When I was a kid, my home state of Florida introduced the state lottery, one of the arguments for it was that all profits would go to education.
Of course, what that really meant was that the state could reduce the state contribution to school system by an equal amount.
Harvard says that 100% of the money goes to the students. What that really means is the money doesn't need to come from somewhere else.
Are we to believe that Harvard ("a hedge fund with a university attached to it") couldn't plan for a pandemic, or couldn't have set aside funds for this possibility?
Or (IMO more likely) assumed the government would pay for some of it anyway - private profit, socialized risk.
Sure, but just following regular news I had learned that "Wimbledon paid pandemic insurance for almost 20 years. Now it’s getting $141 million" [1] and a quilt market “... carried [...] expensive protection for years, including a special, and even more costly, clause to protect against infectious diseases. This insurance would have provided the necessary funds to make refunds, which was its primary purpose,”
If they can plan for it, surely Harvard can. It's not like Harvard doesn't have any medical experts.
You wrote: "It does not make business / economic sense."
My question is, what would have happened if Harvard knew they would not get any support money for a pandemic? Would there be a problem without the money?
Would that have changed the business / economic sense? That is, it seems like wealthy organizations expect to be bailed out, leading to privatized profit and socialized risk.
You don't have to plan for a pandemic specifically. Just any kind of a downturn where you might not be making money for months at a time. It's called an emergency fund.
You always hear how people at home should have 6 months worth of expenses saved up in case of emergency. I'm honestly blown away how many businesses don't do the same thing. Basic fucking financials.
I understand a bit more if you're a smaller business, with small margins, and you're just getting started. But if you've been in business for years, with tons of money flowing through... and you can't get through a few months, maybe you should go out of business.
This has been the most frustrating thing for me. The advice for the individual is essentially the exact opposite of the advice for the 'too big to fail'. I understand that the circumstances are different, but it feels frustrating that my accountant would suggest I save 6 months for unforeseen circumstances, but wouldn't provide the same advice to an employer with many people's livelihoods in their hands.
That said: Are there any studies on the economic impact of every company hoarding 6 months worth of safety vs the likelihood of that event vs the cost of no company having the safety net during this pandemic?
Not quite. It's a circular system. Money goes places like university tuition, housing, and dining.
"To the students" means "to pay the university."
I've walked through the complex and bizarre accounting, but the short story is:
* The university wants "general" funds, which it can use to pay million-dollar salaries and for fancy dining establishments, rather than restricted funds.
* Almost all money comes in as restricted funds (e.g. for teaching, research, or otherwise supporting the mission of the school).
* There is a complex network of funnels to go from restricted funds to general.
For example, tuition is artificially set high. It's then discounted to anyone who can't afford it. However, government research grants, fellowships, etc. pay the full tab. If the cost to educate a student is $20k, the university will have a sticker price of $50k. For deep pockets sources, it will take $20k to educate the student, and funnel $30k into general funds. To make donors feel better, it will then advertise it actually costs $200k to educate that student (!).
With research, the channels are "overhead," which is often set at around 60% of elite schools.
These are well-polished channels. Any money coming in for students, you can assume is ultimately landing in someone else's pocket. It's just passing through tuition, housing, or similar along the way, the price of which is always decoupled from reality (in both directions, actually, since it's just a financial game).
"To the students" was supposed to be my shorthand for this quote from the original article: “Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic.” I see that my shorthand was ambiguous at best.
While I understand your point, my point is that surely Harvard - with its huge endowments and staff expertise - could easily have planned for this contingency.
Did they really do no planning, or did they assume the government would step in and give them money?
Concerning your point more directly, did they not consider asking for any of the $41 billion(!) endowment (in 2019) to include being used for this sort of contingency?
It went to "financial assistance to students," some of which I'm sure was what it was (e.g. they presumably helped students with housing or transportation or what-not), and some of which was surely circular (they billed students for a service, paid for that with public funds, converting public money to private money). I have no idea the split.
But yes, Harvard has plenty of funds to weather this crisis. But no, it didn't get there by turning free money down, or being particularly picky about where money comes from.
The only time Harvard will turn down money is if it is perceived to impact their brand. That's usually done be returning money if they get caught (as with Epstein), but they have been known to do it preemptively in select cases.
>> Harvard won’t use any of its $9 million stimulus check to make up for losses
>> “Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic,”
>> Harvard will need the money. It issued room and board refunds to students who left campus.
So... they’re giving full refunds plus an extra $9M, right? Not counting on it.
Government money doesn’t come from nowhere. It comes from people with a median of around $41k income and $100k net worth for the entire household. What percentage of Harvard families fall below that line? They need it though. I’m sure the average American would gladly donate if it wasn’t forcefully taken from them.
> Government money doesn’t come from nowhere. It comes from people with a median of around $41k income and $100k net worth for the entire household.
The median tax dollar doesn't come from the median household. The top 10% of earners pay 65% of income tax, so the median tax dollar is more like $140k income household.
That's actually closer to the truth than your idea.
> It comes from people with a median of around $41k income and $100k net worth for the entire household.
The median federal tax dollar comes from a household making over $200k/year. But marginal spending doesn't actually come from current taxes anyway, it comes (insofar as the concept of the public purse approximates reality, which as MMT observes isn't very much) from borrowing which is repaid by marginal changes to future taxing and spending policy compared to what it would have been without the constraint of that debt. Who that comes from is...obscure and dependent on future elections and policy priorities.
While we're at it, the University of Southern California has a $5,700,000,000 endowment [0], just (literally just in the last few weeks) bought an amazing $8,600,000 residence for it's president [1], and is receiving [2] $19,278,560 in CARES act funding.
I guess with that extra money could have bought a nicer palace... I mean house.
I'm sorry, but the article you linked clearly states that they bought a cheaper and smaller residence for their president, and they are in the process of selling the old residence for potentially more than twice the amount. What's your point here?
Cheaper and smaller, and still $8m dollars. My point is that $8m is a lot of money to be spending on a house for your president (why is the university even paying for this at all?) especially when you then turn around and take a bunch of taxpayer stimulus money.
Fairly certain endowments arent just bank accounts without stipulations. 1m for athletics, 1m for research, 1m for infectious diseases, etc. Not 40b to do whatever you want, there are strict rules on how these funds can be used and what they can be used for. That said, I dont agree with them getting financial assistance from the government.
Yea, goes into this further down the article:
"a Harvard spokesman emailed a list of bullet points about restrictions on endowment spending. The short version: The endowment is made up of more than 13,000 separate funds. The “overwhelming majority” of those are restricted to spending designated by donors, like professorships and scholarships"
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[ 6.0 ms ] story [ 63.1 ms ] threadOf course, what that really meant was that the state could reduce the state contribution to school system by an equal amount.
Harvard says that 100% of the money goes to the students. What that really means is the money doesn't need to come from somewhere else.
Are we to believe that Harvard ("a hedge fund with a university attached to it") couldn't plan for a pandemic, or couldn't have set aside funds for this possibility?
Or (IMO more likely) assumed the government would pay for some of it anyway - private profit, socialized risk.
[1] https://www.sbnation.com/tennis/2020/4/8/21214031/wimbledon-...
[2] https://craftindustryalliance.org/quilts-inc-will-not-refund...
If they can plan for it, surely Harvard can. It's not like Harvard doesn't have any medical experts.
You wrote: "It does not make business / economic sense."
My question is, what would have happened if Harvard knew they would not get any support money for a pandemic? Would there be a problem without the money?
Would that have changed the business / economic sense? That is, it seems like wealthy organizations expect to be bailed out, leading to privatized profit and socialized risk.
You don't have to plan for a pandemic specifically. Just any kind of a downturn where you might not be making money for months at a time. It's called an emergency fund.
You always hear how people at home should have 6 months worth of expenses saved up in case of emergency. I'm honestly blown away how many businesses don't do the same thing. Basic fucking financials.
I understand a bit more if you're a smaller business, with small margins, and you're just getting started. But if you've been in business for years, with tons of money flowing through... and you can't get through a few months, maybe you should go out of business.
That said: Are there any studies on the economic impact of every company hoarding 6 months worth of safety vs the likelihood of that event vs the cost of no company having the safety net during this pandemic?
"To the students" means "to pay the university."
I've walked through the complex and bizarre accounting, but the short story is:
* The university wants "general" funds, which it can use to pay million-dollar salaries and for fancy dining establishments, rather than restricted funds.
* Almost all money comes in as restricted funds (e.g. for teaching, research, or otherwise supporting the mission of the school).
* There is a complex network of funnels to go from restricted funds to general.
For example, tuition is artificially set high. It's then discounted to anyone who can't afford it. However, government research grants, fellowships, etc. pay the full tab. If the cost to educate a student is $20k, the university will have a sticker price of $50k. For deep pockets sources, it will take $20k to educate the student, and funnel $30k into general funds. To make donors feel better, it will then advertise it actually costs $200k to educate that student (!).
With research, the channels are "overhead," which is often set at around 60% of elite schools.
These are well-polished channels. Any money coming in for students, you can assume is ultimately landing in someone else's pocket. It's just passing through tuition, housing, or similar along the way, the price of which is always decoupled from reality (in both directions, actually, since it's just a financial game).
While I understand your point, my point is that surely Harvard - with its huge endowments and staff expertise - could easily have planned for this contingency.
Did they really do no planning, or did they assume the government would step in and give them money?
Concerning your point more directly, did they not consider asking for any of the $41 billion(!) endowment (in 2019) to include being used for this sort of contingency?
It went to "financial assistance to students," some of which I'm sure was what it was (e.g. they presumably helped students with housing or transportation or what-not), and some of which was surely circular (they billed students for a service, paid for that with public funds, converting public money to private money). I have no idea the split.
But yes, Harvard has plenty of funds to weather this crisis. But no, it didn't get there by turning free money down, or being particularly picky about where money comes from.
The only time Harvard will turn down money is if it is perceived to impact their brand. That's usually done be returning money if they get caught (as with Epstein), but they have been known to do it preemptively in select cases.
That is, the Forbes piece appears to be trying to counter the argument made by Trevor Noah and other that Harvard is being greedy.
>> “Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic,”
>> Harvard will need the money. It issued room and board refunds to students who left campus.
So... they’re giving full refunds plus an extra $9M, right? Not counting on it.
Government money doesn’t come from nowhere. It comes from people with a median of around $41k income and $100k net worth for the entire household. What percentage of Harvard families fall below that line? They need it though. I’m sure the average American would gladly donate if it wasn’t forcefully taken from them.
The median tax dollar doesn't come from the median household. The top 10% of earners pay 65% of income tax, so the median tax dollar is more like $140k income household.
That's actually closer to the truth than your idea.
> It comes from people with a median of around $41k income and $100k net worth for the entire household.
The median federal tax dollar comes from a household making over $200k/year. But marginal spending doesn't actually come from current taxes anyway, it comes (insofar as the concept of the public purse approximates reality, which as MMT observes isn't very much) from borrowing which is repaid by marginal changes to future taxing and spending policy compared to what it would have been without the constraint of that debt. Who that comes from is...obscure and dependent on future elections and policy priorities.
I guess with that extra money could have bought a nicer palace... I mean house.
[0] https://en.wikipedia.org/wiki/University_of_Southern_Califor... [1] https://variety.com/2020/dirt/more-dirt/usc-buys-8-6-million... [2]
https://www.independent.co.uk/news/world/americas/us-politic...
https://www.foxbusiness.com/money/trump-mnuchin-say-coronavi...