A Course Everyone Should Take

Students often come to college with their own set of impressions about the people in the world around them, whether they’ve ever personally interacted with those people or not.  That’s not a criticism of college students, it’s a reality of modern life.  We all live in our own little worlds, and we form impressions about what others might be like based on the news that we allow to filter into our bubbles.

img_20180526_130448But what if people tried to get out of their bubbles and actually meet some of the people they’ve formed impressions about, to see what their lives are like and experience their worlds?  That’s what the Harvard Institute of Politics tried to accomplish with something called the Main Street Project.  The goal was to get Harvard students, most of whom hailed from the coasts, out into places in flyover country where they could meet real people who live and work in the heartland.  The group of students visited towns in western Massachusetts, New Hampshire, Pennsylvania, and Ohio, saw people working at their jobs, and went to the restaurants where the locals go.  They stayed in bed and breakfasts owned by locals, traveled in a van, and took the back roads.  In the process, they even met a few Trump voters and went to a gun range where women were engaged in some vigorous target practice.

As one of the organizers wrote:  “Even though these kids had almost all been raised in the United States, our journey sometimes felt like an anthropology course, as though they were seeing the rest of the country for the first time.”  The students admitted that they “had been fed a steady diet of stereotypes about small towns and their folk: “backwards,” “no longer useful,” “un- or under-educated,” “angry and filled with a trace of bigotry” were all phrases that came up.”  But as they traveled through places like Youngstown, Ohio, meeting good people who were living happy, productive lives, the students saw the stereotypes break apart.

None of the students got course credit or a grade for participating in the Main Street Project, but they did get an education.  One of the student organizers said:  “The best way to blow apart a stereotype is to challenge it” — and he is right.  Wouldn’t it be wonderful if everyone, regardless of their age, had a similar opportunity to meet people and challenge some of the stereotypes that we all carry around?

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On Applying, And Getting Rejected

Richard has begun the second year of grad school, and Russell starts his first year of grad school next week.  It got me to thinking about my law school days, and specifically about the application process.

I was working on Capitol Hill for U.S. Rep. Chalmers P. Wylie when I decided to take the LSAT and look at going to law school.  I had a solid undergraduate record, I got a good LSAT score, I had that Capitol Hill job on my resume, and I had a nice recommendation from Mr. Wylie in my application packet, so I aimed high, for Harvard and Yale among other schools.  I was a confident, and foolish, young man.

I was taken down a peg when, very shortly — embarrassingly shortly — after I sent in my Harvard application, I got the standard form rejection letter.  It hadn’t taken them long to figure out that I wasn’t Harvard material.  My rejection from Yale came a few days later.

I soon realized it wasn’t the end of the world.  I was accepted into other good schools, went to Georgetown University Law Center, got a good legal education and met some great people, and have moved on.  I now think that those once-embarrassing rejections were a good thing, because they helped to motivate me to work hard in law school and because everyone needs to experience a little humility in their lives.  And, I’ve also come to believe that it’s not where you go to school, but what you do with the education you receive that counts.

Rejection isn’t the end of the world.  Often, it’s something you can build on and learn from.

You Don’t Have To Be A Judge . . .

. . . to be on the Supreme Court, and therefore it doesn’t bother me one bit that Elena Kagan hasn’t served on the bench.  Over the years, many Supreme Court Justices, including some who had an enormous impact on the Court and its jurisprudence, had no prior judicial experience.

No, what bothers me is that the Court is populated exclusively by graduates of elite law schools and universities who have never had a private law practice.  Although there is diversity of race and gender on the Court, there really isn’t much diversity of perspective.  The Court can take only a small handful of cases each year, and it seems to devote an inordinate proportion of those cases to narrow constitutional issues, like whether World War I veterans’ erection of a cross on federal lands in the Mojave Desert violates the Establishment Clause of the First Amendment.  That may be an interesting academic question, but it doesn’t have much to do with the vast majority of Americans, or the vast majority of lawyers.

I’d love to see a President nominate a practicing lawyer who cares about resolving uncertainties about application of the rules of civil procedure and the rules of evidence, or the drafting of disclosures in SEC filings by public corporations.  We really don’t need another decision that revisits how Roe v. Wade applies in some specific factual scenario — but it sure would be nice to get a definitive ruling on how district courts should apply class certification standards.

Not Smart (Cont.)

I’ve written before on the enormous losses Harvard recently sustained as a result of the investments of its endowment funds and capital accounts.   The Boston Globe has now published an article on how the losses happened.  It’s a familiar story and good lesson for anyone managing their 401(k) account.  People made aggressive investments notwithstanding cautions about risks, the aggressive investments produced very strong returns for a time, and the investment decisionmakers overlooked the risks, focused on the returns, and then took an uppercut when the markets went south.  They forgot the basic questions all investors should ask:  what am I looking to achieve with my account, and how much risk am I willing to take to try to achieve that goal?  These questions should be asked regularly — not just when the markets experience a downturn.

Not Smart

Harvard University has announced that it paid hundreds of millions of dollars to get out of interest rate swaps.  The school also said that its General Operating Account, which is the principal account that funds the schools’ operations, lost close to half its value in the last fiscal year, falling from $6.6 billion to $3.7 billion.  The value of the school’s endowment fund, on the other hand, dropped from $36.9 billion to $26 billion during the fiscal year.

What’s interesting about this story is not that Harvard’s investment accounts lost value — virtually all investment portfolios, except those invested exclusively in gold, have declined in value since the economy and the credit markets hit the wall last fall — but how much Harvard has lost and the nature of its investments.  Any kind of swap investment is risky; you really have to know what you are doing and what the potential downside risks are to make a properly informed investment decision.  It is curious that Harvard would invest hundreds of millions in interest rate swaps.  You have to wonder if its investment advisors really described the risks to the university body that oversees investments and, if so, whether that body really understood those risks.  As for Harvard’s endowment, losing more than $10 billion in one year is extraordinary.

Many colleges and universities have been aggressively raising money to up their endowments, and it appears that they have been investing those funds with, perhaps, even more aggressiveness.  That seems to defeat the traditional purpose of an endowment fund, which is to provide a financial cushion and regular investment income for the institution.  Given that purpose, you would expect endowment funds to be invested more conservatively, and not in a way in which the endowment fund could conceivably lose more than 25 percent of its value in one year.

If you have been a contributor to a university’s endowment fund, only to see the value of your contribution go poof in the past year, what do you say when the college comes back to you this year to ask for help?