LAWRENCE SUMMERS | Butler Award

Lawrence Summers accepts the Butler
Award from the New York Association
 for Business Economics, November 29.

On Friday, November 29, 2018 the New York Association for Business Economics NYABE) presented The William F. Butler Award to former Treasury Secretary Dr. Lawrence H. Summers, the President Emeritus of, and the Charles W. Eliot University Professor at, Harvard University. 

Summers has been close to the center of the economics profession for his entire professional career. He was a strong candidate for the position of Chairman of the Fed under Obama before the President settled on Janet Yellen.

My notes on the lunch talk, which is on the record to the press, at the Cornell Club in New York City, follow. This is not a transcript; I did not use a tape recorder. The portions in quotes were more carefully written down, but may not be verbatim. The unnumbered questions in bold face were from Alan Goldman, the current President of the NYABE, of which I was President in 2002-2003.

I am glad to receive an award from business economists. The best opinions on the current economic outlook come from the business economics community. “I do not believe there is anywhere you can go on this planet than to business economists to get a better take on the business cycle.”

What were your best calls as Secretary of the Treasury?

“I was quite good around the [2007-2009] fiscal crisis. I said what we fear most is the lack of fear among banks.”  “I said that banks were dangerously undercapitalized and needed an infusion of funds and a stimulus was in order.”

“I said declaration of victory over green sprouts in 2009 was massively premature.”

What were your worst calls?

Five years ago my call on China was not so good. It was premature.

I recommended in the 1990s that we help the Russians with their economy, using as an analogy the Marshall Plan. The Russian economy did not develop the way it did in Europe after WW2. My idea did not prove out.

In the mid-1990s and 2000s, I was wrong on my productivity projections.

The jury is still out on the secular stagnation theory for the US economy that I proposed in 2013 based on Alvin Hansen’s work. Structural changes raised the saving rate, lowered the investment propensity. I said we needed more investment incentives. I was accused of recommending an “imprudent fiscal policy.” The problem is we had a bubble at the end of the 1990s, then a recession after 2001, and then the Internet bubble. I felt we had to encourage more investment,

Since 2013, fiscal policy has indeed been more expansionary and the Fed has been easier than the market had previously expected. Growth was harder to obtain. We had bigger bubbles, but less growth. I called it secular stagnation, a change that lowered the long-term rate of unemployment.

Real interest rates in Japan and Europe were even lower than in the United States. Growth continues to be low by historical standards. This supports the secular stagnation theory. I am more sure of it today than in 2013. What are the prospects for a recession? Over the next two years, I would say 50 percent, but I wouldn't argue with 35 percent. I would wonder at anyone projecting a probability of either as low as 15 percent or as high as 90 percent. The problem is that the Fed putting interest rates down to zero again is not going to help.

If I were Chairman of the Fed today, I wouldn't take a position much different from Jay Powell, so far, i.e., tending toward dovish. But I would differ in three ways:

• I would focus on the 2 percent inflation target and I would observe that in the last ten years the Fed has always erred on the downside of this target. With only 3.7 percent unemployment, when if not now should we err on the upside?
• I would be sceptical of balance sheet manipulation. QE works only in the early stages or when it has signaling consequences. The cumulative impact of duration from debt offsets the QE. I would put less emphasis on balance sheet size.
• I would deemphasize the fetish for information provision and transparency. Stick with the "a strong dollar is in our national interest" mantra and deliver a consistent message, with less emphasis on disagreements within the FOMC.

Q1 (from the floor). What about the labor force participation rate? Americans are aging into retirement. More workers are more credibly facing competition from overseas, from robots [the Internet], from the gig economy.

Q2. Should the Fed go to negative interest rates? A negative rate is not likely to produce stimulus. They are "unworldly".

Q3. Could secular stagnation be overcome by innovation? I'm looking at demand, not supply side. I am agnostic about [Northwestern Professor] Bob Gordon's argument, which is supply side. 

Q4. What will Trump tax reform accomplish? The reforms have helped the well off, but is financed by deficits and is therefore contractionary. Damages our ability to invest in infrastructure. Traffic congestion is terrible in NYC; took me 40 minutes to go 1.5 miles.

Q5. Should bankers have gone to jail after 2008? Stupidity is not a crime. By containing the crisis [bailing out the banks] we have had less populism that we would otherwise have had. "There must have been crimes" is not a credible claim. However, bankers were allowed to just resign rather than being  made accountable. That was an error.

Q6. Are the tariffs and trade tensions slowing the world economy? Not so much that as the traditional cycle of fear and greed.

Q7. What topics in economics are not being studied enough? "Relative to its social importance, business economics is overemphasized." I would like to see more study of regional economics. What could public policy do, for example, in West Virginia? Also, structural questions need more study – creation of local infrastructure, development economics. This is insufficiently studied in the United States, in favor of financial topics.

Comment

Professor Summers is a careful and clear speaker; I am a long-hand and therefore selective note-taker. If I have misquoted or misinterpreted anything he said, please send a note to me at john [at] cityeconomist.com and I will look at it again.

In identifying his worst calls, Summers did not go back 19 years to his support of the 1999 Gramm-Leach-Bliley Act. This lifted some of the restrictions on banks' involvement in insurance and investment services that were imposed in the 1933 Glass-Steagall Act. Glass-Steagall was a brilliant deal, part of the New Deal, that traded commercial bank deposit insurance for regulations of banks and other financial institutions to keep "shadow banks" from playing with government-insured deposits. Critics of Summers for his support of Gramm-Leach-Bliley include former Presidents Bill Clinton and Barack Obama.

ART BIZ | Turning an Artistic Idea into Cash

Postcard of the "Flag of the People's Republic
of Palm Beach." 2016. 48" x 72", Acrylic on Canvas.

I was talking today with Kenneth Walker at a Harvard event. 

He went to Brown as an undergraduate, and finished up at the Harvard School of Design.

He told me the minute he met me that he was an architect inspired by Ayn Rand. He had great faith in the free market and was also on the Palm Beach Planning and Zoning Board.

I asked him: "How does a Libertarian function as a member of the Palm Beach Gestapo?"

Walker with Flag.

He said, casting his eye to the next table: "I can see a vacant seat or two for you over there."

But he was just kidding... I think. Later I checked online and he is  portrayed as representing small businesses that are being oppressed by the P&Z Board. A worthy role.

He had a lot of interesting things to say. He swam with the pop-art folk in the 1960s and developed his own style, before he started his firm Walker Group Designs. What intrigued me most from an ART BIZ perspective is that he has figured out how to turn his artistic ideas into cash. His idea after the election of Donald Trump in 2016 was to develop a flag for the "People's Republic of Palm Beach."

I didn't ask him how he interprets his flag. The Palm Beach Post says he just made the British red and blue more tropical, switching to the pastel green and pink of Palm Beach.

My own interpretation is that the gold dollar signs are for the Randian producers, who are cornered by the pinko stripes of the  moocher-taker-looter-parasites. That would fit the title of the flag and the role the artist plays on the P&Z Board.

So I asked him how much he charges for this cute little flag, thinking I could pick up a couple of them as gifts. He said that he had made three paintings in different sizes, selling at $25K, $35K and $45K, as I remember. 

Then he made the painting into a real flag, ready to haul up the flag pole complete with free grommets to hang it by. He made 20 numbered flags. He sells them for $10K each. In case you are as curious as I was, he has sold seven of them. So he has 13 left in inventory. 

He told me that if anyone buys one of his unsold Palm Beach Flags through this post, he will donate a percentage to a charity of my choice. What an opportunity for you, reader, to do good at the same time as you indulge your artistic whim! Please follow up with Wendy Fritz (interview here) at the Fritz Gallery, +1-561-906-5337. Say you are responding to my post.👍

CITY ECONOMIST | Jan. 1, 2015–130K Views; 10 Most Viewed Posts

Thank you for reading the CityEconomist blog.

Here are December's top 10 posts: The "Nonemployment" Series, Parts 1 and 2 Dec 12, 2014
How FDR's Team Calmed the Panic and Created 70 Yea... Oct 16, 2014
Swan Song from Floyd Norris on the Financial Foxes... Dec 19, 2014
When Irish Bonds Look Smashing (Updated) Dec 23, 2014
November Growth in Payroll Jobs by Industry Dec 5, 2014
The Dutch Resistance and Its Financing 1940-1945 Oct 27, 2014
NYC More Catholic, Jewish, Muslim Feb 15, 2008
How Candy Cigarettes Contribute to the U.S. Budget... Jan 1, 2012
Food Biz: The Irony of Tasting Menus (Comment) Apr 16, 2014
Harvard College Admissions - The Asian Quota (Comm... Nov 25, 2014

INEQUALITY | Piketty

Prof. Thomas Piketty, Paris School of
Economics, author of "Capitalism..."

Prof. Thomas Piketty (pronounced PEAK-et-tee) of the Paris School of Economics has been on a triumphal tour of the U.S. media to promote the new translation from French of his book Capital in the Twenty-First Century (Cambridge, Mass.: Belknap Press/Harvard University Press, 2014). What's the fuss?

The closest analogy seems to be the publication of John Maynard Keynes's General Theory, which in 1936 provided a way of thinking about monetary and fiscal policy that provided an economic rationale for the massive injection of monetary liquidity that was engineered by FDR and his first Treasury Secretary, Will Woodin, and the Federal budget deficits that followed.

Reportedly economists were awed then by the way Keynes solved several problems at once. Piketty has done the same thing for the discussion of income inequality.

But don't take my word for it. Paul Krugman has published several blogposts on Piketty's book, and his review appears in the May 8 issue of The New York Review of Books, entitled "Why We're in a New Gilded Age." Krugman sees several stages in the debate over inequality:

First, denial that rising inequality was happening on any major scale. Because of a stream of new data, sometime in the early 1990s

you could mostly say, “Oh, yeah? Guess what.” The evidence for a sharp rise in inequality [since 1975], a definitive break with the three postwar decades, was overwhelming.

Second, denial that those who were getting richer was a small group.  The whole top 20 percent, it was said, i.e., well-educated Americans, were getting richer.

But at a certain point — to a large extent thanks to Piketty and Emmanuel Saez [at Berkeley] — we got to say “Oh, yeah? Guess what.” Actually, rising inequality was in large part about the rise of a tiny elite, the one percent and within that the 0.1 percent.

Third, denial that the ones getting richest fastest were a tiny elite as in the Gilded Age.

The answer [from Piketty] was, “Oh, yeah? Guess what.” We don’t have Gilded Age* survey data, but we do have tax records back to the early 20th century, and top income shares are right back at late-Gilded-Age levels.

In his review of Piketty's book in the NY Review, Krugman gives credit to Piketty for the increased interest in income inequality and above all in the focus on the top 1 percent. He also credits Saez and Anthony Atkinson at Oxford.

Piketty's bottom-line message, says Krugman, is that the United States is on a path back to

"patrimonial capitalism" in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.

Krugman gives credit to Piketty for using tax records to go back before survey data on incomes were generated by the Census Bureau and other agencies. This takes the United States back to 1913 and Britain back to 1909. France has wealth-tax records going back to the French Revolution.

Piketty's essential theory is that if workers can be replaced easily by machines, the rate of return to capital (r) will exceed the rate of growth (g) and this will lead to greater concentration of wealth.

Krugman thinks this is a terrific theory. He and Piketty both have a nagging concern that maybe the higher inequality of income resulting from "supersalaries" could be a significant factor. But the onus for this goes back to the U.S. government for lowering the tax rate, thereby making the marginal increase in incomes worth the time of CEOs to pursue.

The drift toward oligarchy is not inevitable, but Piketty and Krugman think it is probable. This will be comforting for you, or afflicting, depending on your POV. But, Krugman says, with the publication of this book "we'll never talk about wealth and inequality the same way we used to."

* Some writers use "Gilded Age" as largely synonymous with "Belle Epoque". The advantage of using "Gilded Age" is multiple - it doesn't require a decision and word processing technology surrounding an acute accent over the E in Epoque, it doesn't require the reader to know anything about a complicated period of European history, and it refers to American robber barons that we all know about, like Andrew Carnegie. The main difference in the timing is that the Belle Epoque starts in the early 1870s and goes all the way to World War I, whereas the Gilded Age stops with the end of the 19th Century or maybe with the death of Queen Victoria in January 1901 (in those days, finance still revolved around London).

P.S. The CityEconomist Blogpost just clicked over 75,000 page views. Thank you for reading!!

HARVARD | Admissions Changes, 1958-2012

L to R: John Tepper Marlin, Mrs. Robert
Swezey, Jeremiah Brady. Two Portsmouth '58
alumni at Harvard 1962 50th Reunion,
and the widow of a third. 

I greatly enjoyed my 50th Harvard Reunion in May. Last month I commented to the East Hampton Star on the great, and very visible, changes in Harvard admissions since I embarked on my undergraduate years in 1958. Here is the letter as published. 

Changing Composition [of Harvard Undergraduates]

    Springs, June 25, 2012

To The [East Hampton] Star:
     Helen Rattray’s report (Connections, June 14) on Chris Cory’s 50th reunion at Yale prompts me to compare a couple of her comments to last month’s 50th reunion at Harvard, which I attended with my wife, Alice.
    It is instructive to watch in the parade of alumni/ae the changing composition of the classes before and after 1962. The 1960s saw a huge disruption in college admissions. In the 1950s there appears to have been a modest push for more Catholics at Harvard, but this is not so visible in the parade. The push in the 1960s for more minorities and in the 1970s for more women caused much more consternation.
    I attended a small Catholic prep school, Portsmouth Priory (now Abbey), having spent three years already at another Benedictine school in England. The Class of 1962 at Harvard included seven graduates of Portsmouth, two of them via advanced placement. Given that the Portsmouth senior class numbered 35 students, the school was pleased.
     Meanwhile, while Yale had two (some say three) African-American students in the class of 1962, Harvard had 11, with a slightly larger class than Yale’s. The 50th reunion attendance in Sanders Theater was 100-percent white, as far as I could tell. One of the Harvard 11, W. Haywood Burns, was elected a 1962 class marshal and went on to become dean of the City College of New York Law School at Queens College. However, he died at 55 years of age in a 1996 Cape Town car crash.
    Once the civil rights era of the 1960s took hold under President Kennedy, affirmative action in admitting minorities became the new goal. But within a few years, the search for gender equality hit Harvard Yard. In 1970, the 50th anniversary of the ratification of the 19th Amendment, giving U.S. women the right to vote, was celebrated with a huge parade in New York City that featured both Gloria Steinem and Betty Friedan. It had taken 50 years between the 15th Amendment enfranchisement of black males until the 19th Amendment. Young women in 1970 were not going to wait that long again to press for equal opportunity in college admissions.
    The story of the struggle at Harvard over Radcliffe admissions during the years before and after 1970 was told in April 2012 by Helen Lefkowich Horo­witz, a college dean, who received her Ph.D. from Harvard in 1969. Students and the National Organization for Women campaigned for an equal male-female ratio at Harvard when the ratio of men to women at Harvard was fixed at 4 to 1.
    To understand what the women were up against then, here is what the dean of freshmen, F. Skiddy von Stade, no doubt exhausted by the implications of a rapidly changing composition of the freshman class, had to say about the idea of admitting equal numbers of men and women:

    When I see bright, well-educated, but relatively dull housewives who attended the Seven Sisters, I honestly shudder at the thought of changing the balance of males versus females at Harvard. . . . Quite simply, I do not see highly educated women making startling strides in contributing to our society in the foreseeable future. They are not, in my opinion, going to stop getting married and/or having children. They will fail in their present role as women if they do.

    Ms. Horowitz comments:

I’m sure his niece, the great mezzo Frederica von Stade, would have shaken her head at this, if her schedule permitted.

    The dean of admissions in 1970 issued a report that opposed changing the 4-to-1 ratio. But five years later the Strauch Committee recommended gender-blind admissions and this seems to be, formally, the rule now.
    Are there still quotas at Harvard? Formally, no more. But the admissions office would doubtless be forgiven for keeping on eye on the composition of the class to avoid surprise imbalances at the end of the process.
    The unconfirmed scuttlebutt is that the anti-merit quotas that used to keep out New York City Jewish kids are now most likely to be keeping the numbers down on admitting so many talented Koreans applying from overseas or Korean-American families in the United States. I am pleased to say that a Korean-American from the Harvard Class of 1962 was very much present at the 50th reunion.
    Sincerely,
    JOHN TEPPER MARLIN

MONTESSORI | Key to Innovative Passion?

Tony Wagner

On May 3 Harvard celebrated its 375th anniversary in New York with a focus on Harvard's "tradition of innovation". I wrote about it on HuffPost and more recently on my CityEconomist blog. One of the things Harvard has done is to create a Technology and Entrepreneurship Center, which sounds a lot like the NYC Cornell-Technion center that will be created on Roosevelt Island in New York City.

The first Innovation Education Fellow at the T&E Center is Tony Wagner, who has written a four-star (on Amazon) new book Creating Innovators: The Making of Young People Who Will Change the World. Knowledge@Wharton interviewed him about his book. They asked: "How can parents, mentors and others help young people to develop creativity and the skills of innovation as they age?"

Wagner: ... [E]ncourage more exploratory play. So many parents are programming their kids' days and weeks, are worrying about their kids resumes in kindergarten or even earlier. What they need to understand, first and foremost, is that passion derives from more exploratory play. I don't know whether you picked this up in the book, but I uncovered research to the effect that many of the most successful entrepreneurs and innovators today were, in fact, products of Montessori schools, where it is much more of a play-based form of learning. I think the second thing that parents need to understand is they cannot and they should not try to protect their children. Too many parents are helicopter parents who are trying to hover. They are trying to tell their children how wonderful they are, which I think is a huge mistake. You really have to allow kids to experiment and to make mistakes because that is how they are going to gain self-confidence. They don't gain real self-confidence from having been protected and living in a cocoon all their childhood.

My mother (Hilda van Stockum Marlin) and grandmother (Olga Boissevain van Stockum) were both trained in the Montessori Method by Maria Montessori herself. My sister Sheila founded many Montessori schools in the UK and currently is based at High Elms Manor in Garston, UK. We have just located a copy of my mother's curriculum book, which she prepared under Ms. Montessori's direction. We are still hunting for the original book in full color.

HARVARD | Glomming onto Stanford-MIT Model–Splendor in the Glass

Professor Kit Parker and Dean Youngme Moon
Engage NYC Alumni on Innovation

In New York City last week to celebrate Harvard's 375th year and reconnect with alumni was Drew Gilpin Faust, Harvard’s 28th President and its first woman president.

Alumni came to the Allen Room at Jazz at Lincoln Center, on the 5th and 6th floors of the Time-Warner building at Columbus Circle.

The huge room is surreal, with the backdrop of New York City arrayed through two full floors of walls of glass squares–an exterior flat wall and an interior curved one.  As the evening rolled on like a play in a Greek amphitheater, the lighting darkened and added to the entertainment value of the event.

Walter Isaacson was President Faust’s interviewer. He served up a few appropriate puffball questions and then fielded sharper questions from alumni, who wrote on 4x6 cards at each seat with a little golf pencil. A flock of serious people patrolled the stepped aisles of the room and carried the questions to Mr. Isaacson. The same people later carried radio microphones up and down the steps for the second part of the program, on innovation, which was the meat of the evening.

President Faust announced an "80 percent yield" for the entering freshman class of the fall of 2012, i.e., the number of applicants who accepted a place at Harvard College divided by the number invited to attend. This 80 percent figure is the highest Harvard figure since 1971, and my recollection is that Harvard's yield is the highest of any university. Huzzah!

President Faust explained Harvard's high yield rate by giving examples of the current emphasis on teaching at Harvard. The University is attempting to reward good teachers with the same kinds of recognition that accompany significant research.  Good idea!

Isaacson then read out the first alumni question, asking about the status of the Science Center at Allston, and the cognoscenti leaned forward to hear her response. President Faust answered by referring to the impact of the global financial meltdown on the size of the University's endowment.

My Comment: The scaling back of the Science Center is a reflection of the decline of the Harvard Endowment by 30 percent or $11 billion in fiscal 2009, as predicted earlier in Vanity Fair.  In the prior 18 years, the Endowment grew more than sevenfold. Jack Meyer, former First Deputy Comptroller and investment manager for the New York City Comptroller, quintupled the Endowment during his tenure. Key Harvard officials were apparently unhappy in 2004 that Meyer and key staff earned eight-figure compensation for their good performance. President Larry Summers, with support from Robert Rubin on the Harvard Corporation, argued that Meyer was unnecessarily aggressive. Meyer and some key staff quit in early 2005 and set up a private hedge fund that did extremely well during the next five years, outperforming its benchmarks by 8 percentage points a year. President Summers did less well, resigning in mid-2006 following a well-publicized dispute with women faculty; the next president of Harvard was its first woman. To maintain its budget in light of the Endowment's 30 percent slide in 2009, the University took on $6 billion new debt, with a reported annual service cost of more than $500 million. Some ambitious plans, notably for the Allston Science Center, were shelved.  The endowment recovered 21.2 percent of its value in the last two years, but is still $5 billion below where it was in 2008.

A new plan for the Center is being refined, reports President Faust. It will encourage both a greater concentration of scientific talent in the science center and will establish designated locations for nearby private businesses to create spaces for commercializing new ideas–more like Stanford and MIT.

To underscore the message, the rest of the formal program was devoted to a discussion of innovation. The Dean of the Harvard Business School in charge of the MBA program, Youngme Moon, began the discussion. She is a short and slender (see photo at top) graduate of Yale (a few gasps were heard) and Stanford, and previously taught at MIT. She was counter-balanced physically by a beefy engineering professor with a background in the U.S. Army, Kit Parker. They engaged aggressively with the audience on where good ideas come from and the culture of competition. Having contrasted innovative companies like Apple and Nike with not-very-innovative enterprises like the US Postal Service, the two took pains to establish that Harvard was in the former category.

Their underlying thesis is that a university has the job of being a fountainhead of innovation. Individuals put out ideas and then through debate they see how their ideas compete with others in a marketplace of ideas. The discussion then circled back to what kind of students Harvard wants to admit and develop. Answer: It wants students ready to try new things, and it wants to encourage them to do so, which means making it okay to fail. No more looking the other way as students stay in their comfort zone to be sure of keeping all their grades at the A level. Harvard wants students to graduate having tried new things. Harvard wants to be a place where one can "put out ideas and let them compete and it is okay to have ideas fail and start over, letting the bad ideas go."

My Comment: The idea of a marketplace for ideas is ancient, at least as old as the Socratic Method. It was explicitly promoted by John Milton, John Stuart Mill and Thomas Jefferson, whose writings are resurrected when universities want to defend academic freedom and tenure. But Harvard is saying more than that professors should be  free to speak their minds–it wants students and faculty to develop ideas that will be marketable. The marketplace is not just a testing of ideas for soundness, but for actual dollarization of thinking. So Harvard becomes a kind of factory for new ideas, with venture capitalists lurking nearby to pump money into the best ideas. The venture-capital industry happens to have been pioneered by a government agency, the Small Business Administration, through its Small Business Investment Company program. It also works in the nonprofit field as the heart of social entrepreneurship initiatives. But rewards for risk-taking depend on timing and universities are not always the best place to commercialize ideas. Neither Bill Gates nor Mark Zuckerberg continued to hang around Harvard after they decided they had a good idea they could build into a fortune.

After all that we repaired to a post-discussion cocktail party with a parade of servers with small hors-d'oeuvres artistically arranged on elegant glass plates. The biggest risks seem to have been taken by the servers, who had to walk up and down stairs and then face hungry Harvard alumni competing to nab and wolf down the small delicacies. A good innovation for the Allen Room would be a dumb-waiter.

Postscript: After I wrote this I belatedly picked up my April 30, 2012 issue of The New Yorker and read the story by Ken Auletta on Stanford's close ties to business - "Get Rich U." The subtitle is: "There are no walls between Stanford and Silicon Valley. Should there be?" Auletta looks at the other side of the Stanford coin. Stanford faculty not in engineering or computer science told him they felt the humanities are neglected. They wonder about the harnessing of Stanford to student and faculty greed. What happened to the contemplative tradition? When the proposal to open up a New York City campus of Stanford came along, the dissidents questioned excessive focus on applied science. Auletta's story does not note a key fact in the competition among Stanford, Cornell and NYU. Along the way a Cornell alumnus pledged a $250 million gift to the Roosevelt Island campus if Cornell won the bidding. That must have skewed the decision-making, since the campus will be hugely expensive and New York City's contribution is limited to the land and some infrastructure. One person who has seen all three proposals believes that NYU's was the best of all. Once Stanford had withdrawn, the Mayor provided NYU with a substantial consolation prize in the form of space and resources in Brooklyn to help NYU realize its proposal in conjunction with NYU Poly (formerly known as Brooklyn Poly). Although Auletta criticizes the Mayor for giving Stanford a hard time in the final weeks of the competition, the Cornell gift was a game-changer. The Mayor's support of both the Cornell and NYU proposals may turn out to be brilliant. Business Week just came out with a riposte to Auletta, arguing that in the face of competition from China and India, we need more Stanfords. But what is properly a top economic priority for New York City and a valid focus for Cornell and NYU may not necessarily be totally compelling for Harvard. The trade of birthright for soup was a good deal for Isaac's father Jacob, but a bad one for Esau. It's at least worth a little more discussion, which is what alumni reunions are good for besides increasing alumni giving.