Harvard’s Economic Crisis in Boston Mag
Posted on May 27th, 2009 in Uncategorized | 51 Comments »
Yours truly wrote a piece on Drew Faust and the financial crisis at Harvard for this month’s Boston magazine. It’s called “Drew Gilpin Faust and the Incredible Shrinking Harvard.”
The piece begins by quoting Faust’s Commencement address about a year ago.
If the endowment weren’t so enormous, Faust concluded, the university would face a choice: Seek more money from alumni and the federal government, or “do less—less research, less teaching, at a lesser level of quality.”
Nobody, of course, really expected that to happen. But today that is exactly the choice Harvard confronts.
In the piece, I tried to sum up what is at stake for Harvard in this particular moment.
While the failed presidency of Lawrence Summers generated more headlines, this quiet crisis is actually a greater threat to Harvard. The university has been so rich for so long that most of its denizens can’t remember a time when money was a concern. While Harvard officials are doing their public-face best to downplay the problem, the numbers don’t lie, and this economic crunch will leave the school a profoundly changed place. Harvard will have to become smaller and academically more modest, and as it does it will chafe at having grand plans without the resources to fund them. For the first time in decades, it will worry about merely paying its bills. The university will have to decide: If it is no longer so rich that it doesn’t have to make choices, what does it really value? What are its priorities? It won’t be a comfortable debate.
“We are in trouble,” says one Crimson professor. In the aftermath of deep and damaging cuts, “there is a real chance that Harvard will no longer be considered the best there is.”
I hope the article adds to the discussion. See what you think.
51 Responses
5/27/2009 10:57 am
Seems like you base most of it on a “FAS Administrator” + a couple of alums. David Halberstam you are not.
5/27/2009 11:09 am
I was going to write something snarky, Carlos, but I decided to write a serious response. Here it is: I don’t love relying on anonymous sources, but sometimes I have to. People are pretty anxious around 02138 right now, and no one wanted to be quoted by name (about anything other than puffery) on the subject of Drew Faust and the financial crisis.
That said, I’m confident that the people with whom I spoke were well-informed on the matters I spoke to them about. Do you have any issue with the substance of what I reported? Because if you don’t, then it seems odd to fault the reporting.
5/27/2009 11:13 am
I think the portions quoted above hit the nail on the head.
5/27/2009 11:48 am
Enjoyable reading, but not anything that hasn’t been discussed all over campus for the past few months at least. More likely to just put the discussion further into the public eye, although it remains to be seen whether anyone outside Harvard cares. I think Harvard will be able to limp along with cuts and layoffs and more cuts and more layoffs until the economy improves. As you say, Richard, the question is whether the university can take this as an opportunity to reflect on what it really does well, and then pare away what is less valuable. To the extent that the latter parts have strong constituencies, I don’t know if Faust (or anyone) has the will and the political capital to make significant changes or “reshaping” or whatever you call it, happen.
5/27/2009 12:02 pm
02138 still exists?
5/27/2009 12:41 pm
Mmmmm, no. I meant the zip code, not the magazine.
5/27/2009 12:41 pm
Nice piece, and interesting to think how Harvard’s position as a “leader” will be affected by the new circumstances. I am not aware of anyone who has really come out a lot better than Harvard at present, so its relative advantage will remain, at least in the U.S.
Interesting that there is so little challenge to U.S. higher Ed. abroad. Can that last?
5/27/2009 1:19 pm
I like it when you are snarky, Richard. It’s cute when you get all worked up.
5/27/2009 2:42 pm
Has anyone considered the implications of Forst’s resignation? The Corporation proved itself completely inept at watching over the University’s financial position. Forst could not move them to recognize and act quickly upon the deteriorating condition of the endowment, liquidity squeeze, Alston and budget pressures nor could he marshal the sense of urgency necessary to shrink the projected losses in a more expeditious fashion. This is a huge blow to Harvard for what it suggests about its institutional willingness to deal with the crisis.
5/27/2009 3:17 pm
Bravo.
Couldn’t have said it any better; just perfect.
5/27/2009 4:02 pm
“a billion here, a billion there” Was that Dirksen?
5/27/2009 4:12 pm
Actually, I spent quite a long time trying to figure out the truth of that. (The beauty of small details.) It’s generally attributed to Dirksen, and he may have said something like it, and he liked to spread the idea that he was the first to say it…but he wasn’t.
If I recall my research correctly, it cropped up first in the New York Times in the 1920s, and I’m not sure the quote was even attributed to anyone or was said by anyone famous.
5/27/2009 4:55 pm
Richard, this is a methodical and very thorough look at the current state of the University’s finances, and I think you’re generally on the money, so to speak.
But the article left me with a nagging sense of disappointment. It feels to me like 80% of the article is spent setting up your premise, and that it’s only in the last few paragraphs that you really engage with the questions that you seemed at first to be most interested in. Okay, so Harvard’s in bad financial shape, and Drew and co. are going to have to make some tough decisions. I want to know what /that/ looks like. How do you even begin to lay out a principled way to decide what is absolutely essential at Harvard in the 21st century, and what it can do without?
I understand that if it’s tough to get people to talk to you, even anonymously, about Harvard’s finances, it’s even tougher to get them to speculate about the toll that the Great Recession (or whatever we’re calling it) will have on the University’s fundamental mission. So maybe the appropriate forum is here-what do you guys think?
I’ll kick it off-might this period of contemplation and reassessment be a good thing for Harvard’s intellectual vigor in the long run? (I’ve got this half-formed analogy in my head, of the US military, bloated and living in a Cold War mindset, becoming more streamlined, precise, and effective against a new kind of enemy.)
5/27/2009 5:07 pm
I think that article would be a very interesting follow-up, C09. I shied away from it because, while I don’t mind analyzing in my print journalism, I don’t feel as comfortable recommending. (The blog rules are more casual.) And at this point, for me to get into what various people think should be “reshaped” and how would be mostly speculation.
But I could imagine a really interesting essay or forum—perhaps in the Crimson—about what a new, streamlined Harvard would look like.
You guys should do a poll—what should stay and what should go?—asking specific professors and administrators and alums and so on their opinions.
Probably most of ’em won’t say a word on the record, but you could give them some sort of anonymous identifier: “law school professor,” “member of the class of 69,” “university professor,” “member of the economics department,” whatever.
It’d be pretty interesting to read tangible suggestions. And heck, at least that way you wouldn’t be leaving it up to a secretive few.
5/27/2009 5:08 pm
Or, yes, alternatively, people could leave some suggestions here!
5/27/2009 6:11 pm
It was obvious from the start that Drew was unqualified for the job - after a few years of heading a tiny institute with no students or faculty. Now she’s in way over her head. How much longer will she last?
5/27/2009 6:42 pm
The fix Drew faces was of the Corporation’s making. Every single bit of it. The lack of available cash in the endowment:Rothenberg. The runaway costs at FAS: Knowles, Summers and compliant Corporation members. The town gown mess: Summers and the Corporation. The ill fated decision to build the stem cell palace: Corporation. The $11 billion in future capital calls facing the endowment: Rothenberg. I would argue that because the cuts yet to come are going to be so painful for the faculties that the institution needs someone of Faust’s sensitivities. Does Anonymous think a hatchet man with experience downsizing businesses is the right person for the job? Does anyone in higher education have any relevant experience dealing with the kind of liquidity crisis Harvard is experiencing?
5/27/2009 9:34 pm
Try Amy Guttman. She is doing a stellar job at UPenn…
5/27/2009 9:39 pm
Some Deans fear that a major shake up is imminent… there’s a frenzy of appointments and promotions under way in some schools as if something is coming to an end.
5/27/2009 9:52 pm
Good post there Pioneer13, though Jeremy Knowles is probably exempt, philosophically, from the systemic changes with respect to financing buildings that came in after 2000, no? I guess the $100M CGIS cost overrun buck (half the current FAS deficit?) stops with him and others, but that was mismanagement rather than a misguided philosophy I think (i.e. we had the c. $40M originally budgeted). Isn’t that right?
But, pace Sam and his inveighing against NR’s big payout in 1998/9, the real problem is the risky investment and debt-financing policies that came in this side of the millennium.
Just Rothenberg, Pioneer13? Why not Rubin as well? Or does the fact that he skips most of the meetings as rumor has it somehow exempt him? Most faculty are astonished he is still on the Corporation.
In the circumstances we are infinitely better off with DF as president than we would be with LHS, not just because his fantasies about the medical industrial park/stem cell palace and his blind faith in the justice of the financial markets are now exposed for the folly that they were. But with sensitivity we also need a sense of direction.
But we are at least best off without that we are without. The 5:00 - 5:20 mark of this is worth a look in that respect:
http://www.youtube.com/watch?v=-RwqAQZnRm4
Bottom line for a start:
Look at what got added in the last decade, in all divisions, and slash and burn EVERYTHING that doesn’t make sense from the perspective of the stripped-down mission of FAS, acquisition and communication of knowledge, i.e. research and teaching.
5/28/2009 8:48 am
Btw, Richard, you get a bit ahead of things towards the end:
“Harvard has already halted the hiring of junior faculty and announced an early retirement program for tenured professors, and for the first time ever is considering laying off tenured professors.”
I gather there are 19 junior faculty searches authorized for next year, there has not yet been an actual announcement of a faculty early retirement plan (one is in the works however), and there has been no talk of tenured faculty layoffs.
5/28/2009 9:01 am
Yes Richard, RT is quite right. Things are actually contrary to what you describe, not faculty freezes, but actual frenzy in promotions and hiring in many schools. Almost as if people fear the world is coming to an end and need to leave things in place before this imminent change…
5/28/2009 9:39 am
But not in FAS, 9:01. We have a senior search underway, proceeding in an orderly way, and all promotions and appointments occur on schedules set by the Dean’s office, so your scenario would hardly describe FAS. To which schools do you refer?
5/28/2009 10:19 am
Interesting—and it makes sense, in an irrational sort of way. Get everything you can in under the wire. Perhaps what this points up is a sort of cognitive dissonance between those at the very top making the cuts and those at mid-levels who distrust the decision-making process and want to ensure that their schools/departments come out okay.
But it’s a little bizarre to think of new hires now. Where will the money come from?
It also suggests that everyone is looking out for themselves rather than thinking, we’re all in this together.
Or is that too harsh?
5/28/2009 10:44 am
I don’t think it’s too harsh to suggest that everyone is looking out for themselves. Harvard is not an institution that is designed for cohesiveness and internal cooperation. “Each tub on its own bottom” has been the philosophy for so long that it’s going to be very difficult for everyone to stop thinking about competing with the department down the hall and start thinking of the health of the entire institution. I do think that change will happen, but only after truly dire cuts are either suggested or implemented. I also think that would happen much faster if the people at the top communicated more openly about what the situation really is, and what Harvard really needs to do to get through it. I don’t feel like the communications I’ve received so far have done that very well.
5/28/2009 12:56 pm
Well, my department looked out for itself (and for Harvard, I believe) by arguing strenuously and successfully that we needed to replace our one senior classical archaeologist who had just retired, that maybe Harvard would not be competitive without such. Our one senior classical philosopher is about to retire, and I would hope that argument will be successful too. How else does a university remain excellent than by replacing retiring faculty members in areas that should be covered by excellent universities?
I still want to hear what schools are rushing hires trhough under the wire. Certainly not FAS.
5/28/2009 5:35 pm
RT: I agree with your argument in the previous posting (“How else does a university remain excellent than by replacing retiring faculty members in areas that should be covered by excellent universities?”). Unfortunately, a divisional dean told one of my two departments that it was exceedingly “arrogant” to make that argument.
5/28/2009 6:56 pm
Like Pioneer13, I lay the blame for the current fix at the Corporation’s doorstep. But I’m not sure if Faust will be able to successfully guide Harvard through this mess because I’m not convinced that the Corporation yet realizes that a university is not a business, that “Harvard” is not a brand, that faculty and staff are not mere employees. And although the autocrat Summers is gone, not so the autocratic behavior.
5/28/2009 8:18 pm
Easy to see where the new appointments are. Check the websites of the various professional schools. It’s all there.
Are the Deans expecting that the current regime may not live long?
5/28/2009 9:23 pm
I just checked a bunch of them while watching Sox win, and couldn’t find all the new appointments. How about a little help, Frenzy?
5/29/2009 5:42 am
Perhaps Harvard should indeed find a way to get some faculty, who have lost their research skills, to retire.
5/29/2009 8:39 am
I don’t know any colleagues who have “lost their research skills.” What fields are those faculty members in?
5/29/2009 8:53 am
I thought I had lost mine, Judith, but I had just mislaid them, and found them a few minutes ago. Phew!
5/29/2009 10:57 am
“Retiring Faculty,” perhaps because of his early a.m. posting before his first cup of coffee, might have expressed himself rather clumsily. One has to admit, though, that there are older faculty who seem to be treading water, whose teaching isn’t quite what it used to be, and who haven’t published anything in years. Offering early retirement packages seems like the obvious solution, as long as departments are allowed to hire replacements.
5/29/2009 11:12 am
I would agree with that, 10:57.
5/29/2009 12:15 pm
Anonymous administrator aren’t you describing those who are ready for prime administration: chairs, deans and the like. Why retire facutly who can’t teach or write when they can still do so much to steer the rest of their colleagues?
5/29/2009 12:49 pm
Feste, I’m not sure if you’re being facetious here. Many faculty members turn out not to be that good at administration. Totally different skill sets for the teaching/research life vs. the administrative side of things. Some faculty are quite good at chairing depts., etc., , but my experience tells me that this is not always the case.
5/30/2009 2:40 pm
“Feste” of 5/29/2009 12:15 pm is not the real Feste, but some cross-gartered knave. A pox upon moniker thieves.
5/30/2009 6:30 pm
‘Cross-gartered’ — nice Twelfth Night reference to legitimate the well-chosen handle. Weird that someone hijacked it.
SE
5/30/2009 7:23 pm
It’s only me lord Orsino, just a humble Fool.
5/30/2009 7:28 pm
Call it concidence or what have you, but this article was posted yesterday in Harvard’s website, ready for all the Commencement visitors this week in Cambridge…
http://www.news.harvard.edu/gazette/2009/05.28/mendillo.html
reassuring, isn’t it?
5/31/2009 9:43 am
Richard B., could you please do a little language analysis on Mendillo’s prose in the interview to which Jester links above? Should I be more aggressively positioned in order to retain my research skills going forward?
5/31/2009 1:28 pm
Only if you also circle back and leverage your synergies a little, Judith.
5/31/2009 5:32 pm
Alas, RT, my asset classes have been moving in different directions: composure-up, due to sabbatical leave; research-up, due to stay at an archive; jaw line and chin-down, due to gravity and age.
5/31/2009 7:44 pm
This conversation shows well what’s wrong with Harvard. Professors with too much time in their hands and incapable of expressing their grievances other than writing on a blog.
At least under Summers Professors could give him a run for his money at faculty meetings. Clearly things have moved back to their rightful places under Faust, to blogs read only by a couple of tired people.
5/31/2009 8:12 pm
Back to professing: too much time ON their hands I think you mean, Feste, if you really are Feste.
5/31/2009 8:13 pm
It seems to me that the higher the stakes get around 02138, the nastier and more personal some commenters become.
5/31/2009 11:05 pm
“Feste” of 5/31/2009 7:44 pm would you please adopt some other name.
5/31/2009 11:34 pm
Quite so, real Feste, of 11:05. It was quite clear the 7:44 avatar was not the real thing—different fingerprints—so 7:44, become something else or just go away. Really.This blog has a certain attractive honesty about it, and you stand out as what we might call a negative schetliastic exemplar!
6/1/2024 12:07 am
Here is what the real Feste posted before some asshole attempted to steal his/her identity:
“Like Pioneer13, I lay the blame for the current fix at the Corporation’s doorstep. But I’m not sure if Faust will be able to successfully guide Harvard through this mess because I’m not convinced that the Corporation yet realizes that a university is not a business, that “Harvard” is not a brand, that faculty and staff are not mere employees. And although the autocrat Summers is gone, not so the autocratic behavior.”
Interesting that this good post in particular would generate an identity theft by the fake “Feste”
6/1/2024 5:46 am
I can figure out who the fake Feste is from his server address, and if he posts under “Feste” again, I’ll delete it. I’ll give you a hint: It’s the same person who tends to write comments in the form of irritating rhetorical questions.