Academic Horror Story (Harvard University)

Are the heads of large companies worse than the rest of us? Aaron Swartz said as much when, in a discussion of Ken Auletta’s Googled, he called them “sociopaths”. Nicholson Baker seemed to have had similar thoughts when he said about the same book that “what Auletta mainly does is talk shop with C.E.O.’s, and that is the great strength of the book.”

Lawrence Summers, now in the Obama administration, was head of Harvard University, one of the world’s most powerful companies, from 2001 to 2006. Everyone knows about Summers’ repeated tendency to do the incredibly-inappropriate thing. A  generous interpretation of those incidents is that Summers had lived a sheltered life. I believe they were signs of something much worse — signs of pathology — based on what he did to one of Harvard’s best employees:

Back in 2002, a new employee of Harvard University’s endowment manager named Iris Mack wrote a letter to the school’s president, Lawrence Summers, that would ultimately get her fired.

In the letter, dated May 12 of that year, Mack told Summers that she was “deeply troubled and surprised” by things she had seen in her new job as a quantitative analyst at Harvard Management Co.

She would go on to say, in later e-mails and conversations, that she felt the endowment was taking on too much risk in derivatives investments, and that she suspected some of her colleagues were engaging in insider trading, according to a separate letter written by her lawyer that summarized the correspondence.

On July 2 Mack was fired. But six years later, the kinds of investments she allegedly warned about did blow up on Harvard. The endowment plunged 22 percent last summer, in part due to the collapse of the credit markets. . . .

Mack, who holds a doctorate in mathematics from Harvard, had been with Harvard Management for just four months when she approached Summers. She asked him to keep her communications confidential, or risk making her life “a living hell.”

But on July 1, Mack was called into a meeting by her boss, Jack Meyer, then the head of Harvard Management.

The next day Meyer fired her, according to the letter from her attorney, Jonathan Margolis, a copy of which was obtained by the Globe. Meyer told Mack that she was fired for making “baseless allegations against HMC to individuals outside of HMC,” according to the Margolis letter.

Mack writes to Summers, alerting him to behavior by her co-workers that she believed could (and eventually did) have a very bad effect on Harvard. Fearing loss of her job, she asks him to keep her warning confidential. Summers fails to honor her request. What distinguishes this particular horrible behavior from more conventional examples of horrible behavior by incredibly powerful people is that Summers’ action did him no good. He didn’t backstab Mack to get to the top. He was at the top. He didn’t exploit Mack. He didn’t cheat Mack. This is coming across a courageous decent far-seeing person, much less powerful than you, who is trying to help you and all the people in your care  . . . and giving that person a good hard kick. For no reason. There is something very wrong with Lawrence Summers.

Frontline’s recent show The Warning tells how Brooksley Born, when she was head of the Commodity Futures Trading Commission (1996-1999), did her best to protect the rest of us from exactly what Mack warned about. Summers told her, according to a third party, “you’re going to cause the worst financial crisis since the end of World War II. I have 13 bankers in my office that have informed me of this. Stop. Right away.”

19 Responses to “Academic Horror Story (Harvard University)”

  1. Harold Jarche Says:

    Sounds like The Gervais Principle. The “Sociopaths” at the top are protecting the system from “Losers” like Meck, who don’t realize that it’s all rigged. A “Clueless” manager would never have raised the alarm and provoked the ire of the few at the top.

    http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/

  2. Siah Says:

    This story really freaked me out.

  3. Michael Bishop Says:

    Seth, boston.com link is broken

    Are you so sure you understand what happened that you want to accuse Summers of being evil?

  4. seth Says:

    Michael, “evil” is your word, not mine. Mine is “pathology”. No one at Harvard nor Summers himself has denied what Mack has said. It has been more than half a year since she said it. They know a lot more about it than I do — and, as far as I can tell, they agree with her description of what happened. If you know something I don’t know, or have a different interpretation, you are welcome to put it forward.

    I’ve fixed the boston.com link, thanks for letting me know about it.

  5. Andrew Gelman Says:

    Seth:

    My impression is that it’s pretty much universal in organizations that if you go over your immediate superior’s head to talk to a higher-level figure in the organization, he or she will go right back and talk with your immediate superior. I agree this is a problem–it can be a huge problem–but it happens all over the place. Whether or not it’s “pathological,” it’s hardly unusual for Summers to behave like just about every other higher-up.

    I think this attitude is horrible, horrible, horrible, but it happens all the time, and there’s often a huge amount of secrecy about who’s talked with whom in an organization. Higher-ups always like to follow the line of the hierarchy.

    More specifically, I disagree with your implied claim that there was no reason for Summers to talk to Mack’s boss. (The basis of your claim of “pathology” is, I believe, that you’re saying that Summers did something bad “for no reason.”

    An obvious reason for Summers to talk with Mack’s boss is for Summers to get to the bottom of things as quickly as possible. The president of an organization is a busy guy. Trying to handle this while protecting the confidentiality of someone he doesn’t know . . . well, maybe that would be the moral thing (and, in this case, it would’ve been the smart thing too, retrospectively), but, short-term, it takes a lot less of Summers’s time to call Mack’s boss, or Mack’s boss’s boss, or whatever, and delegate the problem to them.

    It’s amusing that Mack shares a name with the lowly turtle who quit his job and, as a result, toppled the mighty Yertle. I wonder what’s happened in the 8 months since the story came out in the newspaper. It doesn’t seem to have been enough (yet) to topple Summers. I’m of mixed feeling on this; on one hand, behavior such as Summers’s is pretty horrible (here, I’m assuming the claims in the news report are accurate); on the other hand, maybe it doesn’t make so much sense to slam Summers for the sort of behavior you see in just about every organization; on the third hand, setting an example with Summers might motivate upper-level managers elsewhere to think more carefully; etc.

  6. seth Says:

    Andrew, thanks for your reaction. The “bad thing” that Summers did wasn’t talking to Mack’s boss — it was telling Mack’s boss who complained. He could have easily talked to Mack’s boss about the complaint and kept her identity confidential. A Harvard Crimson article about this says (based on email documentation) that Mack was promised confidentiality.

    I don’t think you see this sort of betrayal “in just about every organization”. I can’t think of a single example anywhere close to this. I am unfamiliar with many sorts of organizations but in the ones I know about I have not encountered anything like this. Until now.

    My guess, based on the Born story, is that Summers decided that Mack should be fired and accomplished that by telling her boss what she’d done. “May I fire her?” Mack’s boss asked Summers. “She’s your employee,” he replied. I am quite familiar with the dangers of whistle-blowing. It’s plenty dangerous, but not — in any other case I know of — because the person you are writing to might decide you should be fired.

  7. Andrew Gelman Says:

    All the organizations I’ve ever seen, if person A complains about boss B to higher-up C, the most likely next step is C calling up B and saying, “Hey, A says you’re doing something wrong. What’s up?” I don’t know about the Summers case, but in general I doubt that C gives a damn about A, one way or another; C’s goal is to not have to think too hard in these situations and to rely on B to deal with it.

  8. peter Says:

    I don’t think you see this sort of betrayal “in just about every organization”. I can’t think of a single example anywhere close to this.
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
    a similar dynamics occurred in Frontline’s recent show The Warning tells where Brooksley Born was vilified. what about Sec. Def. Rumsfeld firing of General Shinseki for not toeing the company line (if you recall Shinseki opined that about three times the troops would be necessary to keep order; Rumsfeld disagreed and the relatively small U.S. force was unable to maintain order allowed the looting/counterinsurgency to gain traction).
    I’ve seen this over and over again. back biting, intellectual dishonesty and casual betrayal is rampant in every organization and, as far as i can tell, in many relationships.
    What is notable about this story is Summers is as much a bungler as Bernanke and Geithner. they all did well in school and were an integral part of the financial disaster(i.e., it happened on their watch); yet they are charged with fixing the problem. They’re fix? to repeat the same mistakes of the past, i.e., liquidity (money printing) and low interest rates that will insure asset bubbles throughout the world and will render our money worthless.

  9. seth Says:

    Andrew, Mack asked for confidentiality and was promised it.

    Peter, the two cases you mention (Born and Shinseki) are both very different. from the Mack case. Born wasn’t fired. A promise of confidentiality wasn’t broken. She was much much more powerful than Mack. She wasn’t a whistle-blower in the usual sense; she was simply trying to do her job as best she could. Whereas Mack’s job description didn’t include “protect Harvard from your foolish superiors”. As for Shinseki, of course if you publicly disagree with your boss, especially in the military, you risk being fired. Mack didn’t publicly disagree with anyone. Moreover, the power difference was much greater in the Summers/Mack case than in either of those two cases.

  10. Andrew Gelman Says:

    Seth: I don’t know what “a whistleblower in the usual sense is,” but someone going around saying that the people she’s working for are thieves . . . that sounds like a whistleblower (in a very good way)!

    On the other point, I think it’s standard operating procedure in almost any organization that when person A complains about immediate supervisor B to higher-up C, that C will immediately go and talk with B, whether or not confidentiality has been requested or promised.

  11. peter Says:

    Seth,
    in the article i don’t see that Summers made a promise; and even if he did promises are broken all the time. Mack does not have a cause of action (a legal claim) even if summers broke his promise (which i don’t see from you excerpt).
    Also, Shinseki’s comments that resulted in his dismissal were made to a Congressional Committee; whatever duty of loyalty one has to one’s boss, it cannot supersede the duty to speak truthfully under oath.
    But why quibble; the larger point of the summers/mack episode and the examples i gave are same; there is an entrenched institutional mantra that is defended at all cost; the people at the top have an interest in the status quo and see themselves as indistinguishable from the institution, so that an attack of any sort on the institution is an attack on them and vice-versa. That’s the problem. Summers is not any worse or better than anyone else. They are all the same, that’s how they get to the top. They stay at the top (or in power) by letting everyone around them know that dissent(which might reflect badly on them) will not be tolerated. Anytime any of them speak you’ll notice that 80-90% of the comments are self-aggrandizing or defending their department. This is especially true of Geitner and Bernanke.(just today Bernanke said Fed policy of easy credit played a small role in the housing bubble and that mostly it was caused by relaxed lending standards and exotic mortgages; of course, those 2 phenomena would not have been present without the easy credit provided by Fed policy; so his comments were just double speak designed to exonerate the Fed from it obvious responsibility; It is not a coincident that there are are legislative proposals to audit or otherwise supervise the Fed and his comments were an attempt to thwart that effort.)
    Finally whatever the result of the Mack/Harvard lawsuit, her career is likely irrevocably damaged in the way that an Arm General’s career would be damaged by being dismissed by the Sec. of Defense. Even if Mack is vindicated by the lawsuit, the message to every employee is that same, i.e., keep your mouth shut or we’ll ruin you.

  12. seth Says:

    Peter, the promise of confidentiality is described here:

    http://www.thecrimson.com/article/2009/3/31/hmc-analyst-questions-dismissal-after-a/

    As far as I know there is no “lawsuit”. There was a settlement between Mack and Harvard several years ago. I suppose Mack released the documents she did because she thought the rest of the world should know what happened to her. I agree, obviously.
    Promises of confidentiality to whistleblowers “are broken all the time”? I thought I knew a lot about what happens to whistleblowers; I haven’t encountered this. Can you give an example?

    Andrew, yes, Mack was a whistleblower in the usual sense. My point was that Brooksley Born was not. Born thought OTC derivatives should be regulated. That was why she got in trouble. Born wasn’t criticizing her co-workers or boss.

    I have the same question for you as for Peter. You seem to think that promises of confidentiality to whistleblowers are routinely violated (“standard operating procedure”). Could you tell me an example?

  13. peter Says:

    i think we’re speaking at cross purposes. your distinctions are correct, but in a big picture sense, in my opinion, not terribly relevant. if you google “fate of whistleblowers” several items are raised; i’m not going to review all of them to see if promised confidentiality was violated, but it hardly matters if one’s career is derailed; it seems to me that this is the important issue.
    e.g., “The fate of whistleblowers is characteristically bleak in that if they have not already decided to resign they can expect to be dismissed from their employment.”http://findarticles.com/p/articles/mi_m4339/is_n2_v19/ai_20823856/

    “The conventional story–high-minded individual fights soulless organization, is persecuted, yet triumphs in the end–is seductive and pervasive. In speaking with whistleblowers and their families, lawyers, and therapists, Alford discovers that the reality of whistleblowing is grim. Few whistleblowers succeed in effecting change; even fewer are regarded as heroes or martyrs.”http://www.cornellpress.cornell.edu/cup_detail.taf?ti_id=3501 WHISTLEBLOWERS
    Broken Lives and Organizational Power
    C. Fred Alford

  14. seth Says:

    Peter, yes, I knew about the average fate of whistleblowers. Harvard isn’t your average company. It claims to be much better. (The average company hasn’t received billions in charitable donations.) Nor Larry Summers the average CEO. He claims to be much better. (The average CEO isn’t high in the Obama administration.) It wasn’t naive of Iris Mack to expect that a promise of confidentiality from Summers, the CEO of Harvard, would be respected.

  15. bc Says:

    I’m late to the discussion, sent here by today’s Seth links.

    Andrew Gelman has it correct, although I might go further. It’s the boss’ job to make their organizations run smoothly without constantly digging in and micromanaging. They will always get requests that skip levels and they will nearly always send them back down to the sender’s manager to go and deal with it without bugging them. To do anything else undermines the intermediary managers and swamps the CEO.

    Senior managers get a lot of ‘my manager is screwing things up’ email, usually from people who aren’t very good at their job. You can’t tell how good Mack was, but she was a newbie in the org.

    Did Iris Mack know Summers? Did she know that he’d want to listen to her comments? If not she’s taking a huge risk and it didn’t pay off. That was a painful way to learn a lesson.

    Ms Mack starts a new job and straight away goes behind her manager’s back to mail really bad news to the CEO. No wonder she’s no longer on the team.

    Now we don’t and can’t know the circumstances. Did she raise the problems with her team members and her manager? Did she go up the chain with her manager’s assistance? How well did she communicate with her coworkers? Did her manager already know the problem? How big was the org chain? But based on what little is in that quote she sounds like someone I wouldn’t want on my team. Maybe that’s what Summers thought, too.

    Seth, it looks like there was no promise of confidentiality from Summers. The article mentions a request from Mack, but no promise from Summers. He’s got a new employee whining to him so he sends it to the line manager. Yeah it’s kinda rough since she asked for privacy but he’s got a big organization to run, and yeah it bit him in the arse a few years later but there’s nothing out of the ordinary with his actions.

  16. Seth Roberts Says:

    Was Mack naive? Yes. Of course new employees are naive. It is inevitable. Naivete should not produce such results. As for Summers, I don’t find the “everyone does it” excuse (“there’s nothing out of the ordinary with his [Summer's] actions”) persuasive or exculpatory. Summers bears considerable responsibility for the financial crisis because he was one of the strongest opponents of bank regulation. Sure, his position was popular. That doesn’t excuse it.

  17. bc Says:

    There are two areas of concern here – investment and management. On the investment front I can’t comment – I don’t know that area – and my previous comment could be misread otherwise. My bad.

    My comments were only on Summers’ management actions. Sending employee complaints about how the business runs back down the chain is good management.

    The boston.com article but it is behind a paywall and there are so many details missing that it is impossible to say anything more. Depending on those details the actions of Summers and his management staff could be anything from exemplary to illegal.

  18. Paul Sherrard Says:

    “[N]ew employee whining to him”??

    bc, this employee had good reason to suspect her peers of insider trading. Hello? Lawbreaking? Corruption? Playing havok with an esteemed institution’s endowment and reputation? Her motives were plainly good and not at all self-serving. Yet you try to spin it like she went whining to the boss for a better stapler. Why?

  19. Seth Roberts Says:

    “Sending employee complaints about how the business runs back down the chain is good management.” Not when the complaint is that your immediate boss is doing criminal or near-criminal stuff. Obviously that will get the complaining employee fired. As happened here. As Paul Sherrard says, her motives were plainly good — noble, even. Why get her fired? That’s a horrible way to treat employees who try to do the right thing.