the guy by the door …

Formerly mighty financial services institutions get bailouts because, we are told, they are too big to fail. Does formerly mighty Harvard, down to single digit $Billions, need a bailout too? They haven’t asked for one. Their solution? Layoff workers. In response, Cambridge City Councilors Decker and Reeves have offered an “Economic Stimulus Package for Harvard and MIT.” As a “non-profit” institution Harvard is exempt from, among other things, property taxes in the City of Cambridge [and with the Allston Campus, Boston as well.] But Harvard is required to meet with the City Manager and negotiate a Payment in Lieu of Taxes (PILOT). The Council Order would forego about $398, 372 of the Harvard PILOT to cover the salary of 19 cleaners and about $ 70,688 of the MIT PILOT to cover the salary of 2 cleaners. For those watching at home, that’s $20,967/Harvard cleaner and $35,344/MIT cleaner. I gotta ask if Harvard has had some Living Wage slippage here. The Katz Commission that resulted from the Mass Hall Sit-In of 2001, insisted that their had to be ‘market discipline’. They were afraid that Harvard might pay the janitors too well and bring on a colossal market failure. These figures show you that Harvard is not a “price taker” in the labor market. [Doesn’t anyone at Harvard know any economics?] Harvard is a market maker and it has always and still does set it’s wages for low wage workers lower than ‘comparable’ institutions. What we got here is a local market failure engineered by the same guys that brought you THE BIG ONE.

The Medium Sized Picture

The Order was in legislative limbo going into this meeting. I asked them to leave it there for bit. Here’s why. While there has been some activism on this:

This week will probably have better weather.

Second of all, there are lots of other things to look at about the University’s finances before we ask the Cambridge homeowners to forego such little as the PILOT provides.¹ Among them:

Get back the $3+ Million we paid the Late Larry for mismanaging the University.

Get back the $2+ Million we paid the Late Larry since he mismanaged the University.

Get back the $26.5 Million fine the Late Larry paid for, out of the University coffer, for his regrettably still alive crony Andrei Shleifer. Together with legal fees the total is probably more like $30 Million. In case you missed it, the early history of the tawdry affair is chronicled in:

Janine R. Wedel, The Harvard Boys Do Russia, The Nation June 1, 1998

Subsequent revelations are revealed in an article written by Harvard Alumnus David McClintock which appeared in Institutional Investor 1/13/06. Titled, How Harvard Lost Russia, it was passed around the faculty shortly before Summers’ resignation. If you have trouble finding it, bring your Driver’s License to Harvard’s Lamont Library and ask to sign in for Government Documents. Reference staff will help you find it as a network resource. Harvard has a site license. As of this writing there is an open source mirror online.

Dean of the Faculty of Arts and Sciences Michael Smith is due to hold a town meeting with his folks ² today. Hope sombody asks him about this stuff.

The Big Picture

We need to look at the political economy of Harvard in the era of the Summers-Rubin led irrational exuberance or, if you prefer, derivative security feeding frenzy. I need to get ready for the Dean’s town meeting now[See above]. If you aren’t going why not check out Noam’s interview with Amy on Democracy Now! If you are going to the town meeting and haven’t seen the McClintock article, you could take a look.

¹Harvard PILOT 2008 $2,173,492. I don’t know what the total assessed value of all Harvard property is, but I’m pretty sure that if we looked at what Harvard would pay if treated like a normal private business, the PILOT amounts to a small fraction of a penny on the dollar. If you have good numbers on this, by all means e-mail me at: the (dot) guy (dot) by (dot) the (dot) door (at) gmail (dot) com^A,B

²This expository vagueness is the result of desperation. I couldn’t call us ‘constituents’ cause we didn’t vote for him. Nor did we vote for anybody up to and including The Fellows. I can’t call us ‘subjects’ without knowing the man. Is there anything majestic about him?

^AYou can comment if you are in the Berkosphere. I apologize for not having my comments open, but with the proliferation of comment-spambots. I can’t keep up with the moderation effort necessary.

^BIf anybody tried to e-mail me with yesterday’s e-address please try again with today’s. Spam was in part to blame.