Wealth and Want Part 1: Multi-Billion Dollar Endowments

US higher education reflects and reinforces a world of increasing inequality, injustice, and inhumanity. This system (or some would call it an industry) should function as a conduit between good K-12 education, good jobs, and the wellness of all its citizens, whether they attend or not. But increasingly, it does not. 

The first installments of the Wealth and Want series examine the concentration of wealth in the US higher education system.  And this article focuses on loosely regulated university endowments. While many American schools struggle to provide basic amenities and academic resources, elite universities boast endowments that rival the GDPs of small nations. And they pay little in taxes. 

The Endowment Elite and Ill-Gotten Gains

At the pinnacle of higher education wealth are Harvard ($49B), The University of Texas System ($44B), Yale ($40B), Stanford ($36B), and Princeton ($34B). These institutions have amassed endowments that provide a steady stream of income for investments, scholarships, and research initiatives. How their money is invested is rarely known.  

Endowment managers at elite schools typically make more than a million dollars a year. The most elite schools pay their managers $5M-$10M a year, with compensation largely based on returns. But those managers still get hefty salaries even when they lose money.

There are more than 120 schools with endowments greater than a billion dollars. But the 20 richest university endowments together hold more wealth than the other 5000 or so other higher education institutions combined. 

Elite endowments are often the result of centuries of fundraising, donations, and strategic (sometimes shady) investments. For many of the most prestigious schools, it began with land theft and generations of forced labor. 

For other wealthy schools, it was the result of philanthropic robber barons like Johns Hopkins (who also held captives), Andrew Carnegie, Leland Stanford, John D. Rockefeller, Cornelius Vanderbilt, and James Buchanan Duke who made their wealth through mass exploitation of people and the planet. 

For wealthy flagship state universities, it also came from land theft. In the case of the University of Texas, its wealth largely came from, and to some degree still comes from the exploitation of fossil fuels that jeopardize the planet.

Historical Context and Structural Inequality

• Land Theft and the Founding of Institutions: The establishment of many American universities, including Ivy League institutions and those founded under the Morrill Act, was often intertwined with land theft from Native American tribes. This practice, often referred to as "land dispossession" or "Indian removal," was a key component of Manifest Destiny and the expansion of European settlement across the continent.
• Ivy League Universities: Institutions like Harvard, Yale, and Columbia were granted land by colonial governments, which often acquired these lands through treaties that were coerced or violated. They also used enslaved labor to build and maintain their wealth.  
• Funding Models: The funding models for public higher education often favor larger, research-intensive universities. This can lead to underfunding for smaller, less prestigious institutions, particularly those serving marginalized communities.
• Endowment Inequality and Profits Over People and Planet: Endowments are a powerful tool for wealth accumulation and institutional advantage. The concentration of endowments in a few elite universities can exacerbate existing inequalities and create a self-perpetuating cycle of privilege.  These endowments have also engaged in shady investments that perpetuated worker oppression, genocide, and environmental destruction. 

Related links:

Pay and Chief Investment Officers: Good Money while It Lasts

Tax Wealthy Private Universities Now (Paul Prescod, Jacobin)

Socrates in Space: University of Austin as a Model of America's Ivory Tower Future

The University of Austin's inaugural class begins this September. While its founding has had some media attention, critical and uncritical, little is known about the school, other than its founders and some of the curriculum--and more recently about the school's constitution and austere, free market business model. We expect the public to receive information akin to propaganda from the new university while investigative reporters attempt to find what's really developing.  

Tomorrowland's Elite Model

The US has had three major growth periods in elite higher education with the founding of Christian-based Ivy League schools in the 17th and 18th centuries, the rise of more private colleges in the 19th century, and the evolution of state flagship universities in the 20th century, which altered their missions from teaching to focus more on research and medicine.

According to President Pano Kanelos, the University of Austin (UATX) is modeled after elite schools founded by the money of 19th century capitalists: Johns Hopkins University, the University of Chicago (John D. Rockefeller), and Stanford University. In its original plan, the school is seeking accreditation but not public funding. And without federal funding, the school is not required to be transparent on a number of issues, including finances, student demographics, and crime statistics. A limited amount of information will be available on the institution's IRS 990 forms.

UATX's leaders see the school as a model for elite education in the 21st century and beyond: socializing future elites in neo-classical western thought and the search of the truth as they know it: through the lens of US venture capitalists and US private equity. The school's donors include Palantir co-founder Joe Lonsdale who created the start up funds for UATX, real estate investor Harlan Crow, and global real estate investor Scott Malkin.  

Despite its calling for intellectual diversity, the University of Austin will serve as a safe space for conservative and libertarian youth, especially young men: blind to race, class, and gender, and friendly to those who may feel intimidated by progressive folks and the recent pro-Palestinian movement on elite campuses. UATX will be attuned to the needs of private capital and the promotion of their ventures and the ventures of their allies: from bitcoin, to artificial intelligence, to private space exploration. 

Command and Control

At the University of Austin, there will be no faculty senate and no faculty tenure. The initial faculty roster is composed of 19 men and 4 women--and appears to be disproportionately white. Staff and support roles will be done largely by artificial intelligence and workers in Guatemala.   

 

Artificial Intelligence will be used to reduce labor costs at the University of Austin. 

Prospective students will selected by the faculty and on merit, which includes standardized test scores. Those who matriculate will learn classical and neoclassical western philosophy (like Socrates and the Federalist Papers) and English Literature in combination with science and engineering, where all students will take the same coursework for the first two years, then become research fellows in the remaining two years, with each student involved in practically solving "a major political, social or economic problem...by the time they graduate."

Students will share apartments off campus where they will do their own cooking. There will be no amenities on campus or campus police, but local gyms and local police will be in the area. Aside from the Austin Union, the student body is expected to start their own clubs and activities. The physical library is a small room with a few bookshelves, and the librarian has additional duties. Civil debate is encouraged, but campus protests will be limited--it is said, to protect the rights of all students. 

The founding 2024 class is expected to enroll 100 students, growing to 200 students in 2025 and 1,000 students in 2028, reaching a peak of 4,000, and with a new campus. After the founding class, which will receive free tuition for four years, tuition is expected to be about $32,500 per year, with a number of students receiving scholarships.

Related links:

The Constitution of Academic Liberty (Niall Ferguson, National Affairs)

Can the New University of Austin Revive the Culture of Inquiry in Higher Education? (Joanne Jacobs, Education Next)

An American Education: Notes from UATX (Noah Rawlings, The New Inquiry)

Austin’s Anti-Woke University Is Living in Dreamland (Morgan O'Hanlon)

The Future of Publicly-Funded University Hospitals (Dahn Shaulis and Glen McGhee)

A People's History of Higher Education in the US?

Dangerous Spaces: Sexual Assault and Other Forms of Violence On and Off Campus