Another Stopped Clock Moment

[UPDATE: I did not look at the date on the article.  It was from over a year ago, but he is looking at cutting its budget again this year.]

In Trump's latest budget request, he is cutting the funding to the National Endowment for Democracy by ⅔.
Seeing as how the NED is, and always been, little more than a front group for CIA, this is a good thing:

Thank you, President Trump! Finally you have made a foreign policy recommendation that is logical, overdue, and in the long-term interest of the United States. Congress will probably reject it, but you deserve credit for making the effort.

Trump’s budget for the coming fiscal year proposes to gut the National Endowment for Democracy by cutting two-thirds of its budget. The endowment is one of the main instruments by which the United States subverts and undermines foreign governments. In a less Orwellian world, it might be called the “National Endowment for Attacking Democracy.” Cutting the budget would signal that we are re-thinking our policy of relentlessly interfering in the politics of other countries.

That kind of interference is the National Endowment’s mission. Whenever the government of another country challenges or defies the United States, questions the value of unrestrained capitalism, limits the rights of foreign corporations, or adopts policies that we consider socialist, the Endowment swings into action. It pours over $170 million each year into labor unions, political factions, student clubs, civic groups, and other organizations dedicated to protecting or installing pro-American regimes. From Central America to Central Asia, it is a vivid and familiar face of US intervention.

President Ronald Reagan established the program in 1983, following years of scandals that tarnished the Central Intelligence Agency. Soon it took over many of the tasks that the CIA used to perform. When the United States wanted to interfere in the Italian election of 1948, for example, the CIA did the job. Decades later, when Washington sought to push its favored candidate into the presidency of Nicaragua, our instrument was the National Endowment for Democracy. More recently, it has sought to influence elections in Mongolia, Albania, Bulgaria, and Slovakia. “A lot of what we do today was done covertly 25 years ago by the CIA,” one of the organization’s founders explained during the 1990s.

………

Because its job is to shape the course of other countries, the Endowment has become a darling of Washington’s regime-change crowd. Shortly after ordering invasions of Afghanistan and Iraq, President George W. Bush pushed to double its budget. That made sense, because bombing and organizing “peaceful” revolutions are two ways of achieving the same goal: forcing countries to bend to our will. Both reflect our insistence on judging foreign governments, deciding which may survive and which must be attacked.

Leaders of the Endowment include some of our country’s most militant interventionists. One of its board members is Elliott Abrams, who helped direct anti-Sandinista projects in Nicaragua during the 1980s and was later convicted of lying to Congress about the Iran-Contra affair. Another is Victoria Nuland, who as assistant secretary of state in 2016 flew to Ukraine to encourage protesters to overthrow their government.

The US efforts at regime change have been a constant source of misery for their targets, and a constant source of blow-back for US foreign policy goals.

The only thing wrong about reducing the budget of the NED by ⅔ is that it's not been completely defunded.

Russia Declares Blatant CIA Front Organization to Be "Undesirable"

Russia has now officially declared that the National Endowment for Democracy is an undesirable organization, which limits their actions, and the actions of organizations that they fund, in that country:

Vladimir Putin! Now you’ve really done it. You have had the temerity to declare our National Endowment for Democracy (NED), America’s most important Non-Governmental Organization (NGO) to be “undesirable.” Where will this end? Don’t you respect our right, as a US Government-financed NGO, to meddle in internal Russian affairs? After all, we are the most important NGO of the world’s Sole Superpower. We can go wherever we want and do whatever we like. We are truly upset!

This is the clear reaction of Washington to the decision by the Russian Prosecutor General’s Office on July 28 to declare the activities of the US National Endowment for Democracy as “undesirable in the territory of Russia.” The official statement stated that, “the National Endowment for Democracy used Russian commercial and non-commercial organizations under its control to take part in campaigns aimed at denying the legitimacy of results of Russian elections; organize political actions designed to influence the authorities’ decisions and discredit the service in the Russian Armed Forces.” It further elaborated, “In pursuit of these goals, the fund allocated about 2.5 million US dollars to Russian commercial and non-commercial organizations in 2013-2015.”

Vladimir Putin! Now you’ve really done it. You have had the temerity to declare our National Endowment for Democracy (NED), America’s most important Non-Governmental Organization (NGO) to be “undesirable.” Where will this end? Don’t you respect our right, as a US Government-financed NGO, to meddle in internal Russian affairs? After all, we are the most important NGO of the world’s Sole Superpower. We can go wherever we want and do whatever we like. We are truly upset!

This is the clear reaction of Washington to the decision by the Russian Prosecutor General’s Office on July 28 to declare the activities of the US National Endowment for Democracy as “undesirable in the territory of Russia.” The official statement stated that, “the National Endowment for Democracy used Russian commercial and non-commercial organizations under its control to take part in campaigns aimed at denying the legitimacy of results of Russian elections; organize political actions designed to influence the authorities’ decisions and discredit the service in the Russian Armed Forces.” It further elaborated, “In pursuit of these goals, the fund allocated about 2.5 million US dollars to Russian commercial and non-commercial organizations in 2013-2015.”

Under Russia’s law on Undesirable NGOs, adopted by the Duma or parliament and signed into law by President Putin this May, any foreign or international non-governmental organization could become “undesirable” if it threatened the foundations of Russia’s constitutional order, the country’s defense capability and the security of the Russian state.

Significantly, in a statement regarding the decision, Russia’s Foreign Ministry named Carl Gershman, the neo-conservative who has been president since NED was founded in 1983. They noted that Gershman said – absolutely openly – that the NED organization was intended to be a beautiful facade for distributing funds among opposition circles in foreign countries. That suggests they have done their homework very well before banning the NED.

………

The NED, along with Freedom House, has been at the center of all major US State Department-financed ‘color revolutions’ in the world since 2000 when it was used to topple Milosevic in Serbia. The NED was created during the Reagan Administration to function as a de facto CIA, privatized so as to allow more freedom of action. Allen Weinstein, who helped draft the legislation establishing NED, said in a Washington Post interview in 1991, “A lot of what we do today was done covertly 25 years ago by the CIA.”

………

The majority of the historic figures linked to clandestine CIA actions have at some time been members of the Board of Directors or the Administrative Council of the NED, including Otto Reich, John Negroponte, Henry Cisneros, and Elliot Abrams. The Chairman of the NED Board of Directors in 2008 was Vin Weber, campaign fundraiser for George W. Bush in 2000. Gershman, head of the NED since its creation to the present, worked closely with Richard Perle, Elliott Abrams and Frank Gaffney. Gershman was in a sense ‘present at the creation’ of the political-intelligence faction known as neo-conservativism.

On September 26, 2013, weeks before Ukraine President Viktor Yanukovich announced he would join Russia’s Eurasian Economic Union rather than the less appealing EU “associate membership”, Gershman wrote an OpEd to the Washington Post where he called Ukraine “the biggest prize,” explaining that pulling it into the Western camp could contribute to the ultimate defeat of Russian President Putin. Gershman wrote, “Ukraine’s choice to join Europe will accelerate the demise of the ideology of Russian imperialism that Putin represents. Russians, too, face a choice, and Putin may find himself on the losing end not just in the near abroad but within Russia itself.”

In other words, NED is a US government-financed entity that intends to topple Russia’s elected President because he displeases the folks in the Washington neo-con war faction.

Notably, at the same time as Russia is banning NED under its new Undesirable NGO law, China has just signed into law its Overseas NGO Management Law to restrict foreign NGO’s there. Last October, the same National Endowment for Democracy financed the Hong Kong Umbrella Revolution protests and the NED is financing Uygur separatists in China’s Xinjiang Province, cross-roads of all major Chinese oil and gas pipelines from Russia and Kazakhstan.

The NED, Freedom House, and their ilk are bad for a number of reasons:

• These government funded organizations are structured with their primary goal of removing activities promulgated by the state security apparatus from Congressional oversight.  This has been the case since (at least) William Casey took over the CIA with the goal of exempting it from all budget constraints and oversight in 1981.
• It has the effect of tarring all NGOs with the stigma of involvement with the CIA and its ilk.
• It makes it too easy for the CIA to overthrow and destabilize foreign governments, which almost always ends up biting us in the butt.

I Think that We Have Identified the Problem

In an article about cuts colleges are making in response to Covid-19, we have the case of Johns Hopkins cutting retirement contributions.

The details include a list of overpaid and underperforming executives at the University that goes a long way to explaining why higher education has become ridiculous expensive over the past few decades.

The management of the university is increasingly a part of MBA culture, which involves overspending on non-teaching executives, who have bullsh%$ jobs, and who in turn make the people who actually have productive work generate endless reports instead of actually doing their f%$#ing jobs:

My university, Johns Hopkins, recently announced a series of exceptional measures in the face of a coronavirus-related fiscal crisis. Suddenly anticipating losses of over $350 million in the next 15 months, the university imposed a hiring freeze, canceled all raises, and warned about impending furloughs and layoffs. Most extraordinarily of all, it suspended contributions to its employees’ retirement accounts. "Many of our peers are grappling with similar challenges," wrote our president, Ronald Daniels.

That is true. The University of Michigan recently announced anticipated losses of at least $400 million this calendar year. George Washington University likewise anticipates losses in the hundreds of millions of dollars. Stanford University, meanwhile, predicted a $200 million reversal in its consolidated budget. But while many colleges face challenges, no major research university moved with as much haste or revealed as acute vulnerabilities as Johns Hopkins did.

How does a university with a $6-billion endowment and $10 billion in assets suddenly find itself in a solvency crisis? How is one of the country’s top research universities reduced, just a month after moving classes online, to freezing its employees’ retirement accounts?

………

For years, the AAUP and other faculty critics have wrung their hands as norms of shared and deliberative governance disappeared, replaced by the consolidation of administrative power in the hands of corporate executives. With little appreciation for transparency or inclusiveness, and little understanding of the academy’s mission, these managers increasingly make decisions behind closed doors and execute them from above.

………

Consider the process that led to Johns Hopkins’s decision to freeze employee retirement contributions, which came as a surprise to nearly everyone affected. In his announcement, the president explained that the decision had been taken after consultation "with our trustees, deans and cabinet officers, and a subcommittee of the Faculty Budget Advisory Committee." There was no mention of consulting employee unions, staff associations, or other institutions of faculty governance. There was no mention of possible alternatives, or of careful, deliberative assessments about who should bear the financial sacrifices. Certainly, there were no meaningful faculty votes. (The faculty budget committee is composed of a small number of members hand-picked by administrators, and lacks formal authority.)

………

This administrative centralization has come at a serious cost to the university’s sense of community. In the last few years, decisions taken by the upper administration have generated a series of controversies over policing, the power to grant tenure, and government contracts, to name a few. Last spring, students frustrated with the university’s governance occupied the university’s central administration building.

………

The president’s cabinet is a curious body — one that has proliferated throughout higher education, as the values of corporate America infiltrate university administrations. One would hardly think, based on the cabinet’s makeup, that it comprises the senior leadership team for an eminent research university. It looks much more like the C-suite at a public corporation, with two senior vice presidents, 12 vice presidents, an acting vice president, a vice provost, a secretary, and three senior advisers. Of the vice presidents, it seems that only the provost has significant classroom and research experience. Good as he is, he can hardly provide a counterweight to the rest of the cabinet members, who mostly have government, business, finance, or law backgrounds. Collectively, the number of J.D.s and M.B.A.s far exceeds the number of Ph.D.s.

(emphasis mine)
Gee, if you assume that each of these people, excluding the secretary, gets AT LEAST $½ million a year, you are looking at $9million a year in remuneration.

Maybe this is why college is so expensive these days, particularly when you consider that each of the these folks probably have (at least) 3-4 Evil Minions^™ in their offices who also have to be paid, so we're talking serious bucks, and not a penny of it goes to actually educating the students.

As with most universities, the president reports to a Board of Trustees. But this body, like many across the country, has become a funhouse mirror of corporate America. At Johns Hopkins, 36 members sit on the board, almost all hailing from outside academia.

Johns Hopkins executives are paid much like their counterparts in the corporate world. According to the latest available public information, from 2018, the university’s president earned $1.6 million in salary plus $1.1 million in deferred and other compensation for a total of $2.7 million. That tidy sum doesn’t include the money he receives for serving on other boards, including the $310,000 he received that year from T. Rowe Price — whose chief executive happens to serve on the Johns Hopkins Board of Trustees.

But the president is hardly alone. That same year, the university’s senior vice president for finance earned $1.2 million, its vice president for development made over $1 million, the vice president for investments made over $950,000. Even the president’s chief of staff earned over $670,000. Although he earns a salary high in the six figures, the provost, ostensibly in charge of the university’s academic mission, did not rank even in the top 10 earners at the university.

Like I said, not chump change, and an interlocking series of boards of directors/trustees so that it's all one big game of, "You scratch my back, and I scratch yours."

It's self dealing and corruption:

All told, the compensation of the 28 key employees reported to the IRS in 2018 amounted to over $29 million. That sum alone exceeds by nearly 50 percent the costs of the pay raises the university would have granted this year to all of its employees.

And note that this does not including the direct reports to those "Key Employees".

Like said, not chump change.

Then there is the issue of deferred compensation for top executives. According to the university’s latest audit, total liabilities related to deferred compensation amounted to over $130 million — or $30 million more than the institution will save by suspending contributions to its thousands of employee retirement accounts this year.

………

Alas, we now learn that Johns Hopkins’s managers failed to position the institution to weather unanticipated disruptions in its revenue streams.

And if there is ANY sort of expertise that MBA types should bring to their management positions, it's basic finance and accounting.

I guess that makes me naive.

………

If a president and his leadership team have one principal responsibility, it is to ensure that the university is on sound enough financial footing to weather unanticipated crises. Ours have not.

By the way, not everyone was unprepared. Dozens of scholars right here at Johns Hopkins have spent years studying and preparing for events like the ones we are now experiencing. So good are these people at their jobs, millions of people today turn to them for data and guidance about how to navigate the pandemic. The Johns Hopkins Hospital has had an Office of Critical Event Preparedness and Response for nearly 20 years.

………

The university set virtually nothing aside in anticipation of these or any other risks. Instead, the leadership began recklessly expensive building projects, including the purchase of a $372.5-million building in Washington, D.C., — a white elephant that had already brought a large foundation to the brink of collapse.

And I f%$#ing guarantee you that someone in the university president's cabinet or the board of trustees personally benefited from both of these decisions.

Perhaps that is to be expected: university leaders, like their corporate counterparts, are rewarded for their splashy acquisitions and grandiose construction projects, not for cautious stewardship. In this short-term thinking, university executives resemble the airline executives who spent years buying back their own company’s stock only to find they had no cash on hand when a crisis arrived. People are told to set aside money to cover six months of expenses in case of emergency. It took just one month for Johns Hopkins to launch its dramatic cuts.

What about that $6-billion endowment? "Unfortunately, we cannot rely on our endowment or philanthropic support to fill the breach," Daniels wrote in his announcement. Much of it is held in illiquid investments. But exceptional times call for exceptional actions. Is it really better to fund current deficits with employee retirement accounts than to damage the university’s credit rating with further borrowing? Do those in a position of power even bother asking what the purpose of an endowment is? Shouldn’t it serve as a bulwark of financial stability? Or did that idea disappear with the gradual accumulation of financiers on university boards and in senior management?

I would note that even if these investments are unbelievably illiquid, they could still be used as collateral for a loan to make sure that there was sufficient cash on hand, and since interest rates are so low that many businesses are moving from shorter term loans to longer term loans to lock in those rates, it would also make sense from a finance or accounting perspective.

They are f%$#ing their workers instead because they think that real managers screw their employees, as opposed to doing their damn jobs.

Today, university endowments all too often function like giant casinos, putting more than 75 percent of their capital in risky and illiquid assets. Some wealthy universities pay far more in fees to investment managers than they do in scholarships to students. We’ve entered a world where, instead of having an endowment to support a university, the university serves as a tax shelter for the endowment.

Johns Hopkins does not publicly reveal its investments. Available IRS filings do, however, show that over nine years it paid more than $88 million in fees to an investment firm whose founder formerly served as chair of the university’s board. Quite possibly, our endowment pays out more to its investment managers than our university contibutes, annually, to employee retirement accounts. Was there ever much doubt which would be cut in a crisis?

Again, self-dealing and corruption.

The problem is not, as the writer suggests, a narrow set of decision makers who don't understand the mission of a university.

The problem is control fraud.  These executives are acting in their own personal interest, and not that of the organization, and it's not only tolerated, but considered normative behavior.

H/T Atrios.

Massachusetts Has Great Idea, A College Endowment Tax

Specifically, the measure calls for a 2.5% tax on any endowment in excess of $1 billion.

Massachusetts has 9 colleges and universities that meet this criterion, with Harvard's endowment of $35+ billion leading the list, and it would be expected to raise $1.4 billion for Massachusetts.

There are a number of reasons that I think that this is a good idea, the first is that Greg Mankiw, former head of Bush's Council of Economic Advisors hates the idea with a passion, and if a Bushie opposes an idea, you are unlikely to be wrong supporting it.

The second, and more logical reason, is that these endowments are so excessive as to run counter to the goals of these institutions as educational non-profits.

Brad Delong, a Harvard Alumni, runs the numbers, and notes that over the past 50 years, Harvard's graduation rate has gone from 1200 to 1600/year (which means that there is $5.5 million of endowment for each student there), while the UC starting from 5000/year created many more educational openings, both through expansions at UC Berkeley and UCLA, and by improving other parts of the UC system noting that, "Today we have UC Davis, UC Merced, UC Santa Barbara, UC Santa Cruz, UC Sunnydale^*, UC Irvine, UC Riverside, UC San Diego which together with UCB and UCLA graduate 40,000 undergraduates a year."

Matthew Yglesias, also a Harvard Alumni, says "Long story short if you, like me, are a graduate of a fancy college and the development people come around asking you for money don't do it save your money for institutions that (a) have less money and (b) do more to help people in need."

It raises an interesting point, specifically that endowments and foundations become a sort of charitable money pit, where the accumulation of more resources become a major, if not the major driving force behind institutional activities.

^*Never knew Delong was a Buffy fan.

More on College Endowment Abuse

I can't believe that I'm agreeing with a regular contributor to the National Review's "The Corner", Jim Manzi, but I do.

The guy is a moron though, in the last 'graph he claims that because Harvard employees (professors) give to Dems, the institution should not be tax exempt.

He is spot on when he calls Harvard a tax exempt "Hedge Fund".

But he runs the numbers:

Receipts = $2 billion of operating revenue + $7.3 billion of investment income + $0.6 billion of gifts to the endowment = ~$10 billion.

Operating costs = ~$3 billion.

Profit = $10 billion – $3 billion = ~$7 billion.

This explains why Harvard’s net assets increased about $7 billion in 2007, from about $35 billion to about $42 billion.

This actually segues nicely into my previous post on executive compensation. Just how much is too much anyway?

If Harvard never generated another penny in investment, tuition, or gifts, they would be able to continue to operate for 12 years.

Too much is too much, and by making income (and donations) tax deductible, we are subsidizing "too much".

I clearly understand how Harvard is the most egregious case of endowment abuse, but once we have determined that there is a problem and that it needs to be fixed, we are, as the joke goes, just haggling over price.

Consider the Source

About the only time to place any credence to the Wall Street Journal OP/ED page is when they print something so diametrically opposed to their normal line that it signifies a shift in thought behind the scenes.

That is the case with the OP/ED published from two members of the Carnegie Endowment for International Peace describing victory for the Ukraine in its war with Russia as "Magical Thinking." 

The authors are, "Eugene Rumer, a former national intelligence officer for Russia at the National Intelligence Council, is director of the Russia and Eurasia program at the Carnegie Endowment for International Peace. Andrew S. Weiss, who worked on Russian affairs in both the George H.W. Bush and Clinton administrations, is Carnegie’s vice president for studies."

The Carnegie Endowment is a Neocon organization, chock full of former CIA officers and slavering war mongers like Robert Kagan, so this counts as a statement against interest:

As Russian President Vladimir Putin looks toward the second anniversary of his all-out assault on Ukraine, his self-confidence is hard to miss. A much-anticipated Ukrainian counter-offensive has not achieved the breakthrough that would give Kyiv a strong hand to negotiate. Tumult in the Middle East dominates the headlines, and bipartisan support for Ukraine in the U.S. has been upended by polarization and dysfunction in Congress, not to mention the pro-Putin leanings of Republican presidential front-runner Donald Trump.

Putin has reason to believe that time is on his side. At the front line, there are no indications that Russia is losing what has become a war of attrition. The Russian economy has been buffeted, but it is not in tatters. Putin’s hold on power was, paradoxically, strengthened following Yevgeny Prigozhin’s failed rebellion in June. Popular support for the war remains solid, and elite backing for Putin has not fractured.

Western officials’ promises of reinvigorating their own defense industries have collided with bureaucratic and supply-chain bottlenecks. Meanwhile, sanctions and export controls have impeded Putin’s war effort far less than expected. Russian defense factories are ramping up their output, and Soviet legacy factories are outperforming Western factories when it comes to much-needed items like artillery shells.

The technocrats responsible for running the Russian economy have proven themselves to be resilient, adaptable, and resourceful. Elevated oil prices, driven in part by close cooperation with Saudi Arabia, are refilling state coffers. Ukraine, by contrast, depends heavily on infusions of Western cash.

The rest of the article talks about the necessity of containment, says that Putin is bad, and that Russia and Putin are in many ways succeeding beyond the West's wildest expectations.

They also say that we can win this because ……… The Aristocrats!!!!!

If at any time over the past 30 years our foreign policy establishment had allowed even the smallest amount of sanity and reality penetrate their collective blob mind, rather than getting drunk on triumphalism and the "End of History", the entire world would be in a far better place than it is now.

Yes

Over at The American Prospect, they ask, "Are Endowments Damaging Colleges and Universities?"

That sounds nonsensical, but that is because the real question that they are asking is, "Is the path chosen by universities and colleges to rely on risky and extremely high fee strategies run by Wall Street big shots to increase returns on their endowments damaging colleges and universities?"

That answer is unequivocally yes, even if you are not as incompetent a steward of your college's money as Larry Summers was at Harvard. 

The goal of the Wall Street big shots is to maximize their own personal gain, and by promising big and providing almost Byzantine complexity that shields them from oversight, they make bank, and the colleges get f%$#ed:

These are perilous times for private, nonprofit, independent higher education, and not just because of changing demographics, ever-climbing tuitions, and pandemic shutdowns. For years, education researchers have charged that institutions are unable to control costs effectively, especially their operating costs. In public discourse, colleges and universities are often characterized as reckless spenders. So when they slash academic budgets or cut staff, nearly everyone shrugs. Higher education has gradually accommodated itself to austerity thinking. But as any critic of neoliberalism can tell you, austerity is really just another way that money and resources are redistributed upward, and outward.

It is rarely, if ever, discussed how endowment fund management is an integral part of the budget problem. As the tax filings of virtually every private college or university show, enormous investment management fees are pouring out of nearly every substantial endowment and into the pockets of fund managers. Most of these fund managers are not university employees, but rather work for industries such as private equity, hedge funds, and other so-called “alternative” investments. According to its tax filings, Oberlin College (my alma mater) paid out a total of $14,872,522 in investment management fees between 2013 and 2017, averaging around $3 million per year. During that same period, Amherst College paid out $186,601,258. At both colleges, investment management fees actually exceeded reported profits from investments several times. Excluding Harvard (which manages its roughly $41 billion endowment internally and has also faced criticism for immensely high overheads), the remaining Ivy League colleges reported paying out $241,653,279 in fees in 2017 alone. That same year, Stanford University paid out $47,901,005, and Johns Hopkins $28,112,000. The list goes on and on.

………

But we can say that the pattern reflects a widespread institutional practice with endowments, tax-free investments held by nonprofit institutions that provide education as a public good. Increasingly, endowments are invested in expensive, secretive, unregulated, illiquid, risky, and hard-to-value financial instruments—the strategy laid out by David Swensen in his book Pioneering Portfolio Management and nicknamed the “Yale Model.” While acknowledging the greater risks involved, Swensen credits Yale’s returns to this strategy, noting that “developing partnerships with extraordinary people” is the single most important element for its success. What makes these people extraordinary is not specified, but the enormous amounts of money they are paid does fit that description.

Nontraditional asset class investing has become so widely fashionable among university endowments that it has taken the form of ideology. Very few institutions seem to balk at putting alumni and other donations into risky, illiquid investments, something that would have been regarded as foolish and dangerous only a few decades ago.

 As I have said here many times, "There is nothing that the finance industry cannot ruin."

F%$# Me. I Agree with Musk and Ramaswamy

As a part of their DOGE clown show, they want to shut down the National Endowment for Democracy.

At least I am disagreeing with a Wall Street Journal editorial:

On June 8, 1982, President Ronald Reagan delivered a sweeping address on freedom and democracy to members of the British Parliament. He urged democracies not only to defend their principles at home but also to promote them abroad. He traced the struggle for freedom to the Israelites’ exodus from Egypt and the Greeks’ stand against the Persians at Thermopylae. He asserted that “freedom is not the sole prerogative of a lucky few, but the inalienable and universal right of all human beings” and noted that the United Nations Universal Declaration of Human Rights “guarantees free elections.”

………

Reagan’s vision sparked the creation in 1983 of the National Endowment for Democracy, a private nonprofit corporation funded by Congress that acts as a grant-making foundation. Reagan’s words are woven into the organization's founding declaration. For four decades, the organization has remained true to this vision. 

………

The organization has long enjoyed bipartisan support. But now it’s coming under assault and is reportedly near the top of the Department of Government Efficiency’s hit list. If true, this is a troubling development.

I can’t claim to be a neutral observer. I served for nearly a decade on the foundation’s board, during which time I developed deep respect for the organization’s mission and for the dedication and integrity of its staff.

This man is lying.

The NED was created by Bill Casey as a CIA cutout for regime change operations.

It's purpose was to allow those operations to be pursued by the CIA without any formal government approval.

Bill Casey and the CIA wanted to be able to overthrow governments without any authorization from Congress or from the President.

It was intended to subvert the democratic checks and balances of our government.

It is a corrupt and destructive organization that should have been shut down years ago.

Illiquid

Remember how I said that it was the scariest word in finance? Well, now that Harvard is trying to get its endowment out of some private-equity stakes, we are seeing illiquidity in these markets:

A push by the richest U.S. universities to unload their stakes in private-equity funds is flooding the market, driving down prices for the world’s best- known buyout firms. Investors led by Harvard University, which manages the largest U.S. endowment at $36.9 billion, may increase so-called secondary sales of private-equity funds to more than $100 billion during the next year, overwhelming available pools of capital. Interests in funds managed by KKR & Co., Madison Dearborn LLC and Terra Firma Capital Partners Ltd. all are being offered at discounts of at least 50 percent, according to people familiar with the sales

(emphasis mine) Illiquid: You have assets, but no buyers, so those assets are worthless, or near worthless. This is what Greenspan's "financial innovation" have gotten us.

M of A - The (NED Financed) Hong Kong Riots

Guess what? It looks like the CIA front known as the National Endowment for Democracy is dumping money into yet another so called color revolution:

Some organized "student groups" in Hong Kong tried to occupy government buildings and blocked some streets. The police did what it does everywhere when such things happen. It used anti-riot squads, pepper spray and tear gas to prevent occupations and to clear the streets.

………………
Peter Lee aka Chinahand has an excellent piece on the issue at Asia Times Online. But Lee is making one mistake in that he does not consider outside influence:

Occupy Hong Kong decided to light it, starting with a class boycott and demonstrations organized by the Hong Kong Federation of Students. And, since I’m never afraid to mix a metaphor, the Hong Kong government poured fuel on the fire by pepper-spraying and teargassing it.

Who really "decided to light this"? To me the protests, and the "western" reporting about it, have the distinct smell not of tear gas but of some expensive Color Revolution perfume of "western" origin.

So lets look up the usual source of such exquisite fragrance. The 2012 annual report of the U.S. government financed National Endowment of Democracy, aka the CCA - Central Color-Revolution Agency, includes three grants for Hong Kong one of which is new for 2012 and not mentioned in earlier annual reports:

National Democratic Institute for International Affairs - $460,000

To foster awareness regarding Hong Kong's political institutions and constitutional reform process and to develop the capacity of citizens - particularly university students - to more effectively participate in the public debate on political reform, NDI will work with civil society organizations on parliamentary monitoring, a survey, and development of an Internet portal, allowing students and citizens to explore possible reforms leading to universal suffrage.

So the U.S. government in 2012 (2013 numbers are not yet available) hands over nearly half a million to "develop the capacity" of "university students" related to the issue of "universal suffrage" in the election of Hong Kong's chief executive.

Why do we keep doing this sh%$?

Not only does it reduce the credibility of protesters in country, but the results (the Ukraine, Georgia, etc.) have been spotty, to put it mildly.

If the definition of insanity is, "Doing the same thing over and over again and expecting different results," the US state security and foreign policy apparatus are insane.

What Yves Smith Said

She makes a compelling case against Larry Summers being the next Chairman of the Federal Reserve.

Basically, it comes down to the fact that he is a polarizing personality who refuses to listen to others:

The big problem with Summers is not his record on deregulation (although that’s bad enough) or his foot-in-mouth remarks about women in math, or for suggesting that African countries would make for good toxic waste dumps. No, it’s his appalling record the one time he was in a leadership position, as president of Harvard. Summers was unquestionably the worst leader in Harvard’s history.

Summers, unduly impressed with his own economic credentials, overruled two successive presidents of Harvard Management Corporation (the in-house fund management operation chock full of well qualified and paid money managers that invest the Harvard endowment). Not content to let the pros have all the fun, Summers insisted on gambling with the university’s operating funds, which are the monies that come in every year (tuition and board payments, government grants, the payments out of the endowment allotted to the annual budget). His risk-taking left the University with over $2 billion in losses and unwind costs and forced wide-spread budget cuts, even down to getting rid of hot breakfasts.

………

So Summers couldn’t keep his ego out of the way, bullied the people around him, ignored the advice of not one but two presidents of Harvard Management, and left a smoldering pile of losses in his wake. And serious adults are prepared to allow someone with so little maturity and such misplaced self confidence to have major sway over much bigger economic decisions?

Summers’ second big problem is the scandal that led to his ouster at Harvard, which was NOT the “women suck at elite math and sciences” remarks. The university has conveniently let that be assumed to be the proximate cause.

In fact, it was Summers’ long-standing relationship with and protection of Andrei Schleifer, a Harvard economics professor, who was at the heart of a corruption scandal where he used his influential role on a Harvard contract advising on Russian privatization to enrich himself and his wife, his chief lieutenant Jonathan Hay, and other cronies. The US government sued Harvard for breach of contract and Shleifer and Hay for fraud and won.

And yes, he was also hip deep in the ouster of Brooksley Born for her demands that derivatives be regulated.

So, he doesn't listen, he alienates those around him, he is deeply involved in a massive corruption scandal, and he has been wrong on basically everything outside of academe.

Given this record, I expect him to fail up into the Federal Reserve.

The Intercept, Pierre Omidyar, and His Connections to CIA Operations in the Ukraine

There has a bit of a pissing contest between Mark Ames and Glenn Greenwald over the connections between the First Media news organization, and its subsidiary The Intercept magazine which employs Greenwald.

Part of this is that Greenwald and Ames have been involved in a long running pissing contest, which explains why Ames original article mentioned Greenwald prominently, even though his remit is surveillance, and not covert organic operations or the destabilization of disfavored governments by our state security apparatus.

Still, it raises some very valid points, and Greenwald's response addressed none of the underlying facts.

It's basically, Greenwald telling Ames that he's ugly and that his mom dresses him funny, and that the publisher doesn't matter.

This is not true generally, nor which is not true in this case, as Omidyar has a long history of intimate involvement with his media ventures, with The Intercept writer Jeremy Scahill saying that he is intimately involved with their messaging:

Pierre writes more on our internal messaging than anyone else. This guy has a vision.

With those two remarks, Scahill obliterates Greenwald’s claims of independence from his boss, publisher and sole quarter-of-a-billion-dollar backer.

There is no universe, current or imagined, in which Peter Thiel or Marc Andreessen or any other venture capitalist would be allowed within a billion miles of Pando’s internal messaging system. And there is no planet within that universe on which Thiel, Andreessen or any of our dozen or so venture backers would be given any privileged line to our reporters (if they have something to say they can send us a letter to the editor, like everyone else). I would hope all of the other “billionaire-backed” media organizations Greenwald cites in his post would say the same.

(emphasis original)

So this is not one of the Glennster's greatest moments.

Of more significance is the fact that Marcy Wheeler (aka Emptywheel) who is covering the developments in the Ukraine for The Intercept, asked sometime before this article came out about information on intelligence ops masquerading as "civil society.  Quoting from Ames' article:

Marcy Wheeler, who is the new site’s “senior policy analyst,” speculated that the Ukraine revolution was likely a “coup” engineered by “deep” forces on behalf of “Pax Americana”:

“There’s quite a bit of evidence of coup-ness. Q is how many levels deep interference from both sides is.”

These are serious claims. So serious that I decided to investigate them. And what I found was shocking.

And now Wheeler is saying that there is no "there" there. This is the bit I find most interesting:

B) The Kyiv Post reported that in 2012 (the year after New Citizen received this grant, and therefore presumably the year it got spent), Omidyar Network funded 36% of New Citizen’s budget, Pact, a non-profit funded in part by USAID funded 54% of it, and other funding came from the National Endowment for Democracy.

USAID is, of course, a US Government agency, and while it is nominally independent, it is largely directed by the State Department, and the National Endowment for Democracy, thought technically a non governmental not-for-profit is funded entirely by a line item in the budget of ……… wait for it ……… USAID.

Or as the best-named-blog ever, Cats not War, observes:

Now, I say Wheeler knows more than she lets on because she apparently understands enough to link to the excellent Moon of Alabama blog, dedicated to chronicling the less visible manifestations of imperial power, when comparing the Ukrainian and Syrian cases. And be reminded that Ames dug this information up about Omidyar at Wheeler's curiosity--viewing the Ukrainian fray, she clearly knew dirty tricks by their effects and felt compelled to ask about them in public. When Ames revealed that one such meddler was her boss, she employed a new skepticism about the existence of imperial meddling in Ukraine, writing, 'I don't see any evidence that [Omidyar's] donations were explicitly intended to pay for regime change... unless you presume transparency and better governance equates to regime change.' Soon down the text, Wheeler belittles Ames' suggestions about Omidyar's business operations by cueing 'Hollywood villain music' and asking what is wrong about Pact, Omidyar-funded NGO, promoting 'women in leadership,' a goal Pact offers up on its about page (clearly the only place to go when seeking to understand an institution's true workings). The insinuation of conspiracism mimics Greenwald's own, when he reduces Ames charges to the 'laughable hyperbole that Omidyar is now the mastermind who has secretly engineered the Ukrainian uprising.' To Greenwald I'd like to ask, But what if, like, the suggestion is not that Omidyar did anything alone, but that he belongs to a larger oligarchical-state network whose global investments make up that thing called imperialism? And to Wheeler I'd like to ask, But what if, like, an NGO doesn't outright come out with goals of regime change because they are manifestations of soft imperialism, crucial supplements to the harder stuff that use a language of liberal abstractions to work towards goals more nefarious?

Which brings us to my explanation of imperialism. There are two primary parts of which to keep track. The first is its role in capitalism--an odd concept to propose because imperialism is capitalism insofar as capitalism could not persist without it. Here, we are talking about capital and, more specifically, finance. The second is its expansion, which happens through hard imperialism (military operations of varying types--bombings, drones, invasions, covert ops, and so on) and soft imperialism (NGOs and PsyOps), because sometimes the mid-sized and small states fail to cooperate. When describing these activities, I will move from country to country with examples, fully aware that imperial tactics are employed differently in accordance with the needs of given contexts, but hoping still to establish that imperialism has a reliable repertoire, that it is global in scale, and that there can be no doubt about its purpose where it is to be found.

Read the entire Cats, Not War post.  I cannot do if full justice.

No Longer Well Endowed*

I am referring, of course, to the sad fortunes of Harvard University's endowment, which I have blogged on a number of occasions.

Well, Felix Salmon notes that , something which I noted in December, though, to be fair, I never thought that it would get to this point, he said, quoting Mr. Salmon:

Richard Bradley reports:

Harvard has already halted the hiring of junior faculty and announced an early retirement program for tenured professors, and for the first time ever is considering laying off tenured professors.

And why might Harvard be laying off tenured professors? Because it’s down to its last $25 billion, of course. Bradley adds a bit to what we know about Harvard’s financial mismanagement:

According to the university’s 2008 financial report, in the next 10 years it must pay various private investors some $11 billion in capital commitments. Where will that money come from if, as seems likely, endowment growth over those years is minimal or nonexistent, and alumni’s own strained budgets limit their generosity?

So, the question here is where Harvard will go with all of this.

Obviously, hitting up alumni for more money is a given. That's what they do normally.

The real question is whether they will either move to a less aggressive, and less risky strategy, which will provide lower, but more stable, returns and greater liquidity, or whether they will go whole hog into more private equity deals, betting on a rebound which will lift them out of their problem?

Human nature being what it is, I'm going to guess that they go with the latter, because doubling down on failure is basic human nature.

^*Yes, I spent a lot of time on this title, and get your mind out of the gutter!

So Not a Surprise

Members of the National Endowment for Democracy were caught on tape claiming credit for the Belarus protests, which have generally been represented as internally driven.

So not a surprise.  The NED was created by William Casey to allow elements of the US State Security Apparatus to engege in regime change activities without supervision by civilian authorities.

Yes, I know, RT is the source, but they have it on tape:

A pair of notorious Russian pranksters posing as leading Belarusian opposition figures have duped the National Endowment for Democracy (NED) into revealing the extent of US involvement in Eastern European political movements.

In a video call posted on the online channel of pranksters Vovan and Lexus, senior representatives of the American agency disclosed that they have actively financed and supported anti-government campaigns in the region. The officials from the NED, which is funded by Congress and describes its role as “supporting freedom around the world,” also revealed that they are coordinating efforts with prominent political activists in a range of countries, including Russia.

………

During the call, Nina Ognianova, who oversees the NED's work with local groups in Belarus, outlined the wide-ranging programs the agency bankrolls in the country, insisting that “a lot of the people who have been trained by these hubs, who have been in touch with them and being educated, being involved in their work, have now taken the flag and started to lead in community organizing.”

Ognianova claimed that, through this work, the NED played a role in igniting the colossal street protests that rocked Belarus after long-time leader Alexander Lukashenko declared victory in the country’s presidential election last August. The opposition and many international observers say the vote was rigged in his favor, and tens of thousands took to the streets for demonstrations each weekend after the election.

………

The comments are likely to add fuel to Lukashenko’s previous controversial claims that the widespread domestic opposition to his government is being stoked from abroad.

Gee, you think? 

On a more serious note, allowing jokers from the CIA and other TLA acronym organizations to dictate US foreign policy without any civilian oversight is worse than a crime, it is a mistake.

Another Stopped Clock Moment

Over at the 2^nd worst OP/ED page in the nation, they are wringing their hands at the demise of the most transparent CIA front in history, the National Endowment for Democracy:

Speaking to the British Parliament in 1982, President Ronald Reagan called on the United States “to foster the infrastructure of democracy” to help ensure that people around the world were empowered to determine their own fates. Now, at this increasingly fraught moment for freedom around the world, the Trump administration wants to dismantle that infrastructure.

Buried in the State Department’s fiscal 2019 budget request is a proposal not only to slash the budget of the National Endowment for Democracy but also to disassemble its relationships with its core institutes, including the National Democratic Institute and the International Republican Institute. For the NED and those institutes, the proposal is an assault not only on their organizations but also on the pro-democracy mission they are dedicated to.

“If implemented, the proposal would gut the program, force crippling layoffs and the symbolic meaning would also be shattering, sending a signal far and wide that the United States is turning its back on supporting brave people who share our values,” said NED President Carl Gershman.

The Trump administration proposal would allow the NED to continue issuing small grants but move funding of its core institutes to the State Department, where the IRI and NDI would have to compete with private contractors. The organizations involved argue that keeping funding decisions at arm’s length from the State Department allows the NED network to do things on the edges of the pro-democracy movement that the U.S. government can’t or won’t, such as supporting Chinese dissidents in ways that upset Beijing.

The NED has been little more than a a front for regime change efforts for our state security apparatus since its founding.

It is a cover for, "A boot stamping on a human face - forever," fomenting civil wars and civil unrest against regimes deemed insufficiently pliant.

This is why, for example, the NED has been largely silent regarding the excesses of the House of Saud.

Good riddance, even if its demise is for the wrong reason.  (We know that it's the wrong reason because it's Trump and his Evil Minions^™ doing this.)

It’s about Wall Street over Main Street

The Carnegie Endowment for International Peace has an interesting analysis of how the US dollar's status as a reserve currency has inflicted enormous costs on ordinary American people.

Because the US Dollar is the world's reserve currency, the currency is overvalued, because people want to hold it as a safe haven, and because it is overvalued, imports are cheaper and exports are more expensive, resulting in the movement of manufacturing off shore.

But Wall Street makes out like a raped ape, because they get to manage the money from people who want a safe haven.

Rinse, lather, repeat:

This may be excessively optimistic on my part, but there seems to be a slow change in the way the world thinks about reserve currencies. For a long time it was widely accepted that reserve currency status granted the provider of the currency substantial economic benefits. For much of my career I pretty much accepted the consensus, but as I started to think more seriously about the components of the balance of payments, I realized that when Keynes at Bretton Woods argued for a hybrid currency (which he called “bancor”) to serve as the global reserve currency, and not the US dollar, he wasn’t only expressing his dismay about the transfer of international status from Britain to the US. Keynes recognized that once the reserve currency was no longer constrained by gold convertibility, the world needed an alternative way to prevent destabilizing imbalances from developing.

………

Until then, like most people, and because of its role in Latin America, I had pretty much taken the role of the dollar as a given, and assumed vaguely that its dominance gave the US some ill-defined but important advantage – after all they did call it the “exorbitant privilege”. But after a few years in China (I moved to Beijing in 2002) I became increasingly suspicious of the value of this exorbitant privilege.

………

The creation of the euro provided another illuminating variation on the impact of reserve currency status. When German institutions – government, businesses and labor unions – negotiated among themselves at the turn of the century a sharp reduction in wage growth for its workers, they were obviously attempting to reduce German’s high domestic unemployment by gaining trade competitiveness. Because these polices forced up the savings rate, and perhaps also explain why the investment rate dropped, they resulted in huge current account surplus (or which is the same thing, excesses of savings over investment) that were counterbalanced within Europe. These policies “worked”, and they worked probably far better than anyone expected. The sick man of Europe, with its high unemployment and large current account deficits, turned the corner almost immediately.

It turns out that it wasn’t just good luck or brilliant economic policy-making that accounted for the speed of the turnaround. Without anyone’s realizing it, the simultaneous imposition of a single currency on a group of countries that clearly did not belong in a currency union had reduced or even eliminated the monetary adjustment mechanisms in those countries, mechanisms that would have automatically counterbalanced the resulting increase in German capital exports. Instead of multiple currencies slowing the impact of German wage policies, the creation of the euro gave these policies far more traction than they would have otherwise had.

………

The one thing both sides agreed on, however, was that the US enjoyed an advantage because of the reserve currency status of the US dollar, with some people even assuming that the US was somehow repressing the ability of Europe, China and Japan to gain the advantage for themselves. No matter how many times the US engaged in policies that tried to shift the benefits to those countries, or these countries engaged in policies that prevented them from receiving the benefits, it was somehow clear to both sides that reserve currency status is a wonderful thing that everyone wants but only the US is allowed to have.

………

Conditions have changed however, and the potentially destabilizing effect is no longer so distant. In a recent essay I tried to show that if we have not already reached the point at which the dominant reserve currency status of the US dollar is harmful to the US and potentially destabilizing to the world, logically we will inevitably reach that point, and probably soon.

At the start of this essay I said that I am optimistic that we are seeing a change in the way the world thinks about the role of the US dollar, and I think this is because the 2007-08 crisis in Europe and the US, the start of Abenomics, and the extremely difficult adjustment that China faces have all focused attention on the nature and structure of savings imbalances and their effect on the global balance of payments. It is becoming increasingly obvious, I think, that Keynes was right. Several years ago, I received an email from Kenneth Austin, a Treasury Department economist who had read one of my articles. He himself was working on the same set of ideas and over the years we have had a running conversation about this topic.

………

While recognition of the exorbitant burden had been growing in recent years, Austin’s article focused a lot of new attention on this topic, and it seems that finally Keynes’s insight is attracting the kind of acceptance that might eventually modify future policy. In August in a much-commented-upon article in the New York Times, Jared Bernstein explained one of the corollaries of Austin’s model, pointing out that

Americans alone do not determine their rates of savings and consumption. Think of an open, global economy as having one huge, aggregated amount of income that must all be consumed, saved or invested. That means individual countries must adjust to one another. If trade-surplus countries suppress their own consumption and use their excess savings to accumulate dollars, trade-deficit countries must absorb those excess savings to finance their excess consumption or investment.

Note that as long as the dollar is the reserve currency, America’s trade deficit can worsen even when we’re not directly in on the trade. Suppose South Korea runs a surplus with Brazil. By storing its surplus export revenues in Treasury bonds, South Korea nudges up the relative value of the dollar against our competitors’ currencies, and our trade deficit increases, even though the original transaction had nothing to do with the United States.

This is a key and much misunderstood point. The inexorable balance of payments accounting mechanisms make Bernstein’s claim – that “Americans alone do not determine their rates of savings“ – both necessarily true and joltingly shocking to most economists. How many times, for example, have you heard economists insist that the US trade deficit was “caused” by the fact that Americans refuse to save, or, even more foolishly, that “no one held a gun to the American consumer’s head and forced him to buy that flat-screen TV”?

The fact is that if foreign central banks buy trillions of dollars of US government bonds, except in the very unlikely case that there just happen to be trillions of dollars of productive American investments whose backers were unable to proceed only because American financial markets were unable to provide capital at reasonable prices, then either the US savings rates had to drop because a speculative investment boom unleashed a debt-funded consumption boom (i.e. household consumption rose faster than household income) or the US savings rate had to drop because of a rise in American unemployment. There is no other plausible outcome possible. Americans cannot wholly, and sometimes even partly, determine the American savings rate.

………

We need to keep this argument in mind. As US policymakers take steps to extend free trade through various bilateral and multi-lateral agreements, it is important both that the exorbitant burden is addressed before it becomes much more destabilizing but it is also important that the exorbitant burden not become an argument against free trade. To argue in favor of constraining unlimited purchases of US or other government bonds is not the same as arguing that the US or other countries should not engage in international trade, as many commentators have bizarrely claimed.

Let me note that this is a very long, and extremely self referential, read, and it is rather tentative in its assertions, but considering that it has found its way into a mainstream publication from the Carnegie Endowment is significant.

Personally, I would just mint the damn platinum coin, about 100 Trillion worth, which would mean that the US government would not have to borrow money, or refinancing bonds that reach maturity for about the next 20 years.

It would make the US status as a reserve currency impossible, and the dollar would fall, and trade rebalance in a way that benefits the American people.

The fact that this would have a few thousand brokers and hedge fundies jumping out of windows is just icing on that cake.

Harvard Alums: When Your Alma Mater Comes Calling, Tell Them to Pound Sand

In response to poorly paid cafeteria workers going on strike at the university, Harvard is recruiting scabs:

Harvard is hiring. Applicants must be willing to work for free in the dining halls.

On Monday, the Ivy League school entered the sixth day of its standoff with dining hall workers, who have gone on strike for the first time in over 30 years. The cafeteria staff are demanding affordable health care and base pay of $35,000 for year-round workers. But workers and Harvard negotiators can’t come to an agreement. And while dining hall workers strike for better wages, Harvard is hiring scabs.

After nearly six months of bargaining with the university, cafeteria staff walked out on Wednesday. In anticipation of a strike, Harvard allegedly stockpiled three days’ worth of frozen foods. But now on the strike’s sixth day, students say they’re living on undercooked chicken prepared by untrained strikebreakers while administrators scour the faculty for any employees willing to serve breakfast.

The university is “actively seeking for volunteers all across campus,” an email from Harvard’s Campus Services implored. The email, obtained by the Harvard Crimson clarified that only employees who were not paid hourly and did not qualify for overtime would be allowed to work for free in the dining halls.

………

“Dining hall workers feel like they have really modest demands,” Tiffany Ten Eyck, a spokesperson for Local 26, the Boston-based union that represents Harvard dining hall workers told The Daily Beast. “Especially because Harvard has the resources that it does.”

The dining hall staff is asking Harvard to roll back a proposal that would hike health care costs for employees. The workers also want a guaranteed salary of $35,000 for year-round staffers.

Harvard has an endowment of nearly $40 billion, and it enjoys an annual operating surplus of over $60,000,000.00.

Harvard is balking at a $5000 a year raise for 750 employees, and it wants them to pay more in medical premiums and copays.

To quote Otto from Repo Man, "F%$# that."

Subhed of the Day

None of This Would Have Been Legal If They’d Sent Competent Adults. But the Fact That They Sent Smirking Little Sh%$s Makes It So Much Worse.

—Liz Dye at Law and Chaos, describing how the DOGE bros comported themselves when forced into sworn depositions. (%$ mine) 

Yeah, these smirking assholes make it much worse.  (BTW, the hed is, "DOGE Bros Had More Fun Burning Down Government Than Testifying About It."

In the spring of 2025, the Elon Musk’s DOGE slashed and burned through various congressionally-created and -funded federal agencies, systematically destroying them as part of an effort to … well, who the hell knows. Something-something deficit. Blahblahblah waste, fraud, and abuse. Eradicate DEI!

………

On March 12, the code monkeys descended on the National Endowment for the Humanities, an independent agency established by Congress in 1965 to “foster and support a form of education, and access to the arts and the humanities, designed to make people of all backgrounds and wherever located masters of their technology and not its unthinking servants.”

Which is a little on the nose, to be honest.

………

None of that interested Justin Fox and Nate Cavanaugh, the 20-something tech bros dispatched to raze the agency. They’d never worked in government or the humanities, and they didn’t know didn’t know the First Amendment from the Administrative Procedure Act.

………

Fox and Cavanaugh instructed NEH staff to rate the agency’s active grants for the presence of DEI, “gender ideology,” and “environmental justice.” When this failed to yield enough cuts, Fox and Cavanaugh turned to ChatGPT, feeding it the database of grants and instructing it to flag anything that relates to DEI.

A $349,000 grant to replace the HVAC system at the High Point Museum in North Carolina was DEI because, according to ChatGPT, it “enhances preservation conditions for collections, aligning with the goal of providing greater access to diverse audiences.” A documentary about the Colfax Massacre — the 1873 slaughter of Black Louisiana freedmen, one of the bloodiest atrocities of Reconstruction — was canceled “because it focuses on exclusively anti-Black violence, which is a race.” A project to digitize local newspaper archives was nixed because digital accessibility “aligns with DEI goals of inclusivity and representation.” A documentary about Jewish women’s slave labor during the Holocaust was flagged as DEI because it focused on gender and religious oppression.

In short, every bit scholarship or art involving anyone who wasn’t white, male, and able was cut.

………

If all this sounds wildly illegal, that’s because it is.

I really hope that the DOGE Bros get prosecuted to the fullest extant of the law, and that they then get sent to a Federal PMITA prison. 

It's Like the Mafia

I am referring, of course, to the Ivy Leage and its fellow "Elite" universities, who are being sued for operating as an illegal cartel.

This was made illegal in the late 1990s, though only barely, because Ivy League made men were Bill Clinton's kind of people:

Sixteen major U.S. universities, including Yale University, Georgetown University and Northwestern University, are being sued for alleged antitrust violations because of the way they work together to determine financial-aid awards for students.

According to a lawsuit filed in Illinois federal court late Sunday by law firms representing five former students who attended some of the schools, the universities engaged in price fixing and unfairly limited aid by using a shared methodology to calculate applicants’ financial need. Schools are allowed under federal law to collaborate on their formulas, but only if they don’t consider applicants’ financial need in admissions decisions. The suit alleges these schools do weigh candidates’ ability to pay in certain circumstances, and therefore shouldn’t be eligible for the antitrust exemption.

The settlement requires that admissions be need blind under all circumstances, and is as clear as the nose on your face, they admit some students because their daddy is rich and donates to the school.

Jared Kushner is a classic example of this.

The suit seeks damages and a permanent end to the schools’ collaboration in calculating financial need and awarding aid.

College admissions practices are being challenged more broadly and pillars of the decades-old admissions system are crumbling.

………

In addition to Yale, Georgetown and Northwestern, other named defendants in the suit are: Brown University, the California Institute of Technology, the University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, the Massachusetts Institute of Technology, the University of Notre Dame, the University of Pennsylvania, Rice University and Vanderbilt University.

………

In 1991, all eight members of the Ivy League and MIT were charged with price fixing. Prosecutors said representatives from the schools would meet to discuss their anticipated aid offers for students who had been admitted to more than one school. This practice unfairly limited price competition, prosecutors said. Schools said the approach eliminated bidding wars and allowed students to choose schools based on fit rather than on price.

BTW, that bit about choosing on fit/quality is something that all monopolists say, as did a relative of mine who was a college president.  It's bullsh%$.

Cartels continue to compete, just not on price. 

They can do this because the social connections formed at the schools, though not necessarily the actual quality of education, create what can generally be described ad, "Made Men."

Matt Stoller, who is one of my go to guys on monopolies, oligopolies, and cartels, goes into some more detail:

Last April, Sam Haselby and I wrote a piece titled “Break up the Ivy League Cartel,’ offering a history of the elitism of top universities in America. For hundreds of years, these top schools have policed the moral, cultural, and economic boundaries of what forms the American elite, and in the post World War II era, the global elite. They are in many ways a cartel of institutions that share strategy on endowment funds, academic trends, cultural capital and student management.

But it’s not just this informal elite-production model that makes such universities a cartel; they are also an *actual cartel.* Today, a group of class action law firms sued 16 universities for price-fixing against low-income students in the admissions process, which is the key gatekeeping mechanism designed to enhance prestige. The defendants are the wealthiest and most powerful academic institutions in America: Brown, CalTech, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, MIT, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt, and Yale.

The specific charge is that these universities colluded to price-fix the terms of financial aid. Working together to provide scholarships isn’t necessarily illegal. A lot of universities give out scholarships based on income, under the premise that higher education should be an equalizing force in American society. Some schools even say they make admissions ‘need-blind,’ which means that they don’t take into account ability to pay when determining which students to accept. Instead, the admissions department accepts students based on merit, and then gives accepted students scholarships to make sure they can afford the schooling.

But what specifically makes someone ‘needy’ in a ‘need-blind’ system? The answer to that is an accounting question, so universities work together through an organization called the 568 President’s Group to set the terms for what makes someone needy. Now, if this also sounds like open price-fixing, that’s because it is. But done properly, it’s not necessarily illegal. The reason is universities have been caught before for price-fixing, and part of the settlement of that suit was that they were given an antitrust exemption so they could work together to price scholarships, within certain bounds.

In 1991, the Justice Department investigated 23 prestigious Northeastern universities – including Harvard, Yale, and MIT - for holding an annual meeting in which they “discussed the financial aid applications of 10,000 students who had been accepted to more than one institution in the group,” ultimately colluding to offer the same financial package to these students. The Attorney General called them a “collegiate cartel.” After the settlement, top universities agreed to stop the meetings, but it’s hard to watch the Ivy Leagues without concluding that they are watching each other and mimicking each other carefully.

This settlement was codified when Congress passed the Improving America’s Schools Act of 1994. Universities were allowed to work together to establish standards for who is needy, and how much they would need. However, to qualify for the antitrust exemption, universities had to admit “all students” on a need-blind basis. If they aren’t need-blind for everyone, they can’t work with other universities to price admissions. 

(emphasis mine)

And this is how they engage in selling admissions, which is the antithesis of this:

Do these universities have a need-blind policy for all students? Most of them say that they do. But as it turns out, admissions officers have a nasty habit of letting in the children of the wealthy and powerful, in return for donations and prestige. "At Dartmouth,” so goes the complaint, “development officers meet with admissions staff to review a list created by the development office. Each year, up to 50 applicants may be considered through this special process, most of whom are admitted, accounting for 4-5% of Dartmouth’s student body." Selling admissions to the powerful is policy at many of these schools.

The evidence about this sort of behavior is pretty clear:  It increases the costs to their customers, and it's pretty clear that they are breaking the law, because the development office is in constant contact with the admissions office to make sure that moneybags children get in so that they get big donations.

It's all very public.  There is no secret conspiracy here.  It's all done out in the open.

Also, read the essay Break up the Ivy League Cartel mentioned above.  It makes a very strong argument that the meritocracy is an argument used by the elites to preserve their positions and pass them down to their children.

"Charity" Hospital

All organizations, even allegedly charitable ones, need financial reserves to account for problems as they come up.

Under-capitalization, the lack of sufficient resources to weather something going wrong, is one of the main reasons that new business go bust.

That being said, a number of charities (I discussed Harvard's outsize endowment here and here over a decade ago) that have an obsession with building up reserves that is so extreme that it runs counter to their basic mission, case in point the St. Jude Hospital system:

In July 2021, St. Jude Children’s Research Hospital announced to fanfare that it had just finished raising $2 billion in donations, a single-fiscal-year record for the nation’s largest health care charity. “Solving pediatric cancer is a global problem — a multi-trillion, multi-year problem,” Rick Shadyac, chief executive of St. Jude’s fundraising arm, told the Associated Press at the time. “The way we look at it is: If not St. Jude, then who?”

Financial disclosures newly released by St. Jude, however, show $886 million of the hospital’s record $2 billion-plus in revenues last fiscal year went unspent. Those surplus dollars instead flowed to the hospital’s reserve fund, which helped it grow to $7.6 billion by the end of June 2021. That’s enough money to run St. Jude’s 77-bed hospital in Memphis at last year’s levels for the next five years without a single additional donation.

I wonder what Danny Thomas would have to say about that.

………

Last year, ProPublica reported that St. Jude had accumulated billions of dollars while many families of young patients treated at the hospital struggled financially. Parents told ProPublica that they’d exhausted savings and retirement accounts and borrowed from family and friends, despite St. Jude’s much-publicized pledge to alleviate many of the costs associated with treatment “because all a family should worry about is helping their child live.” St. Jude said they provided generous benefits to families, but cannot cover all financial obligations that a family experiences during a child’s illness. In response to the story, St. Jude significantly increased its benefits for families, including more support for travel and housing.

Some researchers, oncologists, health care advocates and families of patients complain that St. Jude’s fundraising makes it more difficult for other pediatric hospitals to raise money for their operations. St. Jude competes for fundraising dollars directly against other children’s hospitals, some of which have significant numbers of patients in clinical trials and their own research divisions focused on pediatric cancer care. To visualize just how much St. Jude outstrips its competitors: In 2020, U.S. News and World Report’s ranked the nation’s best children’s cancer centers. St. Jude’s, ranked tenth, pulled in more than the combined total of the nine hospitals ranked above it , according to financial records filed with the Internal Revenue Service.

Call me a cynic, but my guess is that the metrics used to determine the bonuses for executives at St. Jude are slanted toward fundraising, and not patient care.

Econ 101:  If you pay for it, that is what they will give you.

There needs to be more regulation of charities.