WSJ: When $26 Billion isn't enough

Parents Forum
101

<p>I think academics not affordability should be the criterion for getting a decent education. I think college education should be relatively free to students. I favor raising taxes to pay for public colleges and universities. My interpretation of free includes mandatory work for the institution or the state and a reasonable academic success rate. Affordabilty and its relative, accessibility, are important; and encouraging or requiring students to work for their education is reasonable. </p>

<p>I am not opposed to low rent dorms that offer a modest meal plan (here is your peanut butter and jelly sandwich and milk for lunch, be sure to make it back for the delicious vegetable soup tonight with fresh bread, hope you enjoyed your oatmeal this morning.)</p>

<p>We can’t require private schools to offer free education, but we can expect certain responsible behavior in exchange for their not for profit tax status. We could and should require them to explain to donors what portion of their donation will actually make it to their purpose within the next year or two. We should re-examine our tax policies with regard to schools that are disproportionately open to one small segment of our economy. Why should a nurse have to pay higher real property taxes to compensate for the reduced or non existent property taxes of a private school for the wealthy? Don’t they use fire departments and highways? </p>

<p>Wealth is relative. A villager in India being helped to build a mud brick home might seem wealthy to a beggar in Bangladesh. A seedy apartment with running water and a bathroom might appear to be a palace to the villager. A dentist living in a two-bath three bedroom home in a nice neighborhood with a decent school certainly appears rich to almost half of America but might consider himself to be squeaking by as middle class. I have seen people who earn almost a million dollars a year describing themselves as middle class because they have seen the mansions of the rich or work for them and because they think someone has a nicer bigger boat then them. I have heard a parent complain that because of the high price of school they were giving up one of their ski trips this year. They considered it a sacrifice and it was. I would not be offended if all schools offered free education regardless of ability to pay. I don’t know who would be hurt if the decision to attend a college was simply based upon academics instead of affordability.</p>

<p>I donate to my union’s fund which has no overhead and which distributes scholarships to students based on need , leadership and academic success. I encourage everyone to help keep colleges affordable to all.</p>

102

<p>“I favor raising taxes to pay for public colleges and universities.”</p>

<p>Do you favor raising YOUR property taxes in California to pay for public education? </p>

<p>If we were to raise taxes to pay for public colleges and universities, to whom should we dedicate the “extra” help? Should we make a school such as Berkeley even cheaper to ALL, including the Bay Area multimillionaires who may live in mansions? Should we try to help a large portion of the middle-class who has benefitted from a virtually free K-12 public education also attend a university free despite the absence of any meaningful lifetime tax contribution, as in the example of that “poor” correction officer who lived in a 600,000 home and paid no taxes at all, but expected a free ride for his 3 children? Or should it be a proposal to make ALL schools free using a system such as Harvard or Princeton, where people earning less than $40,000 attend school free? </p>

<p>Lastly, should I assume that, when you mention raising taxes, it should really say raising “other people” taxes?</p>

103

<p>Xiggi, I would not object to the children of millionaires going to college for free along with middle and lower income family members. I believe that the better educated the population is the greater the chance of democracy thriving, so I view it as important as any other federal program to improve our country. While I would prefer it if ability won out over assets in college admission, I would never deny someone an education just because they were born into a wealthy family.</p>

<p>So if raising somebodies taxes means they have to rethink the built in dvd player for the backseat of their new SUV, I don’t get chills over that nightmare. Our society as a whole and our economy in particular will benefit from having a well-educated population rich or poor. Of course, well educated poor people are something of an anomaly. Accordingly, better educated people tend to pay more taxes over their lifetime.</p>

<p>I don’t know about the correction officer who had a $600,000 home but I think I would have heard about it if all correction officers had $600,000 dollar homes so it must also be an anomally and therefore not particularly relevant. </p>

<p>As for my taxes being increased, that would be fine with me if it meant every child, rich poor, or in between, would have a shot at a free college education. This includes, the UCs, State schools and community colleges. In California I would add at least one new University to take the pressure off the others. I suggest one north of San Francisco with a hotel/casino school.</p>

104

<p>“Lastly, should I assume that, when you mention raising taxes, it should really say raising “other people” taxes?”</p>

<p>I think we should listen to Adam Smith, who (in the Wealth of Nations) strongly advocated a highly progressive tax system. </p>

<p>(And as for those who “suffered as a result of a free K-12 education”, I’d put them first on the list for the uni. education - the public benefit is greatest, given what is likely to happen if/when they don’t get it.;)</p>

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<p>Mini, listening to Adam Smith is not a bad idea. However, one cannot poach from his ideas at will, pick what serves one’s aganda, and reject the remaining ideas. </p>

<p>Inasmuch as there are strong suggestions for a progressive taxation in The Wealth of Nations, the opus is an even larger statement for laissez-faire, the thesis that government should not attempt to control or direct economic activity . Adam Smith also suggests that the government cannot hasten the natural process of ensuring the well-being of citizens by meddling in the economy.</p>

106

<p>This thread has covered a lot of territory, but what about the key point of the article - is spending 5% of an institution’s endowment too penny-pinching, and does it result in a hoarding of money?</p>

<p>To me, a university’s endowment is meant to be a pool of money that, one hopes, grows over time and produces increasing amounts of cash that can be used for the school’s purposes. In my view, an endowment’s principal should be tapped only in the most dire circumstances.</p>

<p>5% is a prudent amount to spend if one doesn’t want to see big declines in the principal. If there’s a down year or two in the financial markets, one could well see the value of the endowment decline, but if the money is invested well it should recover those losses in better years.</p>

<p>I think the onus is on the donors - if they expect their contributions to be fully utilized in the short run and have an immediate impact, then they should earmark the contributions for a specific purpose. (This isn’t perfect, of course, since the school could always reduce other funds for that purpose by the amount of the gift - kind of like what they do with outside scholarships and financial aid - but at least the donor can feel his funds were spend where he wanted.)</p>

<p>The onus to spend unrestricted donations and endowment income wisely falls on the administration - if one has $20 million in extra endowment income, how should it be apportioned between financial aid, facilities maintenance, new facility construction, endowed chairs and faculty recruitment, etc.? These are tough decisions - the very mission of the university may be open to disagreement, and even where agreement on the mission exists, the best tactics to achieve that mission may be hotly debated. Would attracting ten world-class applicants (that would probably attend other schools) each year be more productive than hiring a Nobel-winning prof? How would either of those compare with expanding a key research facility? Or adding a superb piano performance venue?</p>

107

<p>“Adam Smith also suggests that the government cannot hasten the natural process of ensuring the well-being of citizens by meddling in the economy.”</p>

<p>Actually, if you read carefully, he does just that. He recognized that the natural outgrowth of “self-interest” was cheating, and that “self-interest”, taken by itself, would result in an end of competition, the very thing that was supposed to propel progressive welfare. And so, both here, and in the 1790 revision of his “Theory of Moral Sentiments” (which he considered his more important book), he set up the twin and equal polls of “self-interest” and what he called “justice” (which others might think of as progressive-style governmental meddling".)</p>

<p>I suggest you read the WHOLE book (and the Theory of Moral Sentiments), not just the Friedmanesque soundbites. Smith could never get a hearing in today’s business community - he was far too left-wing. (The current business community seems to prefer warmed over Malthus, often through the mouth of Thomas Sowell.)</p>

108

<p>“I suggest you read the WHOLE book (and the Theory of Moral Sentiments), not just the Friedmanesque soundbites. Smith could never get a hearing in today’s business community - he was far too left-wing.”</p>

<p>Mini, doesn’t it take a leap of faith or presumption for you to believe I did not read the books, but used mere “soundbites” to form an opinion? </p>

<p>Fow what it is worth, the consensus among scholars is that Adam Smith’s theories fell into oblivion in the 20th century, but are now making a surprising comeback. On the other hand, didn’t Malthus revival follow a similar fate as most of the theories presented by Rachel Carson in Silent Spring?</p>

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<p>Smith’s book is making a comeback precisely because it WASN’T a diatribe against governmental interference. He understood quite well (or at least he did at the end of his life) that “self-interest” would result in that interest making use of every available tool (of which government was one) to suppress competition. In other words, there was no “natural force” to oppose self-interested “cheating”. What he was trying to do was find something of “economic value” stemming from the small capitalist ventures of his time, over and above those promoted by the aristocrat classes, both in governmental control, and in the fashioning of noble sentiments. But he wasn’t prescient in seeing that his theories would be seized on by Malthus and Ricardo in providing for the intellectual underpinnings for the hell-holes that became industrial England 50 years after his death.</p>

<p>And yes, I do think you poached the soundbite, because your reading of Smith as reflected above is so incomplete. </p>

<p>For a great parody of Malthus (and of Sowell), I suggest a close reading of Dickens’ “A Christmas Carol”. (And, no, there is no nothing approaching so venal, so smugly mean-spirited, and so WRONG in Rachel Carson as there is in Malthus – or Sowell.)</p>

110

<p>Ah … some of the postings here remind me of that old Beatles song – “Back to the USSR” …</p>

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<p>Mini, I am getting used to your style of speaking with authority but without foundation. Only you could unearth a way to blame the incompleteness of my reading to find a plausible correlation between your first two statements quoted above. </p>

<p>As far as my reading of Smith, this is not the place to present personal analyses of such a complex author, and I never attempted to even begin such expos</p>

112

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<p>It has nothing to do with what Harvard should be doing. It has everything to do with what Harvard students who are complaining about cost should be doing. </p>

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<p>Well, I’ll put it to you this way. The Harvard Crimson provides a useful vehicle for Harvard students who want to enter journalism, and the Harvard Lampoon provides a useful vehicle for students who want to explore comedy. I would propose that a “Harvard Consulting Club” could be modeled on how the Crimson and the Lampoon are modeled - mostly student run, perhaps with some help from graduate students (especially HBS students). Harvard wouldn’t have to do anything except provide some classroom space and the use of the school name. Although obviously any profs who wanted to get involved would be welcome, just like the Crimson and Lampoon used to have (and may still have) some informal faculty advisors. </p>

<p>But look, my point is, if we want to solve the problem of people not being able to afford Harvard, especially those people who come from that 75-150k income ‘gap’ in which they’re too rich to get aid, but not rich enough to not care about money, then it will be solved with a two-way process. The students have to agree to want to work, including sucking it up and working during exam time if necessary. And the colleges themselves can try to offer money-making opportunities. With the number of jobs that Harvard is hiring regular Boston/Cambridge locals to do, I have to believe that there are some opportunities to take at least some of those jobs and slice them up to make them “student-friendly”. On the other hand, I agree with 4thfloor that some of these students have to overcome their aversion to performing low-level manual labor. Just because you go to Harvard doesn’t mean that you’re now “too good” to do low-level labor, and that’s sadly the sort of attitude that I’ve seen among many students.</p>

<p>To give you an example, I know 2 guys, guy A and guy B. Guy A used to do number of odd jobs to pay his way through Berkeley - working at a paper factory, working for a moving company, etc. However, upon graduation from Berkeley, he quit his all those jobs because he felt that as a Berkeley graduate, he no longer had to do that sort of work anymore. But then he couldn’t find a job that suited him and his new college-grad status (granted, this was during the 2001 recession). So basically he ended up spending 2 years with no job at all, and in fact ended up borrowing thousands of dollars from his friend, guy B, to pay the rent. This friend of his had no college degree, but in his case that was actually good for him because he didn’t have the mental block that prevented him from taking all those odd jobs. So here’s guy B holding down a number of low-end jobs - i.e. working in fast food, as a delivery man, as a bank teller, etc. So basically, guy B, with no college degree, ends up taking odd jobs to financiallly support guy A, who does have a degree, but refuses to take those odd jobs. </p>

<p>My point is that education is supposed to make a person more economically productive, and it usually does. That’s why college grads tend to make more than non-grads. But not always. Sometimes education can actually make you LESS productive because it increases your aversion to performing certain kinds of work.</p>

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<p>Perhaps. But I’d say a guy with a Berkeley degree who couldn’t find ANY work for two years (other than the odd manual-labor jobs he declined) has some issues that go well beyond a weak economy.</p>

<p>One could say that work experience has the same effect. A newly unemployed CEO can expect a job search that could last a couple of years, and wouldn’t be well advised to take the first junior exec offer that came along (much less be a greeter at WalMart).</p>

<p>I think the real issue isn’t that those with high-level qualifications are less productive if they won’t take lower level jobs. Rather, it is whether undergrad students (with no degree and minimal work experience) feel that jobs like feeding the dishwasher in the cafeteria are beneath them. I agree that some definitely feel this way.</p>

<p>Undoubtedly, there’s the issue of peer perception, too. Undergrad populations tend to be much more diverse and less judgmental than high school populations, but there’s got to be some stigma associated with telling your Porsche-driving roommate that you have to go scrub floors for four hours.</p>

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<p>So we have students on financial aid (grants only, if at Princeton) taking breaks in Cancun, leaving their immigant parents (who work as floor scrubbers) wondering whatever happened to good old work ethic …</p>

115

<p>I think a number of posters might be surprised to learn that in California and New York residents’ tuition was almost or completely non existent 40 years ago at their state schools. California has, to its credit, kept the cost of community college below $30 a credit hour. I have read that some small airports get so much federal support that it is the equivalent of $200 per passenger taking off. (Waimea, Hawaii, is one) I would rather see our tax dollars spent on education, rather than creating conveniences for the owners of private planes.</p>

<p>Everybody doesn’t need or want a college education but those who do and are willing to put in the book and classroom time should be able to get that education. </p>

<p>As for the 5% or 6% figure, I think the goal of a scholarship fund should be granting scholarships and a better measuring tool should be considered. I am not as concerned about the size of the scholarships as I am to “who can afford to go question.” If 4% meant everyone could go for free there wouldn’t be much of an issue here. Another question would be at what rate is the fund growing. A flat growth rate would justify a lower percentage payout, but a steeper growth slope might suggest greater generosity. Is 5% greater than or less than the annual contributions? If it is less the fund grows even during flat economic periods. </p>

<p>As for the stigma of being broke when others are flush…most of us learn that lesson as an extra curriculla. The problem is when it is constantly in your face and that usually gets reduced when you move off campus into the student ghettos.</p>