A Eph working in finance writes about a recent Record interview with Morty.

Did you see this?

I’m shocked. I had no idea that Collette had lost so much of our endowment ($500M+). Plus, Morty sounds like he’s panicking. The fact that he doesn’t have a good grasp of the school’s finances AND that he used the phrase ‘brink of bankruptcy’ in a Record interview has me seriously reconsidering Morty’s competence at a time we need someone good at the helm. Either Morty is playing up the situation a little to try and good more donations or the college has seriously overextended itself.

1) You shouldn’t be “shocked.” With an 50% allocation to global equities, it is impossible for the Williams endowment to escape serious damage during a market meltdown. See our previous discussions.

2) Are we reading the same interview? Morty doesn’t sound panicked at all. In fact, he seems his always highly competent and (too?) honest self. This is one of the many things that I love about Morty! Consider the bankruptcy quote in context:

So, there are no plans to lay off any faculty or staff?

If we get to the brink of bankruptcy, who knows what’s going to happen? But as things are going, no plans for that … We come up with an attrition rate of seven faculty and 10 staff per year, which is lower than what it’s been. All over American outside of academia, people are being fired. Even within academia they’re being fired left and right. We’re the major engine of economic activity in the northern Berkshires. We talk all the time about how it’s not just the faculty are educators, but the staff as well, and they need us most when many of their partners or spouses are being laid off. Is this the time when we should lay them off too, or are we serious about the family and the community? I think we’re serious.

Morty is making it clear that, if the endowment levels off at $1.3 billion or above, there will be belt-tightening (no more visiting professors) without real pain (lay-offs). But, obviously, if the endowment falls further or stay flat for long enough (the Japan scenario), all options are on the table.

3) “[R]econsidering Morty’s competence” is absurd. It is hard to imagine a better leader to see Williams through a (potential) economic crisis. As you note, Morty may also be emphasizing the difficulties so that people start cutting costs seriously. (Please don’t tell me that the College is going to pay for a trip to DC for the Obama inaugural.)

4) It’s somewhat frustrating that some people (not this Eph) perceive me as a big Morty critic when, in fact, I am a huge fan. 95% of the decisions that Morty makes are correct. And the 5% that (I think) he gets wrong are often more a matter of tactics than ultimate goals. Yet I write much more about the bad staff than the good stuff. Let me rectify that my pointing to that Record interview. Read the whole thing. Morty is right about the challenges Williams faces and the best methods for confronting them.

5) The more subtle question is: What signs/decisions would make me rethink my faith in Morty? What evidence would falsify my hypothesis that he is a great Williams president? An easy question! A failure to start cutting costs in a serious fashion. Although it may be too late to do much with the 2008-2010 budget, Morty needs to start making tough decisions now that will contain the operating budget to zero growth for the next two years. If he doesn’t, I’ll start to worry that Morty is a just great fair weather president. When tough choices were called for, he failed to make them. Let’s all hope it doesn’t come to that. Popperian falsification is much more fun in theory than in practice.

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