Who Pays The Price of Indoctrination?

Harvard’s endowment is $37.1 billion. And it only returned a very disappointing 8.1% in 2017. Whether that’s because Harvard’s investment arm is “lazy,” “fat,” and “stupid,” as characterized by McKinsey, or the constraints of social justice-guided investment choices. But whatever. Their money. Their investments. But Faust’s whining about Harvard’s billions?

HMC’s trailing performance has worried University President Drew G. Faust, who last year warned the low returns would “constrain” budgets across the University for years to come. That rang true last year when the Graduate of Arts and Sciences, citing HMC’s low returns, cut the number of graduate students it accepts by 4.4 percent. Then, graduate students  and  professors learned they would receive smaller pay increases that were outpaced by the rate of inflation. Harvard also faces a number of financial challenges amid potential decreases in federal research funding.

Who cares? You should, because Drew Faust took her problems to Congress when she feared that Harvard’s endowment didn’t merely reflect its really mediocre investment skillz, but could be subject to (dare I say it) tax.

Drew Gilpin Faust, the president of Harvard University, has been lobbying in Washington against a Republican proposal to tax large university endowments and make other tax and spending changes that might adversely affect universities. Faust says the endowment tax would be a “blow at the strength of American higher education” and that the suite of proposals lacks “policy logic.” Perhaps so, but they have a political logic.

Is the problem that Republicans no longer appreciate education?

The proposed tax and spending policies aimed at universities are surely related to the sharp recent drop in support by conservatives for colleges and universities. According to a recent Pew Research Center report, 58 percent of Republicans and Republican-leaning independents say that colleges and universities have a negative effect on the way things are going in the country, a figure that has grown significantly in the past two years.

Republicans prefer stupid people? Harvard lawprofs Jack Goldsmith and Adrian Vermeule proffer a different perspective, broken into four parts.

First is the obvious progressive tilt in universities, especially elite universities. At Harvard, for example, undergraduate students overwhelmingly identify as progressive or liberal and the faculty overwhelmingly gives to the Democratic Party.

Second, the distinctive progressive ideology of elite universities is relentlessly critical of, to the point of being intolerant of, traditions and moral values widely seen as legitimate in the outside world. As a result, elite universities have narrowed the range of acceptable views within their walls.

Third is the rise of anti-conservative “mobs,” “shout-downs” and “illiberal behavior” on campus, as New York University social psychologist Jonathan Haidt describes it.

Fourth is the public contempt of so many university academics for those who fund their subsidies.

Making endowment investment tax exempt means we’re making a societal choice of helping to finance education. As a concept, this is a wonderful thing, as education should benefit everyone in society, even if it’s fabulously well-endowed elite schools like Harvard. But to wrap up Goldsmith’s and Vermeule’s four points, is society willing to finance political indoctrination rather than, say, physics?

The curious response is that elite universities shouldn’t be blamed for being smart. It’s what they do.

The best schools engender rational thought. Of course conservatives don’t like them.

Should less-than-progressive politicians, who are making the tax decisions, and a less-than-well-educated public who elects these politicians, punish schools because smart people are progressive, believe in progressive causes, act in furtherance of their progressive beliefs? The crux of this argument is that these are our best and brightest, and what the best and brightest believe is that progressivism is good and conservatism is not.

Is it their fault that smart people think the way they think? After all, “brilliant people agree with me.

Not being Harvard worthy myself, perhaps my problem is a matter of my intellectual challenges, my inability to grasp why social justice is the one true god and doing everything possible to teach students what to believe is worthy of societal financing.

But then, there is another possibility as well, one that even someone like me can grasp. Progressive academics, bent on the creation of their Utopia, have had a generation to stuff their chairs with like-minded, deeply committed and unduly passionate “scholars,” such that they’ve created an echo chamber (some might call it a circle-jerk, but academics tend to be upset by the language us vulgarians employ) of confirmation.

At the same time, anyone who fails to share and appreciate their Utopian dreams must be, well, stupid, and therefore unworthy of a seat at their faculty teas. Just as brilliant people agree with me, anyone who doesn’t must be an idiot. And so the scholars indulge their fantasy that they are smart, and therefore right, because they’ve surrounded themselves with similarly smart people who similarly share their religion.

But the public? Not too smart. And the politicians elected by the public? Either not too smart or beholden to stupid people for votes, and therefore inclined to pay back higher educators for being smarter than they are.

Except maybe people like their traditions, even if academics are on  a higher intellectual plane? Or maybe the disdain reflects what Goldsmith and Vermeule explain, an unwillingness to use tax exemption to finance the indoctrination of a political ideology.

But educational institutions should not be surprised when these attitudes and behaviors prove unappealing to a Congress and executive branch that are largely in the control of conservatives. Conservative politicians and their constituents hear, on the one hand, that government owes universities a continuance of largesse and, on the other, that conservatives are ignorant, unworthy or corrupt. This sounds suspiciously like special pleading by an intellectual elite that wants to indulge in social criticism at the expense of the criticized, in both figurative and literal senses.

Maybe progressive academics are right, are smarter than the rest of us. Maybe guys like me really are too dumb to get it. So, you’ve got $37.1 billion. Invest it wisely. Pay for whatever it is you think is worth the price and do whatever you have to do. Why do you need dumbos like me to finance it for you, if you’re so friggin’ smart?

36 thoughts on “Who Pays The Price of Indoctrination?

  1. B. McLeod

    With earnings of 8.1%, they are outperforming the investment assumptions of all the country’s largest state and local public pension systems. I would say their investment folks are doing okay, and the problem getting higher returns is the pitiful yield on debt components of their portfolio, caused by the controlled interest rate climate held in place by the fed since the Great Recession. If the administration can’t budget to live within 8.1% annual earnings on a $37.1 billion endowment fund, the problem is the administration.

    Further, if this were a public institution, I could see a better rationale for tax exempt treatment of its endowment earnings. But it is not a public institution. When I visited Harvard’s campus some decades ago, the main library was open to the public, but many buildings (including the law library) were not. Why should the public pay, through foregone tax revenues, for facilities that are closed to public use? Why should blue collar workers pay higher taxes so that a private, ivy league institution that caters to the children of the ultra-wealthy can benefit from tax breaks? I have no sympathy for Harvard’s position, and I don’t think it’s because I am not smart enough to understand. It’s because I do understand.

    1. SHG Post author

      I’m averaging ~30% in the past year. Color me unimpressed with Harvard’s yield. But then, I’m just your average dope.

      1. B. McLeod

        When investing your own money, you can take whatever risk exposure you can tolerate. You can go 100% equities in foreign and emerging markets if you want. If it turns out badly, you aren’t going to sue yourself for breach of fiduciary duty. Boards and officers investing for large trusts and endowments have that fiduciary exposure for losses, and so they get regular advice from consultants to allocate the portfolio to hedge against risk. Following that advice shows their “prudence,” but limits the overall portfolio return. This is why individual investments of average dopes often outperform the portfolios of institutional investors.

  2. Pedantic Grammar Police

    Thank you for linking one of the most insightful and informative blog posts ever (not a fan of Volokh, but truth speaks for itself).

    I’m happy to see that I’m not the only one who thinks our education system has lost its way, but taxing endowments isn’t enough; we need to burn down the entire garbage heap by ending the system of lifelong debt slavery called student loans.

  3. Jake

    “Is the problem that Republicans no longer appreciate education?”
    “Republicans prefer stupid people?”

    lol. You think these are questions. Keeping the electorate fat, drunk, and stupid has been the GOP strategy since for forty years.

      1. Jake

        That’s cute, but there are also objective, specific facts about Republicans. It is a Republican goal to dismantle public education. Republicans are far more likely to believe in angels, creationism, and that a man once loaded two of every animal onto a giant boat to survive a global flood because Republican districts are far more likely to teach religious myths as a factual alternative to measurable observations. Republicans voted for Donald Trump.

        We can pretend there isn’t a delta in the sophistication of people in, say, Silicon Valley and people in the Ozarks if you want, but that delta still exists.

        1. SHG Post author

          Some would say it’s a Republican goal to return educational decisions to local school boards rather than bureaucrats in Washington. They’re probably from the Ozarks, though, so they believe in animals on boats.

          1. Jake

            “Republican goal to return educational decisions to local school boards”

            Tomato, tomato, potato, potato…

        2. Pedantic Grammar Police

          “Republicans voted for Donald Trump.”

          There were only 2 choices. Trump was the least bad. I was so disgusted by the choices that I didn’t vote, but if I had, it would have been for Trump. At least he is entertaining to watch on TV, unlike the smarmy, screeching, insufferably entitled alternative. Nails on chalkboard, anyone?

    1. Pedantic Grammar Police

      Right vs Left is a false dichotomy. The DemoPublican party is a new kind of cult; a double cult. In a normal cult you have to hate everyone who isn’t in the cult. In the DemoPub cult you have to hate all of the outsiders, plus half the people in the cult, and you have to ignore all real issues in favor of fake hot-button issues like abortion and statues of (war heroes/genocidal shitlords). It’s not only the Republicans who are stupid; nobody is stupider than those who ignorantly think they are smarter than everyone else and that everything they see on their favorite TV show is true.

    2. Nigel Declan

      Stupid people are often the preferred choice of those more interested in being right than in being correct. This is true whether those folks operate in the hallowed halls of progressive academia or in the deepest, darkest backwaters of the conservative South.

  4. Jim Tyre

    Did I ever tell you about the tort I invented in law school, Definition of Character? I thought it was a sure fire winner. Oddly, it didn’t catch on.

    1. Jim Tyre

      Before you yell at me, your software glitched that one, I didn’t. I hit the reply button immediately below where you take my name in vain much higher up.

        1. Jim Tyre

          If it was software that either EFF created or EFF uses, I wouldn’t. We can’t be held responsible for glitchy software that we dont use. ‘-)

  5. DaveL

    I find it a little disheartening that our “best and brightest” seem to have trouble figuring out that “you’re an idiot, pay me*” isn’t going to fly with most people.

    *”Pay me for what? Why, to continue calling you an idiot, of course!”

  6. rxc

    Acedemia wants to become a force like the church, in the middle ages, doing all the “research” that the government needs to rule the masses. They need all that money to do the “research”. They are building an empire that will rule from within, without any political accountability. They saw how the various military contractors and national laboratories have succeeded in controlling the government, using the hard sciences and building weapons systems, and they determined that they should do the same thing, using “social science”.

  7. Gretz

    Meh, I’d be happy if Hahvahd and the like would just back it’s own student loans, rather than letting the public take all the risk. Might have some changes in their diversity plans, but moral hazards being what they are, they should learn to put up or shut up.

    Since we have to eat it, they can pony up some taxes, like the rest of us deplorables, and see what the heavy cost of the huge government they love actually feels like.

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