So long as you steal enough. Not only does it pay, but if you reach the top of the profession, you don’t even have to worry about going to jail and, if you contribute money to NYU, you get an award.
But, I am beginning at the end, which means I’m forgetting the White King’s advice.
The immediate impetus for this rant is this piece at Wall Street on Parade, in which we learn that NYU is about to (or by now already has) honored John Paulson by giving him the Albert Gallatin Medal for Outstanding Contributions to Society. He appears to have earned this honor by giving a small percentage of his ill gotten gains to NYU, on whose Board of Directors he also sits. Beyond that it is not at all clear how society has benefited by dint of his existence.
Paulson is the guy, you may remember, who arranged with Goldman Sachs to have Goldman sell an investment vehicle to unwary investors, which investment vehicle was designed to fail. Paulson made a big bet against it, and made a billion dollars. He gave 5% of that to NYU and, for that, he was awarded the prize named after Thomas Jefferson’s Treasury Secretary, who was himself quite an estimable man, who can’t be blamed for the fact that the University he helped found has now become a prime example of the New Way in academia: large salaries for a few administrators, out of sight tuition for the students, and paltry pay for the “contract teachers” and adjuncts, most of whom make less in a year than a single student pays in tuition. As a comparison, in my student days, a professor surely made at least 10 times the full cost of a year’s room and board. Not exactly a recipe for academic excellence, but who cares about that?
What’s really funny is the way in which NYU describes Paulson’s criminal conduct:
In July 2010, Goldman Sachs settled with the SEC for a payment of $550 million. Fabrice Tourre was subjected to a jury trial and ordered to pay more than $825,000 in gains and penalties. John Paulson and his hedge fund skated and kept their profits.
This is when the power brokers at NYU seem to have taken their first interest in remarketing the villainous reputation of John Paulson into that of visionary businessman. The 2010 Spring/Summer issue of the Alumni Magazine of the Stern School of Business carried a glowing tribute to Paulson, noting that he had made a $20 million gift to the school. There is no mention of Abacus or shorting an investment designed to fail. Instead, the article tells alumni readers that “during the recent subprime mortgage crisis, Paulson developed a contrarian strategy that included shorting mortgage-backed securities. It turned into one of the greatest trades in Wall Street history.” (Emphasis added)
Actually, the description is perfectly accurate. After all, isn’t all criminal activity just a “contrarian strategy”? At the very least we should do as Dean Baker suggests, and relieve these institutions of their tax exempt status unless they limit excessive compensation. At the same time we should make public universities free, so these “not so non-profit” institutions would have to compete. But back to Paulson, and to paraphrase Mel Brooks, “it’s good to be a crook”.
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