Thursday, May 15, 2008

Time to kill the fatted calf

Glen Beck, a conservative political commentator who spends a lot of his time saying very stupid things has stumbled on the truth for once. He points out that the top five university endowments in the country have over $100 billion. Harvard, the largest, has $37.3 billion dollars and earned 23% on their money last year.

Of course they paid no tax on that, which is no big deal if they would have loosened up and spent a little of it on their students. Harvard costs $47,215 a year. They raise fees about 3 ½ % a year. If they spent $300 million a year, less than1% of their endowment, they could waive fees for   their entire student body. If they had done that last year, their endowment would have only grown by 22% so I guess we can see their thinking on this. Or we can if we are living the life of Ebenezer Scrooge and pinching every penny until Abraham Lincoln screams in pain.

 

What the hell are these people thinking ? Their whole reason for existence is to educate students. They could do it for free and not break a sweat ? What are they saving for ? According to Beck, who may or may not be any better at math than I am, if Harvard’s endowment continues to grow at its present rate it will be half a trillion dollars in twenty years. You say that’s impossible ? How did YOU do in the market last year ? If you came out 3-4% ahead you were doing great. Obviously it helps to have the smartest guys on the planet help you invest. There ought to be a mutual fund called the Harvard Fund which just tracks their investments. Then we’d all make enough money to send our kids to Harvard.

 

What would Harvard do with half a trillion dollars ? If we go by their past actions, nothing. No help for their students, no help for the community and taxpayers or their national, state or local governments. Half a trillion dollars still buys a lot of stuff. I’m pretty sure that if Harvard got hold a trillion dollars they could start running their own wars if they wanted to. Raise armies, launch satellites, build power plants, make the desert bloom. Anything except educate students.

 

Now I know what you are thinking, “Porter, you are just mad about this because you are now on the hook for tuition at a private college for your daughter.” Well, that’s true. It’s also true that the local appraisal district raised the valuation of my house to the point where we are going to have to take in laundry to pay our taxes. And, yes, I’m screaming about the inequity of that too. But the fact that my ox is being gored does not mean that my argument is wrong. Should you really have to pay up to $50,000 a year to educate someone ? The only possible way an education would have that kind of value is if they taught  you to invest like the Harvard endowment fund does. But they don’t. They teach you liberal values and instruct you that money is not the end all and be all of education. Unless you happen to be the educator. It is time for the Federal government to tax these endowments at a confiscatory rate and to distribute the money in the form of scholarships to get the cost of education down to what the middle class can pay and they need to do it before September (or at least make it retroactive to September 2008 if passed before 2012). Surely we can all see the fairness in that.

 

 

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