By JACK HAMILTON, SANDRA Y.L. KORN, and JENNIFER SHEEHY-SKEFFINGTON
As members of Occupy Harvard, we are writing in response to your letter to the members of the Harvard Community sent on Monday, Nov. 21.
Thank you for recognizing the important conversations our movement has generated, and of the centrality of free speech and debate for Harvard as an institution of higher education. We appreciate your concern for the safety of all members of the Harvard community, including the occupants of our encampment in Harvard Yard.
However, we are concerned with your characterization of our movement. As stated in a motion passed at our first general assembly on Nov. 9, we have been committed to being peaceful in all our actions. Exceptions to peaceful conduct from that night can be cited from both sides, but these isolated events do not speak to the broader principles and behaviors that drive either side. You make reference to incidents of sexual assault at other Occupy sites, which are abhorrent. However, we invite you to compare the number of such incidents with that of sexual assaults occurring, for example, on Harvard’s campus and in final clubs.
Given that we have made a public commitment to nonviolence, we request that you do the same. In light of brutal institutional acts carried out by police at the University of California Davis and Berkeley, the Harvard Undergraduate Council passed a resolution calling for “the continued support of the right of students to peaceful protest without violent response by the Harvard administration, the Harvard University Police Department, as well as student unions, university administrations and police departments across the US." We share that sentiment, and we ask that you make a public commitment that the University and its agents will refrain from the use of violence against Occupy Harvard.
As we share your concern with violence, so do we share your concern with free speech. A number of faculty have written to you asking that you open the gates of the Yard, and some are holding classes off-campus in protest against the gate closure. We agree with this sentiment, we think that speech cannot genuinely be free in a location heavily locked down by security, with public access largely eliminated.
Over the past weeks, we have received strong support from the Harvard community and have enjoyed productive conversations with many students at the encampment. At the same time, the closure of the Yard has divided the campus community, and created an atmosphere of anger and frustration that has stymied constructive debate within Harvard and strangled exchange with the world outside it. It has enabled, rather than prevented, individual acts of verbal and physical abuse directed at the encampment by certain inebriated students late at night. If Harvard genuinely cared about freedom of speech, the health and well being of its own campus, and its obligations to a community larger than the one that lies within its walls, it would open its gates
Let us now focus the discussion on one of the real issues at hand. Controlled by the world’s second-largest non-profit, Harvard’s $32 billion endowment is larger than the gross domestic products of more than half the countries in the world. Why are Harvard’s investments opaque to the Harvard community? How can we be confident that Harvard’s investments are socially responsible? We appreciate that you, as the President, play multiple roles within this university. You are both the leader of a community of scholars and an employee of the Harvard Corporation. When conflict arises between these two allegiances, whom do you serve?
We want to know, and we want Harvard to be held accountable. The scholars who contribute lifetimes of hard work and research, elevating Harvard’s prestige, winning grants and garnering huge donations, should have a say in how our contributions to Harvard are impacting the broader world. As far as we know now, there is a deep void of transparency and accountability with regard to the broader impact of Harvard’s investments. This is not only a problem of management, but also a problem of morality.
We invite you to a discussion of this and other issues that have led to the creation of the Occupy Harvard movement and maintain hopes that we will have substantive opportunities to engage with you on the pressing issues of integrity and fairness that are causing growing discontent on campus. Members of your administration have declined to attend any of the general assemblies to which they have been invited and have pulled out of two discussion events to which they had previously committed: the general assembly of Nov. 10 and the Dudley House discussion forum of Nov. 21. We are a horizontal and democratic movement and we invite you, again, to attend one of our general assemblies, which take place on Mondays and Thursdays at 6 p.m. in the Yard, right outside your office.
By the time this letter appears in print Harvard Yard will have been locked down for nearly three weeks. A movement rooted in the reclamation of public space and an enhanced engagement with fundamental ideals of democracy and equality has been met with repression and a retreat into exclusion, a breed of fear that is the most regrettable byproduct of privilege. We call upon you, and our University, to do better.
Jennifer Sheehy-Skeffington ’14 is a Ph.D. student in the Department of Psychology. Jack Hamilton ’12 is a Ph.D. candidate in the History of American Civilizations. Sandra Korn ’14 is a joint History of Science and Women and Gender Studies concentrator in Eliot House.
Around the time when the mainstream media began to cover Occupy Wall Street, one of my responsibilities at my internship included interviewing Marva, a 65 year-old African-American woman living on a fixed income in Ballwin, Missouri who had been fighting the foreclosure of her home for over two years. As we talked, a stack of paper several inches high sat on her kitchen table -- all of the paperwork she had received and filled out in a so-far unsuccessful attempt to stop the foreclosure of her home. At some point during our conversation, Marva referred to herself as a "99 percent-er." I was taken aback.
Up until that moment, I hadn't truly believed that Occupy Wall Street was anything other than a movement created by "radical leftists," for "radical leftists." But hearing Marva self-identify with the 99% changed my mind.
Since first hearing about it last summer, I had been skeptical of Occupy Wall Street. But despite my skepticism, I continued reading about the happenings in Zucotti Park. Although I was wary of the "movement," Occupy Wall Street did resonate with me, simply because it was willing to say, "We have a problem."
In fact, it was willing to say, "We have a lot of problems. And we haven't figured them all out yet. The problems are big banks, capitalism, income inequality, unfair foreclosures, the repeal of Glass-Steagall, environmental degradation, unemployment, corporate greed, globalization, racism, a Congress controlled by corporate interests, and a lot of other very complicated things." It was willing to say, "We're angry, so let's be angry together and figure out what we can do about it."
Still, I was skeptical. There weren't any clear-cut demands! Too many people were wearing Guy Fawkes masks! The high number of young, white people participating did not accurately reflect the composition of the 99%!
But after speaking with Marva my skepticism began to fade. I realized that, as someone who claims to be committed to "social justice," it would be irresponsible and impossible for me not to participate in the Occupy movement to the best of my ability. For me, "participating to the best of my ability" meant engaging in civil disobedience at a rally at the Martin Luther King Jr. Bridge in St. Louis on Thursday, November 17 as part of Occupy Wall Street's national Day of Action.
When I asked myself, "why should I participate in civil disobedience?" part of my answer was: because I can. For most people, such as Marva, voluntary arrest is not possible because of financial, health, and other concerns. But as a white, upper-middle class college student with the social and financial resources to be arrested with almost no subsequent consequences, I can strategically use my privilege to call attention to the injustice that pervades our country.
It is integral that students across the country become even more involved in the Occupy movement. We can carry on the legacy of student activism in our country by working to build a more just future in which we will live. Civil disobedience is one way that we can contribute.
In his famous "Letter from Birmingham Jail," Dr. Martin Luther King Jr. writes, "We who engage in nonviolent direct action are not the creators of tension. We merely bring to the surface the hidden tension that is already alive. We bring it out in the open, where it can be seen and dealt with." To me, that is what the Occupy movement is about. That is what Thursday's march was about. That is why I participated in civil disobedience: to force us all to see that something (even if we don't know exactly what it is) is wrong, and then to come together to figure out how we can begin to fix it.
I only spent 11 hours in jail, but many of the things I experienced and observed affirmed again and again why the Occupy movement is necessary, and why change can't wait. Injustice of all kinds was constantly on display. The other inmates (and even some of the police officers and other people who worked at the jail) expressed support of the Occupy movement's messages.
I hope that the actions across the country on Thursday made it clear that the Occupy movement is not ending anytime soon and inspired more people -- especially students -- to participate. Now, Occupy can start having serious and difficult conversations about how to transition from symbolic victories to real victories, from social change to political change, and from a problematic present to a more just future.'
You can watch a video of the arrests here.
Occupy Wall Street, a completely leaderless movement that claims to represent 99% of the population against the greedy 1%, staked a claim on a small piece of New York real estate known as Zuccotti Park in September 17.
Employing a range of tactics for media publicity, the movement has gathered thousands of people to occupy Zuccotti Park (private) near in the Wall Street vicinity and staged protesters all over the Manhattan, inspiring solidarity movements globally in 71 cities and drawing disdain from those opposed to their political views.
The unorthodox approach of the Occupy movement—deliberately avoiding sharp, limited demands in favor of a democratic-cum-anarchic call for change—has prompted speculation on the movement's potential success.
In spite of the vagueness of its message, this amorphous structure has proven successful. The undefined mission and intentional disorganization have allowed the movement to be inclusive, drawing people from all different walks of life –from former Wall Street traders to union organizers to professional left-wing activists.
While no one can deny that Occupy Wall Street (OWS) has been quite successful in drawing media attention and attracting solidarity movements worldwide, the ultimate effectiveness of its media strategy remains uncertain, due to the lack of defined message and an apparent absence of internal consensus.
The widespread media coverage won by the movement is so far regarded as one of the biggest successes, something that even the initiators did not expect.
“No one knows what’s going to happen the next day,” admitted Throine Peace, one of the media coordinators on the #OWS Media Team, an internal working group based in the middle of the park. “We are carefully letting people grow; now you can’t take it down,” he added during an interview, “the movement is meant to redefine itself everyday with the changes” and indeed no one has predicted the wild attention they have raised so far.
Another member of the Media and the Press Teams, Jason Ahmadi, believes their communications strategy has succeeded particularly well on the Internet.
“We are attacking all fronts” he said. He considers the movement’s website and the relationship it has developed with LiveStream as their biggest success, a place where anyone who is interested can follow what is happening even if they cannot be there.
The spread of “Occupy” protests nationwide triggered also attests to this success; the #Occupy movement in Seattle and Washington D.C. are prime examples of this. In addition, numerous organizations plan to incorporate the idea of #Occupy movement into their own campaign causes. Recently, the idea of bringing Occupy Wall Street together with the Tea Party even surfaced briefly. No matter criticism or support, cooperation or skepticism, the attention #Occupy achieved in just four weeks far outstrips the track record of recent such movements.
Turning this success of media attention into real changes, however, remains a challenge. #Occupy has yet to define a consistent message that can be condensed down to pragmatic political changes. Though everyone in the movement wants a fairer economy and to live a better life, their suggestions for changes vary widely. There are people asking for stricter governmental regulations, while others are urging for smaller government, if not an anarchic society. Some protest against job outsourcing to developing countries, while others hold signs for a truly globalized planet. The only common idea all protesters seem to share is solidarity in belonging to the “99 percent”.
People came to the Park to voice their opinions through the existing publicity, become part of the movement and help expanding the spread with their own outreach efforts. In this case, to reach a consensus among people holding conflicting opinions, if at all possible, and come down to certain specific policy options means to block out a certain group of people, who are part of and have been helping to expand the movement. If Wall Street is facing a protest, the protest is facing a dilemma.
Not surprisingly, this dilemma has caught attention from media, NGOs, scholars and politicians, including former US President Bill Clinton. In a Chicago talk show last Wednesday night, Clinton, who has sympathized with OWS, urged the protesters to come down to more specific political goals and work with people who have the knowledge and power to implement these changes.
“To make the change, eventually what it is you’re advocating has to be clear enough and focused enough that either there’s a new political movement which embraces it or people in one of the two parties embrace it,” Clinton said.
Though it is hard to predict what OWS is heading towards, a growing number of case studies in campaign, advocacy movements or NGO management have discussed lessons learned from the movement. Most of these articles focus on its successful strategy in outreach, while warning future movements to develop a more defined message.
Responding to this debate, Throine argued that a more open approach amplified the movement’s appeal. “If you say this is about one thing at the beginning, lots of people would not have come,” he said. #Occupy is a progressing movement.
Two clear but conflicting efforts to redefine OWS are in the air: one to address their weakness and, as Clinton suggested, “work with a political party” or “form their own.” This allows OWS more space to come down to real changes from the top down. The other would seek to maximize the advantages of an undefined message, or even broaden it. To make any real changes this way, #Occupy would need to influence individuals spiritually from the bottom up.
Still, some common ideas exist in either of these directions: they all recognized #Occupy’s inclusiveness as comparing to the previous protests or revolutionary movements, while at the same time even #Occupy admitted that it is not the same as those organized and targeted campaigns in many ways. This comparison of #Occupy with something it is fundamentally different from reveals a stereotype in the understanding of the movement.
The stereotype about protest movements is that they should have a central message and an organized, effective structure; therefore, when there is no defined consensus within, people think there is something wrong. The premature self-comparison with the Arab Spring may have made the situation even worse as people constantly refer back to it, while forgetting about the progressive redefinition and adaptation of the movement.
What if it is not meant to be a unified movement? What if it is not meant to carry one channeled message? What if it is just “an open resource project”, as they like to call themselves, which hosts an amalgam of ideas from everybody who is willing to contribute, but which has no defined message as a whole? Rather than asking whether this could be the third direction #Occupy could turn towards, it appears “a platform for voices” is what really defines the movement right now.
In this case, debates on #Occupy’s problem based on the ground of “campaign theory” do not shed much light on the future of the movement. If they need to make a decision for their future, it seems they already had made one. The question is, how should the world view OWS from a different perspective. Just as software programmers need to maintain the server, how can OWS keep their momentum and advantage of existing publicity and turn that to the advantage of people and groups who need a place to speak their mind.
With the U.S. trade deficit reaching the highest levels in three years, the unemployment rate hovering at 9.1 percent, and President Barack Obama announcing the second stimulus plan in two years, Americans are terrified of their country’s fiscal future. It should be no surprise that young protesters have camped out on Wall Street, venting their anger at the financial system. Against this backdrop of widespread discontent, the same financial institutions continue the same risky strategies that led to the crisis in the first place. If this continues, say World Policy Institute senior fellow Jeff Madrick and former Assistant Secretary of the Treasury for Financial Stability Herb Allison, these firms will keep finding ways to fail. For the U.S. to recover and avoid further financial disaster, the government needs to find a way to re-regulate Wall Street.
As the country struggles to get back on its feet, hostility and blame fall on Wall Street as the root cause of the banking crisis. Now, many Americans are demanding reregulation and the removal of Wall Street’s lobbyists’ hold on Congress. Madrick and Allison echoed these sentiments in a The Century Foundation and World Policy Institute talk on Sept. 16 where they discussed what the role of Wall Street really is, and what can be done to fix its dangerous shortcomings. Madrick, who wrote The Age of Greed: The Triumph of Finance and the Decline of America, 1920 to the Present, raises an important question in his book and in the discussion: What good is Wall Street? It’s a question “we should ask, and we were being afraid to ask,” Madrick says.
As the size of the financial industry grows, the original purpose of banking to allocate capital to its most productive uses has been forgotten not only by the bankers but by the public as well. According to Madrick, the current system that pushes the socially beneficial goals of the industry to the periphery only encourages greed. Now, banking shifts money around while rarely increase market efficiency.
Allison, who wrote The Megabank Mess on financial reregulation, takes a bolder step, claiming, “Trading has never made money on Wall Street.” Allison points to proprietary trading, where banks bet their own capital on movements in the markets, as a financial activity with no economic benefits. The profits, he claims, are illusory since they always will disappear, usually all at once in downturn. It can take months or years to find out whether the profit is real or the temporary result of excessive risk.
Before directing the Troubled Asset Relief Program (TARP), the government’s $700 billion financial bailout program, Allison worked as President and CFO of Merrill Lynch. At the financial firm in the 1990s, he once saw a trading desk lose more money in a day than the company had made in more than 100 years. Allison says the payment structure is partly to blame. “Traders are getting paid on a basis of carrying risks,” he says.
As Wall Street continues to evaluate profits and losses every afternoon based on the closing prices, traders are motivated to think in the short-term, ignoring uncertain or pessimistic long-term growth predictions. Defending their activity as an obligation to make profits for shareholders, banks actually fail shareholders when the market collapses. Traders are left with huge personal bank accounts, while shareholders and taxpayers pick up the losses.
Though the Dodd-Frank financial reform bill came out to prevent banks from taking too many risks, its effect is limited, according to Madrick and Allison. Some banks now issue bonuses in the form of restricted stock that can’t be sold immediately or cash that cannot be used for a certain number of years. Still, with continued loose regulation, the previous model focused on short-term profits is too lucrative for traders to stop.
On Wall Street, there is a widely held belief that “Greed is Good.” Allison says, “These banks had one goal, and they still do. Their goal is measured in profitability. If there is only one goal, there are no limits.” The pressure to generate profits immediately while ignoring long-term outcomes will continue to drive excessive risk taking.
Deregulation of Wall Street was once necessary for growth, Madrick says, but that need is long gone. Now that firms have consolidated into just a few players—many arguably too big to fail—the government needs to return to Wall Street with real regulations so they can’t ignore their social role of allocating resources efficiently.
But before the government can do this, Allison argues, officials will need to break free of Wall Street’s grip on the government. Major investment firms turn their money into power when their lobbyists go to Congress, preventing any government attempt at regulation. Only after the conflict of interest is resolved can there be any hope for the re-regulation of Wall Street.
This post was based on a discussion by Jeff Madrick and Herb Allison on Financial Regulation and the Future of Wall Street (brief bios for the two speaker can be found by clicking the link). The video recording for this talk can be found here as well. There was a New Yorker article by John Cassidy titled What Good is Wall Street: Much of What Investment Bankers do is Socially Worthless which inspired me and I strongly recommend if you are interested in the greed in Wall Street as well as Occupy Wall Street.
Massachusetts state Senators Michael Moran and Pat Jehlen recently co-sponsored a bill that would strengthen state financial disclosure requirements for private universities. The bill calls for more transparency and accountability in endowment practices or other investment procedures of universities. This bill is an initiative that students should support, because it will promote better practices and ensure the financial stability of the institutions of which we are part.
The recent financial crisis significantly hurt school endowments. For example, the University of Massachusetts endowment lost 17% of its value from 2008-2009. The lack of oversight and transparency on Wall Street created problems that affected all, and made it even more imperative for universities and colleges to closely monitor their financial situations. However, schools of higher education often fall prey to the same mistakes that Wall Street did, by not incorporating enough transparency and accountability into their endowment or investment management.
Endowments can and should be handled responsibly. The Higher Education Right-to-Know Act aims to define and implement ways that universities can improve their financial stability to the benefits of the schools themselves and the communities of which they are part. For example, if the bill were passed, colleges and universities would have to calculate the amount of subsidies and tax exemptions they receive from the government and report that figure. They would also have to provide listings of their assets and real property and report that figure, as well. These increased reporting would ensure that universities were honest about their holdings, and that their tax exemptions were fair. Furthermore, colleges would have to list all employees making over $250,000 a year, and ensure that individuals on their boards file conflict of interest disclosures. These steps would make legislators, citizens, stakeholders, and students more equipped to monitor if endowments were being managed soundly and in the interest of the students and community – not in the interest of generating personal wealth. The bill allows universities to retain opaqueness in their individual investments, but ensures that this investment is done in a safe and fair way.
My group, Students at Tufts for Investment Responsibility, supports this legislation. I hope that other Massachusetts students will also fight for the bill’s passage. Students in other states should also look to this bill when advocating transparency, as it provides clear examples of tangible transparency goals. Hopefully, these goals will turn into a reality.
Want to help get this historic legislation passed? Email email@example.com to learn how you get involved.
REC recently began a substantial research project into the practice of responsible investment in universities. Already a few interesting numbers are surfacing.
While it is no secret that universities lost substantial amounts during the recent financial crisis, it appears that by 2009 endowments had shrunk on average by 26% from their 2007 peak. While some bounce-back occurred in 2010, endowments are still down on average about 20% on their 2007 levels. This equates to losses of tens of millions of dollars for typical endowments, a number which increases to upwards of ten billion for the largest ones. So, how should schools respond to these figures?
One possibility is to simply redouble their efforts doing the same things as they did before. Schools have a lot of ground to make up, and the habits of their investment managers, which have been ingrained over many years of training and practice, must be hard to shake. But, of course, it was arguably those habits, and the logic that informed them, that resulted in such unsustainable investments being made in the first place. From REC’s point of view, this is a concerning possibility as it may make schools less sensitive to the merits of responsible investing.
Alternatively, schools could allow this experience to prompt a radical rethink of investment practices. On the one hand, by investigating the social and environmental impact of specific investments, ethical considerations can become part of investment decision-making. But beyond this, schools will develop a greater pool of knowledge about the investments they are making, allowing a more informed and thus more accurate assessment of the risk to which they are exposed. Had schools traced their investments through to the unsustainable lending practices prevalent in the mortgage sector leading up to 2007, they could have been better placed to protect themselves when the house of cards finally tumbled.
REC’s research project is still in its early stages, and hopefully will yield some more profound insights as it progresses. Nevertheless, it is important to consider how the endowment losses it shows schools to have experienced could produce two quite opposing reactions. This provides an indication of the situation with which REC is faced. We must work hard to elevate the advantages of the latter interpretation of these losses above the temptation to pursue the former one.
How has your endowment responded?
As they have been for the past several years, Chief Investment Officer David Swensen GRD ’80 and his second-in-command, Dean Takahashi ’80 SOM ’83, were the two highest-paid employees at Yale in the 2008-’09 academic year, with investments director Alan Forman coming in fourth. Third on the list was University President Richard Levin, who, with $1.5 million in salary and benefits, made about a quarter more than he did the year before.
Swensen’s salary and benefits totaled $5.3 million last year, almost a quarter more than the $4.3 million he earned in the 2007-’08 academic year. His deputy, Takahashi, took home $3.5 million, a 35 percent raise from the year before.
What the filings do not make clear is how much exactly the investments officers took home in 2008-’09, since their compensation includes deferred bonuses they will be paid in the future as well as past deferred bonuses they have now been paid.
The two men’s bonuses were based on the endowment’s long-term performance prior to last year’s disastrous negative returns. Future bonuses for Investments Office employees will reflect last year’s losses. (Facing a $300 million budget gap, University officials postponed major construction projects, cut back on spending across Yale and laid off nearly 5 percent of its staff.)
But those same University administrators — who have defended Swensen’s strategy over the past year even as he remained quiet — say that while Swensen may be paid well, it is Yale that has benefited the most from his time here. At $16.3 billion, the most recent figure available, the endowment is still worth much more what it was when Swensen came to Yale in 1985: $1 billion.
On Wall Street or even at other universities, they say, the several million Swensen makes yearly would be a pittance for an investor as renowned as he is. Endowment managers at Harvard have earned as much as $35 million recently, dwarfing Swensen’s and Takahashi’s pay.
“Here’s a guy who could make 10 times his salary,” former deputy provost Charles Long said of Swensen last April. “But his goal is to make as much money as he can for Yale.”
How much is too much? Yale's endowment has increased by a factor of fifteen since 1985, adding on average nearly $1 billion each year. And yet by taking home $5.3 million in a single year, even as budget cuts and layoffs hit the school, the #1 top earner is framed as someone who is making relatively little, "a guy who could make 10 times his salary."
by Steve Flynn, Greensboro, North Carolina
Over half the children in Guilford County Schools live below the poverty line. Nearly 50 percent of males of color are no longer in school after the age of 16. Accordingly, our high schools then proudly champion ‘graduation rates’ of 100%. Where do many of those young men end up? Even those kids who do graduate and go on to college and graduate, where exactly are they going to find jobs?
We see the building of our city’s new prison taking shape downtown, we witness the decades long struggle between Greensboro’s police department and its citizenry east of Murrow Boulevard. We know in our hearts where many of those young men are ending up, if we choose to listen.
Some of us wonder what institutions will step up and work toward community solutions in terms of sustainable economic development. Today I want to begin a discussion about Greensboro’s higher education institutions and how they can envision together becoming part of the community’s solution and not, as so many at the grassroots feel, part of the problem.
I’ve been a member of Greensboro’s higher education community, in various flavors, for nearly two decades. Having previously worked in international educational exchange that took me around the world, one comparative thing I’ve come to learn is that one of American culture’s truly unique and amazing things is the capacity of American college graduates to give back to their alma maters. As a city of colleges and universities, this wonderfully charitable spirit is alive and well here in Greensboro.
This is something that speaks well of us: our spirit of giving.
I attended the US Social Forum in Detroit a couple of weeks ago and learned of the Responsible Endowments Coalition (REC). One of REC’s main goals is to teach and train college students to organize advocacy campaigns to harness small percentages of university endowment dollars for the purpose of local community investment. In Detroit I gathered committed Greensboro students from North Carolina A&T, University of North Carolina at Greensboro, Guilford College and other local schools to meet with the REC people. Those meetings in Detroit were transformative and I’m confident the student activists in our community’s Colleges and University’s will be moving the ball forward this coming year.
My own personal dog in this hunt is to begin similar conversations at the leadership level. The students discussed above will no doubt soon begin pushing these new ideas and values from the bottom up among Greensboro schools (indeed, this has already begun). I would like to help nurture the conversation from the top down so that just maybe we can meet each other in the middle or somewhere on behalf of our community and the citizens of North Carolina.
If we’ve learned anything in at least the last couple years, it is that the world of Tom Wolf’s ‘Masters of the Universe’ and Oliver Stone’s Gordon Gecco have born strange fruit. Previous truths about how assets and wealth are ‘made and accumulated’ are suddenly called into question. As a global culture, it seems we are currently in search of new ideas for what economic development and sustainability and knowledge production now mean.
I believe American Universities need a new paradigm as it relates to philanthropy and investment. We are expert at and resource significantly our planned giving enterprises on our campuses. Yet, our ‘expertise’ in terms of soliciting gifts goes only so far. In terms of actual investment decisions by investment managers, we typically outsource such expertise to ‘outsiders’ such as Cambridge and Associates (in the case of University of North Carolina-Greensboro I believe). The result? However good or bad our endowment returns each year (and its moral and sustainable impacts) how much of our endowment income and investments are actually directly benefiting our own community? I have no idea, since such information is not available in the opaque universe of endowment investing, but I would venture to say the answer might be none.
We are currently living in a world where assumed paradigmatic truths (which evolved over the last 30 or so years) about capitalism and high finance are now in question. Universities trained and staffed the whiz kids on Wall Street and London that got us into this mess. Having trained them, universities assumed these whiz kids would do right by university endowments. In the wreckage of 2008, where did that get us?
What do universities have to show for it? Far more importantly, what are our local communities gaining when we outsource our own investment management? I believe new thinking is the way of the world in the coming century and universities seeking relevance must change their approach.
This past weekend, I had the opportunity of attending a training on popular economics and popular education put on by United for a Fair Economy , an independent advocacy and educational nonprofit and REC ally that works towards equity and fairness within the American economic system. We all had the great privilege of participating in the training - or, as they more adequately referred to it, the "Training of Trainers Institute" - at the famous Highlander Research and Education Center in the foothills of the Great Smoky Mountains of eastern Tennessee. Highlander, for those who don't know, has played a major role as a meeting space, educational institute, and workshop center during the struggles of the labor movement, the Civil Rights movement, and the movements of the people of Appalachia throughout the 20th century. It was incredibly fortunate that we all had the ability to meet and learn from each other in such a place.
The intersection of popular economics and popular education was the focal point of the four-day long institute, and the intertwining concepts informed a unique participatory and educational process. Both the content and the process we used were central to what was being taught. The subject that we discussed was popular economics: the exploration and history of "Bankers, Brokers, Bubbles, and Bailouts" from the perspective of the middle- and working-class American people who are most affected by the mismanagement, greed, and growing inequalities of our current economic system. Process was also key to what we were learning about - the methods of popular education, a participatory system of sharing and building on each others' knowledge to digest and understand material in an engaging and empowering way.
Popular education is an umbrella term for a number of inclusive and participatory methods that we believe can help responsible investment groups on campus function effectively. For example, try asking your campus group "Where does the money in our endowment come from?" and see whether the group can find the answers instead of simply listing or handing out pre-packaged content. Or perhaps try letting the group build a meeting's agenda from the ground up, instead of the more hierarchical and traditional way of having one person draft an agenda and then just asking, "Any questions?" Doing so can help group cohesion, tease out contrasting opinions and perspectives, and help everyone involved on your campus take a more active ownership in your process.
REC stands by the great work that United for a Fair Economy does to highlight and address the injustices of our economic system. Beyond that, however, we also believe deeply in the process of popular education as a way of respecting and learning from each others' experience, and bringing out the educator within all of us.
I look forward to sharing the methods of popular economics and popular education to build a more effective responsible investment movement nationwide.
What is the role of universities in the financial crisis? Universities are major institutional investors, and at the peak of the market they held 400 billion in their endowment coffers. And what, exactly, were these tax-exempt, public-benefit organizations doing during the heady years leading up to the crash? They were leading the charge into alternative investment vehicles, like private equity and hedge funds that turned out to be some of the economy’s worst offenders. They were raising tuition, constructing fancier campuses, and giving themselves raises, all while cutting tenured jobs for adjuncts, and union-busing staff efforts to organize. They made cozy contracts with corporations with poor records on labor, human rights, and the environment, producing or offering everything from student loans to soft drinks.
With little transparency or accountability to their multitude of stakeholders including their students, faculty, workforce, and host communities, colleges and universities were largely free to do as they pleased to maximize their investment returns, without regard to their investments’ effects or conflicts with their missions. Even after the crash and the extreme losses that resulted, there continues to be a lack of discussion about the effects of these decisions on our communities and our economy.
We call on our universities--students, faculty, staff, administrators, and community members—as well as taxpayers and policy makers to reevaluate the role of the American university. We must not only fund education pre-K through graduate school for free, because education is a right, but we must also ensure that our institutions are accountable to us, not only to a group of very powerful elites, mostly white men, who sit on boards of Trustees or Regents.
To find out more about how REC is working to make universities more accountable to their communities and how you can get involved email firstname.lastname@example.org.