April 21, 2022

GUEST ROOM | Welcome to Cornell Inc. 

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Ever since my freshman year, now a distant three years ago, I’ve been trying to crack this place. Some goofy kid two doors down the hall and I would stay up until 4 a.m. pondering meaningless questions like “What is the Cornell ethos, really?” We still do, now in the mundane daylight of a cramped apartment, the magic sucked out of the air ever since we settled on the answers but found ourselves no less trapped by them.

If you ask me, you can’t even begin to understand this place until you acknowledge that Cornell University is functionally a corporation. It’s an embarrassingly obvious observation to make — the kind that warrants a slap in the face from any local resident whose years living here renders it common sense. A vague sense that it’s true floats about campus, peeking out in grumblings about tuition and financial aid, but nobody ever seems to make the full case, so here I’ll attempt to embark on that task. 

Before I continue, allow me to say that Cornell also happens to be delightful. It is home to great people and great ideas, and when life here isn’t trampled by work, it can be something quite beautiful. None of that, however, exempts it from criticism as a social institution accountable to the public. 

The bitter truth is as follows: Cornell is governed undemocratically by a literal aristocracy in the form of its Board of Trustees. It presents a faux diversity and has no tangible plan to truly fulfill an “any person” mission. It shirks its financial obligations to the city of Ithaca. And the endowment is a wealth-hoarding machine wholly incompatible with a public service mission. 

While universities have long been bastions of elite interests, to understand how we got to our peculiar present, scholars look to a neoliberal turn beginning in the 70s and 80s that saw funding for public education dry up and marketized competition between schools intensify. Over the following decades, the business model of universities began to fundamentally change — we saw students reimagined as customers, the explosion of tuition rates, increased reliance on endowments as financial instruments and the proliferation of professional degrees and commercialized research. In short, we witnessed the financialization of higher education — a process whereby a public good becomes hyper-commodified as it is opened up to financial logic. 

The org chart fits the trend. Cornell’s Board of Trustees, the governing body “vested with supreme control over the university,” is a sea of CEOs. A body of 64, the Board votes on major policy and oversees the senior administration. This appears to be a progressive board structure by private universities’ standards, but it still utterly fails to share power. Forty-three of the seats on the board — a  two-thirds majority — are appointed by the board itself, constituting a blatantly undemocratic process. Meanwhile, faculty, workers and students hold a total of just five seats

The 43 are stacked with multimillionaire and billionaire financiers and business magnates, some of whose names will ring a bell — Paul Milstein, David Breazzano, David Einhorn — and it appears to be an unwritten rule that big-ticket donations are expected in order to assume these roles. Some cursory Google searching uncovers a number of these trustees’ donation histories. 

Student discourse tends to focus on the latest Student Assembly drama, but the elephant in Willard Straight Hall’s Memorial Room is that S.A. and its sister assemblies have essentially no structural power within the university. They should, but they don’t, because the administration regularly bats away or even ignores resolutions as if the constituents practicing democracy are mere critters nagging at their feet. 

It’s useful to start here, by admitting that “shared governance” is nothing more than a buzzword. But to really get at the heart of university governance, we must look to Cornell’s sacred lifeforce: its endowment. 

Cornell’s endowment, the pool of financial resources both fluid and frozen “in perpetuity” that represent its overall wealth, currently sits at $10.6 billion, a figure larger than the GDPs of fifty-odd countries. Harvard’s, by contrast, comes out at $53.2 billion

Endowment assets are invested using private equity and hedge funds afforded by financier board members, as researched by economic sociologist Charlie Eaton. And these fund managers collect hefty fees from the investment profits in a win-win transaction that leaves students picking up the slack with loan debt.

Crucially, nearly all endowments grow tax-free — Cornell currently narrowly avoids the criteria for a modest 1.4 percent tax on investment income imposed in 2017, which currently applies to an estimated 40 institutions. Exemptions from both endowment and municipal property taxes, which amount to a government subsidy that offloads the burden to the general public, are justified by arguing that even the snootiest of universities ultimately serve the public good. 

But when financial interests dominate constituent voices, socioeconomic diversity has gotten significantly worse over the past three decades (as leaked in minute five of the following fundraising campaign video), research regularly props up a corporate agenda and the city of Ithaca continues to be strangled economically, this becomes a highly suspect claim. Elites have selfishly hacked the system to their own advantage, as Ivy Leaguers have always done best. 

Endowment finance is a prime example of how “sound” business decisions can suddenly border on sociopathy when put in human terms. In 2014, Yale paid out $480 million in private equity fees, while spending only $170 million on financial aid support for its students. Endowments purport to protect the present and the future equally; but in practice, they torpedo the present in their pursuit of infinite accumulation, all to cement the dominance of already elite (read: wealthy) schools that have no intentions to open up their spoils to the masses.

Cornell’s unspoken position goes like this: in order to deliver on the promise of education for the public good, we must make it an ultra-private good to make lots of money, and once we have more money, we promise to eventually do better. We’ve all heard that one before.

In the next one to two decades, Harvard’s endowment growth is on pace to begin generating enough residual income to cover the university’s entire annual operating budget of $5 billion. 

This unfettered growth has opened up a quasi-post-scarcity future where not only student debt but also socioeconomic diversity could theoretically be concerns of the past, liberated from any financial constraints. The trick, of course, is that such a fairy tale could only be built off of wealth hoarding of planetary proportions, effectively banishing others to impoverishment in order to fulfill the twisted fantasy of a meritocracy heaven.

It seems we’re headed toward a bizarre paradox in which the richest schools can afford to do whatever it takes to legitimize their supposed commitment to the public good; meanwhile, financially struggling public universities are looking out-of-state and abroad for full-price students instead of those in-state they’re intended to serve. It is completely backwards and nonsensical, because treating education as a private good is completely backwards and nonsensical. 

We regularly strike the tone of saying that Cornell is greedy. This deserves to be said; but it’s important to recognize that, in fact, it’s Cornell’s job to be greedy, because it’s a corporation. We should absolutely demand better of Cornell and its peers in the short term, but in the long term, we must set our sights on structural reforms that shift these incentives. That means challenging the neoliberal conception of universities that we inherited by tearing down the profit motive, redistributing wealth, rebuilding public funding and embracing truly democratic access and governance.

For a start, Cornell should be made to pay both endowment and property taxes, as has been put on the table in Rhode Island, to redistribute wealth towards public education and municipal budgets, respectively. It must also allow all its workers to unionize, divest from hedge funds completely and replace the big suits on the board with community members who actually live here. The political project, then, extends far outside the realm of university life. 

There is something immensely valuable to protect here. Let’s reclaim it and bring Ezra Cornell’s radical vision to life in a way that only we know how.

John Monkovic is a student in the College of Agriculture and Life Sciences. He served as multimedia editor for the 138th editorial board. Guest Room runs periodically throughout the semester. Comments can be sent to [email protected].