Old Yale New Yale

Edwin S. Rockefeller (“but not one of those”) began his education in a one-room Quaker schoolhouse then went to Yale where he was in the class of 1948 with George H. W. Bush. He went on to Yale Law School then became an antitrust lawyer. Unless he was unusually precocious, he is about 90 and, in 2015, he published a book called “Yale and the Ivy League Cartel: How a College Lost its Soul and Became a Hedge Fund.”

A few weeks ago I went to see him speak and stayed to have lunch with him. I just finished reading his book, which begins with a note of appreciation to Herman J. Lippke and William Brinkerhoff Jackson, “who provided the money and made possible my college education.” Definitely not one of those Rockefellers.

This Mr. Rockefeller is not very happy with Yale’s current direction, and both his book and his talk happened before the recent firestorm about safe spaces and free speech. One can but imagine a sequel.

Yale is a Brand

Yale is a valuable brand at least in part because it is associated with wealth, power and membership in an elite cadré of graduates including five U.S. Presidents, 19 Supreme Court Justices, 13 living billionaires, 52 Nobel Prize winners and 230 Rhodes Scholars to say nothing of John Kerry and Hillary Clinton.

Telling almost 94% of applicants they are not good enough to go there enhances the value of the brand. Never mind that drumming up extra applicants and counting even those who take barely any steps to apply fattens up the denominator of the acceptance rate fraction. Yale is only for the very best, and most years it raises the price to prove it. After all, if you only sell your product – the branded Yale diploma accompanied by the permanent resumé line – to 6% of potential buyers, price-cutting is low on the list of suggested business strategies. And, if the diploma does not suffice, Mom can always slap the bulldog sticker on the back of her SUV to one-up the other players in her tennis group.

This might be a good moment to put to rest the legitimate accusation of being a Harvard guy who just wants to pick on Yale. Harvard does all of the same things of which Mr. Rockefeller disapproves and, as we will see later, a Harvard President had a significant role in what appears to be a favorable but unfortunate policy decision. Yale is the subject of this book but any number of other SUV sticker colleges could just as well have been.

Old Yale New Yale

If you are circling 90, chances are you might not think much of Yale’s current direction. On the other hand, the opinions of 90-somethings rank low on the list of undergraduate concerns especially when they say, “sex without constraint was welcomed on campus.”

Interestingly, Elihu Yale, whose donation bought him the naming rights, made a fortune with the British East India Company, which was not exactly a paragon of virtue in the treatment of the downtrodden. It might create a spot of bother for the Yale brand burnishers if the new Puritans on campus decide that Elihu has to go the way of Woodrow Wilson at Princeton.

Whitney Griswold (Yale President 1950-1963) and Kingman Brewster (1964-1977) draw special fire for doing more to dismantle the Old Yale than anyone by “replacing values with academic freedom and religion/capitalism with an omnipotent caring government.”

But Rockefeller is not alone in his concern. Lee Bass (Yale ’79) gave $20 million to Yale for a Western Civilization curriculum. According to The Wall Street Journal, “Between 1991 and 1995, Mr. Bass repeatedly sought assurance that his money wouldn’t be dumped into multicultural education. He kept asking the university president, Richard Levin, when the program will materialize. When it became clear that the liberal faculty’s objections to Mr. Bass’s gift had won the day, he asked for his money back.”

Benno Schmidt, Yale’s President when the gift was solicited, later told The Wall Street Journal, “The greatest threat to academic freedom today is not outside the academy, but from within. … The assumption seems to be that the purpose of education is to induce correct opinion rather than to search for wisdom and to liberate the mind.”

Though the author began his book with the Old Yale New Yale discussion; he barely mentioned it in his talk and we should follow his lead to get to the more important points.

Financial Aid

What a lofty idea. It suggests that actual money contributed by donors is given to needy students to permit them obtain an education. Does it make a difference to your feeling – or more importantly to your generosity (if you happen to be an alum) – to know that no actual money changes hands? Financial aid, a.k.a. a scholarship, is in fact nothing but a discount offered to desired students whose families can’t afford the artificially inflated sticker price charged to wealthier ones.

The whole point of a brand is to make people pay far more for a product or service than it costs make or provide it. If the brand is working well enough that 16 people want each available place, how much relationship do you think there is between to sticker price and the cost of providing the service? If you failed to answer “none” to that question you are more likely one of the 16 who did not get in to Yale than the one who did.

But surely competition with other colleges limits the ability any one college to raise prices endlessly?

Not so fast. And this is where Edwin Rockefeller’s book becomes really important.

The Cartel

As with so much that is wrong with today’s higher education, we begin with sports. In 1852, Harvard and Yale competed in a boat race and, in 1875, they followed with a football game. Ivy league competition began after World War II.

“An athletic league to preserve sports competition between real college students rather than school-sponsored professional athletes provided a foundation on which to form a tuition price-fixing cartel. From agreement not to compete on price for athletes it was an easy step to agreements on prohibition of price competition for ANY (sic) student. The result is a cartel that prevents price competition and denies to students any opportunity to choose between the schools in the league on the basis of price.”

By 1958 it became clear that some students whom these colleges wished to admit could not afford to attend. If they were unable to afford the sticker price, they could be offered a discount so long as the practice did not get out of control.

Enter the Ivy Overlap Group consisting of the eight Ivy colleges plus MIT. Stanford was also invited to join as it was thought to compete for the same students, but to its credit, Stanford declined thinking the arrangement a violation of the antitrust laws.

The purpose of the Overlap Group was to compare the discounts (scholarships) offered to students admitted to multiple group member colleges to assure that none was out of line with the others. Sticker price fixed. Discount fixed. Bye bye price competition.

Enter the Justice Department

In 1989, during the administration of George Bush (Yale ’48), Attorney General Dick Thornburgh (Yale ’54) looked into the Ivy Overlap Group and concluded that its practices, especially the periodic meetings at which discounts were negotiated, violated the federal antitrust laws.

Negotiations carried on for several years highlighted by Harvard President, Derek Bok, a professor of antitrust law, telling the Attorney General that Bok knew more about both antitrust law and higher education than did the AG. True or maybe apocryphal, the exchange certainly enhances the Harvard arrogance brand.

Unsurprisingly, the negotiations were fruitless and the Department of Justice filed suit. Chief Judge Louis Charles Bechtle found for the Department of Justice and held that the Ivy Overlap Group was in violation of the antitrust laws. The decision was appealed by MIT after the others gave up, but the appeal was rejected 2-1 by the Court of Appeals. There was no appeal to the Supreme Court.

Exit the Justice Department

Should you ever reincarnate as a really long-term institution, for example, a religion or a college, remember the advice of Kenny Rogers: “know when to hold ‘em, know when to fold ‘em.” The colleges waited out the Bush administration — populated as it was with Old Yale values — in hopes the incoming Clinton administration — populated as it would turn out to be by those who might be a bit more New Yale — would prove to be more … understanding.

It was a wise strategy as the DOJ under Clinton settled with the colleges by saying (more or less) “well done boys keep up the good work.” True, the meetings to fix the discounts could no longer happen but they became unnecessary after the federal government took over the management of financial aid forms.

Rockefeller concludes his book with the words, “There is no life left in Derek Bok’s claim that Yale is not engaged in trade or commerce subject to the Sherman Act. The devious action of the Clinton administration of quietly washing out the success of the first Bush administration attacking it should be reversed.”

The Impact

According to Vance H. Fried of Oklahoma State University, “Undergraduate education is a highly profitable business for nonprofit colleges and universities. They do not show profits on their books, but instead take their profits in the form of spending on some combination of research, graduate education, low-demand majors, low faculty teaching loads, excess compensation, and featherbedding. The industry’s high profits come at the expense of students and taxpayers.”

Worse, some of America’s most prestigious colleges have successfully raised the price bar for all of the others. True, Professor Fried’s Oklahoma State might not get away with the same sticker price as Yale, but it can use the same model to inflate the price from what it was before.

Meanwhile total student debt is now more than $1.2 trillion as President Obama renewed the federal law that permits the settlement to continue. Yet the wife of the President who worsened the situation vies with her socialist opponent to outdo each other in calling for free college.

Sounds like Mr. Rockefeller’s Old Yale approach to solving this problem might have been better than Mr. Clinton’s New Yale approach.

Two End Notes

One: If you are circling 70 and fumbling around with writing, there is a well-deserved place on a pedestal for Edwin Rockefeller who is writing informatively and successfully at age 90. Thanks for the inspiration. If he does write a sequel, order an advance copy. Thanks as well to Herman J. Lippke and William Brinkerhoff Jackson, who provided the money and made possible Rockefeller’s college education. They made a wise investment.

Two: Today I saw a full-page ad in Harvard Magazine. It depicts the statue of John Harvard under the headline, “Earn Double Points on Every Gift to Harvard.” The ad continues, “Now you can earn double points on any gift you make to Harvard University with your Harvard Alumni World MasterCard. Take advantage of the only card designed exclusively for Harvard Alumni, featuring no foreign transaction fees, no annual fees and exceptional travel rewards. For more information or to apply for your Harvard Alumni Card, please go to harvardcard.com.”

I am far too Old Yale for that.

12 Responses to “Old Yale New Yale”

Gaetano Cipriano, January 02, 2016 at 5:34 pm said:

A wonderful essay, Haven. It is accurate ,and enlightening . Where does all this high- minded admissions gobbledygook leave the other 96% who are rejected by Yale? Well actually they are doing ok. They go to well- respected schools in the NESCAC, Patriot , or Centennial Leagues . They get their first jobs , and after the first week at work nobody cares where they went to school. Then when they apply to grad school their work experience and test scores carry more weight than their undergrad GPA, so that matters less and less. Then they join clubs, get married , build careers , and their undergraduate diploma is quickly eclipsed by what they do in real life. So the parents get to brag for a while at Greenwich and Short Hills parties , but two years later , it doesn’t mean a thing . The smart , driven , hungry kid who goes to Drexel , Lehigh or Bowdoin will be turbocharged in his/her career , and the little snotty Yale girl who was filmed screaming and cursing about her “safe space” will be a loser in life. So all in all, Yale is succeeding at a great con game, but in real life, all its diploma will do is get a kid his first interview, maybe.

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Haven Pell, January 04, 2016 at 6:46 pm said:

There are people spending many hours at high rates of pay trying to keep people from knowing what you have just said.

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George Packard, January 02, 2016 at 5:37 pm said:

You might also note that Ed Rockefeller earned his Master’s Degree at the Johns Hopkins School of Advanced International Studies, of which I was Dean at the time. George Packard

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Haven Pell, January 04, 2016 at 6:47 pm said:

I had no idea, but now the world knows. Well, a tiny part of the world

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ctm, January 02, 2016 at 10:31 pm said:

Humility 101:
I have it from good authority that what’s more important than any Ivy League degree is to have played a team sport at any Division One School.

ctm

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Haven Pell, January 04, 2016 at 6:49 pm said:

Interestingly as work requirements turn more toward team building and cooperative efforts, the D 1 team sport is best played by a woman.

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SellersMcKee, January 02, 2016 at 11:40 pm said:

Excellent essay Haven. I cringe every time I think about what Harvard has become. Even if I could afford it, I would not send my child or grandchild there today, not that many of the other colleges are any better. I do like what I hear from Hillsdale, though. It appears as though they have not lost touch with reality.
Meanwhile, there seems to be an unending stream of disturbing news coming out of Harvard. The two top ones, in my opinion, were 1) a female editor of the Crimson declaring that Progressives have won the political debate, and therefore opposing opinions should be banned from the paper or disparaged, if published, and 2) Law School students being exempted from exams because of some “horrifying” incident, which, if memory serves, was the shooting of Michael Brown, later proved to be 100% justified. These weaklings are actually going to hold down jobs in the legal system?
Who are these people and how do they get into an institution like Harvard? Is it possible to be smart enough to get into the Ivy League and stupid enough not to know you are being brainwashed by the Progressive agenda of the faculty and Administration? Clearly it is.
Before reading your essay, and despite indications to the contrary, I did not really believe that personal greed played a part in how colleges are being administered today. How stupid am I, huh?
Should we be rooting for Ted Cruz?
Sellers
PS: Donald Trump sat in the pew behind me during Midnight Mass at Bethesba by the Sea on Christmas Eve. Did not know what to expect, but it seems he is very popular with Palm Beachers. Go figure…

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Haven Pell, January 04, 2016 at 6:53 pm said:

Thanks for the thoughtful comment, Sellers. Elite colleges are businesses that provide careers and, of course embedded bureaucracies that care a great deal about self preservation. Like politics, universities are businesses and the insiders are often better served to keep them just as they are.

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Barrett Seaman, January 03, 2016 at 6:11 pm said:

I thought I’d posted this before, but I don’t see it, so I will try again:

You have identified the higher ed version of The Big Short, Haven. As faculty, which essentially run these institutions, flood the curricula with courses that reflect their own scholarly interests–and not the basic necessities of a college education, the “best” schools in the country are losing sight of what a Bachelor of Arts degree is supposed to represent: demonstrated competency across a range of disciplines that provide the tools with which their holders are expected to tackle life’s challenges. The whole business of “safe spaces,” “micro-aggressions” and the suppression of free speech that they represent only furthers the erosion. The only real value left will be the achievement of having been accepted in the first place.

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Haven Pell, January 04, 2016 at 6:55 pm said:

Barry, Thank you for the comment, especially from a long-term college trustee and published author on the topic.

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Dale Jenkins, January 04, 2016 at 10:51 am said:

The following is a copy of a letter sent on December 28 to the head of the Harvard Corporation.

DALE A. JENKINS
2 Beekman Place
New York, NY 10022

December 28, 2015

Mr. William F. Lee
Senior Fellow
The President and Fellows of Harvard College
(Harvard Corporation)
c/o WilmerHale
60 State St.
Boston, MA 02109

Dear Mr. Lee:

Recently the Harvard administration announced that the title of Housemaster of the Harvard houses would be changed because certain students have asserted that the title has connotations of slavery. This is a deplorable development. The title of Housemaster goes back centuries to English universities who accorded the title to faculty members who assumed the role of tutors or mentors to students. The English word “master” is derived from the Latin magister, which means teacher.

Dating from the construction of the Houses in the 1930s, the Harvard administration wisely provided for a senior faculty member with his family to reside in each House as the Housemaster. As persons of fine character assumed these positions the role grew to become one of mentor, teacher, counselor, intellectual leader, loco parentis and humanist. Housemaster, or Master of a Harvard house, has nothing to do with slavery. Further, to change this title is a symbolic rejection of the long and distinguished line of faculty members who served the University in this role and benefitted thousands of graduates. A few just from my era were Charles H. Taylor, John H. Finley, Jr., and Gordon Fair. Others continued this great tradition over many decades up to the present.

This incident is yet another example of a radical minority’s attempt to control the use of words, and to unjustifiably deny the legitimate use of particular words by others. It is an infringement on the University’s right of freedom of expression, particularly the use of appropriate and time-honored titles for faculty members who assume leadership positions in the Harvard houses. In addition, it is a rejection of the experiences of thousands of Harvard graduates, the vast majority of whom prospered under the House system, which included the Housemaster, and its connection to the traditions of great universities even older than Harvard. Just because the same word is used in a completely different context should not affect the validity or appropriateness for its use in the Harvard houses. It is really just a play for power under the guise of sensitivity to the emotions of others.

This rude and exaggerated pretense of emotional injury, combined with the threat of hostility, has cowed the Harvard administration – president, deans, and current housemasters – into a pitiful surrender to the wishes of this radical group. There is no indication that this power play reflects the views of more than a small but threatening core group of agitators. Moreover, this and other demands using similar tactics will have the effect of separating, not uniting, the student body.

This weak surrender stands in sharp contrast to the valiant actions taken by Harvard President Nathan Pusey during the communist witch-hunting period in the early 1950s. Tenured professors at major universities had been dismissed for even purported membership in the Communist party. Demands were made to dismiss physics Prof. Wendell Furry because of similar associations earlier in his life. Pusey, with the support of the Harvard Corporation, refused to dismiss Furry. Pusey upheld Furry’s constitutional right to refuse to answer questions about his previous associations. Despite withering attacks in 1953 from Sen. Joseph McCarthy against Furry and Harvard itself, Pusey prevailed. Furry continued on the faculty, made significant scientific contributions, and served as chairman of the physics department in the late 1960s. It was Pusey’s finest hour, and his actions were a victory for Harvard, for constitutional law, and for human decency.

It is important to note the sharp difference in the potency of the two protagonists against Harvard. The worst that probably can be expected from the student radicals, at least at this point, are vulgar emails and other communications, defaced University property and trespassing. The situation in the 1950’s was far more threatening. The entire nation, including senior members of the federal government, was aroused to a frenzy to persecute anyone with the faintest connection, even years earlier, with the Communist party. Some citizens went to jail for contempt of Congress by invoking their constitutional rights. The threat to the Harvard community and faculty members was far more deadly than anything faced now by student radicals. Yet Pusey stood firm.

However, make no mistake about the goals of the radicals. Victory on the elimination of “master” will lead to other demands. Faculty appointments are fair game, as well as heavier allocations of University resources to accommodate their individual preferences. Even the selection process for membership in the Board of Overseers or the Harvard Corporation could be targeted.

Referring back to the issues of slavery and possible goals of the radicals, slave economies were the norm in many parts of the world until comparatively recent times. It would be logical for the radicals who are focused on slavery at any place or time to target representations of leaders of such civilizations. For example, we could expect demonstrations at museums where statues of Greek city-state leaders and Roman emperors, senators, generals, and philosophers are displayed – persons who invariably were slave owners.

Our sister universities have already made panicked misjudgments regarding constitutional rights of free speech and decent behavior. Princeton has substituted “head” for master. Standby for cartoons of Navy toilet facilities, as well as references to various parts of human anatomy. Using CEO will bring forth associations with the worst forms of corporate greed and squash any sense of humanism. Yale, in a child-like abdication of its responsibilities and previous standards, has arranged for the “resignation” of instructor Erika Christakis. She dared to send an email merely asking about sensitivities to Halloween costumes that the radicals considered emotionally damaging.

The official site of the University states that the Harvard Corporation is responsible for assuring that Harvard remains true to its mission. Presumably this includes upholding the laws of the United States, including those set forth in the Constitution, with respect to Harvard students. Student groups are not separate societies with different standards than the rest of our culture. Students at Harvard are not entitled to an exemption from the law just because they are students. Illegal actions to prevent the Harvard administration from exercising its responsibilities and rights of free expression invite chaos unless countered effectively.

The possibility exists that some students will extort other students, faculty members or administration officials, deface or destroy property or trespass onto University officials’ offices. Students should understand that there is no place for them at Harvard if they commit illegal or criminal acts. Hiding in a crowd will not diffuse their responsibility to respect the law and the rights of others.

In the McCarthy witch-hunting era it was Boston lawyer Joseph Welch who was sufficiently talented and courageous to take on McCarthy. His efforts during the Army-McCarthy hearings of 1954 followed those of Pusey and Harvard, and McCarthy was brought down.

Harvard needs to state plainly and simply that the title of Housemaster, after due consideration, will not be changed. Harvard, still recognized as a leader in higher education, is positioned to stake out a lawful and principled position about freedom of expression that also could inspire other institutions of higher education across the country. However, to accomplish this Harvard needs someone with the emotional strength and intellectual power, as Pusey and Welch exhibited in the 1950s, to insure that Harvard remains true to its mission in the face of powerful opposition.

Will that person please stand up?

Very sincerely,

CC: Harvard Corporation Members
Selected Alumni

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Haven Pell, January 04, 2016 at 6:56 pm said:

Dale, please share any reply you get from Harvard. Fellow libertyPell readers, don’t hold your breath waiting.

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