There is a special plaque in philanthropist hell for John Paulson. The hedge fund billionaire made a fortune betting against the subprime mortgage market in the mid to late '00s, and he's given big chunks of it away to the least worthy charitable endeavors he can find. Back in 2012, he gave $100 million to Central Park, which was likely already the "most lavishly endowed park in the world," as Felix Salmon put it.
Now he's decided to give $400 million to the most lavishly endowed university in the world:
John A. Paulson MBA ’80 makes a transformative $400 million gift to Harvard http://t.co/kyYKth8CLn— Harvard University (@Harvard) June 3, 2015
Let me be extremely clear: Harvard is not a charity. If you want to donate to it as a bribe to help your kids get in, go nuts. It's not the absolute worst thing you could do with your money. Kidnapping people and making them fight to the death in gladiator pits would be worse. But if you want to make the world a better place, your dollars are better spent literally anywhere else.
Harvard overwhelmingly serves the already wealthy and privileged. It likes to boast that more than 65 percent of its undergraduate students receive financial aid — but then appeals to parents by noting that families making over $150,000 are still eligible for "significant financial aid." That jibes with a 2013 survey the Crimson took of freshmen. Fifty-three percent reported family incomes above $125,000. By contrast, the Census Bureau found that in 2013 only 19 percent of families in the US had incomes in that range. Meanwhile, 14 percent of freshmen had family incomes in excess of $500,000, placing them solidly in the top 1 percent.
Harvard also overwhelmingly serves smart kids. The middle 50 percent of Harvard students got between a 700 and 800 on their reading SATs, and between 710 to 800 on math and writing. For comparison, the average scores nationwide are 497, 513, and 487, respectively. The SATs are basically just an IQ test, and while IQ isn't everything, it is correlated with higher income, better health, and longer life expectancy — even after you control for socioeconomic factors. And IQ, of course, isn't something anyone chooses. Moreover, basically all the non-IQ factors that contribute to success — discipline, work ethic, etc. — are hugely influenced by factors beyond students' control. Harvard students just lucked into good genes and/or good childhood environments that, due to no hard work of their own, will pay considerable dividends.
Paulson's donation is aimed at Harvard's School of Engineering and Applied Sciences — excuse me, the John A. Paulson School of Engineering and Applied Sciences — which oversees programs in computer science, engineering, and applied math. Those are all worthy fields, but they're also not exactly strapped for cash. For one thing, there's a huge amount of private sector funding going to R&D on computing topics, with Uber's recent hiring of dozens of roboticists to work on driverless cars only the most recent example. There's federal funding both on the civilian side and from the Department of Defense. And Harvard itself has already enjoyed substantial donations in this area. One of the biggest buildings at SEAS, which houses the computer science department, is named Maxwell-Dworkin, after the maiden names of Mary Maxwell Gates and Beatrice Dworkin Ballmer — mothers of Microsoft cofounders Bill Gates and Steve Ballmer. That cost them $20 million, but their contributions didn't end there. Ballmer donated another $60 million last year. Gates had given $15 million before the Maxwell-Dworkin gift. This is what philanthropists like to call a "crowded" funding space. It's wasteful to make crowded spaces even more crowded.
Literally any other charity is a better choice. Paulson could give $400 million to distribute bednets in sub-Saharan Africa, a highly cost-effective way to save lives. He could give $400 million directly to poor people in Kenya and Uganda through GiveDirectly. He could give $400 million to deworming efforts that spare children ailments that can cause immense pain and poverty. He could give $400 million to the Open Philanthropy Project or the Gates Foundation or another group doing careful, rigorous work to determine the best ways to use charitable resources to make the world a better place.
Higher education in the US is generally a bad place to donate, but if Paulson insisted, he could give $400 million to a public university that's serving overwhelmingly poor students. He could give to $400 million unselective colleges that, unlike Harvard, don't concentrate resources toward already advantaged smart kids less in need of help. He could, in fact, do everything listed above, because he's crazy stupid rich.
But giving to Harvard is not philanthropy. It's not helping people who need help, and it's obscene that Paulson is getting a massive tax write-off for it. Giving to Harvard is not an act of altruism. It's a gigantic, immoral waste of money, and it's long past time we started treating it as such.
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