Sorry this blog has been dead for the past month. Mr. Computer died and no one knew what was wrong with it. It seems to be working now, but I still don't have a clear diagnosis of what the problem is/was. If any readers are tech-savvy and have suggestions about why a laptop will refuse to switch on, or switch on and then shutoff spontaneously, I'd be eternally grateful.

On to news. As you may have heard, Harvard lost $8 billion in the first quarter of this financial year. That's 22% of their endowment. Before you get too sympathetic, remember that these are mostly unrealized losses-i.e. stock prices fell so the worth of their investments dropped but until Harvard sells the stock, they don't actually lose any money. In other words it's a bit like saying I lost $100 because I bought an iPhone for $199 and now Walmart is planning to sell them for $99.

Also note that if $8 billion is 22% of the endowment, then the total endowment was $36 billion. So they still have $28 billion. Further note that $8 billion is more money than all but 6 universities in the US have total. So their loss is bigger than what almost every university has to work with.

One interesting lesson from all this comes from the President of Bard who says rich universities have been using money to avoid reform. First of all, he points out that universities aren't supposed to get rich. They should use money to educate instead of storing it away. just as banks aren't supposed to teach people astrophysics.

Second, and more importantly:

...the wealthiest universities have “endless tiers of overlapping management” and lack a tradition of making tough choices. “Instead of figuring how to cooperate [within universities], wealth let everyone do their own thing. Creativity was that you never subtracted, you added."...

The reason this issue matters so much, Botstein said, is that leading universities are “trying to be even less risk averse” and are “learning the wrong lesson” from what’s going on. Many wealthy institutions are announcing hiring or salary freezes and doing so largely across the board, assuming equal value for most or all programs and justifying the approach by pointing to losses of 25 or 30 percent or more in their endowments.

In other words, when universities can afford to do anything, they do everything and never question whether they are developing programs and methodologies that teach students well. For examples, look at the failure of most online degrees even at highly regarded universities, or the dumbing-down of education by using Facebook, Myspace and cellphones as pedagogical tools just because the uni can afford the latest software or toy!

So here's hoping American universities are like Rocky; when times get tough, they will become lean and mean fighting machines.

Thanks to UD for posting on President Botstein.