Tuesday, May 13, 2008

Tax the Bastards!

Wow!

And wow again!

I was led to this from Paul K's blog post. I think some of the comments over at Felix's blog tough on some things that Harvard could and should do. First, I'd vote for decreasing tuition even more, so that even more low income students can attend (in accordance with admission criteria, of course). Then taking a high school under its wing, and possibly even an elementary school, would be a great community service.

Harvard has the numbers to make this work without affecting either its asset gathering ability or its endowment size. From what I've heard about it (not much, admittedly), this might position them to take a liability driven investing (LDI) approach which may not necessarily make sense. At least, this is something I could see occurring, the endowment becoming more risk averse to the point of abandoning risk management.

Considering the compensation levels for faculty, I don't really get why there was an uproar about Meyer's compensation, or that of any of his lieutenants. They did good work -- active investment management -- and Harvard needs to put more of that money to use in the surrounding community if they want to keep Congress off their back. However, the 2 go hand in hand, right? More investment in the community, more spending of the funds that come in (or rather, are generated as investment returns) will keep the DC doctors away.

2 comments:

Greg said...

Really no need to tinyurl a hrefs! John Grapper has some thoughts and actually, I found many of the comments to be very insightful.

http://blogs.ft.com/gapperblog/2008/05/slapping-a-tax-on-harvards-35bn-hoard/#more-324

Khyron said...

Heh.

I use the TinyURL so that my links don't merge into my nav bar on the right, like yours did.

;)

Ok, I see the for and against. But given that Harvard has amassed this endowment (up to $42B at the start of 2008 from some things I read), the commonwealth is hurting for revenue to fill a budget shortfall, Dems are coming in strong, and the fact that they could STILL spend more without hurting the endowment, it all lost on me.

I also get the comments about how little Harvard gives back to the community but how it benefits (no taxes on property, beneficiary of infrastructure improvements, etc.).

Hell, that tax could be considered an investment in Harvard's ability to continue attracting talent, money and students.

As for moving, yeah, with all that Harvard benefits from local government, the accumulated investment in physical plant, and nostalgia, I don't see THAT happening.

Hell, just paying out 4% of the endowment every year, in some form - and better to use it as I described above, reducing tuitions even more and increasing investment in community schools, adopting 1 or 2 - would reap political dividends. That's a choice they can make now, before being forced.

My money is on government for the win.