Interview with New MIT Corporation Chairman
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FNL: Let’s move on. Over the last decade and more MIT has collaborated with several other countries to form research programs, etc. There’s Singapore, Russia, Abu Dhabi, to name just three. This is a dramatic change from the Cold War days. What are your thoughts on these international collaborations? Are they discussed at the Corporation meetings?
RM: These collaborations are definitely discussed at Corporation meetings. And there have been varying degrees of success. The Skolkovo Institute [in Russia] has been a work in progress. You know, I wasn’t around here five years after MIT was founded, but maybe people were saying the same thing about MIT back then.
Singapore is more mature; we’ve been there 20 years now. And I want to be clear that nowhere are we trying to create another MIT with the Institute’s name. We all agree, everybody agrees, especially the Corporation, that the MIT brand should never be diluted or imperiled.
To have international engagements seems reasonable. The world’s a big place. It used to not be quite as big. And we distinguish – and I’m sure the faculty does as well – between educational endeavor and research endeavor. So we do research in a lot of different places, funded by a lot of different sources. Some foreign, some government, some philanthropic. So, it’s MIT research, and I don’t think we are ever that sensitive about letting people say that they are paying for our research.
But we have not set up a residential educational institute anywhere else. Those are just the facts, as I understand them. We are not granting MIT degrees anywhere else in the world. We are, however, doing MIT research at other places in the world. So, with that distinction in mind, as to whether or not we should, someday, extend our education reach beyond Cambridge, MA, that’s a question more for the faculty and administration. Is that a down payment on the answer?
FNL: It is.
RM: This is what I did say to the Corporation: After World War II, which is basically when MIT really got going, the United States had 50% of the world’s GDP. And in terms of the kind of GDP that you need in order to sustain the sorts of things we do at MIT, like a disposable sort of advanced GDP, we were probably three-quarters of the world’s GDP.
There are certain things you can track linearly to the GDP of a country. Basically what a country can afford, like its defense budget or its R&D budget. And our government was incredibly enlightened in making a major investment in research. But it was also a function of the fact that we could afford it. The rest of the world simply couldn’t. So, our international strategy after WWII was just to be in America. And in particular, this was true for MIT, because what we were doing was what the world needed, because the world had turned scientific and technological.
So we were in the perfect place at the perfect time, and this was the perfect institution to take advantage of that. But today, you wake up and the U.S. is 23% of the world’s GDP. And it’s going down. Our GDP is still growing, but the rest of the world is growing faster. So for us to have an effective monopoly now is just not going to happen.
Back when we were young, even though we were 50% of the world’s GDP, we were getting an even greater share of the world's talent. Our grad students would come from all over the world, and then they would stay here. Now, the world’s changed. There’s a middle-class in most of these countries, and the grad students are returning to their own countries. If you think of it as a market share exercise, we have a big headwind, whereas before we had a tailwind. Now, I think that’s an international strategy question and this Institute would be very remiss not to carefully consider what the implications of these incontrovertible facts will be over the next 50 or 100 years.
FNL: We hear concern from some faculty that these international collaborations are financially based versus research based, or intellectually based, or humanities based.
RM: I don’t believe that. I think they are grounded in research. There is some financial component that flows through the Institute to compensate the Institute for the allocation of resources – for both time and attention.
There are a lot of places in the world that would love to have MIT be present and sprinkle a little bit of our magic dust on them, so they can say they are keeping pace with MIT and that we are attracted to them. But the thing that attracts us is research dollars.
If the NSF gives a faculty member research dollars to go study something on top of a mountain, then I guess we might do that. And if someone gives us research dollars to study something in Singapore, I don’t see that as a whole lot different.
There’s a structural component where we have been helpful to others from managerial and organizational points of view. And for that we’ve been paid beyond the price tag on the sponsored research. That is logical and consistent. We've not sold our brand to anyone. I don’t think we’ve had to do that.
FNL: A question we were asked to submit to you is what do you think can be done about the extent of rape and sexual assault on campuses – MIT as well as well as others? How can undergraduate women be protected?
RM: Men and women are no different than they’ve been for perhaps the last 3000 years. So whatever is causing this problem has been around for an awfully long time. But we’re doing a lot more now than we’ve ever done before. I do think we’re hearing more about it, which is a good thing, and part of the solution and, thus, doing more about it.
We’ve done a lot on this campus. We had the study on sexual assault. We were leaders in this. We got high marks from it, we’ve been open, we’ve been honest. We’re doing, frankly, what we should be doing. And we did discuss this seriously at the Corporation.
FNL: It’s important for people to hear that the Corporation is concerned and discusses it.
RM: And, as usual, that MIT is handling things well, handling things objectively. Openly. Without emotional overreactions. We’ve done better than some other universities in this general area.
FNL: How about if we talk about campus planning – MITIMCo [MIT Investment Management Company], graduate student housing, etc.
RM: That is something I can be more specific about.
FNL: Although it may not be exactly accurate, we had gotten the impression during Susan Hockfield’s administration that in essence the campus planning functions got turned over to MITIMCo. At least that’s how faculty heard it. The Institute used to have a Planning Office that was abolished in 2000, and it seemed that all of their functions were reassigned to MITIMCo.
We do finally have a faculty campus planning committee, and it was quite a battle to get it as a standing committee of the faculty. It’s a committee that every other major university in the United States has as a standing committee of the faculty – campus planning. There was a lot of resistance.
And perhaps the major issue among graduate students and post-docs is the issue of housing. It’s absolutely a systematic theme at MIT. As the rentals have gone up, and the Novartises and Pfizers and the Googles have moved in, they price out the grad students. It’s one of the most common coffee table gossip among graduate students, when your landlord says you have to move out, what about your lease, somebody else had to move in, etc. So, this decision, the decision about graduate housing on the campus, that such an important decision should be made by MITIMCo. . . .
RM: OK. So, first of all, I have been reading the Faculty Newsletter, and I think that it’s served a very useful, invaluable purpose, and I’m not just being patronizing. It has illuminated, articulated, the issues that you just described.
But some of the things I read in the Faculty Newsletter about campus planning are just simply wrong. And I’m happy to rigorously develop that, and perhaps offer a better understanding, which could be the most useful part of this discussion. And you know I’ve been involved in all parts of this.
So, first of all, MITIMCo is not running campus planning. And it never has. MITIMCo does have a lot of real estate, and it has a lot of expertise in how to build things and how to run real estate.
Campus planning is done by the administration, drawing on MITIMCo’s expertise. I know all these people well. MITIMCo has never been confused about the goals of campus planning. I think they’ve been accused of things, which are just wrong.
I don’t think the administration was as clear as it could have been. And the Faculty Newsletter was useful in getting that controversy out. And hopefully, it’s in a better place now.
OK. So which branch should we go down? In terms of graduate student housing, last spring the Graduate Student Housing Working Group, led by Phil Clay, published their report. And probably as a consequence of that report, 270 net new graduate student housing units are being constructed as part of the most recent plan.
There is a temptation to dwell upon what people think is a cultural divide between MITIMCo and MIT...that one is a profit-seeking enterprise and the other is a do-good kind of place; that one group wears black hats and the other wears white hats; good guys and bad guys. And that is naïve, simplistic, and frankly counterproductive.
There is no confusion at MITIMCo. I know these people, and I chaired this Corporation committee and there is no confusion at MITIMCo about whom they’re working for, and what the object of their mission is – it’s this academic/research enterprise. There is no confusion about that. There isn’t a person at MITIMCo who couldn’t make more money going to work in the private sector. That’s just a fact.
And it’s also a fact that our 30-year returns through MITIMCo – and it doesn’t matter whether you look at one year, three years, 10 years, or 30 years – our 30-year returns have been 12.9%. And a portfolio of the traditional 60/40 model that a university would use, has been 10.4%.
Among the 150 or so universities to which we’re compared, we’ve been in the 99th percentile for the last three years in terms of return, and in the 98th percentile over the past 10 years. These are facts.
So when you talk about the quality of those people, every one of them could get a job making more money, but they’re all here because they love MIT and they believe in this mission. And frankly I’m very sympathetic to that, because I gave up my career doing stuff like that to come do this. Because I love this, and I think this is what’s saving the world; this changes the world. And I think they feel that too. And to sometimes be painted with a brush that suggests that they’re these evil, money-grubbing people is just terrible.
My worst fear, during all the controversy about Kendall Square, was that they were just going to leave because, as they say, no good deed goes unpunished, and they were certainly getting the punishment. And as loyal to MIT as they are, they were really hurting.
FNL: That’s a very interesting notion that they were feeling bad; no one has ever presented that perspective before.
RM: They really were hurt.
FNL: I can believe that.
RM: So, there’s no black hats/white hats thing. Now, getting back to campus planning: I remember the first time this MIT 2030 plan was laid out. It started with what were our long-term projected academic needs, in terms of square feet. The all-day discussion concluded that MIT’s growth was geometric and they came up with a range of projections about how much academic space we’d need on this campus for the next 100 years. I believe it was a 100-year projection.
That was the beginning point of the conversation. We will take the upper bound of what we could conceivably need over the next 100 years, and make sure that whatever we do, we have that capacity.
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FNL: How does that connect with MIT’s real estate holdings?
RM: Well we’ve got this other real estate, which we have wisely assembled over the years from a lot of adjacent, largely derelict properties. And what should we do with it? One of these miraculous virtuous circles that you occasionally see is this MITIMCo real estate/academic thing that we’ve been doing. And it’s been going on for a long time. One of the smartest things I ever heard in real estate, is that real estate next to you is worth more to you than to someone else. Well, so it was to MIT.
So, wisely, MIT, before we got here, bought up real estate for more than enough of its future academic needs. And some of the leftover real estate was developed in a way that was consonant with our academic mission. They didn’t let someone open a Walmart or something like that. And we retain ownership of the underlying land. We still own the lease. We still own the real estate underneath.
For example, this Novartis building that’s getting built has a 60-year lease. They’re putting in a better part of a billion dollars to build their world research headquarters there. Yes, it will compete for some housing and some secretaries and some other support service. But the reason they’re doing it, and paying us a lot of money for the land, is to be near us.
I mean, Walmart wouldn’t pay us. So, as it turns out, the highest and best use for this excess real estate is for people who want to be near us. And you know, MIT has embraced this industry/academic connection like few others in the world. It’s sort of how MIT started 150 years ago, by partnering in industrial research, being a dimension of industry when a lot of other universities treat companies as the enemy.
So, we’ve leased land to people who’ve built some buildings and some of them may be beautiful, but we eventually get them back in 60 years. And meanwhile, they’re occupied by people who are somehow contributing, I think, to our enterprise, or as I said, are consonant. And they’re making the neighborhood nicer.
To me, it’s this virtuous circle. But it’s always been the academic institution first. And no one at MITIMCo has ever proposed putting a tenant in or using a piece of real estate for a commercial purpose that the administration didn’t want to.
FNL: You’re obviously very knowledgeable about real estate, and we don’t disagree with anything you said. On the other hand, if you’re one of the 4500 graduate students who has to find housing off campus, the consequence of what you’ve described is now you have to commute from Everett or Somerville or Medford, because you can’t possibly compete with Novartis and Pfizer and Google. So the fact of the matter, is they are spending more time commuting, often they can’t afford a car, and it can be quite difficult.
And so the whole reason, of course, that Novartis and Pfizer want to be here is because of all these talented, hardworking grad students and postdoctoral fellows. And it’s a fact that the lives of graduate students are being made more difficult. They are not benefitting from what you just described. They are seeing a reduction in their quality of life in order that MIT can grow in this way. And there is enough land there that MIT could build on. The Clay Commission actually calls for 1000 units; 600 new and 400 swing. And to many graduate students it feels like the burden of the growth has been put on their backs. That’s what it feels like to many.
They don’t see any benefits from Novartis or Pfizer. A few of them might get employed, but for most of them finding a place to live is absolutely key, and they need to be close to campus, so they can be productive. And we have never heard MITIMCo express a scintilla of concern about those graduate students.
It’s always going to be a cost plus operation. A subsidy in some way. So, we have never known anybody in MITIMCo to show any understanding of the life of people who have to work in a laboratory, getting things done maybe late at night, seven days a week.
RM: I certainly understand the thrust of your concern. We have close to 7,000 graduate students here, even more graduate students than undergraduates. And it’s the graduate students who make the research possible. It’s the research that makes MIT possible. So, I get that. I’m not arguing with that at all. But MITIMCo does not decide how to spend, it does not decide the academic priorities that the administration administers.
FNL: So there used to be a Planning Office. It got abolished. So who makes those decisions now?
RM: You mean, a real estate planning office?
FNL: Yes. It was abolished. Now there is a committee consisting of members of the high-level administration. So if MITIMCo doesn’t make those decisions, who does? Does the Corporation?
RM: No, the Corporation does not make those decisions. The administration makes those decisions. And I can’t tell you what office. I know there’s a building committee. I don’t know who gets to decide whether we should have a Collier memorial or if we should have more graduate student housing, or should we restore Kresge Auditorium. But the administration does that, not the Corporation. And I think that you, as faculty, need to engage with the administration.
FNL: But it is a little odd. I mean, MITIMCo is an institutional form that the faculty have no relationship with or oversight of, as it should be. But they do think that decisions about housing are absolutely something that the faculty should be centrally involved in. And we would say that in the four years of discussions that we’ve been in concerning these things, you’re the first person who said that the MITIMCo people were not making those decisions. Because what we generally were told was those are the people who know how to use the campus real estate.
RM: So consider the current Kendall Square project. There are some academic buildings in there, and there’s some commercial stuff in there. And the academic stuff is not going to be owned and run by MITIMCo.
RM: There is going to be a proper accounting from the endowment to the university. And the university has to put up the money to build its portion of that. MITIMCo does what it’s supposed to be doing, which is making money off of the investments. It’s not investing in the academic plant.
FNL: So, MITIMCo doesn’t say it’s a 20-year lease, it’s a 40-year lease, it’s a 60-year lease. The MIT administration makes that decision.
RM: No, I wouldn’t say it’s that black and white. Like with Novartis. The Corporation and the administration and MITIMCo decided that was best served going to a 60-year lease. So, I think that MITIMCo is acting in MIT’s best interest at all times, trying to maximize whatever value can be created on MIT’s behalf. But it is never making the decision.
FNL: So, in terms of should something be rented, should we build a lab, should we build housing, should we build classrooms, should we upgrade 10-250 – all of those kinds of decisions are not made by the Corporation, they’re made by the administration. And they may talk to MITIMCo about that, but ...
RM: No, let me be more precise about that. They will talk to MITIMCo to gain expertise. The decisions are proposed by the administration. The administration sets the priorities, describes the priorities, and they then go to the Corporation Executive Committee, which acts for the Corporation.
Those decisions are proposed by the administration and approved by the Corporation via the Executive Committee. We do have serious discussions at the Executive Committee that reflect the academic priorities of the Institute, balanced against its resources. When they were planning the Nano Building, for example, we argued a lot of the points. There were three different versions, each going to cost in increments of 100 million dollars, more or less. We spent a lot of time on that. The Executive Committee approved the final decision.
FNL: So, all those things are run by the Executive Committee.
RM: Oh, absolutely. Every building project that’s more than five or 10 million dollars.
FNL: Moving on. What do you think about MIT divesting from fossil fuel companies?
RM: Well, we have a campus conversation going on. The Boston Globe called me last night and asked me to comment on the fossil fuel divestment issue. I said as far as MIT’s concerned, we have a very open, ongoing, campus conversation. There was a debate in Kresge about divestment, about what we should do, what the proper response is for MIT. So, we’re engaged in that, and we don’t have a position yet, because we’re not finished with the conversation.
FNL: Well said.
RM: But they wanted to know my personal opinion. And I said, my opinion is a personal matter, and I wasn’t hired to be chairman for my personal charm. They hired me for my inclusiveness. But I did say that I think it’s unfortunate what’s going on at Harvard. It’s unfortunate, because this question about divestment is being phrased in moral terms. And I don’t think it’s a morality issue. I haven’t heard anybody, neither Harvard nor MIT, disagree with the importance of the issue.
The climate is changing. The science says that humans have contributed mightily to this. No one is denying that. We have a crisis on our hands that is perhaps one of the worst crises humanity’s ever faced. No one’s arguing with that. It’s only about tactics.
And how can you impugn people’s moral standing about a legitimate discussion about tactics? I think that’s unfortunate. I said we don’t have that yet, at least not at MIT. And I hope we never have that. I think we’ve gone to great lengths to include everybody, to consider it, to be open. And we’ll make some decisions.
I think the word divestment is a simple word. I think divesting from a big endowment is not simple – you don’t just press the divestment button and it happens. What I find lacking from all of the conversations, including from our own debate in Kresge Auditorium, is any discussion about the practical aspects of it: the cost, the time, the tradeoffs. So I think we need more work on that.
FNL: Ultimately, assuming petitions, faculty in favor of, votes, whatever it is, will the Corporation decide whether or not to do anything relative to divestment?
RM: The first line of decision-making, as with most things, is the administration. I don’t think the Corporation decides these things on its own and then imposes it upon the administration. There’ll be the usual train of progression of decision-making. The administration, working with the Executive Committee – and we discuss it at every Executive Committee meeting. We’ve discussed it at great length.
FNL: There does seem to be an attempt to get some kind of consensus, if there is a consensus. And we think the faculty may be surveyed about it.
RM: I would like to see a little bit more detailed discussion about the practicalities of divestment before the faculty. A little less of an emotional symbolism, and a little bit more of the practical part of it discussed. Although symbolism has value.
FNL: It is being driven by the students. You know, it’s not something that’s coming from the faculty. It’s driven from below.
RM: I think both sides in the debate have acknowledged that it’s only symbolic. That it’s not likely to have a practical effect.
FNL: In closing, is there any particular area about which the Executive Committee and the Corporation is interested in receiving input from the faculty?
RM: I think that’s a really, really great question. And I’d like to answer it now. But I’d also like to think about it a little bit more. Because I think it’s a great question. First of all, from my perspective, it’s an incredibly flattering invitation.
I’ve devoted the next big portion of my life to this job because I love what we do here. What we love, what we do here, is what the faculty does. And the students. But the faculty. So I have many friends on the faculty, and I have to say that if you ask me what, and I really, really mean this, if you ask me what’s the best part of the job? Without a doubt, it’s dealing with my faculty friends, with getting to know faculty.
One question I’d ask is what the faculty think about the size of our undergraduate population remaining basically the same for so many years.
FNL: The world has grown, everything has grown, MIT is still the same size, and so some think that’s a good thing, we should protect that. Other people think it’s some kind of anomaly. Clearly there are more bright people out there than we thought there were. Why shouldn’t the campus grow?
RM: I think it’s a great question. It’s not for me to answer, but it’s for me to ask. And I have asked.
FNL: And the faculty is the same size, also. The undergraduates and the faculty are the same size, and the graduate students have grown almost exponentially.
RM: I think the sizing question is not unrelated to the economics question. The economics question around here is what have we got here? We have a cost structure that rises disproportionately, because there are no gains in productivity the way there are in the rest of the economy.
So our cost structure rises faster than inflation. I’m not the only one who sees that, but I’m surprised at how few people understand it. It’s just true. The world has gotten bigger, which means our competition has gotten bigger, or better, and more expensive. Which affects the cost structure yet again.
Research funding, which is what this place was really supercharged on, is flattening. We’ve got a lot of headwinds in a lot of different directions. So is this economic model sustainable long term? I think that’s a faculty question.
FNL: Thank you so much for allowing us to interview you for the Faculty Newsletter. I’m sure our colleagues will find it most interesting.
RM: Thank you. The pleasure was all mine.
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