Too Well Endowed

It’s time to start redistributing the wealth of our great universities

Harvard University has an endowment of about $50 billion. Yale comes in second at over $40 billion. Stanford’s is roughly tied with Princeton about $35 billion. There are also a number of public universities (Michigan, Texas, California, Virginia) in the top twenty in excess of $10 billion.

These numbers speak to the miracle of compounding over generations—centuries. They also speak to something else: the tax-exempt status of these universities.

It’s not hard to see why they enjoy this privilege: these are non-profit institutions (though this can be a less straightforward matter than it may seem, especially in an age where cutting-edge research leads to patents that can pay literal as well as figurative dividends). Governments have good reasons to create incentives and exceptions from the usual rules of commerce in an economy, and these institutions indeed contribute to the overall health of society. The most obvious way they’ve done so by is promoting upward mobility. Rich schools subsidize admission in the form of financial aid and spend more per pupil than less well-endowed ones.

But, by and large, these schools—and higher education generally—have lost their way. This is apparent by a number of metrics. The first is that they are now failing on the meritocratic standards by which they judge themselves. As a number of observers have noted—most recently David Brooks in The Atlantic—elite colleges and universities are now factories for reproducing a ruling class more than engines of upward mobility. This is true even among the racial minorities so deeply cherished as the moral foundation of affirmative action. (Students of color are more likely than not the sons and daughters of the rich, many of them from abroad.) Moreover, only a small portion of endowments are actually being directed at instruction. Harvard could easily charge nothing for tuition. That would not actually be wise—many students could afford to pay—but it does indicate that most of its financial power, and most of its resources, are directed elsewhere.

There’s plenty of blame to go around. Faculty pride themselves on how little, not how much, they teach: peer-reviewed research is the gold standard for most scholars, who largely only speak among themselves. In any case, they have been supplanted by armies of administrators whose primary job is to sustain themselves through enterprises of questionable value. And then there are the students, who, compared with those of previous generations, spend remarkably little time doing actual academic work and whose sense of entitlement has led to aggressive demands for safety coupled with ignorant denials of free speech.

Such dynamics are indicative of a larger insularity that breeds justified resentment in society at large. The political orientation of academe is sharply at variance with the public. That’s not necessarily a bad thing: dissent is an important role for intellectuals in a culture. But all too often academic communities see working people as a problem to be solved rather than a constituency to be served.

Addressing such issues is not easy, and people can legitimately disagree on how to do so. What seems less arguable is that the privilege of elite institutions needs to be checked. The best way at this point is to require them to return some of their surplus gains to the wider good. There are some nominal taxes on some schools; they should be raised, perhaps allocated to public education generally. They’ve been living by Andrew Carnegie standards of stewardship for far too long. To borrow their own patois, it’s time to dismantle their structures of power that reproduce inequality.