Yves Smith with more thoughts on the looting phase of higher education

Naked Capitalism has a post up discussing the previously mentioned Pam Martens article on NYU Law School compensation for administrators and select professors.

Now the house deal (which is rather bizarre given that NYU owns lots of nice faculty housing) might be what made [Jack] Lew’s pay deal so out of line relative to his job. But if the forgiveness of debt was not included in the total, it’s even more insane, the equivalent of $1.1 million a year.

There’s simply no way this compensation level (or the house side deal) was justified by any notion of what the position demanded. You don’t need a marquee name for an operations job. I can give a long list of people I know personally who have more relevant experience and be happy with a ton less money. Nor is there any evidence that Lew did enough in the way of fundraising to justify his NYU pay level. This was a low-stress overpaid sinecure arranged by the Rubin mafia.

And it’s important to recognize that this sort of rent extraction by unproductive overhead is a significant contributor to the explosion in education costs. When I was young, the top administrators were modestly paid. They viewed the job as quasi public service. The hours were generally not taxing, although the politics could be fractious. The faculty looked down on you but you had lots of stature in the local community, the top echelon might live in housing the school owned as a perk and you got the bennies of university life. The sort of people who took those jobs were old money who’d spent some time in the private sector and wanted a change of pace in their middle age or executives who’d lost out in corporate intrigue or via a takeover.

Benjamin Ginsberg says that 30% of the increase in educational costs over the last twenty-five years is due to administrative “growth”. That sounds low to me, and I’d imagine the overheads have attributed as much of their costs as possible to program. For instance, universities have also overspent on facilities, and a big building program not only justifies more adminisphere, but some of those costs may have been allocated to the big build rather than as ongoing overheads. I mean, why have Jack Lew types around if they can’t pretty up the books?