In the last year, Harvard has faced diverse and troubling news in the financial sphere. From President Drew G. Faust’s alarmed February letter
about the endowment and to Dean Michael D. Smith’s announcement 10 days ago of the need for Faculty of Arts and Sciences “restructuring,” everyone has been looking for places to cut. And they have found them. Departments have slashed around 15 percent of costs, Allston development has been significantly delayed, and undergraduate Houses have had to tweak refurbishment plans. Furthermore, the university went ahead with a voluntary early retirement program and an across-the-board hiring and wage freeze.
Meanwhile, the national media has used Harvard as a symbol of the bubble: The endowment that quadrupled since 2000 is now crashing down, producing a hard landing for the Harvard Management Company
. Given the illiquid nature of many of the diversified endowment’s assets, the university has had to issue IOUs with comparatively high yields to maintain the liquidity needed to keep functioning.
Across the board, the message is simple: Stay put, cut where possible–these are not times to dream big.
I strongly disagree with that position. The university’s deep financial crisis notwithstanding, I believe this is a time for Harvard to spend, and spend handsomely, in order to seize another opportunity to improve its international reach, quality of education, and commitment to its ideals. It is a well-known and documented problem that most of the funds that Harvard has are overseen by strict stipulations of how they can be spent. Neither the state of Massachusetts nor the lawyers of those who have donated to Harvard throughout the years are easy to please–but this is a unique time, when they may be more amenable to change. That is precisely why the University should try to use this opportunity to release more funds–and then use them to literally reactivate and reinvigorate the community.
The projects that Harvard is currently considering cutting or delaying–like housing renovations and Allston development–will have tangible detrimental effects on the quality of the education it provides. No matter how we spin it, slower Allston construction means less science research in the medium term. It also means fewer students enrolled and less academic expansion into other fields. Tweaked House renovation plans mean slow progress in improving undergraduate education, no expansion of social spaces, and less overall satisfaction. Perhaps most importantly, department cuts not only affect the quality of the catering at faculty meetings but also impact the way our professors will be able to teach present and future students. For instance, the announcement yesterday that a great-books program
within General Education would be delayed (perhaps forever) due to lack of funds is plainly unacceptable, since it is an issue that both senior faculty and students have long considered important for the Core’s successor.
Because of the service it provides, Harvard should think of itself more like a government than an individual or a business firm. With its reputation and available funds, the university is not going anywhere, but delaying improvements will have dismal effects on future endowment performance. The current global economic crisis is being fought by governments from South Africa to Japan with counter-cyclical measures that attempt to hasten the move from recession to growth. The now-revived Keynesian approach justifies the deep temporary deficits with the promise of future growth. The same applies to Harvard, for the endowment will continue to grow–and receive fresh funds–as soon as growth resumes. Hence we should behave counter-cyclically, helping the economy and the community in the process.
This is not to say we should be crass Keynesians. Crises often spur efficiency reviews that help organizations in the long run by improving performance. Ultimately, the point is that we should not consider the endowment a fixed and static managed investment. Rather, it is a self-regenerating pool of funds that is directly impacted by the result of our community achievements. More and happier students will donate more in the future, as happened when Harvard weathered the 1930s Depression. Allston will bring better research, attract better faculty, and bring more prestige to the university. Housing renovations will improve student life and happiness surveys—the backbone of FAS. Hence the debate should not be about changing the way HMC invests
(they almost always know better than the pundits), but rather about enacting counter-cyclical measures to take advantage of the downturn in order to grow faster and stronger than the competition.
Ultimately, the point is more than just about numbers and future compensation in terms of donations. It is about Harvard’s ideal of providing the best possible education. Our community’s investment goes beyond bricks and mortar–it is in our students’ lives. And we can trust that will pay off.
Pierpaolo Barbieri ’09, a former Crimson associate editorial chair, is a history concentrator in Eliot House. His column appears on alternate Fridays.