Soak the rich! (Colleges).(the Campus Economist, endowments)

University and college faculties are overwhelmingly liberal in their politics. The faculties of Harvard and the University of California at Berkeley were large contributors to John Kerry's Presidential campaign. The Berkeley faculty gave six times as much to Howard Dean as to George W. Bush. Campus liberalism is particularly pronounced at the most elite and wealthy institutions.

A core value of American liberals is the importance of redistributing wealth from the prosperous to others, through highly progressive taxes and transfer payments. Which leads to a question: If redistributing wealth is a good idea for workers, companies, individuals, and families, then intellectual consistency suggests it should be equally valid for institutions like colleges and universities. Right?

Why should students at Princeton, where economist Paul Krugman teaches when he is not thundering against the "well off" on the New York Times editorial page, enjoy income from huge endowments, while students at poorer institutions have far fewer educational resources? How unfair!

Worse, the extreme inequality of colleges is subsidized by the government. Gifts to rich schools are tax deductible for the donors. Universities and colleges pay no taxes on their capital gains, dividend, and interest income. This is an outrage against liberal principles! Remedial legislation is dearly needed!

These are no small matters. The disparities in college endowments are enormous. As of mid 2004, Harvard, Yale, and Princeton had average endowments of $14.9 billion, while three private institutions of similar size, George Washington University, Georgetown, and American University, averaged $543 million. That is a ratio of 27:l--about the same difference in income between a successful investment banker and a Wal-Mart clerk.

The numbers are even more striking in small liberal arts colleges. Grinnell, the richest of those that report data publicly, had an endowment of $1.2 million per student. Annual earnings of just 4 percent would produce more than $46,000 per student in yearly interest. Why does Grinnell charge tuition?

Bates College had only $106,000 in endowment per student, less than one tenth of Grinnell's. Gettysburg had $85,000 per student; Pitzer College $56,000; and Sarah Lawrence, only $38,000. That's about 3 percent of Grinnell's wealth.