Asterisk

We want to be on ‘roids too

In yesterday’s post I observed that Princeton is similar to the bailout beggars in that both are dependent on the federal government. Today I learn, from Pres. Tilghman’s April 6 letter to the commune, that it was not similarity, but rather identity, that I saw. She writes:

“The stimulus package that was just passed by the Congress contains some funding for infrastructure, and Dean for Research Stew Smith is actively seeking to attract some of those resources to Princeton.”

We are renovating our bathroom. Unfortunately, we do not have a Dean for Research. We interviewed for one, but they all had unrealistic compensation expectations.

Fly balls don’t just fall from the sky. Someone has to hit them up there.

A league of their own

Unequal persecution

Princeton is a ward of the federal government. In the fiscal year 2006-2007 it received more than twice as much revenue from “government grants and contracts” than it did from “tuition and fees”. But, due to the tax code, the university’s dependence on the federal government goes much deeper than “grants and contracts”. Princeton is treated as a charity for tax purposes, which creates a two-pronged, direct financial benefit. First, the university is not required to pay tax on its income—it keeps 100% of all interest, dividends, other entity distributions, and capital gains that it receives. Second, taxpayers who make donations to Princeton pay less federal income tax, which of course encourages donations. Should the federal government withdraw either one of those financial props, which it could do with a simple act of Congress, Princeton would be forced to convert to a profit-based business model. [fn [1]] Consequently, Princeton is in essentially the same position as the private corporations that recently have begged, or been induced, to become wards of the federal government.

The government requires that the operations and financial data of those bailout beggars be open (complete transparency); that they submit to increased regulation, and that they grovel and wear manicles in the public square. Their representatives are made to sit behind cameras and microphones facing an oak-panelled grandstand of elected parasites who ask loaded, pre-scripted, rhetorical questions that cannot be, and are not designed to be, answered, all for the purpose of deflecting blame from the parasites and furthering their chances of reelection and additional blood-sucking.

Marvelously, none of this applies to Princeton and its compatriots, the other highly-endowed private colleges. Their operations and financial data are not transparent. Harvard revealed a few weeks ago that its endowment investments are leveraged (they have invested an amount greater that the full value of the assets that they own), illiquid (they found no market for certain private equity securities), and burdened (they are required by contract to contribute additional capital, from other endowment assets, to continue funding some of their private equity holdings). I have tried, without success, to learn the extent of Princeton’s exposure to similar problems, but that information is not transparent. It’s secret.

The highly-endowed colleges are unregulated as well. There is no limitation on, or forced disclosure of, executive compensation. [fn [2]] Neither the cost nor the need for palatial capital projects is controlled, and unregulated prices (tuition and fees) increase inexorably, against the most inelastic of demand curves.

And best of all, Princeton’s officers have not been dragged before the cameras and the parasites for public lashing. They have found a way to avoid equal persecution under law, although when the officers of other government wards are lashed the entire Princeton faculty stands in the square and applauds. [fn [3]] Indeed many professors are consulted on ways to barb the whips, while remaining untroubled by the intellectual dishonesty inherent in finding false distinctions on which to excuse putting certain mismanaged government wards to the lash, others in grandstands to pass judgment, and a privileged, exempt group on commissions to uncover those plausible, but false, excuses.

[1] A copy of “How the tax code forces you to donate to Princeton” is available on request.

[2] Princeton discloses the compensation of only the five highest paid employees, most of whom are endowment managers. To my recent request to know the amount of compensation paid to Prof. Paul Krugman, the figurehead of Princeton’s socialist economics faculty, and the number of courses taught by him, Princeton, predictably, replied: “not a matter of public record”.
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[3] If there are any exceptions, please identify yourselves, and I’ll gladly print retractions.