February 26, 2006

Summers' Resignation

BeckerPosner 2 entries Grouping confidence 1.00

Becker February 26, 2006 Opening 136 comments

Summers' Resignation and University Governance-BECKER

I will follow Posner's example, and compare my present views with what I said a year ago in our discussion on February 27th about the opening controversy between Harvard President Larry Summers and his faculty critics. My views remain close to what they were, but some of my statements then need to be clarified and even changed somewhat.

"As Harvard's president, Summers has shown vision, enormous ability, and strength, qualities typically lacking in university presidents…. If allowed to persist in his endeavors, he will go down as one of the great university presidents of recent decades."

Alas, he was not allowed to finish his agenda, although it was a breath of fresh air and long overdo not only at Harvard but also at many universities. He made promising starts in revitalizing sciences at Harvard, recruiting a younger and more balanced faculty, holding faculty to higher responsibilities for teaching and research- the Cornell West episode is one good example of this- and beginning the process of giving Harvard undergraduates a better education.

It is not clear to an outsider how to weight different aspects of the faculty opposition that led to his resignation. But I believe it is a combination of the inherent tendency of all faculties to resist changes in what they do, despite their radicalism on many political issues, a concern that he was usurping some of the authority that faculties claimed for themselves, and Summers blunt style. Those overly sensitive faculty members at Harvard who consider his style blunt and confrontational should attend some of the seminars in the department of economics at the University of Chicago. Summers would appear relatively mild in comparison. Summers has an inquiring mind, and he ran up against faculty members with closed minds on issues like explanations for the differences in male and female achievements, or the contribution of some members of the African American Studies program.

"Posner argues against the view that faculties should be running universities. He points out several problems with such a system, including that professors pursue their own narrow interests instead of the universities long-term goals, that professors are not selected for interpersonal skills, and that universities have become too complex to be run by a faculty collective. Strangely, he comes down in favor of university trustees as having interests that are better aligned with those of universities. Yet my experience is that trustees typically know little about, and generally do not have much interest in, the universities they oversee, they are intimidated by professors, are not very brave in their trustees' role, generally go along with whatever is presented to them by university administrations, and very seldom force a university president to quit."

The Harvard experience has strengthened my views on university trustees. Perhaps one reason why university trustees are usually so ineffective is that they are mainly drawn from business, with an eye to fundraising and their own financial contributions, and have had little experience with university administration. By contrast, corporate boards usually contain many members who do or have run companies, so they know a lot about corporate administration.

That said, I failed to mention last year my long-standing belief in greater power for presidents, deans, chairmen of departments, and other administrators than found at most American and foreign universities. A faculty-run university is usually biased toward compromise and the status quo, while a president and his administrators will sometimes take bold actions when given the power. Power and boldness can lead to major blunders and great variability in outcomes, but it can also lead to university greatness. The great presidents of the past, such as James Conant of Harvard and Nicholas Murray Butler of Columbia, were not reluctant to use their power to transform the sluggish universities they headed. Since it is so hard to be a really great university, that risk is well worth taking.

"Still, I believe the only satisfactory way to evaluate how universities (or businesses) are run is by their success or lack of it in the long run. Although there is no simple way, like profitability, to judge universities, there is an effective way to judge a university system. The American college and university system is widely accepted as the strongest in the world. This is why American universities are filled with students from abroad, including those from rich nations with a long history of higher education, like Germany and France.

I conclude from this that the American university system must be doing many things right, at least relative to the other systems. And what is right about this system is rather obvious: several thousand public and private colleges and universities compete hard for faculty, students, and funds. That the American system of higher education is the most competitive anywhere is the crucial ingredient in its success.

Competition tends to weed out the inefficient and the ineffective, regardless of whether competing enterprises are private profit –maximizers, as are most business firms, private non-profits, as are many American universities, or public non-profits, as are the majority of universities. In any industry, including the education industry, many different approaches are tried, as in the Robert Hutchins great books approach to undergraduate education at the University of Chicago. Many of these approaches fail, as the great books approach failed because it turned out to be a poor way to teach science, economics, and many other subjects.

The basic effect of competition is that only the successes tend to survive in the long run. What survives in a competitive environment is not perfect evidence, but it is much better evidence on what is effective than attempts to evaluate the internal structure of organizations. This is true whether the competition applies to steel, education, or even the market for ideas.

Given the effectiveness of the American higher education system, its governance, including the role of faculty, is probably on the whole along the right lines. Some literature has even shown that an industry composed of workers cooperatives, Posner's analogy to faculty-run universities, in a competitive environment tends toward efficiency because these cooperatives have to bid against each other, and against other industries, for labor and capital. Much of that literature would apply to universities run by professors, and to other aspects of the structure of American universities.

Yet enterprises in even the most competitive industry often appear to be inefficient when looked at under a microscope. This is why the many best sellers every year on how to improve the management of American companies before long pass into the market for shredded paper. I am dubious about proposals to improve a competitive system that is working. The American university system is competitive and it is working well, at least judged by its ability to continue to attract the best students from abroad, that few Americans go abroad for advanced degrees, and by the current efforts to imitate the American system of higher education in many other countries. We should not be complacent, but that is pretty effective evidence in its favor, including the approach to governance."

I still support these claims about the beneficial effects of competition, and that the American system is superior to other higher education systems. But I should have been clear that this does not mean that every organization even in a highly competitive industry is doing well and cannot be improved. Defective companies can continue to survive for quite a while even in competitive environments (look at General Motors). This is especially true among universities. Past reputations count for much more at universities than at say car companies, which is why the ranking of universities is much more stable over time than is the rankings of firms in various other industries (an observation on rankings that Summers once brought to my attention).

I support many of Posner's proposals for change that he lists at the end of his post, but I weight them somewhat differently. The following are to me the most important: 1. The Arts and Sciences faculty has too much power relative to professional schools at Harvard, as shown by what happened during the Summers controversy. An overall University Senate would have helped Harvard during this crisis, as it would have helped Columbia during the student disturbances of the late 1960's (where I taught at that time). It was crucial in the University of Chicago getting through those disturbances in much better shape than Columbia and many other universities. 2. Presidents should have more power and faculties less, for the reasons I gave. Universities will continue to be run mainly by faculties, but their power is excessive at Harvard and many other universities. 3. In light especially of the Federal law of the 1990's that prevents universities from forcing faculty members to retire, and because of the great competition among universities for faculty, a competition that in many fields is becoming worldwide (see my post on tenure of January 15th of this year), academic tenure is excessively strong. It should be greatly weakened, if not abolished.

Posner February 26, 2006 Opening 144 comments

Summers' Resignation and Organization Theory--Posner

On February 27 of last year, almost exactly one year ago, I posted a longish note about the organizational issues raised by the controversy between Harvard President Lawrence Summers and his faculty critics, a controversy that has now culminated in his resignation. Here is what I said (with a few deletions and other minor changes), based on my almost 40 years as either a full-time or part-time university faculty member and my current interest in organization theory (I am also an alumnus of the Harvard Law School):

"The 'case' against Summers made by his faculty critics is a four-legged stool: he had the temerity to challenge the absenteeism of a prominent faculty member, Cornel West, who as a result resigned in a huff; he is peremptory, perhaps even rude, in his dealings with faculty; he refuses to consult faculty on administrative matters, such as the expansion of the campus into Alston, across the Charles River from the traditional campus; and, most notoriously, he challenged the conventional left-liberal view that any underrepresentation of a group in a prestigious activity (e.g., women on the science faculties of Harvard) must be due to discrimination rather than to preferences or capabilities.

"For these actions, Summers--the most exciting and dynamic president that Harvard has had since James Conant--has been (or at least has felt) compelled to undergo a humiliating course of communist-style "reeducation," involving repeated and increasingly abject confessions, self-criticism, and promises to reform. He has been paraded in a metaphoric dunce cap.

"To appreciate the sheer strangeness of the situation, imagine the reaction of the CEO of a business firm, and his board of directors, if after the CEO criticized one of the firm's executives for absenteeism, ascribed the underrepresentation of women in the firm's executive ranks to preferences rather than discrimination, dealt in peremptory fashion with the firm's employees, and refused to share decision-making powers with them, was threatened with a vote of no confidence by the employees. He and his board would tell them to go jump in the lake. But of course there would be no danger that the employees would stage a vote of no confidence, because every employee would take for granted that a CEO can be brusque, can chew out underperforming employees, can delegate as much or as little authority to his subordinates as he deems good for the firm, and can deny accusations of discrimination.

"If, however, for employees we substitute shareholders, the situation changes drastically. The shareholders are the owners, the principals; the CEO is their agent. He is deferential to them. Evidently the members of the Harvard faculty consider themselves the owners of the institution.

"They should not be the owners. The economic literature on worker cooperatives identifies decisive objections to that form of organization that are fully applicable to university governance. The workers have a shorter horizon than the institution. Their interest is in getting as much from the institution as they can before they retire; what happens afterwards has no direct effect on them unless their pensions are dependent on the institution's continued prosperity. That consideration aside (it has no application to most professors' pensions), their incentive is to play a short-run game, to the disadvantage of the institution--and for the further reason that while the faculty as a group might be able to destroy the institution and if so hurt themselves, an individual professor who slacks off or otherwise acts against the best interests of the institution is unlikely to have much effect on the institution.

"All this is true of Harvard. The faculty are interested primarily in their own careers, and what is good for their careers and what is good for Harvard are only tenuously connected. The individual faculty member who denounces Summers knows that his denunciation is unlikely to bring about Summers' departure, and even if it was decisive, and even if Summers is the best president that Harvard could find, an inferior replacement would be unlikely to do so much harm to Harvard as to have a discernible impact on the career of the denunciator. What is more, that replacement might be more inclined to kow-tow to faculty, enhancing their careers at the expense of the long-run health of the institution.

"Apart from the misalignment of faculty and university interests, faculty at research universities, like intellectuals generally, tend not to be responsible participants in collective action, such as university governance. The academy does not select for people who have interpersonal skills, because most academic research is either solitary or conducted in groups of two or three, though there are exceptions, primarily in the hard sciences. In addition, faculty are highly specialized, many in fields wholly unrelated to the financial and other practical questions that loom large in a university as large and affluent as Harvard.

"Universities are increasingly complex enterprises. Harvard has a multibillion-dollar annual budget. It is ludicrous for English professors to think they have a useful contribution to make to decisions involving budgetary allocations, building programs, government relations, patent policy, investment decisions, and other key dimensions of modern university governance. They are in no position to balance Summers' strengths in these areas with what they consider his weaknesses in relations with faculties, or his ideological views that they find offensive.

"Because universities are organized as nonprofit entities, there are no shareholders, and hence no owners in the conventional sense. As a practical matter, the university's trustees (the members of the Harvard Corporation) are the owners; they control the endowment and the other assets of the university and they appoint the president, who in turn appoints the administrative staff of the university. The trustees' interests are better aligned with the university's interests than the faculty's are. The trustees do not have a personal financial stake in the university's success, but the position of a trustee of a major university is prestigious and even visible, and trustees who botch their job will experience embarrassment and loss of reputation.

"Of course, as part timers and (mostly) outsiders to academia, the trustees cannot actually manage the university. Nor do they try. Their principal function, besides general supervision and assistance in fund raising, is to hire a president, and to fire him if he performs badly. (So they are much like the board of directors of a business firm.) That is a limited function which a board of trustees should be able to discharge competently. The president is the CEO and he has both a reputational and a financial stake in the success of the institution. The president and his administrative staff, not the trustees--and not the faculty--should manage the university. The role of the faculty should be teaching, research, and appointments (subject to override by the president or provost) within their field of academic specialization.

"So I would like to see faculty think of themselves as employees and leave governance to the university's president. And for the further reason that preoccupation with governance is a distraction from teaching and scholarship, and so reduces faculty output. In doing so it compounds the bad effects of academic tenure, an institution that reduces the productivity of many academics.

"Against all this it can be argued, first, that competition among universities will assure good performance regardless of the governance structure and, second, that a comparison of American with foreign universities shows that our universities must be doing something, or rather a lot of things, right, because our universities are the world's best. Competition is indeed a powerful force for efficiency, but interuniversity competition is blunted by a variety of factors, including the lack of a profit incentive and the difficulty of evaluating a university's output.

"I agree that our universities are the best in the world, but comparisons of this sort are invitations to complacency. (If the Harvard trustees were complacent, they wouldn't have appointed Summers president!) When the United States had monopolistic regulation of the telephone industry, as it did until the breakup of AT&T, we had the best telephone system in the world. When we lost the war in Vietnam, we had the best armed forces in the world. When the Civil Aeronautics Board administered an airline cartel, we had the best airlines in the world. We have the best universities, but I believe that they would be even better if they were governed differently. My belief is supported by the fact that American universities are evolving in the direction of greater conformity to the principles on which private businesses are run. The time has come to retire the faculty slogan '"we are the university.'"

The passage of a year has reinforced rather than undermined what I said about university governance. It is clearer now than it was then that Summers' policies--ranging from greater emphasis on science, on modernizing and rationalizing the undergraduate curriculum and improving undergraduate teaching (a serious Harvard weakness since time immemorial), and on intelligent utilization of Harvard's extensive real estate, to tuition remission for students from families of modest means and blocking weak tenure candidates in weak disciplines--are entirely sound. It is also clearer now than it was a year ago that Summers' blunt manner (I would prefer to call it forthright) were not the decisive factor in the faculty revolt that has led to his fall from power. (Whether he was forced out, or he merely concluded that he could no longer be effective as president without the unwavering support of the Harvard Corporation, is unimportant.) What was crucial was that he challenged the worker'-cooperative model of university governance (a model adhered to more closely by foreign universities--which is one reason they are on average inferior to our own), that an influential fraction of the faculty rebelled, and that a timid and inept set of trustees were unwilling to back Summers against the rebels. I knew a year ago that Summers was embattled; I never thought it a battle he could lose. I am greatly disappointed in the Harvard Corporation and would be gratified to see its members resign in embarrassment.

One sign of the Corporation's ineptitude is its decision that there shall be an 18-month period in which, in effect, Harvard will have no president and the faculty will consolidate its power. But as serious is the signal that the Corporation is sending to potential candidates. The signal is that only individuals willing to be weak presidents need apply for the job--individuals willing to concede a veto power to the Faculty of Arts and Sciences and devote their presidency to fund-raising, glad-handing, and back-office management. Eugene Robinson, in a good-natured column in the Washington Post defending Summers' resignation but expressing hope that Summers, whom Robinson appears to admire, would become an active member of the Harvard faculty, argues that such a change in roles would mean that he was "no longer an ineffective herder of cats but once again the big cat he was meant to be." Cats cannot be herded, but faculty members merely do not want to be herded. They have soft jobs with life tenure. The loftier the institution, the greater the salary and prestige and the softer the job. So little is demanded that retirement has few attractions. The result is a faculty many of whose members are both smug and superannuated.

Summers' resignation should, but will not, precipitate serious thinking at Harvard about transformative change. The following suggestions, quixotic in the short run, are offered as aids to thinking imaginatively about the governance of the nation's most prominent university:

The members of the Harvard Corporation should resign; their successors should rescind Summers' resignation.
The reconstituted Corporation should redefine the lines of command of the university, making clear that faculty are not the owners or "citizens" of Harvard, but rather are honored employees.
A purely consultative University Senate should be created so that the university administration can obtain reliable, representative expressions of faculty opinion.
The president of the university should be authorized to appoint the department chairmen.
The anachronistic institution of tenure should be reexamined and perhaps jettisoned. The market for university professors is highly competitive; a good person whose contract is not renewed can get a comparable job elsewhere. (See my post on tenured employment of January 15 of this year.)
A generous buy-out program should be instituted in order to encourage early retirement and thus provide greater career opportunities for young academics.

If the suggested measures precipitated some, even many, resignations of faculty, the quitters could easily be replaced with individuals of equal or higher quality.