Harvard University’s endowment—which swelled to $36.9 billion on paper during the financial bubble and then saw $10.9 billion of its fictitious gains disappear—
(on paper) by 11 percent over the past fiscal year.
The budget crisis created by the notional loss of the notional money is still going on, however. In principle, the whole purpose of an endowment is to provide an institution with financial stability through the ups and downs of the overall economy. But Harvard allowed its endowment to evolve into a plaything for finance wizards, who collected immense bonuses and made volatile and illiquid investments, pushing the supposed value of the endowment to unprecedented heights.
When the recession hit and the exotic investments collapsed, this meant that the endowment money was unavailable to shore up the operating budget. So a school that still claimed to have billions of dollars to its name was forced to announce
absurd penny-pinching measures
such as doing away with hot breakfast and cookies in the dining halls. (The cookies story was a funny way to invert the class significance of what the budget cuts really meant—namely, shutting down a bunch of bakery jobs and the morning shift for kitchen workers, because the finance folks had misplaced the money for their wages. Boo-hoo, spoiled college kids couldn’t have hot oatmeal!)
Anyway, now the endowment is “growing,” as far as the money managers are concerned. But so far none of the newly gained $1.4 billion is being used to pay anybody to cook breakfast. Or to close the
that’s still facing the Faculty of Arts and Sciences. Harvard: it’s just like America!
