Map of life expectancy at birth from Global Education Project.

Friday, January 30, 2009

Hard Times All Over

Brandeis University, which bestowed a degree upon me, may be on the verge of making an even bigger mistake. Colleges everywhere have seen their endowments hammered, and that is creating some real pain in academic programs and other areas. Brandeis has bigger problems tham most, however, in part because it is a relatively young institution that didn't have all that big of an endowment in the first place, but also because many of its major donors had entrusted their money to Bernie.

I don't know how much it's been in the news nationally, but around here it's a very big deal that the trustees, at the urging of president Jehuda Reinharz, voted to sell off the collection of the university's Rose Art Museum. They think it might be worth $300 million, which would more or less replace the lost funds, but as you can well imagine this is not sitting well with anyone. Meanwhile, the Carl and Ruth Shapiro Foundation, an important benefactor of many cultural, charitable and health care institutions in the Boston area, has cancelled all new grant making for the year because Bernie stole half of their endowment.

The Madoff victims are particularly poignant, and it is particularly obvious that they were robbed, however the truth is that we've all been robbed, mostly by people who aren't going to jail and who in fact are walking away with the loot. All of the gains in the financial markets for several years now have been illusory, the product of pretending that borrowed money was income -- in other words the whole thing was a giant Ponzi scheme. One of the saddest consequences of all this is that it will just increase inequality. It will make higher education harder to afford, it will cause tens of millions of people to lose their health care and quite possibly spiral down into disability and life long poverty, it will make poor kids poorer and send middle class families into poverty. The charitable institutions and state agencies that provide a safety net will be collapsing just as they are most needed.

President Obama has branded his legislation as an economic stimulus, but it's more than that. It's a two-minute drill to save our asses and give us a chance to play again next Sunday. It is really frosting my pumpkin that the punditocracy is saying the Democrats will be held accountable for "failure" if we don't have a strong recovery by 2010. Believe me, if we just manage to hang on to social decency through 2010, it will have been a success.


Anonymous said...

The amazing thing is the number of people invested with Bernie Madoff who actually realized exactly what they were part of. Hang out with a couple of professional hedge fund analysts on Wall Street and you'll quietly learn that a large percentage of his "victims" knew better.

Cervantes said...

Oh, I definitely believe that, I think it's clear -- but that applies more to the intermediaries who were collecting cut for rounding up suckers. At the far end there were many true victims, although I agree they were probably made foolish by greed and should have known better in many cases.