Vanity Fair's Article on Harvard

I'm writing this on my flight back from California, where I've just been reading the August Vanity Fair article on Harvard's endowment situation. (It does not appear to be available online currently.) The cover blurb is Harvard's Big, Dumb Financial Train Wreck, and the actual title seems to be Rich Harvard, Poor Harvard, so you have some idea where it's coming from.

The article has its ups and downs, its mild exaggerations and understatements. But overall it's interesting reading. One interesting point is that it starts and ends with none other than our own Michael Smith, computer science professor currently on loan as Dean of the Faculty of Arts and Sciences. The article begins with Mike calmly addressing undergraduates and trying to forthrightly explain the financial situation. (Of course, the undergraduates are up in arms, insisting on things like no layoffs, as one would expect undergraduates everywhere to do, regardless of the actual situation.) The article ends with Mike talking to the reporter on the way back to Mike's car at the end of the day; the reporter describes a lack of success in otherwise getting information or meetings with Harvard's standard PR organization. (Strangely, I've also multiple times caught Mike heading for home, and chatted with him about various Harvard happenings at those times. He needs to change his car routine.) While this impromptu chat didn't seem to reveal significantly novel information -- Mike's smart enough to keep his cards close to his vest as needed -- it shows Mike talking more openly than one might naturally expect from a Dean in his situation. He's not a "no comment" kind of guy.

This, to me, highlights some of Michael Smith's strengths as a leader. He talks, and he listens. He sees the numbers, and doesn't hide from them, but thinks clearly and calmly about where we go from here. I'm happier knowing Mike's helping steer the ship here. (And I continue to wish him the best of luck.)

The article nails some things squarely. The fall in the endowment will have significant effects. Fewer TAs, fewer support staff, closed libraries, fewer perks all-around for students and faculty, and less money for all sorts of projects and initiatives. All this is, naturally, not good, but perhaps the article overstates the effects all this will have on Harvard as an educational institution. I, for instance, was a Harvard undergraduate in what must now appear to be the dark, dreary days of 1987-1991, when Harvard's endowment was just over 1/10 th the size it was before the crash, and I still liked the place and thought I received a good education. Harvard's resources are still remarkable, and I feel lucky to teach here; I'm sure we'll still manage to provide a high-quality education.

In terms of the question of how we got to this point, the article considers two main thrusts: the Harvard management company and how the endowment was run, and Harvard's unsustainable spending spree as the endowment increased. The first I don't feel qualified to talk about; it seems that Harvard's investment portfolio has become more risky over the years, but it's not clear to me how far the risk-reward ratio was out of whack, or that performance was out of line with other institutions. (It's hard to know what the right comparison is, given the flaws that seem to have been underlying the financial system of the last several years, of which there are several victims beyond Harvard.) It seems to me that more information is needed, and the article suggests that Harvard is not particularly transparent about these sorts of things.

On the spending side, I think it's clear Harvard went too far too fast in its spending plans, particularly under Larry Summers, who I think if anything gets insufficient blame in this article. It was under Summers Harvard dramatically increased spending on new buildings (financed by debt, and sometimes without getting sponsorship from donors first), faculty size increased, and financial aid plans zoomed. I have to admit, all of these things, particularly at the time, I thought of positively, at least in theory. Of course (duh), increasing space/faculty/aid money all always sound good. But it was also fairly clear at the time (and much clearer in retrospect) that Harvard was doing too much too fast and assuming the money would come from somewhere down the line. While my standing far outside the inner circles of Harvard administration means I can't claim to know who holds responsibility for this, from my standpoint Summers seemed to be leading the call for an overly ambitious agenda, never mind the costs.

(Indeed, the most rankling part of the article for me was the following quote: "The fact that they fired him is a symptom of everything that's wrong with Harvard," one of Harvard's big donors told me. "He's not politically correct or diplomatic -- he's incredibly provocative. What he really got fired for was attacking waste and abuse in the Faculty of Arts and Sciences." I don't think this donor knows what he/she is talking about, and no evidence in the article suggests otherwise. First, Larry Summers wasn't fired, he resigned. The faculty does not have the power to fire him; we did take a vote of no confidence, which had no formal power, but was a statement of how the faculty as a whole felt about him. Second, I'd enjoy hearing more about the waste and abuse he was attacking; in terms of profligacy, I think it's clear his tenure as president was a net negative. The previous paragraph of the article has a different take. "In reality, however, when Summers was president of Harvard, he alienated just about every faculty member who crossed his path. Instead of being admired as a visionary, he was said to be arrogant. Instead of being recognized as a bold and fearless leader, he was perceived as a cerebral bully." The current administration, under the gun, is dealing with financial waste through serious budget cuts, apparently more effectively than Summers ever did. And through a quite difficult situation, they appear thus far to have maintained the strong respect and support of the faculty.)

Anyhow, I encourage everyone to read the article, and to comment on the issues raised by the article -- both in terms of Harvard's situation and the corresponding situations at other universities -- as you like.