The Senate is sticking its nose where it doesn’t belong. (Is that news?) In recent years, endowments and tuition at colleges have risen. Lawmakers, concerned about this trend, want to mandate that universities spend 5% of their endowments every year, as foundations are required to do. The Senate would also mandate that colleges account to them for their expenditures as a condition of maintaining their tax-exempt status.
This is absolute nonsense. As for spending a set amount of an endowment every year: there are 3,000 colleges in the United States, and only about 100 or so of them have endowments that exceed $1 billion. So let’s not use Harvard as the guide for, say, Slippery Rock. Second, there is no way to increase an endowment if one is obligated to spend part of the principle every year. Under the Senate scheme, inflation will erode the value of an endowment until the colleges are equally ill-equipped to provide a world-class education. Is this the equality of the progressive movement – equality through poverty? As for accounting to the Senate: does anyone really believe that colleges are not spending their endowments in a manner consistent with their educational mission?
Finally: colleges are not foundations. They have very high fixed and capital costs. Their buildings do not need updating and replacing in neat intervals that cost the university 5% of its endowment every year. Many colleges went through building booms (when they had a lot of cash, a few donors with money to spend, or as needed). Those buildings will often need to be replaced or renovated at the same time, which requires irregular expenditures – years of little spending followed by years of high spending. Universities may want to save money for land acquisition, financing research projects, or the creation of new schools or programmes.
Law firms are getting warm and fuzzy. That’s great, except they are getting warm and fuzzy and paying their 25-year-old associates $160,000/year. The firms complain that their associates are leaving in droves. Now, this elephant is loath to complain about her generation, but really, people: you can’t earn a six-figure salary at age 25 when you have no marketable job skills and expect to see your family at night. If law firms are serious about reducing associate attrition, they would cut the salaries to make them commensurate with value added to the firm – low at first, with a sharp increase after several years.
The Nanny State in Massachusetts strikes again. A bill would forbid texting while driving, forbid the under-18 crowd from using a cell while driving, and would mandate that everyone else use a hands-free device. No word out on eating while driving, talking to the person next to you, giving a pacifier to your kid in the backseat as she throws soggy Cheerios at your head, fiddling with the iPod, or doing the crossword puzzle as you sit in traffic on 128. Attention, Massachusetts lawmakers: people will always find ways to distract themselves while driving.
Ford lost $2.75 billion in the fourth quarter. It’s total losses for 2007 are $2.7 billion. That works out to be about 1,200 Mustang deluxe convertibles per day in the fourth quarter. When spread out over a year, it’s still a Mustang every five minutes. Maybe Ford should just bite the bullet and do a promotion: test-drive a Ford, and be eligible for a Mustang-every-five-minutes drawing.