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New Yorker writer Malcolm Gladwell doesn't tweet a whole lot. But he makes periodic exceptions to go on tirades condemning contributions to rich research universities like Harvard and Yale. His last one, on hedge funder John Paulson's massive $400 million gift to Harvard, was particularly good.
But on Wednesday, a New York Times op-ed attacking Yale for paying $480 million a year to private equity firms to manage its endowment — while spending only $170 million on financial aid and prizes — set him off on a more misguided rant:
This seems reasonable. http://t.co/MBkO4NzhnM
— Gladwell (@Gladwell) August 19, 2015
Yale's endowment spent $480 million paying its hedge fund managers last year and $170 million on its students.
— Gladwell (@Gladwell) August 19, 2015
I was going to donate money to Yale. But maybe it makes more sense to mail a check directly to the hedge fund of my choice.
— Gladwell (@Gladwell) August 19, 2015
Why doesn't Yale spin off its university division and concentrate on its core money management business?
— Gladwell (@Gladwell) August 19, 2015
All the Wall Street analysts are in agreement: time for Yale to shed the declining legacy educating business.
— Gladwell (@Gladwell) August 19, 2015
If a hedge fund guy gives millions to the Yale endowment and then gets millions back for managing the same endowment, what is that called?
— Gladwell (@Gladwell) August 19, 2015
It's masturbation. Only with money.
— Gladwell (@Gladwell) August 19, 2015
Masturdation
— Gladwell (@Gladwell) August 19, 2015
Tax deductible self-pleasuring. TDSP. I believe that's the technical term.
— Gladwell (@Gladwell) August 19, 2015
Does this mean that if I spend four years at a hedge fund I get a Yale degree?
— Gladwell (@Gladwell) August 19, 2015
Gladwell picked up the thread again Thursday, noting that elite universities get far more from the government per student (largely by virtue of their tax-exempt status) than even public universities do. And that's not even taking research grants or property tax exemptions into account.
A fascinating look at how taxpayer subsidies for higher Ed vary by institution. http://t.co/Gfcv9Nu9fV
— Gladwell (@Gladwell) August 20, 2015
Total yearly value of taxpayer grants, loans, and tax subsidies per student at a typical community college: $2k to $6k
— Gladwell (@Gladwell) August 20, 2015
Annual per student taxpayer grants and subsidies at a typical state college like Penn State: $9000.
— Gladwell (@Gladwell) August 20, 2015
Value of Annual per student taxpayer subsidies at Harvard: $48,000. Yale: $69,000. Princeton: $105,000.
— Gladwell (@Gladwell) August 20, 2015
Ivy League students are on the government free lunch program--only the lunch is at Nobu.
— Gladwell (@Gladwell) August 20, 2015
If we don't subsidize Ivy Leaguers now, how will they learn how to ask for a bail out later?
— Gladwell (@Gladwell) August 20, 2015
Creating a sense of entitlement costs way more than you'd think.
— Gladwell (@Gladwell) August 20, 2015
The specific criticism of Yale's private equity spending is a little unfair. It's quite possible that the university's investment strategy yields higher returns, which means more money for worthwhile expenditures like research and financial aid. And Yale's returns suggest that's actually happening: Over the past 10 years, it netted 11 percent annually on average, compared with 8.4 percent average gain for stocks as a whole.
The bigger problem is that Yale spends a ludicrously low percentage of its endowment, choosing instead to rack up billions in savings, tax-free, every year. And all the while, it keeps getting hundreds of millions of dollars in donations for things like performing arts centers, even as actually cost-effective charitable causes — like distributing anti-malarial bednets, or providing cash directly to very poor people in Uganda and Kenya — have room for funding. This costs taxpayers billions (as Gladwell's second tweetstorm noted) and provides precious little in the way of societal benefit.
