Tuesday, 16 March 2010

How Yale Destroyed New Haven's Economy

I'm not usually inclined to reproduce personal correspondence on this blog, but this is fully deserving of as wide a dissemination as possible. It is scandalous, and confirms everything in Will Teach for Food, as well as a whole lot more. Big thanks to derridata here:

"I discovered this while listening to a talk given by Rick Wolff (Capitalism Hits the Fan). When Rick publicised this, Glenn Beck invited him on his radio show. Yes, Glenn Beck invited a Marxian academic on his show to discuss Yale's historical tax exemption and the destructive results this has had on New Haven, now one of the poorest cities in the US. And Glenn Beck agreed with everything Rick had to say on the matter".

In 2005, Yale enjoyed a tax-free endowment of just over $15 billion after a 22.3% return on its investments in 2004. (Among universities, only Harvard has a larger endowment, at nearly $26 billion.) Yale alumni created the core of the endowment in good part because gifts to universities are a tax write-off. The endowment grows rapidly in large part because the capital gains on its in-and-out stock trades are not taxed (Stein, 2005). (The fact that Yale has the enormous sums to take advantage of company takeovers and private buy-outs arranged by billionaire capital funds also helps). So the university benefits in two ways from its tax-free status, but only in the 1990s did it get around to giving $2-$3 million each year in "voluntary contributions" to the city for fire services, a figure that rose to $4.18 million in 2004. (For a January 2008 update by a New York Times reporter on the growing dominance of Yale in New Haven, click here.)

The argument about New Haven in the 1950s, a city seen at the time as evidence for the great future made possible by urban renewal, is especially poignant in terms of how things turned out there. It is now one of the poorest cities in the United States. Yale and its faculty members are islands of increasing privilege and isolation in a sea of misery. Here's how a reporter for The Observer of Manchester, England, started a story on the city

in 2002:

The north wind cuts cold and sudden across the historic green of New Haven. It blows through the "tent city" where the homeless huddle. And it blows round the spires and quadrangles of Yale University, one of America's richest Ivy League colleges.

The contrast is stark: Charlene Johnson, three months pregnant, emerges from her bivouac, worrying about the winter that lies between her and her due date. And all around are Yale's stone walls, elegant colonial churches and smart people walking past boutiques and coffee shops, carrying their course books.

"You know what's underneath you?" challenges Rod Cleary, who was released from prison in Los Angeles after a conviction for gang fighting, found but lost a job in New Haven, and has now been evicted. "I'll tell ya: bones. This green was a cemetery once; you're sitting on a pauper's grave. And, man, that's what it's going to be again if we ain't careful."

The contrast this reporter draws between Yale and the poor is more than poetic. Although few Yalies can bring themselves to believe it, Yale contributes significantly to the basic problems caused by deindustrialization. It started taking a large amount of prime downtown land off the tax roles in the 1920s and 1930s while refusing to give any compensation, just at the time when New Haven was starting to decline as a manufacturing center. In addition, it always has paid dirt-cheap wages to its thousands of staff employees, leading to strikes and tensions in the last few decades. Peter Dobkin Hall, a historian who taught at Yale for many years, and now teaches at Harvard, wrote a detailed account in 2003 for the Yale Daily News on "How Yale Destroyed New Haven's Economy".


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