Changes
You may have noticed that our layout has drastically changed. Because we host on Blogger, and they're pushing a new layout design before they eliminate the old templates, we have been forced to upgrade. Not to worry, we'll have this blog looking spiffy before long.
Tuesday, January 08, 2008
An endowment update from the WSJ:
Yale University said it will increase the amount it spends annually from its endowment next school year by 37%, to $1.15 billion, to boost financial aid, expand scientific research and take on other initiatives.
...Charles Grassley, the senior Republican on the Senate Finance Committee, has been pushing to require schools to spend a minimum amount of their endowments each year. Foundations are required to spend 5%, while many universities fall below that threshold.
...Mr. Levin, while praising Sen. Grassley for bringing attention to the low spending rates of many universities, said he opposed any legislation requiring a minimum payout. "We think that's a matter best left in the hands of universities," Mr. Levin said.
Saturday, January 05, 2008
Yale and Financial Aid
The New York Times compares Yale's private spending to New Haven's public spending on infrastructure in today's business section. With a "major announcement" from the university planned this month about financial aid policy, the article puts Yale's endowment philosophy into clear focus: the endowment should be conservatively spent to protect Yale's future while investing in things that provide the greatest long-term benefit.
Harvard announced in December that contributions from households making $120-180,000 per year will be capped at 10% of income, reducing the tuition for a student at the top of the bracket to $18,000 per year -- almost half of the $35,000 Yale charges just for tuition (excluding room and board) for the 2007-2008 year.
As someone who would directly benefit from Harvard's new policy, my economically self-interested response is for Yale to change financial aid. I feel very strongly, however, that marginally increasing student quality, in a way that is likely to favor students who are academic hermits than the leadership-oriented student Yale has attracted for decades, is not the right thing to do. The endowment is not for the immediate gratification of four classes of Yale students out of the 310 classes in Yale's history; it is to guard against unanticipated hard times in Yale's future and provide for generations of Yalies to come.
To advocate liquidating the endowment to give out free educations to disadvantaged students is the height of selfishness. Furthermore, I've never really understood the reasoning behind it. Yalies go on to either high-paying jobs or high-satisfaction jobs. The way that financial aid is currently done artificially segregates Yale along class lines, a division that many current undergraduates have lamented. Upper-middle class students that have too much wealth to qualify for financial aid but are not wealthy enough to pay for tuition are stuck taking out huge student loans to finance their education, stuck majoring in fields that are likely to pay the most after graduation. I have yet to meet a Theater Studies major whose family makes $60-150 thousand per year.
What seems like a prudent policy is for Yale to finance low- or no-real interest loans to students, charging only the rate of inflation for interest. It avoids the loss that students make by venturing into the turbulent world of bank-financed student loans, while also ensuring that financial aid is not a free pass--it's a grant to encourage students to make the most of their educations. If financial aid is kept as-is, they should at least remove home equity and stock holdings from the parental contribution formulas. Those two things indicate parents responsibly saving for a retirement, not skirting their obligations to help pay for their son or daughter's tuition. The better indicator of a parent's wealth is cash flow, and removing equity and stock from the calculation gives a better picture of who needs financial aid.
The New York Times compares Yale's private spending to New Haven's public spending on infrastructure in today's business section. With a "major announcement" from the university planned this month about financial aid policy, the article puts Yale's endowment philosophy into clear focus: the endowment should be conservatively spent to protect Yale's future while investing in things that provide the greatest long-term benefit.
Harvard announced in December that contributions from households making $120-180,000 per year will be capped at 10% of income, reducing the tuition for a student at the top of the bracket to $18,000 per year -- almost half of the $35,000 Yale charges just for tuition (excluding room and board) for the 2007-2008 year.
As someone who would directly benefit from Harvard's new policy, my economically self-interested response is for Yale to change financial aid. I feel very strongly, however, that marginally increasing student quality, in a way that is likely to favor students who are academic hermits than the leadership-oriented student Yale has attracted for decades, is not the right thing to do. The endowment is not for the immediate gratification of four classes of Yale students out of the 310 classes in Yale's history; it is to guard against unanticipated hard times in Yale's future and provide for generations of Yalies to come.
To advocate liquidating the endowment to give out free educations to disadvantaged students is the height of selfishness. Furthermore, I've never really understood the reasoning behind it. Yalies go on to either high-paying jobs or high-satisfaction jobs. The way that financial aid is currently done artificially segregates Yale along class lines, a division that many current undergraduates have lamented. Upper-middle class students that have too much wealth to qualify for financial aid but are not wealthy enough to pay for tuition are stuck taking out huge student loans to finance their education, stuck majoring in fields that are likely to pay the most after graduation. I have yet to meet a Theater Studies major whose family makes $60-150 thousand per year.
What seems like a prudent policy is for Yale to finance low- or no-real interest loans to students, charging only the rate of inflation for interest. It avoids the loss that students make by venturing into the turbulent world of bank-financed student loans, while also ensuring that financial aid is not a free pass--it's a grant to encourage students to make the most of their educations. If financial aid is kept as-is, they should at least remove home equity and stock holdings from the parental contribution formulas. Those two things indicate parents responsibly saving for a retirement, not skirting their obligations to help pay for their son or daughter's tuition. The better indicator of a parent's wealth is cash flow, and removing equity and stock from the calculation gives a better picture of who needs financial aid.
Friday, January 04, 2008
Thursday, January 03, 2008
From Consumer Reports Online:
Good God! Is no plumbing safe from their madness?
An interesting question I once received from an occasionally libertarian friend of mine went something like, "Surely you can't oppose a ban on incandescent bulbs? No one actually prefers them, and the market's just being slow in getting rid of them." This kind of regulation is the answer to that question. When the government starts making day-to-day choices for people, things go wrong in two important ways.
First, rather than handling a problem like CO2 emissions with clear and flexible legislation, it builds a crude patchwork of temporary measures that make it impossible to gauge how much is really being done and distract from any effective solution. If the Congress ever decided to fine tune its environmental intervention, it would be faced with the task of systematically strengthening or weakening each of these small provisions.
Second, no matter how smart you are, there will be plenty of people who actually prefer the other option. With these toilet and washing machine laws, the opposition is just about everyone affected, but even with something as obviously obsolete as an incandescent bulb I have friends who really prefer them or need them for specialty applications. If these people are willing to pay extra for their emissions, why would we want to deny them the opportunity?
There are plenty of areas where most libertarians will admit that government regulation is necessary. Be it carbon tax or cap-and-trade, something has to be in place to stop people from hurting each other through the environment. But the answer will not look like Washington living people's lives for them. Put the overarching incentives in place, and let individuals decide where best to make their changes.
Not so long ago you could count on most washers to get your clothes very clean. Not anymore. Our latest tests found huge performance differences among machines. Some left our stain-soaked swatches nearly as dirty as they were before washing. For best results, you’ll have to spend $900 or more.
What happened? As of January, the U.S. Department of Energy has required washers to use 21 percent less energy, a goal we wholeheartedly support. But our tests have found that traditional top-loaders, those with the familiar center-post agitators, are having a tough time wringing out those savings without sacrificing cleaning ability, the main reason you buy a washer.
Good God! Is no plumbing safe from their madness?
An interesting question I once received from an occasionally libertarian friend of mine went something like, "Surely you can't oppose a ban on incandescent bulbs? No one actually prefers them, and the market's just being slow in getting rid of them." This kind of regulation is the answer to that question. When the government starts making day-to-day choices for people, things go wrong in two important ways.
First, rather than handling a problem like CO2 emissions with clear and flexible legislation, it builds a crude patchwork of temporary measures that make it impossible to gauge how much is really being done and distract from any effective solution. If the Congress ever decided to fine tune its environmental intervention, it would be faced with the task of systematically strengthening or weakening each of these small provisions.
Second, no matter how smart you are, there will be plenty of people who actually prefer the other option. With these toilet and washing machine laws, the opposition is just about everyone affected, but even with something as obviously obsolete as an incandescent bulb I have friends who really prefer them or need them for specialty applications. If these people are willing to pay extra for their emissions, why would we want to deny them the opportunity?
There are plenty of areas where most libertarians will admit that government regulation is necessary. Be it carbon tax or cap-and-trade, something has to be in place to stop people from hurting each other through the environment. But the answer will not look like Washington living people's lives for them. Put the overarching incentives in place, and let individuals decide where best to make their changes.
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