "wizards of smart" should have repeated Economics 101.

Alas, numbers and reality are stubborn things. Perhaps our nannies in Washington should go after "big education" and the greed, indulgent perks, wasteful spending, high salaries, and mismanagement the same way they went after banks, Wall Street, and the automakers. That won't happen. They're soul mates.

10 comments:

James F. Epperson said...

OK, I'm confused. The article talked a lot about financial woes at a number of schools, but the only school which could be criticized for foolish decisions would be Simmons. Your headline ("Harvard flunks") is seriously deceptive. I didn't see anything in the article which would suggest Harvard had made any foolish decisions. (Maybe I just missed it.) They are dealing with problems caused by loss of value of endowment, but everyone is having to do that.

Nor did I see much in the article about "greed, indulgent perks, wasteful spending, high salaries, and mismanagement" in higher education. I'm sure there is some of that somewhere, but I didn't see it. I'm a 20-year veteran of higher education, and I didn't see much in the way of "high salaries" during my career.

Richard G. Williams, Jr. said...

"Seriously deceptive"? Did you read the right article?

One example:

“Economic progress and educational achievement have always gone hand in hand in America,” Obama, a Columbia College and Harvard Law School graduate, said in a March speech.

Harvard is mentioned specifically, 11 times, including in the title of the piece.

You write:

"I didn't see anything in the article which would suggest Harvard had made any foolish decisions. (Maybe I just missed it.)"

The piece points out:

The perks designed to lure them during boom times -- from hot tubs to dorm-suite kitchenettes, to in-room cable TV -- are crushing universities with debt.

Yeah, I'd say you missed it.

You write:

"I didn't see much in the way of "high salaries" during my career."

Quoting from a NYT piece:

"For the first time, the survey reported leaders of private universities earning $1 million in a single year. The four others identified were Audrey K. Doberstein, formerly of Wilmington College in Delaware ($1,370,973); E. Gordon Gee of Vanderbilt University ($1,326,786); John R. Silber of Boston University ($1,253,352); and John N. McCardell Jr., formerly of Middlebury College in Vermont ($1,213,141)."

See: http://tech.mit.edu/V125/N56/56nytsalaries.html

And from the same piece:

"Overall, the survey said, nine presidents of private universities earned more than $900,000 each, compared with none the year before, and 50 presidents of private universities earned at least $500,000 each, a 19 percent increase over the previous year."

More recently, see this piece:

http://media.www.dailypennsylvanian.com/media/storage/paper882/news/2009/02/11/News/University.Presidents.Under.Fire.For.High.Salaries.Interactive.Graphic-3622972.shtml

Like I said, numbers and reality are stubborn things. I stand by what I wrote and the facts prove I'm right.

James F. Epperson said...

"The perks designed to lure them during boom times -- from hot tubs to dorm-suite kitchenettes, to in-room cable TV -- are crushing universities with debt."

Harvard is not mentioned in connection with this comment; Simmons is. I don't recall Harvard's financial decisions being criticized in the piece. I stand by my assessment of your headline.

The high salaries you found are all for university presidents. Do you really think someone running a multi-hundred-million dollar operation should only be paid, say, $120,000 a year?

In any event, the salaries got that high because of the marketplace; if President X at University Y was making $200,000 and University A wanted to hire/steal him/her away, they'd usually have to offer a significant salary increase. Over time, this market is going to give you presidential salaries on the order of a million dollars. Surely you are not suggesting that the demands of the marketplace be ignored?

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Richard G. Williams, Jr. said...

James - you missed the point of the article. It IS the Harvard model, as the HEADLINE of the article alludes to. How plainer can it be?

The issue is systemic to much of elite academia. That is the point of the piece.

"Do you really think someone running a multi-hundred-million dollar operation should only be paid, say, $120,000 a year?"

You missed it again James. I agree with you and think the salary should be determined by market forces. The same rhetorical question could be asked regarding Wall St. firms, large banks, auto companies, etc. My comments in the post were sarcastic and pointed out the Obama administration's rank hypocrisy regarding the salaries and bonuses of corporate executives. Where's the outrage over this same situation in "big education?" There is none due to the like-mindedness of the elites.

Richard G. Williams, Jr. said...

Thank you Green Giant for stopping by. We homeschooled our 4 youngest and I would appreciate your perspective from time to time.

James F. Epperson said...

"Where's the outrage over this same situation in 'big education?'"

Because nothing in "big education" is in nearly the trouble the banks, or auto companies, etc., are.

James F. Epperson said...

"The issue is systemic to much of elite academia. That is the point of the piece." --- Then you ought to be able to point to financial idiocy on the part of major educational institutions. The article didn't, and you haven't.

"My comments in the post were sarcastic and pointed out the Obama administration's rank hypocrisy regarding the salaries and bonuses of corporate executives." --- If you could point to a university president who has been as foolish as the executives at, say, AIG, and who has taken a bonus on the scale of those given to AIG executives, you'd have a point. Can you? (In which case, he/she would deserve criticism, but not the entire class of university presidents).

Richard G. Williams, Jr. said...

James - You should read the piece again. As you said, you "missed it." -

"Harvard model destroys budgets."

T"hen you ought to be able to point to financial idiocy on the part of major educational institutions. The article didn't, and you haven't."

The article did. You're in denial.

"If you could point to a university president who has been as foolish as the executives at, say, AIG, and who has taken a bonus on the scale of those given to AIG executives, you'd have a point. Can you?"

Yes, I can and did. Follow the links provided. Collecting $500k+ and installing hot tubs and in-room cable TV for students is foolish.

Let me quote directly from the piece, which you either didn't read or chose to ignore the salient points:

“The spending binge by colleges and universities was part of the same trend that created the bubble in the rest of the economy,”

That's pretty plain to me James. You're in denial.

Comments are closed. Arguing the obvious bores me rather quickly.

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