Ivory Towers of Debt
Javier Arbona has a new piece up called "The Sorrows of Finance Capital," in which he asks how it is that a university system in crisis can afford to build snazzy new buildings with vertiginously high budgets.
This is something that has bugged me a great deal lately. The credit crash has led to budget-tightening in universities, but the college building boom just keeps going. Whether it's at SFSU—which as Javier points out, can't afford an urban studies major anymore but can afford neomodernist digs—or at the University of Limerick, which during my at last visit a couple of weeks ago was sprouting more cranes than ever—it's been a striking feature of the Great Recession.
As Javier points out, although the university brags that the building is funded by a $10 million gift, some $258 million (!) will have to come from construction funding. Now all this is—no surprise, alas—something that the press has chosen not to report on, and even seems to find hard to comprehend, as a series of Twitter exchanges between a newspaper critic and Javier on the above site demonstrates.
Universities have let a Wall Street mentality infect them. As a recent report by the Tellus Institute concludes, colleges and universities not only embraced risky investment strategies with their endowments, they continue to gamble with their money even after the 2008 crash. Tellus concludes that these universities "have been as much contributors to the financial crisis as they were victims of it."
Part of the problem is that, as Karen Ho points out in Liquidated: An Ethnography of Wall Street, investment banks operate on ever-smaller time horizons. Lasting value is scoffed at in favor of immediate profits that can drive annual bonuses. With university boards populated not by faculty and researchers but by "leaders" in business, universities look at their endowments not so much in terms of sustainability and social responsiblity but rather as investments from which to wring maximum profits.
No wonder, then that university presidents are enamored with flashy construction projects which are much easier to justify to boards than equitably-paid faculty or low tuition for students (indeed, both of these are at odds with the sort of mentality that Ho observes on Wall Street: employees are always disposable and any university that keeps tuition down must be failing to charge apporpriately for its services).* After a few years at a university, the building-enamored president moves on to bigger and better digs, leaving faculty to struggle to get grants to fill buildings that shouldn't have been built in the first place.
As a byproduct, universities issue bonds and, so long as endownments keep flowing in, can service them. It's a giant ponzi scheme with little of value for students and, as Harper's described in a notorious graphic about the consequeneces of overbuilding in Brandeis (Brandeis has threatened a lawsuit and has accused Harper's of slander and libel over this piece), can collapse precipitously during times of economic crisis. But while bonds were hot, Wall Street couldn't have enough of them, so universities eagerly complied.
With regard to Javier's exchange with the critic, there's been a lot of chatter lately about the effect of the Internet on the field and I suppose that for whatever reason, I'm going to have to add to that chatter on Tuesday at "Critical Futures" an event at Storefront. In anticipation of that event, I'll conclude by observing that when design critics are unable to confront kind of issues that Javier raised in his piece, then we should be asking just what merit the field has in the first place, unless its merely cheerleading for the next building boom.
* At one institution that I once worked at, the director told the staff one year that cost of living increases were not possible due to poor finances. After delivering the news to the board that he had held staff salaries down, the chairman—a local businessman—moved to raise the director's salary.