This was going to be a Friday potpourri, but this story says so much about the liberal mentality and its failure to run an economy that works: Harvard University, the Moonbat Factory on the Charles, is broke. Read this article, it’s a tremendous demonstration of how hubris, political correctness, and utopianism make left-wing elites unfit to manage an economy.
During the boom years, it was assumed without question that the value of Harvard’s endowment would keep rising. Trusting in that false certainty, the already profligate university went wild, increasing its annual operating budget by 67 percent, from an inflation-adjusted $2.1 billion in 1998 to $3.5 billion in 2008—this, even as the number of students remained constant.
The “the market boom will last forever” mentality that fueled Barney Frank’s reckless adventures in giving out mortgages to financially unfit – but politically favored – groups was also shared by the flagship educational institution in his home state.
For years, Harvard depended on an aggressively managed investment fund guided by brilliant people. But then, the University assisted by the mainstream press went all PC on them, accusing them of the heinous crimes of being too successful and making too much money.
By 2005, Jack Meyer had had enough. After 15 years at Harvard Management Company, frustrated by the circular fights about compensation, and sick of justifying himself to Summers and Rubin, he walked out and started his own giant hedge fund. Shamelessly, he took many of Harvard Management Company’s best people with him, about 30 portfolio managers and traders, along with the chief risk officer, chief operating officer, and chief technology officer.
How well did the strategy of punishing the successful work? Not so well, it turned out. First, a directionless, caretaker regime lost half a billion dollars in a trendy hedge fund. Then, a fellow with a trendy, exotic name was hired to run the finance operation … Mohamed El-Erian. His tenure was relatively successful, but he got fed up with dealing with the Harvard aristocracy and quit after two years. He was replaced by Jane Mendillo, whom colleagues describe as pleasant and hard-working, which is like describing a blind date as having a nice personality.
Also, part of the scheme, vast public works projects to create a liberal Utopia.
The university’s master plan called for a “seminal” transformation of 220 acres in Allston over the next 50 years: in place of broken pavement and abandoned warehouses, Harvard would build new walkways and bicycle lanes. A paved piazza would be surrounded by theaters and museums. A new pedestrian bridge would span the Charles River. Here and there, landscapers would plant abundant, well-tended gardens. Small, charming shops would be adjacent to outdoor cafés. All that and more was the Utopian plan.
What they have to show for that effort is a $1.2 Billion hole in the ground that was to be the foundation of a … wait for it … a stem cell research laboratory. But because of their horrific financial mismanagement, they only have enough money to fill in the foundation with concrete to keep mud from collapsing the walls. Makes one wonder what will come of all this “Stimulus” spending.
The architect of this failed liberal utopia? Former Harvard President Larry Summers, who now heads the National Economic Council under Barack Obama.
Those who taught the government elites that claim they can run health care at peak efficiency and with savings to the economy seem to have lavishly spent and expanded themselves into too much debt with no way to pay for it. Their acolytes who hold the levers of power in Washington are spreading the hubris, political correctness, and utopianism that failed at Harvard onto a nationwide canvas.