An absorbing interview with Michael Hudson:
At the same time, you’ve had an increasing financialization of the organization of the schools. University presidents, their cronies and middle management with no-show jobs have proliferated. The top administrators, people like the new Treasury secretary, Jacob J. Lew, was at NYU and there is now a big to-do over $900,000 salary (even more than the university president), essentially to make sweetheart deals with banks to make exorbitant student loans to finance the highest tuition rates in the country. Lew then got $700,000 in severance when he left voluntarily to cash out with an even-higher paying job at Citigroup.
This week New York University’s tenured faculty is holding a no-confidence vote in the president of the university, John Sexton, because they say that he turned a school into an adjunct of the bank to make a killing in government-guaranteed student loans.
In New York City, the second- and third-largest real estate owners were Columbia University and New York University. So in essence, New York University was a real estate company that got tax exemption on its holdings in exchange for holding classes in some of its universities. When New York University bought a spaghetti company some years ago, it tried to claim that this was part of the educational process and wanted tax exemption for its earnings. The case went to court and NYU wasn’t allowed to pull that trick.
Despite the fact that the university has raised the tuition sharply, this hasn’t been reflected in hiring quality professors. The university is run like a financial manager would run a company that’s been raided. It has steadily been replacing full-time tenured professors with part-timers, paid only a fraction of the full-time salary. Dr. Sexton said last week that NYU is in business to make money, basically, and if it can save money by hiring part-time professors at one-tenth the rate of tenured professors, it’s going to do it. This is happening across America.
The public sector no longer is running schools like a public utility. If they regulated them like an electric or gas company, they wouldn’t let the upper management be taking more and more money. They wouldn’t let Mr. Lew, Dr. Sexton and their cronies siphon off tuition at the top, press down the professors, lower teaching standards and tell the students, in effect, that the university is not here to give you education as such, but to charge for the privilege of giving them a diploma to get a middle class job. They’re saying, “It's going to cost you. Your money or your life.”