After all, the school's economic philosophy "leans heavily toward free and efficient markets," yet Griffin made his billions in a hedge fund universe that depends on markets being inefficient.
I concur with Beales' assessment—and raise him another layer of irony.
There is nothing remotely "free" or "efficient" about the higher education "market." Buttressed by an unending stream of guaranteed loans, generous federal aid and donor dollars, the price of the product continues to outpace inflation even though its value is dubious.
I'll explore this familiar line of thought and how donors perpetuate this flawed model a bit further in a moment. But first, let's take a deeper dive into Griffin's gift.
We love to read the philanthropic tea leaves here at IP, especially when it involves Kenneth Griffin.
Griffin and his former wife were active philanthropists through their Kenneth and Anne Griffin Foundation, focusing on areas like early childhood education, the arts and medical research. Supporting institutions in Chicagoland was a top priority. In the wake of the couple's 2015 divorce, the direction of Griffin's philanthropy was unclear.
Two years on, however, clarity has been achieved. Griffin continues to embrace pre-divorce causes like art ($40 million to the Museum of Modern Art) and Chicago-based causes ($12 million to the Chicago Park District and $5.5 million to Chicago's Field Museum).
Meanwhile, his big new gift to the University of Chicago's economics department, which funds financial aid and expands faculty resources, encapsulates his dual interests of higher education and "home city" philanthropy. In recognition of the gift, the school will be renamed the Kenneth C. Griffin Department of Economics. If that name doesn't roll off the tongue so naturally, it's because we don't often see entire departments named after donors. Buildings and schools, yes. Programs, centers and endowed professorships, yes. But departments? Rarely. It's hard to deny the logic of extending naming rights in this way, though, since it opens up virgin real estate at wealthy universities where nearly everything has already been named after this or that donor.
A trustee of the university, Griffin praised the school as “fundamentally committed to free expression, fierce debate, and intellectual pursuit" and a culture of “rigorous questioning and open discourse."
Last year, the university drew national attention when its dean spoke out against practices gaining ground at other schools. “Our commitment to academic freedom,” he wrote to students, “means that we do not support so-called ‘trigger warnings,’ we do not cancel invited speakers because their topics might prove controversial, and we do not condone the creation of intellectual ‘safe spaces’ where individuals can retreat from ideas and perspectives at odds with their own.”
We've reported on older white alumni donors backing away from some universities and colleges that they've seen as giving in to activist demands. Here, we see a school that stood up to the barbarians at the gates being richly rewarded by one of the GOP's top mega-donors.
Griffin, whose net worth currently stands at around $8.5 billion, is only 49, and it looks like he's just getting warmed up. "I expect over the remainder of my life to give frankly well over a billion or several billion dollars to higher education," he said.
Griffin has made his fortune as a shrewd investor. But his inclination to pour some of that fortune into higher ed makes you wonder just how critically he's thought about the inefficiencies and other problems of this sector.
Conventional wisdom suggests that the student loan crisis is like a bubble, slowly inflating before bursting at some point in the indeterminate future. Derek Thompson floats an alternative analogy in a recent piece in the Atlantic. "The higher-education market is not bursting, like a popped soap bubble, but it is leaking, like a pierced balloon."
According to Thompson, one culprit is weak demand: The number of young people going to college is in decline. Second, the number of colleges in the U.S. has fallen for four straight years, and the rate of decline is accelerating. A third is the implosion of the for-profit college sector.
Thompson also attributes the higher education market's slow-motion demise to the fact that families have become "savvier higher-ed shoppers" or that "years of public outcry about tuition costs and student debt have encouraged more public universities to rein in their costs."
I wish I could agree, but it's hard to do so a few weeks after the University of Oregon, flush with recent mega-donations from Phil Knight and a recent anonymous donation to the tune of $50 million, proposed a double-digit tuition increase.
In a truly "free" market, most investors (e.g. donors) wouldn't be pouring billions of dollars into a contracting market. The "hidden hand" would see prices (e.g. tuition) stabilize, if not decrease, and certain providers (e.g. inefficient colleges) would exit the marketplace. (All that being said, many economists—including, ironically enough, quite a few from the University of Chicago's economics department—argue that a "free market" for education may be impractical and ineffective, anyway.)
Nonetheless, we're stuck with the current model of warped incentives and artificial stimuli. An endless flow of guaranteed loans, coupled with gifts like Griffin's—to a school that boasts 29 Nobel prize winners in Economics, no less!—allows inefficient schools to conduct business as usual while artificially driving up prices.