Morals and money: the University's duality

Yale University was chartered in 1701 to educate youth "for publick employment both in Church and Civil State." It has always fostered responsibility to the world at large, and its graduates have fulfilled that responsibility with great distinction, enriching the lives of the nation and the world through their inventions, their art, their ideas, and their leadership.

This official mission statement appears on the University's web page. Next to it is a photograph taken at a Commencement: a graduate and her father, their backs to the camera, hold a cluster of big blue balloons. It seems that any minute they will fly away from Yale and into the future, to grand and glamorous lives.

SHAWN CHENG/YH

The myth of the graduate—who must emerge from the academic cocoon to fulfill "responsibility to the world at large"—is embedded in the minds of many students. But it does not tell the whole story. Responsibility to the world is not something deferred to those outside these hallowed halls. From scientists doing business with private biotechnology firms, financial administrators speculating on investment portfolios, or students sleeping in tents in protest of corporate clothing manufacturers, members of the Yale community do battle with responsibility every day. As Yale entangles itself in the activities of profit-making businesses, the idea of a university detached from the world's realities seems less and less believable. Gaddis Smith, PC '54, GRD '61, Larned Professor of History, who teaches a course on universities in American society, puts it this way: "There is no such thing as the Ivory Tower. There never was."

Yale needs money

With the recent growth of corporate-funded research, there is anxiety that the long-lived bastion of objective inquiry may be threatened by a grab for private funding. Although Yale has a variety of safeguards to prevent conflicts of interest, biotechnology firms often have close relationships with individual researchers, providing them with research funding or placing them on their boards of directors.

In some ways, however, the turn toward profit is inevitable. "Yale isn't sufficiently financially independent for its professors not to need to rely on outside grant money," Ben Givan, GRD '03, who has been researching this issue, said. Some projects would not be carried out at all if it weren't for extra money. To maintain first-rate education and research, universities have no choice but to rely on private spending.

Many conflicts stem from a struggle between Yale's ideals as a nonprofit educational institution and its financial needs. "At least in terms of philosophies, Yale operates very differently from a corporation like GM [General Motors]," Smith said. "GM just wants to make better cars. A university wants to attract students, faculty, and money, but it also has to have some ideas about intellectual freedom and human rights."

Despite this disparity, many of Yale's goals correspond to those of a profit-making entity. "The financial managers of this institution essentially have one goal: maximize income in a way that is consistent with the law," Smith said. "The University money managers have a kind of position that says, `Don't complicate our lives.'"

Promising ethical standards

In the struggle between the two sides of Yale—morals and money—what has kept money from winning? Augustus Linus Professor of Law John Simon, LAW '53, spearheaded a move for universities to seek a measure of social consciouness in investment policies, which helped tip the balance. In 1972, the Yale Corporation adopted guidelines from his book, Ethical Investment, which outlined a practical philosophy of a university's investment obligations.

Simon's book proposed the idea of a moral minimum. It doesn't ask that Yale's investment policies take active take positions on controversial issues, but instead that they adopt a stance against activities within corporations which are clearly "socially injurious." "How do you get people to decide what is good and what is bad? You can't," Simon declared. "But you can agree to a basic idea of not inflicting harm."

On top of a moral minimum, Simon constructed the idea of "voice and exit." Using the voice that all voting shareholders of a corporation have, Simon argued, the University should support the resolutions that reform harmful activities. If "voice" has no effect—if the University can't influence its activities through resolutions, then "exit" should be used as a last resort—that is, divestment.

Two committees were formed to help the University President and Corporation members make these investment decisions: the Investor Responsibility Committee, consisting only of members of the Corporation, and the Investor Responsibility Advisory, which includes students.

Yale's policy is good on paper; the problem lies in execution. There is no indication that the University has used its voice in any shareholder resolutions, and has notoriously resisted the call for divestment from tobacco holdings. "These committees, they were hardworking committees in the '70s and '80s," Professor Simon commented. "To be honest, I don't know what has happened to them." Simon also spoke of the inaccessibility of information. "We used to send out yearly press releases of 20 or 30 stock issues—what controversies were arising in each corporation, what was being voted on." This is no longer the case.

Does Yale live up?

The issue of sweatshops parallels the story of ethical investment. Licensing the Yale name to clothing companies began as a business venture. And as in the case of investments, the University relented to demands for more social responsibility by joining the Fair Labor Association (FLA). But Students Against Sweatshops (SAS) are now claiming that the FLA is a largely empty structure that would impede real progress on conditions in sweatshop factories.

In a Tues., Mar. 21 letter to the student body, President Ricard Levin, GRD '74, upheld FLA membership as a legitimate way to monitor factories and questioned the validity of its competitor, the Worker Rights Consortium (WRC). "It would seem premature to lend Yale's name and financial resources to an organization whose founders coutinue to attack efforts by apparel companies, human rights organizations, and universities to create a cooperative system of industrial regulation," he wrote.

Stephen Osserman, DC '02, speaking from a tent in Beinecke Plaza, disagreed. "The whole point in joining the FLA is gone," he said. "I would understand if Levin didn't agree with making sweatshops better at all. He's agreed, but not taken any steps to follow through." Meanwhile, Levin has rejected SAS's proposal to create a committee with decision-making authority to evaluate Yale's licensing policy. "For 300 years Yale has vested final authority for decisions of consequence in the President and Fellows of the Yale Corporation," Levin wrote in his letter.

"Levin's statement is historically accurate," Smith said. "The Board of Trustees have always had final authority." Smith pointed out that working outside the system through protests has often been an effective means of student influence. "Yale, like any other institution, doesn't like unfavorable publicity," he said. "When the issue of South Africa came up and student protestors erected shantytowns, President [A. Bartlett] Giamatti [SY '60, GRD '64] was appalled. The issue was publicized nationally."

Osserman agrees about the importance of protest, but wants a more direct means of influence. "Columbia has a student senate which actually has a voice in issues like sweatshops," he said. "I don't see why Yale couldn't do the same."

A relativist world

On Thurs., Mar. 30, protestors of a different sort took to Beinecke Plaza, complaining about Yale University Health Services' spending of student money on abortions, a policy that they consider amoral. But such spending is justified by Yale on the grounds that it is a legal procedure, and that insurance is based on funding procedures that affect only a few students. Paul Genecin, director of the Yale Health Plan, explained, "Our mission is to help students stay in school." Ironically, protestors saw such spending as reason to leave. "There is something inherently wrong with forcing students to either ignore their moral views and go to Yale or not go to Yale at all," said Gene Vilensky, TC '03. Such uproar represents yet another attempt by students to have some say in how Yale spends it money—but it also illustrates the complex moral quandaries that ensue. At the University of Wisconsin, students recently lost a lawsuit in which they attempted to avoid paying student fees because they objected to funding of student groups to which they were philosophically opposed. This bodes ill for those who are attempting to pressure universities into spending their money with moral concerns in mind.

SAS members continue to sleep on Beinecke Plaza, waiting to be given a louder student voice. On Thurs., Apr. 27, Phillip Morris will hold its annual shareholder meeting in Richmond, Va. Will Yale—assuming it still owns stock in the company—act in a socially responsible way? It remains to be seen when—and how—the real conversation between the the accountants and the ethicists, between the Corporation and the students, will begin.

Back to News...