This is the season to watch the Dickens classic, “A Christmas Carol.” We all know the story of Ebenezer Scrooge, a businessman who has been consumed by greed. He is visited by three ghosts who collectively show him the error of his ways.
Attacking businesses and their leaders as greedy is a common refrain, but how do we know this is the case? I would suggest that corporate greed could be measured by the extent an industry raises their prices relative to overall inflation. The higher the price increase above and beyond inflation, the greedier the industry. Does that seem fair?
If so, then which industry is the greediest of them all? Would it be oil companies? No. While there are short periods of time where oil prices rise faster than inflation, there are more times when inflation goes up while oil prices stay steady. In fact, in 1980 a gallon of gas cost $1.19; adjusted for inflation, that would be $4.25 in 2022 dollars. Today the national average price is $3.01. So adjusted for inflation, gas costs less today than it did in 1980.
How about the tech giants? The basic iPhone cost $499 in 2007, which would be $739 in today’s dollars, and it came with 4GB, which won’t store a lot of family pictures. The iPhone 15 costs $799 and comes with 128GB. That is a lot of added power for very little additional cost.
The greediest industry in America, by a large margin, would be the industry of higher education. After adjusting for inflation, college tuition has increased 747.8 percent since 1963, according to the Education Data Initiative. Had college costs risen only by the rate inflation since 1963, the average cost today would be $2,122.75.
I know what you are thinking: but colleges are nonprofit, and only people who make profits are greedy. So they say. Nonprofit is a tax status, not a business plan. In my experience, greed is measured by how obsessed one is over money. When I go to buy an iPhone, the subject of price will of course come up, but usually not until the end. We mainly talk about features: memory, phone quality, battery life, and coverage. Will I lose signal? How much data can I download? Then we discuss the price. Once decided upon, that is it.
College admission starts with a full financial disclosure. It is all about cost, who will give the most aid, etc. Once in college, they start right away with the pressure to give. Once you are out, saddled with life-altering debt, the only thing one will hear from their school is, “Please give more.” The more they charge, and the more people give, the less time they seem to spend actually educating.
Over the last few weeks, the most elite colleges in our country have been exposed as frauds. As Fareed Zakaria of CNN recently said, our universities “have gone from being centers of excellence to institutions pushing political agendas.” This CNN anchor went on to say, “New subjects crop up that are really political agendas, not academic fields.”
Has there ever been an institution that has become this greedy and corrupt? I can think of only one: the Roman Catholic Church of the Middle Ages. Not today’s church, but the one of indulgences and inquisitions. The parallels are striking.
Indulgences: First, a refresher – indulgences were payments to corrupt church officials who would then claim that the donors were forgiven of their sins…and that money ended up mostly in the pockets of those church officials. Today, we have the example of author and academic Ibram X. Kendi, who was lured to Boston University, where a reported $43 million funded his Center for Antiracist Research. The money came from corporations wishing to be forgiven for their lack of diversity. Three years later with little to show for the money, the majority of the staff was laid off. According to Saida Grundy, an associate professor of sociology at BU, this center showed “the pattern of amassing grants without any commitment to producing the research obligated” by them. Sounds a little like an indulgence to me, but this is not just in the academic wings of universities these days.
On the other end of the spectrum, Texas A&M is now paying Jimbo Fisher approximately $76 million not to coach football. No, the athletic departments cannot be left out if this. This money comes from alumni who are told that they must donate if they even want the right to then pay for season tickets. It may be completely shameful that the presidents of three of the most elite universities in our country don’t know that genocide is a bad thing, but it is just as dense for Stanford and SMU to believe that they belong in the Atlantic Coast Conference. Note to our readers – if you are ever asked, genocide should always be condemned and Stanford is in California, which borders the Pacific Ocean, not the Atlantic. Indulgence indeed.
One would have to have their head buried in the sand to ignore the inquisitions that have plagued our universities over the last several years. Cancel culture is real, and just like the days of the Spanish court, if one dares speak heresy, then he must be punished. Our universities have stopped teaching history and now they are repeating it.
In 1517 a brave priest, Martin Luther, nailed 95 theses on the door of Castle Church is Wittenberg, Germany. His document revealed to the world the corruption that had grown within; what followed was the Protestant Reformation. Institutions can be reformed and redeemed. While it was not their intent, the three university presidents may have started another reformation. One can hope.
Scrooge awoke from the visit of the third ghost to learn that it was Christmas day. He hadn’t missed it. He had been transformed by the revelation of ghosts and it was said that he kept Christmas well. The same can happen to our universities, and we can hope that process has begun. I personally believe a positive next step would be for them to lose their tax-advantaged status; maybe paying taxes would bring a little reality to the ivory tower. At least that is my perspective.
Chuck Osborne, CFA
Managing Director
