Regarding the current financial crisis, a consensus has developed that the government needs to do something, and do something dramatic. The argument is, basically, that the normal sources of cash flow that might stimulate the economy out of recession have dried up, either through idiotic investments, or out of fear caused by all the idiotic investments. The government, then, is the only entity with the financial resources needed to get things moving, and they should be pumping cash into the economy through infrastructure projects and the like, to get things moving again.<\/p>\n
There is another class of institutions out there, though, with large sums of money at their disposal, who could be using it to do similar good: colleges and universities. As of the end of fiscal 2007, according to the National Association of College and University Business Officers<\/a>, there were 76 colleges and universities with endowments of at least a billion dollars (including my alma mater), and 141 with at least half a billion. Harvard alone has more than $30 billion. This is a tiny fraction of what the federal government has at its disposal, but it’s money that for the most part is just sitting there.<\/p>\n At the same time, though, these institutions are engaged in exactly the sort of austerity programs that really smart people say are a terrible idea<\/a> for the government. I got a letter a while back through the alumni association saying that Williams plans to put construction projects on hold, and hold off on filling open jobs (see also here<\/a>). Via Matt Yglesias<\/a>, Harvard is making similar noises<\/a>.<\/p>\n This strikes me as completely crazy.<\/p>\n <\/p>\n The problem here is that too many academic institutions have lost sight of their real missions with regard to these huge investment holdings. In too many cases, college and university endowments have come to be seen as another way for rich people to count coup against one another. This is all over the current discussions of endowments, as the main concern of many people is not how the institution is performing but how the endowment is doing relative to other comparable schools– see the comments at the Ephblog post above<\/a>. Too many people are asking not “How will this affect our students and our communities?” but “How will this affect our US News<\/cite> ranking?”<\/p>\n I mean, look, I understand that investment income on the endowment is an important component of the operating budgets of these institutions, but ultimately, this sort of situation is what you have this money for<\/strong>. The endowment is money set aside for a rainy day, and it’s raining cats and dogs. <\/p>\n This is a time when colleges and universities ought to be spending money, not hoarding it. You can’t move forward as an educational institution if the whole country is sliding backwards into depression. The academic community should be doing whatever it can to invest in the communities that it depends on.<\/p>\n I have two concrete-ish suggestions:<\/p>\n 1) Back your students up.<\/strong> The real crisis didn’t hit until October, at which point most families have their financial aid arrangements locked down for the year. Come next September, though– if not sooner– I expect the academic world to be full of stories about students who needed to drop out or transfer for financial reasons. Either they won’t be able to get financial aid from colleges and universities who are tightening their belts, or they won’t be able to secure loans from a financial sector that has gone into panic mode.<\/p>\n No student should have their education curtailed because a bunch of idiot financiers decided that 2) Invest in your community.<\/strong> The word from smart economists is that we need government stimulus to get people working, and get money moving. The most common recommendation is to invest in infrastructure– fix bridges, repair highways, upgrade the power gird. This creates new jobs, pumps money into the economy, and produces tangible and much-needed improvements.<\/p>\n Colleges and universities have the ability to do the same thing on a local level. Don’t delay or postpone construction projects or infrastructure upgrades– push ahead now. Especially don’t put off hiring people– people are cheap compared to buildings. Hire people, continue with planned projects, and get money flowing into the economy.<\/p>\n Yes, these probably require dipping into the endowments of the institutions in question. Isn’t that what the money is there for?<\/p>\n We’re constantly bombarded with high-minded rhetoric about the noble mission of academia, and the need for community service and public service. This isn’t a mission that starts with the faculty and ends with the students– it ought to reach up to presidents and boards of trustees, as well.<\/p>\n Community service ought to mean something more than just chasing frat boys out of bed to pick up litter a few Saturdays a year. If academic institutions are really committed to the public good, shouldn’t that include putting some of their hundreds of millions of dollars to work doing what they can to improve the economy for everyone?<\/p>\n","protected":false},"excerpt":{"rendered":" Regarding the current financial crisis, a consensus has developed that the government needs to do something, and do something dramatic. The argument is, basically, that the normal sources of cash flow that might stimulate the economy out of recession have dried up, either through idiotic investments, or out of fear caused by all the idiotic… Continue reading Academic Stimulus Package<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"1","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,47],"tags":[],"class_list":["post-3159","post","type-post","status-publish","format-standard","hentry","category-academia","category-economics","entry"],"_links":{"self":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts\/3159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/comments?post=3159"}],"version-history":[{"count":0,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts\/3159\/revisions"}],"wp:attachment":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/media?parent=3159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/categories?post=3159"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/tags?post=3159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}tulip bulbs were precious<\/s> real estate prices would increase forever without limit. This is an area where academic institutions have a duty to step up– either provide direct aid to families in trouble, or offer to guarantee private loans for students and families having trouble getting private credit.<\/p>\n