Harvard and the Money Culture

A couple of years ago, right after a Capitol Steps show I did at Sanders Theatre, a Harvard junior came up and told me I had a really fun job. She said she hoped she could someday have a job that was half as much fun. Her voice revealed a trace of melancholy, as if she didn’t think there was much chance the real world would ever allow her to engage her whimsical side. I understood, because I’ve met a number of others like her.

When I was at Harvard nearly four decades ago, as part of the “strike” Class of 1969, many of my classmates had a very grand sense of the possible. Sure, we had problems—the men had the Vietnam-era draft, and the women faced far worse gender bias than now—but we were confident we could fix those problems. Our biggest dreams had little to do with money, and a lot to do with grand causes and personal journeys into the arts, teaching or elsewhere.

Lofty ideals were more affordable then. When I entered Harvard in 1965, the tuition was less than $1,800 per year—roughly 60 percent less than it is today, adjusted for inflation. Student loans were small, seldom more than a couple of thousand dollars total, and most of us paid them off pretty quickly. Starter jobs in many fields, especially public service, paid better than today (adjusted for inflation). Housing costs—even in major cities—were low enough to enable a typical Harvard grad to find a nice place to live within a few years after graduation. Nearly no one counted on their parents for financial help out of school.

How unlike now, when so many young people—especially those whose families aren’t “well off”—have no choice but to rivet their ambitions to the moneyed practicalities of life.

In time, nearly all Harvard students will do fine. You’ll get good jobs, pay off those loans, buy houses and start families. What concerns me more are your non-Ivy friends from high school, many of whom will be saddled with at least as much debt, with far less prospect of ever matching your earning power.

What also concerns me is that not enough of you Harvard graduates will spend your twenties and thirties doing the vibrant and important work every rising generation needs to do to advance human civilization—writing books, musicals and plays, creating works of art, challenging injustice, safeguarding the planet, enhancing the child’s world, pursuing whatever intrigues you.

Many of you won’t do those things simply because you’ll be spending too much time chasing money rather than fascinations. How odd that this has come to pass, given that America is now a far more affluent place than when I was your age. One of the many reasons it has is that college and graduate education has become so expensive. There’s been a steady run-up in tuition over the past four decades, not just at Harvard. Unless you’re rich or near-rich, paying for college is a bigger burden now. And there’s been a huge run-up of student debt, a problem that’s worse elsewhere than it is at Harvard.

On the whole, your generation has far more trouble than we did with money. Money ambition veers you away from your ideals and can steer you toward professions in service of the elite. Money inequality drives a wedge between students who have cash pouring in from their families and others who don’t. The money culture—that inclination to reward anything based on a “market” (whether real, illusory or corrupt)—is corroding the values of too many fine institutions. Including Harvard.

People of my age and generation are now running things at this University, by and large. I know many of them, and without exception they are smart and good people. Sometimes smart and good people make choices that are wrong, and when they do, their friends should tell them so.

As it has grown wealthier over the last two decades, this proud place has immersed more than it should into elements of money ambition, money inequality and the money culture.

The Harvard endowment, most recently measured at $19.3 billion, has shown outstanding growth over the last decade, trailing only Yale in its investment performance. This should be cause purely for celebration—but it’s not.

With the University now vastly richer than ever before, one would think the place would bristle with new benefits for students. This would require an increase in the annual payout from the endowment, approximating its recent long-term gain in value, but that’s something Harvard has not done in recent years.

What we see, instead, is the bizarre combination of frequent high pronouncements of vast wealth combined with even more frequent pleadings about the need to squeeze the annual operating budget. The recent cutbacks and layoffs of library staff and services are just one example of this.

While Harvard is laying off librarians, it’s paying six other employees—fund managers—a total of $107.5 million this year. Wrap your mind around those numbers. Six people. Over a hundred million dollars. That’s a sum so large it’s hard to fathom.

In 2003, according to the National Association for College and University Business Officers report, only 717 colleges and universities reported having endowments, and of those, only 419 had assets (acquired over their entire history) adding up to more than Harvard is paying these six people in a single year.

Two fund managers are personally receiving about $34 million and $35 million. How much is $35 million?

That number is 20 times the money earned by top football and basketball coaches, the next best-paid university employees in America.

It is 80 times what University President Lawrence H. Summers earns, 200 to 400 times what many tenured members of the Harvard faculty make, and 1000 to 2000 times what many of Harvard’s clerical and service employees earn.

Thirty-five million dollars is three percent of the entire Harvard operating budget for the current fiscal year, and the entire 5.5 percent tuition increase paid by all full tuition-paying students at Harvard College.

These six people are good at what they do. So are many other employees of Harvard, from deans to adjunct professors to medical staffs to police to cafeteria workers. The fund managers’ work is unique in that they deal with large amounts of money. So do employees in the office of Harvard’s vice president for finance, and they don’t get a slice of the sums that pass across their computer screens.

Let’s not forget: That money isn’t theirs. It’s the accumulation of gifts made by many generations, dating back centuries. The purpose of the endowment should be to serve current and future generations of students, not current and future generations of fund managers.

These six people received these sums based on formulas tied to “benchmarks,” which they can exceed even when the endowment loses value. This happened over the two years prior to June 2002, during which several fund managers were paid over $5 million apiece, and one as much as $17 million.

If Harvard is flush enough with endowment money to pay six people $107.5 million, Harvard can surely find the money to do things like freeze tuition for all college students, replace all undergraduate student loans with grants and fund a program of loan forgiveness for recent graduates in low-paying professions.

Plus, as long as Harvard persists in vastly overpaying this handful of employees, any staff layoffs, service cutbacks and (especially) tuition increases can and should be directly linked to that one enormous expenditure.

Last November, seven alumni from the Class of 1969 (including myself) wrote Summers to object to these fund manager payments. This is our 35th reunion year, and Harvard is asking us for gifts totaling roughly half of what is going into one fund manager’s pocket. A number of others in our class have similarly expressed themselves.

Come graduation week, I expect this fund manager pay issue—along with other questions about the endowment and the money culture—will be front and center among the entire community of alumni.

We have called for a public airing of this issue, but our request has been ignored. Instead, the University delayed its announcement by two months, and then announced its intention to pay the fund manager bonuses, with a terse statement from the treasurer asserting that it’s in Harvard’s best interests to do so. He offered a review of the pay procedures, but made no promises to stop the current practice.

It’s time for students (and others) to take up this cause—or, at a minimum, to hear out various points of view and then take a stand and make your voices heard. Changing minds won’t be easy, but it’s possible. There’s a lot at stake here. The example we set here is tremendously important—and not just for higher education.

Harvard is a great and powerful university, and we all want it to use that greatness and power to promote and serve the highest ideals of our society, culture and nation.

You have dreams, just as we did at your age. You deserve just as much chance to nurture and follow those dreams, without the money culture getting in your way.

William A. Strauss ’69 is co-founder and director of the Capitol Steps, playwright of three musicals and co-author of nine books, including Generations and Millennials Rising.