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Much commentary on the rising cost of higher education is ill-informed: most writers show little understanding of basic cost accounting. As an example, Peter Cohan, a management consulting and venture capitalist who teaches business strategy and entrepreneurship at Babson College, wrote in the Worcester Telegram to commend Phil Hanlon’s strategy of re-allocating 1.5% of the College’s costs each year. He noted what economists refer to as Baumol’s Disease:

… economists William Baumol and William Bowen noted that there had been no increase in the productivity of string quartet performers in the 200 years that had passed since Beethoven’s time.

They argued that this failure to boost musician productivity explains “why the cost of going to a live classical musical performance has gone up more than the cost of a drinking glass. You can manufacture the drinking glass more productively now than you could 200 years ago.”

Writing in the New Yorker on July 3, 2003, James Surowiecki made the same point:

Generally, productivity growth is a boon, but it creates problems for non-productive enterprises like classical music, education, and car repair: to keep luring talent, they have to increase wages, or else people eventually migrate to businesses that pay better. Instead of becoming nurses or mechanics, they become telecom engineers or machinists. That’s why teachers are getting paid a lot more than they were twenty years ago. (The average salary for an associate college professor has risen almost seventy per cent since the early eighties, and that’s if you adjust for inflation.) To pay those wages, schools and hospitals have to raise prices. The result is that in industries where productivity is flat costs and prices keep going up. Economists call this phenomenon “Baumol’s cost disease,” after William Baumol, the N.Y.U. economist who first made the diagnosis…

The basic flaw in this argument is that when you attend a string quartet concert, the fees paid to the musicians are but a fraction of the cost of your ticket. The cost of the concert hall, property taxes, ticket-takers, ushers, marketing the show and selling the tickets themselves eclipses the money paid to musicians. Those other costs reflect no more than inflation in the general economy and the increasingly efficient production of goods and services.

The same point can be made about higher education. What percentage of Dartmouth’s budget actually goes to professors’ salaries? If the answer to that question were a high percentage, say 70-80%, Baumol might have a point, but the actual figure is but a fraction of that amount, as we can calculate from a recent letter written by Professor of Mathematics Scott Pauls, the Chair of the Colllege’s Committee on Priorities:

A&S Budget.jpg

Stick with me on the math here: Pauls notes that 1.5% of the total spending on the Arts & Sciences portion (i.e. the education of undergraduates) of the College’s budget amounts to $1.8 million. That puts the total A&S budget at $120 million. Pauls also observes that $1.8 million is 6.5% of the non-compensation portion of the budget, which would amount to just under $28 million. Working with those two numbers, you come up with the figure of $92 million for the compensation of faculty and staff (department secretaries, research assistants, etc.).

Let’s assume most generously that the A&S faculty budget is approximately half the College’s total faculty budget, the remainder being compensation for the faculty at Giesel, Tuck and Thayer — I write “most generously” given the large number of non-tenure track teachers at Geisel, almost 25% of the faculty at Dartmouth. By that equation, total faculty compensation in Hanover amounts to less than $200 million/year.

However in fiscal 2014 total salaries and benefits for faculty and staff (including deans, janitors, cooks, carpenters, electricians, administrative assistants, accountants, personnel officers, etc.) came to $491,832,000 ($369,404,000 in wages and $122,428,000 in benefits), which limits the percentage of the College’s compensation bill allocated to faculty at about 40%.

Putting those figures in a larger context, in 2014 the College took in tuition and fees (net of financial aid) of $191,826,000, the endowment disbursed $187,043,000, and operational funding from the Dartmouth College fund and other gifts came to $85,584,000. And the total cost of running the College came to $853,110,000.

Using this latter figure, we can calculate that faculty compensation is just over 23% of the cost of running Dartmouth. The remaining amount is made up of all of the College’s remaining expenses: the cost of labor of the non-academic staff, buildings, energy, taxes, food, computing, etc.. These items are the same expenditures made by regular business in the economy. In light of that fact, it should be self-evident that the cost of faculty compensation does not come close to explaining the exploding expense of going to college:

Higher Education Cost Growth.jpg

For a better understanding of the explosion in the cost of higher ed, one should look to the behavior of America’s erstwhile industrial behemoths: Big Auto, Big Steel, Big Rubber, and so forth. In the post-war decades they could charge what they wanted. As a result, many decisions that management in these enterprises should have made to stay lean and efficient were not taken, and staffing and wages ballooned. That strategy worked fine for a while, until well managed foreign competitors stole their markets. None of these once-admired companies exists in its original form today.

There is a lesson to be learned from this history.

Addendum: Jim Kim’s long-departed-but-not-at-all-lamented Chief of Staff David Spalding tried invoking Baumol in a speech to the Alumni Council in March 2013. He asserted that the massed personnel of the College could best be compared to physicians, lawyers, and dentists in trying to understand the evolution of Dartmouth’s costs. Given the ratio of faculty members to much-lower-skilled support staff, that assertion is silly.

Addendum: My legal training compels me at times to reason analogically. Imagine that you receive a quote from a contractor to build a house, and then he comes back to you and says that the total quote is now double the original figure due to a doubling in the cost of wood. Obviously, you would look him in the eye and assert that wood is only the fraction of the cost of building the house, and you would politely suggest that he not take you for a fool.

Addendum: Les grands ésprits se rencontrent. In a story today about Wisconsin Governor Scott Walker’s reforms of his state’s system of higher education, the WSJ notes: “The entitled academics pretend that universities are chamber orchestras that can’t improve productivity. But you can tell a college administrator is dissembling when he claims there is no fat left to trim, especially in as large an organization as UW.”

The Journal piece also praises Phil Hanlon’s first efforts to trim waste and invigorate the academic program, all with one cost-reallocation policy: “Another [cost-cutter] is Dartmouth’s Phil Hanlon, who requires college departments to cut 1.5% of spending each year and spend it on something new. This annual reallocation clears out deadwood while encouraging innovation.”

If this little village were in Italy — at least the part north of Rome — it would have a small factory or two on its outskirts. But here in France a community like Bussières in the Haute Saône region lost its mill/factory three or four decades ago; the old stone buildings are sinking into the river near where I was standing when I took this snapshot. Regulations and taxes have smothered these little towns, and they are slowly losing life, despite their many pretty 17th and 18th century stone houses and prominent churches. Today residents commute to larger nearby cities and try to hang on to the land where they were born.

Bussieres2.jpg

The French countryside — la douce France — still has a hold on the hearts of les français and les françaises, but it is ceasing to make economic sense. That’s the world’s loss.

Degrees from Dartmouth and the Yale Law School are fine qualifications for an anti-aircraft battery commander, especially when the Germans are about to break through in the Battle of the Bugle and the battery’s 90mm gun (right) is pressed into anti-tank duty for which the men have no training. Leon Kent ‘35 and his crew were told to hold the line in what must have appeared to be a suicide mission (the German name for such assignments is Himmelfahrtsmission: trip-to-heaven mission), and on that day, they did their job. As other American troops streamed by them in retreat, Kent’s unit did not move. They fought German tanks from a gun that offered no protection to its men; as Kent put it in a 2011 interview: “If they got one shot at us, we were dead. I remember thinking: Do the shells go through you or do you go up in pieces?”

They destroyed two panzers in their first engagement, and then participated in the destruction of three more in subsequent days. Kent’s men all received Silver Stars for their courage; Kent’s application was lost, and he only received his medal in 1998.

Leon Kent Comp.jpg

The LA Times reports on Kent’s post-war career:

Resuming his law practice after the war, Kent was involved in tax cases and entertainment and copyright law. His clients included Clayton Moore, who played the Lone Ranger, Lou Costello of the comedy team Abbott and Costello, and Pilar Wayne, wife of John Wayne.

He successfully represented American playwright and screenwriter Emmet Lavery in a copyright case in a court in Paris. Back in Southern California, he became an attorney for the Grandview Building Company and Budget Rent-a-Car.

In the 1960s Kent worked with the dean of the UCLA law school to help admit more minority students. He was chairman of the Lawyers and Civil Rights Committee of the Beverly Hills Bar Assn.

Leon Kent ‘35 died this week at age 99.

Addendum: Kent described his wartime experiences to the Library of Congress’ Veterans History Project.

As they say, you can’t buy publicity like this — nor would you want to do so. The Chronicle of Higher Education’s lead story today says it all:

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The above was the e-mailing to people on the daily feed. Here is how the Chronicle’s website looked:

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Do we really need yet another re-hash of the scandals and controversies, the protests and the vulgarity?

That said, does anyone find it interesting that none of the other Ivies is engaging in similar endless, public, self-flagellation?

Addendum: If you can’t get beyond the Chronicle’s paywall, here is the article in pdf form.

Addendum: The Chronicle describes its reach as follows:

The Chronicle’s audited Web-site traffic is more than 12.8 million pages a month, seen by more than 1.9 million unique visitors.

The newspaper is subscribed to by more than 64,000 academics and has a total readership of more than 315,000.

According to Bloomberg, students at the nation’s top B-schools are preparing for the high life even as they work for their MBA degrees. The piece describes networking vacations with classmates “to far-flung destinations and swank enclaves closer to home”:

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While some students believe that the returns are worth the expense, others question that logic. However, we can all agree that the exercise prepares our future CEOs for deficit spending:

The trips pay off over time, some say. “This group of people that I’m in school with right now, in 10 years are going to be the next CEOs,” says Phuong Nguyen, a second-year student at HBS who has traveled to Israel, among other places, with her fellow MBA candidates. The trips can cost up to $3,000, not including airfare, she says, but that’s nothing compared with the benefits of putting in time with people who could aid her career climb. “It’s investing in more than just knowing the names, but knowing the story behind them.”

Others aren’t convinced that luxury budgets have a higher purpose. “Wharton encourages extravagant spending,” one student said anonymously in Bloomberg Businessweek’s survey, calling the spending “toxic.” Wrote the student: “The mentality is that we’ll be rich eventually, so why not spend a ton of money now while we’re in debt.”

Two years at a top business school costs around $100,000 in tuition, and students at these programs have even more debt than their peers, who are also heavily indebted. At Dartmouth University’s Tuck School of Business, the median debt load for students was $90,000, including student loans, credit card debt, and personal debt, twice as high as the median of $40,000 at all U.S. schools. Wharton students said their median debt was $66,000.

That said, perhaps the investment pays off, as Poets & Quants notes:

For Harvard and Stanford MBAs, in fact, starting salaries and bonuses were the lowest they have been in the past three years. HBS grads landed jobs paying $138,346, down from $142,501 in 2012, while Stanford MBAs took jobs that on average paid $137,525, down from $140,459.

In contrast, Wharton grads were paid a record $141,243 last year, nearly $4,000 more than Stanford MBAs. Dartmouth Tuck grads left the school’s Hanover, New Hampshire campus with average salary and bonus of $139,036—more than $1,500 extra.

Nice work, if you can get it.

We can agree that offensive jokes have no place among thoughtful people, but it is a stretch to go from that assertion to determining that an inappropriate comment deserves the intervention of the College’s Office of Pluralism and Leadership (OPAL).

The Foundation for Individual Rights in Education thinks so, too. The watchdog organization gives the College a Yellow Light rating for OPAL’s policing policies in the area of mildly offensive speech, versus our overall green light rating for protecting free speech:

OPAL Speech Code FIRE.jpg

When the petition trustees won their initial elections in in 2004 and 2005, they campaigned against the College’s burdensome enforcement of speech codes, and after their election, the Wright administration rolled back the egregious rules about speech. However OPAL’s new rules seem to represent backsliding.

Once again, we can agree that certain types of expression are unacceptable among adults, but might we also agree that spoken and written words are protected from censorship. As has been said many times, the remedy for speech that offends is more speech: thoughtful, intelligent, even forcefully expressed arguments as to why even mildly offensive comments in various forms can wound people. But that response should be the end of it.

A little more than two years ago, an insensitive undergraduate made fun of two Chinese students who were speaking together in their native tongue; he let forth a stream of gibberish that was his attempt at mock Chinese. Funny? Not to the Chinese students. To the point that they filed a complaint with OPAL and the Bias Incident Response Team (BIRT, I kid you not). S&S was charged with hunting the perpetrator down, and a College spokesman said that if found, the miscreant might well be expelled.

We can look at such situations as proof that OPAL is a mess, and that the next Dean of the College has a clear task ahead in reforming that area (and many others) of the College’s sprawling bureaucracy. I don’t know if people still learn in kindergarten that “sticks and stones will break my bones, but words will never hurt me,” but one would hope that the lesson would have sunk in by the time students begin their post-secondary education.

The Review has published a fine interview with Student Assembly President Frank Cunningham III ‘16 — ya, ya, he of Patagonia fleece fame — who served on the Moving Dartmouth Forward Steering Committee. The whole piece is worth a look, but the striking segment concerns the inner workings of the Committee as they relate to the abolition of the Greek system:

TDR: Do you think The Dartmouth’s editorial and the faculty vote had any impact on the discussion within the Committee?

Frank Cunningham.jpgFC: Yes. Abolition immediately moved to the forefront of the conversation when [it hadn’t really been] considered for the few weeks prior to that. After debating it for a while, the motion to get rid of the Greek system came up for a vote. Two of the faculty members on the Committee were throwing out all sorts of statistics and talking about how they [needed to support abolition because] they didn’t want students showing up [to class] hung over anymore. I lost my cool. I blew up in this meeting and told them they didn’t understand anything. I said, ‘You simply want to sit there and judge us based on… how many parties we throw and all of things you can see. But you can’t see the meaningful conversations I have. You can’t see the bonds that I’ve created in my fraternity.’ I flat out said in this meeting that I came out to my fraternity this summer. I came out to one of the most heteronormative fraternities on this campus, and at no time was I shunned. I remember [after I came out], I had almost my entire fraternity class standing in my room. They said, ‘We support you because we love you to death.’ I explained this to the Committee and then I packed up my stuff and I walked out the door. I was so frustrated that the conversation had gotten to that point and that they were judging us on these figures and [the headlines] without understanding the reality. I agreed that there needed to be a way to fix the problem of reckless behavior and make people more accountable. But I did not agree with getting rid of the [Greek system]. The problems were still going to exist. You needed to address the problems head-on. But at the end of the fall, the Committee wasn’t too receptive [to that argument]. Towards the end, I felt like my voice had been silenced. I felt like no one saw my side. I felt like I had divulged so much information about my own personal life and how the Greek system helped me through it, and yet the Committee didn’t see it for it was. Abolition was still its focus. And I’m telling you, in the weeks after Homecoming, the Greek system was as good as gone.

Way to go, Frank. The hill winds will know your name.

Addendum: Here is Frank’s bio from the SA’s website:

Frank M. Cunningham III is a ‘16 from West Palm Beach, FL. He is a Government major and is Dartmouth’s 2014-2015 Student Body Vice President. In addition to his role on Student Assembly, Frank is a member of the Moving Dartmouth Forward Presidential Steering Committee, a task force created by President Hanlon to address the serious issues of Sexual Assault, High-Risk Drinking, and Inclusivity. Previously, Frank served as President of the NAACP and as a member of The Dartmouth Business Staff. In the winter of 2014, Frank interned for Senator Tim Kaine in Washington D.C., where he tackled policy projects dealing with healthcare, education, and civil rights. Additionally, Frank served as the Director of Visibility for President Obama’s 2012 re-election campaign at Dartmouth, as well as spending two summers interning at ADT Security Services Corporate Headquarters as a marketing intern. In his spare time, Frank enjoys running, hiking, and spending time with family and friends.

Shall we forgive him for those Patagonia vests?

While it is true that institutions of higher education are burdened with costly and unnecessary federal regulations — as a recent report described in the Chronicle of Higher Education notes — don’t for a minute think that the obligations imposed by these regulations explain the high cost of college and the high cost of Dartmouth College:

CHE Fed Paperwork Comp.jpg

As this space reported on December 4, 2013, although colleges throughout the land bear the cost of identical federal requirements, the efficiency of different institutions varies a great deal. The College looks awful when compared to similarly situated New England institutions:

Dartmouth Per Student Cost Comp.jpg

Phil, if you could cut the per-student cost at Dartmouth to the level of Brown, you’d then have a huge pool of money available each year to do truly interesting things: radically reduce the cost of tuition; refurbish the College’s most decrepit dorms, hire more faculty, and innovate in many other ways. Oh, the places you’ll go with the savings drawn from today’s wasteful spending.

One of the lesser-noted aspects of cost-cutting at the College is that the in extremis cuts that are made during periods when the endowment drops (1990-1991, 2001-2002, 2008-2009) are never restored. Take for example, the levy: the money that the central administration began skimming in 1999 from gifts that had been dedicated to specific college functions by alumni and other donors.

Before 1999, when a donor endowed a faculty chair, a center, or an academic department, that donation threw off a distribution each year. According to a specified formula, every penny of the money distributed went into the budget of the intended recipient. However, unbeknownst to donors — and to most people at the College — in 1999-2000, Jim Wright ordered that 14.29% of all distributions be skimmed off for the use of the College’s general fund. The endowment performed so well in that period that the change passed unnoticed.

Come the financial crisis of 2008-2009, Kim & Co. furiously sought out places to save money or increase income. Of course, trimming the bloated staff was off limits (John Rawls oblige), so Kim chose to cut bone rather than fat: tuition jumped up; financial aid was reduced; games were played in the admissions office (more legacies, early admits, and private school kids) and the levy, finally, was bumped up from 14.29% to 19.1%.

The Levy Growth.jpg

In real terms, according to Kim himself, approximately $2 million dollars was stripped from the College’s academic and research efforts in favor of the central operating budget.

Given that the endowment soared by 19.7% last year, and as the capital campaign gears up, Phil should put his house in order: the College’s academic areas should be given back their money — drop the levy back to its pre-1999 level of 0% — and donors should be told that their entire gifts will go directly to the education of students, and not to the ravenous bureaucracy. That’s the fair thing to do, and it will help everyone except the bloated staff. How about it?

Addendum: In a review of the share of returns taken from targeted gifts by the central administrations of other schools, Inside Higher Ed could not find any schools that skimmed off a figure as high as Dartmouth’s 19.1%.

I’m no hiking fool, but I can happily walk for hours through the plain and brush of 11,000-acre Ndarakwai Ranch in northern Tanzania with Nkarsis and Risiki, two elephants whom the owners saved as one-year-olds after the rest of their herd had been killed. The girls (they are sixteen and seven now; they won’t be full-grown until age 20) forage and stroll, pause to chat with each other, and occasionally come over to visit their human friends. They extend their trunks, and one is expected as a sign of greeting to blow into the outstretched nostrils.

A particular interaction is hard to properly describe — the language of spirituality has been so debased — but when one stands closeby to either Nkarsis or Risiki and inclines forward, and human forehead and the fleshy part of an elephant’s face just above the tusk come into mutually agreed contact, and stay there for thirty still and silent seconds, it is hard not to believe in the kinship of living things.

Nkarsis Hillside.jpg

Addendum: The slaughter of Africa’s elephants proceeds apace. A decade ago, herds as large as 200 elephants migrated down from Kenya to Ndarakwi. Today a large grouping would be thirty animals. Overall populations have dropped by as much as 90% in some African nations over the past decade as China’s demand for illegal ivory drives a massive, corrupting trade (China leads the way, followed now by the U.S. market). The Times notes that, “More than 100,000 elephants were killed for ivory since 2010, according to a 2014 Colorado State University report.”

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Last year the Times asked a number of authors, “What can literature tell us about love?” Here is the sweet answer penned by Columbia English Professor Colm Toibin:

I don’t read fiction or poetry to learn; nonetheless, it often happens as though by implication. Teaching us is one of literature’s afterthoughts; it is fiction’s bored sigh. Thus I have learned, or half-learned, that love is often just one way of putting something much more complex, and that, in turn, language is revenge on easy or false or lazy feeling. Often in fiction, people make choices in love that are very foolish; the drama comes from this. But there are times when words don’t matter, and books even less, and these are maybe the best times, such as when you turn in the night and find that someone you — what is the word? — love? desire? feel warm with? turns with you by a mixture of pure magic and sweet will, and then you both fall into a lovely literatureless sleep.

EVP Rick Mills’ Town Meeting on Wednesday — with “special guest” Provost Carolyn Dever — was a pleasure to listen in on. Gone are the Wright/Kim/Folt dissemblings, the we-can-do-no-wrong lies about the state of the College and the supposed achievements of the administration. What you hear are two people who are, as the French say, “comfortable in their skin” and ready to work for a good many years to improve Dartmouth. They laugh easily and sincerely, and they seem happy to work with each other.

Mills began the discussion with stories about administration projects gone wrong, but with a twist: the administrators involved saw the errors and admitted them quickly so that immediate action could be taken, rather then covering up bad choices that would later need to be fixed a great cost. These stories have a message: Mills is trying to show that honesty and risk are not just tolerated, but encouraged, at Phil Hanlon’s Dartmouth.

Mills Dever Co;p.jpg

Provost Dever is still getting on her feet, and she is excited about the intellectual liveliness that she hopes to see from the soon-to-arrive post-docs. The sub-text to the post-doc story is that the College is burdened with a great many sub-par faculty members (some people estimate about a quarter of the faculty is in this category), professors who received tenure for political reasons from Jim Wright. They aren’t about to be poached by other schools; they’ll be in Hanover for decades. Post-docs are Phil’s compensation for their dead weight.

Regrettably Dever seems somewhat besotted by diversity. Yawn. May I suggest that she spend at least as much time talking about excellence as she does about having a faculty that is hired based on present-at-birth characteristics. Finding faculty of color, etc. is a challenge that all schools are facing; rather than reaching down into the third or four tier of scholars to meet some type of quota, the good Provost should assure us that she will look first for quality, and then hire diverse faculty members if she can find them in the pool of top-notch teachers and scholars.

One last note: only about 50-55 people attended the Town Hall meeting. That’s a sparse turnout given that the College community has been offered the chance to ask questions of Dartmouth’s senior-most administrators (other that Phil). Mills and Dever would be happy to field tougher questions. Don’t miss the next meeting, which will be held on April 15.

Addendum: Dartmouth Now has a report on Rick Mills’ Town Meeting.

The Valley News is reporting that Andrew Lohse ‘12 will be back at the College as a student this spring term. He read from his book, Confessions of an Ivy League Frat Boy: A Memoir, yesterday in Hanover at Left Bank Books:

Lohse is Back Comp.jpg

Lohse’s book (which I reviewed here) followed on his initial report on hazing in Dartblog, a piece in The D the next day, and then a subsequent feature in Rolling Stone.

Other than to ask where do undergraduates learn this stuff?

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Addendum: “Survive this place”?

Let’s take a brief break from our intense focus on Moving Dartmouth Forward, and turn our attention to the possibility of a global pandemic that could kill hundreds of millions of people. This presentation tomorrow could be of interest:

Ebola Panel.jpg

African countries are responding differently to the concern that Ebola might spread to their shores. Ethiopia (which, uh, does not have any shores) screens all incoming passengers, including those from Paris, for an elevated body temperature. When we changed planes at Addis Ababa airport on February 3, a technician was using a hand-held, laser temperature reader (left); upon our return from Tanzania on February 9, heavier-duty hardware was in place (right):

Ebola Screen Comp.jpg

Tanzania is less focused on the problem:

Ebola Tanzania.jpg

Addendum: The NYT ran an editorial yesterday on Ebola. The piece summarized the disease’s current run:

As of Feb. 6, Ebola had infected more than 22,000 people and killed more than 9,000 of them, mostly in the three West African nations of Guinea, Liberia and Sierra Leone, with a smattering of cases in other countries. The number of new cases of Ebola had been falling steadily in those three countries but recently ticked back up for the first time this year in all three, according to the W.H.O.’s latest weekly report. There were 124 new confirmed cases, up from 99 the week before.

That could be a momentary statistical aberration or a harbinger of worse to come as the rainy season makes it increasingly difficult to reach remote areas where the virus may still be lurking.

Addendum: When we were in South Africa and Mozambique in October, we saw no screening at all.

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