18 February 2007

"sense of mission"!?!?

yesterday's times has a fawning tribute to yale's chief investment officer. and, ok, maybe being the highest-paid official at yale is still a step down from wall street, but can we be a teensy bit less impressed at the sacrifices of a man who earned over a million dollars last year?

swensen appears to be one of the many nicely insulated university folks who have come to believe that universities are good per se -- they do research! they offer financial aid! therefore all the money they make must be blameless! one of the more offensive bits of the times article concerned the immense wonderfulness of yale's financial aid system (a system with which swensen has clearly had exactly zero actual experience):
While Mr. Swensen has no say about how Yale spends the proceeds from its endowment, he is eager to note the beneficiaries. “One of the things that I care most deeply about is that notion that anyone who qualifies for admission can afford to go to Yale, and financial aid is a huge part of what the endowment does,” he says.
can i just say? that part about "anyone who qualifies for admission can afford to go here"? absolutely not true. period. indeed, back in 1999 yale's financial aid offer was considerably worse than any other offer i received (harvard, stanford, williams, amhert, swarthmore, carleton, st. olaf), and certainly not in the affordable range, for me or for my parents. even swarthmore's offer, by far the most generous, was not actually "affordable." only the richest of the rich (swensen's reported income places him above the 99.5th percentile) would think of financial aid as such an unqualified equalizer. yeeeesh.

i'm also struck by the extent to which the article glosses what, precisely, goes into the handsome returns swensen has earned. for example:
After joining the university’s investment office when he was just 31, Mr. Swensen moved Yale’s portfolio away from a strict menu of stocks and bonds, favoring instead more diverse instruments like hedge funds, commodities like oil and timber, and private company investments.


When it comes to hedge funds, with their hefty fee structures, Mr. Swensen can be particularly tough. Tom Steyer, a Yale undergraduate, approached Mr. Swensen in 1987 to raise money for Farallon, his diversified hedge fund. “They turned us down flat,” Mr. Steyer recalled.

Like many hedge funds, Farallon charged a 1 percent management fee and took 20 percent of the profits. “David told us: ‘I don’t see why we would give you any money. You might shut down after a bad year,’ ” Mr. Steyer recalled.

It was only after Mr. Steyer swore that he wouldn’t shut down — and that he wouldn’t immediately charge Mr. Swensen 20 percent of his profits and other fees — that Mr. Swensen gave Mr. Steyer some of Yale’s money.

this is...hmmm...this is...virtuous? did you see the part about "commodities like oil and timber"? "Farallon"? investing in oil and timber is just...bad. investing in Farallon is investing in private prisons, among other excitement. essentially, the article is uncritically praising a man because his goal is to make money for the university by any means necessary, rather than to make money for himself by any means necessary. "better than bad" != "good."