Tuesday, April 15, 2014

A Chronology of Governance of the Hoover Institution: The Board of Overseers

The Board of Overseers (BO) of the Hoover Institution (HI) plays an important role in its activities.  Its 100-plus members contribute annually 60-65% of annual expendable gifts.  (Altogether about 150 Overseers and other donors provide 85% of annual gifts, with the balance coming from another 850-plus smaller donors and other miscellaneous sources.)  Since the Hoover endowment generates about half of annual operating revenue, BO represents about a third of annual revenue.

The history of BO began shortly after the conclusion of World War II.  On September 19, 1946, the Stanford Board of Trustees (SBT), with the agreement of President Herbert Hoover, adopted a plan for what was then the Hoover War Library.  The HI and Library was organized as a separate division of Stanford University (SU), an Advisory Board (AB) was to advise the SU administration on its operations, and the AB chairman would be responsible to the SU president (SUP) similar to other department heads.

The next major statement of SBT came on May 21, 1959.  With the approval of all parties, the status of HI was redefined as follows: “The HI is an independent Institution within the frame of SU....”  The 1959 Resolution dealt with appointments, selection of the director, and defined HI academic appointments as “staff,” not “faculty,” lacking academic tenure.  The AB was charged with the responsibility of helping raise money and advise on HI policies.  It was to consist of “eminent men,” including SUP and chairman of SBT committee on HI.

The SBT Resolution of January 12, 1971, changed the name of AB to BO.  BO was to be national, not local, given HI’s national and international standing and reputation.  BO could elect its own officers, recommend new members to SUP and SBT, and was to make an annual report to both.

The September 12-13, 1988, Resolution authorized BO to create such committees as it determined useful in carrying out its duties.  It was to advise SUP on the compensation of HI director and, after consultation with the Herbert Hoover Foundation, could recommend to SUP the removal of the director or acting director.

The June 15, 1990, Resolution expanded BO responsibilities.  After stating that BO was responsible for overseeing the strategic direction and financial health of HI and the preservation of its institutional independence within the frame of SU, it was to undertake the following activities.

1.  Ensure that HI policies and operations complied with SBT resolutions on HI governance.

2.  Review and approve a strategic plan for HI, including research and publications.

3.  Approve the annual operating and capital budget of HI, review its endowment and investment performance, and recommend the appointment or removal of investment advisors.

4.  Assist with fund-raising, approve any future nominee for director pursuant to the 1971 Resolution, provide annual reports on HI activities to SUP and SBT, and review annually the director’s performance and recommend compensation.

5.  Most importantly, BO was charged to work with SUP and SBT to promote and enhance the reputation of HI and to develop and maintain a cooperative relationship between HI and SU.  This extra clause was reflective of the appointment of numerous Joint Appointment Senior Fellows (JASFs)

HI, along with SU, suffered a loss in its endowment and payout from the 2001 dot.com collapse and again in the financial crisis that erupted in September 2008.  In both cases, SU offered tenured faculty and HI offered HI Senior Fellows (HISFs) enhanced retirement incentives.  In all, 15 HISFs were induced to accept these offers or run the risk of being terminated with fewer benefits on grounds of financial exigency.  Only one JASF accepted the offer, but he had already resigned from his department to move to New York.

Those who accepted the enhanced retirement offer were full-time Senior Fellows (FTSFs).  None of the JASFs were prodded to accept.  The reason is that SU would likely be pressed to make up the difference in compensation and benefits (between 30-80% of salary and other benefits) for any tenured JASF who lost the share paid by HI.  Such action would have strained relations between HI and SU, violating the new BO instruction.

FTSFs do not enjoy academic tenure.  They are easier to sever from their continuing appointments than are tenured faculty in departments or schools or JASFs.  Effective spring 2013, FTSFs were denied permission to purchase a campus residence.  Off-campus comparable homes in Palo Alto can cost as much as one-half more than the median-priced $2 million single-family residence on campus.  The difference makes it much more difficult to recruit FTSFs.

No BO member publicly protested any of FTSF retirements, or loss of campus residence eligibility relative to other designated SU institutes and centers.  Indeed, BO members, including successive chairmen of BO, have routinely praised JASFs on the grounds that they spread HI’s message of free markets, limited government, and strong national security into departments and their students.  This flies in the face of the fact that all joint appointments but one were made at the behest of departments and other SU officials’ seeking to strengthen departments and schools.

In an October 19, 1989, statement to SBT, acting HI director John Raisian stated his hope “that relations between Hoover and other elements of the university can now enter a new era of harmony and fruitful cooperation.”  “The practice of joint appointments to the university faculty and Hoover fellowship should be continued and expanded.”

Nineteen years later, on April 21, 2008, the Stanford Daily published an article headlined “Hoover, Univ. team up to hire faculty.”  The article counted twenty faculty members holding ‘joint appointments’ with the Institution and the University,” which increased the integration of academic departments and the think tank.  Dean of Humanities Richard Saller said that “a research fellowship at Hoover was an aid in recruiting faculty.”

An important reason for the attractiveness of a joint appointment was stated by Political Science professor Morris Fiorina, who noted that Hoover provided him with “summer research salary and a yearly research budget” without his having to jump through thirty-one hoops to get money from a foundation or the government.  Director John Raisian stated “I think the integration continues and I think it will have a positive impact.  This has been a feather in my cap and I’m proud of it.”

The proprietor of Thoughtful Ideas should offer a disclaimer.  He was one of the FTSFs induced to accept the enhanced retirement offer in 2009 so that joint appointments would be spared.  He has often been a minority of one in search committees opposing joint appointments and closer cooperation with SU, partly from self-interest, but also because he feared that HI would steadily evolve into a funding vehicle for faculty leave from teaching and research money, away from HI’s historical policy mission.

Thoughtful Ideas believes that the changing responsibilities of BO and the increase of joint appointments have diminished HI’s independence.  A large majority of SFs are JASFs.  This presages a future in which departments will increasingly determine SF appointments and research programs.  HI will exist as an independent institution within the frame of SU in name only for fund-raising from conservative donors, but will lose its independence in appointments, programs, and expenditures.

“We are the Borg.  You will be assimilated.  Resistance is futile.”  The past quarter-century of gradual assimilation have turned this Star Trek theme on its head.  HI’s director, with full support of BO, have affirmed of SU: “You are Borg.  You will assimilate us.  Resistance is futile.”  The next director will likely complete the assimilation, transferring four buildings (including a new one to open in 2017), an endowment nearing a billion dollars when pledged legacies are received, half-time relief from teaching duties for dozens of Stanford faculty with little interest in [conservative] policy research, freed-up funds for departments to recruit more faculty, and a permanent end to any future Hoover-Stanford controversy.

Tuesday, April 1, 2014

Hoover Institution Forms New Task Force to Study Income Inequality

The Hoover Institution "Task Force on Income Inequality" will appoint experts on the doctrines of Karl Marx, Vladimir Lenin, Joseph Stalin, Mao Zedong, Fidel Castro, and other Communist heroes to illuminate how their doctrines can be applied to reduce income inequality in the United States in the next two years under the leadership of President Barack Obama.

Watch for their names to be announced in the coming months.

Saturday, January 25, 2014

The Think Tanks and Civil Societies Program, 2014: How does The Hoover Institution Fare?

On January 22, 2014, James G. McGann, director of the Think Tanks and Civil Societies Program at the University of Pennsylvania, released its seventh annual rankings report (the 2014 report actually covers 2013) on think tanks in a variety of categories.  The introductory sections of the report outline its methodology, its timeline for nominations (August-September 2013), peer and expert rankings (October-November 2013), and expert panel final adjustments for errors (November-December 2013).  Altogether, more than 1950 peer institutions and experts participated in the nominations and selection process.  Qualitative and qualitative measures were used to determine rankings.

Rankings were listed for “top think tanks in the world,” “by region,” “by policy area of research,” and “by special achievement,” These four general categories subsumed 47 specific topics.

The proprietor of Thoughtful Ideas has been associated with the Hoover Institution (HI) since the 1971-72 academic year, first as a National Fellow, then as a grantee, and lastly as a Senior Fellow since July 1976.  This period is longer than the years encompassing the start of World War I till the end of World War II, an era of great social, political, and economic change.  During his 42 years with HI, your proprietor has watched HI grow from a small group of 11 Senior Fellows and an annual budget of $3 million to an assortment of more than 150 fellows, an annual budget of around $50 million, an endowment nearing $500 million, and a handful of donors to more than a thousand.

The ascension of Ronald Reagan to the presidency propelled HI to the top 1 or 2 think tanks in the United States given the role Hoover scholars played in formulating his political platform and the jobs many held during his two administrations.  Since then, HI’s star has waned and other think tanks supplanted HI in influence with subsequent administrations, both Democrat and Republican.

Many of the think tank topics do not apply to Hoover, in particular, those of foreign country rankings, new think tanks, and other special topics.

The first category is Think Tanks in the World.  The relevant table insofar as HI is concerned is combined Worldwide (U.S. and non-U.S.)  HI is not in the list of 150.

HI ranks 19 in “Top Think Tanks in the United States.”  This is down from 14 in 2012.

HI ranks 32 in the list of 80 “Top Defense and National Security Think Tanks,” down from 15.

HI ranks 21 among 65 “Foreign Policy and International Affairs,” (new issue area combing two from 2012).

HI ranks 13 among 80 “Top Domestic Economic Policy Think Tanks,” down from 12 in 2012.

HI ranks 32 among 60 “Outstanding Policy-Oriented Policy Public Programs,” down from 28.

HI ranks 4 among 40 “Best University Affiliated Think Tanks,” down from 2 in 2012.

HI is not listed in any of the following topics (number of think tanks on each list in parentheses)

Education (50)
Energy and Resource Policy (20)
Environment (70)
Health Policy (30)
International Development (80)
International Economic Policy (50)
Science and Technology (50)
Social Policy (50)
Transparency and Good Governance (30)
Best Advocacy (75)
Best Managed (60)
Best New Ideas or Paradigm (40)
Best Policy Study/Report Produced (30)
Best Conference (60)
Best Network (60)
Best Transdisciplinary Research Program (60)
Best Use of Social Networks (60)
Best External Relations/Public Engagement Program (50)
Best Use of the Internet (40)
Best Use of Media, Print or Electronic  (35)
Most Innovative Policy Ideas/Proposals (30)
Most Significant Impact on Policy (70)

Subsequent posts will try to clarify the reasons for HI’s decline in five issue areas and non-appearance in all remaining topics.  Background information can be read in previous posts here, here, here, here, and here.

Thursday, January 2, 2014

Legalized Marijuana in Colorado--Bending the Health Care Cost Curve

It is alleged that marijuana reduces pain.  If correct, will less money be spent on both prescription and over-the-counter pain relief medicine?

Monday, December 23, 2013

Centers for the Study of Inequality and Poverty Reduction

“Centers for the Study of Inequality and Poverty Reduction” (CSIPRs) are rapidly proliferating throughout America’s top private and public universities.

Most scholars in these centers point to the stagnation of median incomes while the share of income received by the top quintile, decile, 5%, 1%, 0.1%, and especially for the top 0.01%, has been steadily rising during the past 30 years.

An increasing number of prominent economists blame rising inequality for slow growth and lack of job creation in the advanced industrial economies.  Political scientists warn that rising inequality is increasing the likelihood of conflict within and between countries and regions.

Inequality can be measured in units of individuals, households, within and between communities, between urban/rural areas, between nations, and among global regions.  A frequently propounded solution is the transfer of wealth and income from “haves” to “lesser haves” and “have nots.”  Within communities and nations, this often takes the form of more progressive income taxes, higher wealth taxes, and higher taxes on capital income.  Foreign aid and other transfers from rich to poor countries are standard proposals to redress inequality among nations.

The consensus among professors in CSIPRs is that one solution lies in greater access to quality education.  A small number of elite universities enjoy large endowments and annual gifts which enable them to recruit the best (highly-paid) professors and students.  Meanwhile, the vast majority of community colleges, four-year colleges and universities, and massive state-financed universities are strapped for money.  State support is declining and many students cannot afford tuition increases.

To the best of my knowledge, no CSIPR in an elite institution has issued a policy paper recommending that some of its university’s endowment and annual gifts, and some of its faculty’s salaries and benefits, be transferred to less wealthy colleges that face the daunting task of educating the majority of America’s future work force.

CSIPRs recommend redistribution of income and wealth for all except for the centers and professors in them.

It is what it is.  Go figure.

Wednesday, December 11, 2013

Who Cares About the National Debt?

On January 31, 2009, a few days after President Obama moved into The White House, the U.S. National Debt amounted to $10.88 trillion.  Of this, marketable debt held by members of the public amounted to $5.75 trillion, non-marketable debt (largely held by the Social Security Trust Fund) was $4.88 trillion, together summing to $10.63 trillion.

On November 30, 2013, the comparable numbers were $11.79 trillion, $5.43 trillion, and $17.21 trillion, an increase of over $1 trillion a year in both marketable and total national debt.

President Obama and most Democrats believe that annual budget deficits since the financial crash of September 2008 have, if anything, been too small.  They would have preferred larger deficits than actually transpired to stimulate the economy.

Most Republicans prefer smaller deficits, balanced budgets, and ultimately paying down the national debt or at least substantially reducing it.

It’s easy to explain this difference.  It depends on who might have to pay the debt.

Voting by Race and Ethnicity

In the 2012 presidential election, 95% of African-Americans, 72% of non-White Hispanics, and 67% of single women (inclusive of single mothers) voted for President Obama.  In contrast, a majority of men and White married women voted for Republican candidate Romney.  (According to the 2010 Census, Whites were 72%, Hispanics 16%, and Blacks 13.3% of the population.)

How might the U.S. government go about paying increasing interest and paying down  principal on the rapidly rising national debt?  One recourse is a wealth tax, either a one-off measure or an annual levy.  Another option is higher tax rates on upper-income households.

Wealth by Race and Ethnicity

There is a large wealth gap between Whites, Blacks, and Hispanics.  In 2009, the median net worth of White households was $113,140; of Hispanics, $6,325; and of Blacks, $5,677.  The ratio of White-to-Black wealth was 19:1, and White-to-Hispanic 15:1.  A wealth tax would overwhelmingly be borne by Whites.  Only a small fraction of Blacks and Hispanics possess sufficient wealth to be subject to a wealth tax.

Income by Race and Ethnicity

There is also a large income gap between Whites, Blacks, and Hispanics.  White median income in 2009 was $62,545; of Blacks, $38,409; and of Hispanics, $39,730.  For family income exceeding $100,000, Whites were 27.0% of all White families; Blacks, 12.1% of all Black families, and Hispanics 12.4% of all Hispanic families.  For family incomes below $35,000, Blacks made up 55.3% of all Black families, Hispanics 46% of all Hispanic families, and Whites 33.8% of all White families.  Low-income Blacks and Hispanics are a much larger fraction of their respective communities than are low-income Whites.  An income-tax surcharge or increase in tax rates would largely affect White taxpayers.

Racial and ethnic differences overlap education levels, full-time work status, and  marital status.  Whites are better educated, disproportionately work full-time, and are more likely to be married, all of which are strongly correlated with wealth and income.  (Asian-Americans are omitted from these comparisons because they constitute a much smaller fraction of the U.S. population, and because they are divided into many nationalities–Chinese, Filipino, Indian, Vietnamese, Korean, Japanese, and 12 smaller nationalities of East- and Southeast Asians–which vary in income and wealth (e.g., Chinese-Americans vs. Laotian-Americans).

To summarize, Republican voters will largely pay any wealth and/or additional income taxes that are levied to pay interest and principal on the national debt.  Democrat voters will pay little.  It should come as no surprise, then, that President Obama and most Democrats in Congress care little about large deficits and the expanding national debt as their constituents will bear little of the additional tax burden.

Sources: Income data from U.S. Census Bureau, Statistical Abstract of the United States: 2012, Tables 690, 696; Wealth data from U.S. Census Bureau, Survey of Income and Program Participation: August 2010.