Louis Proyect: The Unrepentant Marxist

October 5, 2010

Henry Kravis and Columbia University: a match made in hell

Filed under: Academia,capitalist pig,Columbia University,economics — louisproyect @ 7:14 pm


This morning I spotted some good news on the Columbia University website, at least for the powerful men who run it:

Henry R. Kravis ’69, cofounder, cochairman, and co-CEO of Kohlberg Kravis Roberts & Co. (KKR) and cochair of the School’s Board of Overseers, has pledged a gift of $100 million to Columbia Business School. It is the largest gift in the School’s history.

The gift will be used to support the construction of the School’s new facilities, which will be part of Columbia University’s expansion into Manhattanville, just north of the University’s Morningside Campus. One of the School’s two new buildings will be named The Henry R. Kravis Building in recognition of Kravis’s extraordinary generosity. The search for an architect is currently under way…

Columbia Business School’s expansion into Manhattanville will elevate the School’s role as a source of global business innovation and economic policy. “Our new home in Manhattanville will reflect the fast-paced, high-tech, and highly social character of business in the 21st century,” said Dean Glenn Hubbard. “Further, it will allow students, alumni, and neighboring communities to collaborate and develop new ideas that not only transform business practice, but also reinforce the potential for the application of business principles to solve multifaceted problems and improve the world in which we live.”

As you may be aware, I have been working at the university for 20 years and am part of a forward detachment colonizing the Manhattanville property that has just come under Columbia’s control through eminent domain. The owners of a gas station and a household goods storage company in the neighborhood are hold-outs against the land grab and who are taking their case to the Supreme Court. The NY Times reported that it is unlikely that the court will even hear their case.

You may remember a reference to Glenn Hubbard in my review of Charles Ferguson’s must-see Inside Job that opens on Friday. Hubbard and Kravis are cut from the same cloth. Kravis has made billions out of corporate raiding at the expense of fired workers, while Hubbard has gotten rich from consulting payments made by the kinds of companies Kravis operates.

Kravis runs a firm called KKR that gets its name from him and two partners, George R. Roberts and Jerome Kohlberg, Jr. KKR was involved in the takeover battle for the RJ Reynolds Tobacco Company that was chronicled in “Barbarians at the Gate”, one of the best books ever written about these slugs. It has the memorable quote from Warren Buffett, a principal in the fight: “I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s a fantastic brand loyalty.” And Buffett has the nerve to posture as one of the world’s great philanthropists.

In a typical KKR operation, the firm will buy a company and strip its assets while forcing the workers to take pay and benefit cuts or lose their jobs. Robert Greenwald, whose documentary “War on Greed” is excerpted above, explains how one company was victimized by Henry Kravis from the same film.

Kravis is a long-time major donor to the Republican Party. As the operator of a private equity firm, he has been on the front lines pressuring politicians not to raise their taxes. In 2007 Washington tried to eliminate the “Henry Kravis loophole” that allowed private equity billionaires to pay less taxes (15%) than the servants who wait on him in his 26 room mansion on New York’s Upper East Side. A new tax bill was passed by the House, but nixed by the Senate as David Sirota reported:

However, when the bill hit the Senate, The Washington Post reported that “a sprawling, big-money lobbying campaign” stopped it cold.

In the first nine months of 2007, the private equity industry spent about $20 million on campaign donations and lobbying. That kind of cash is barely a fraction of what just one executive like Kravis saves each year thanks to the tax loophole. But it was more than enough to convince a bipartisan group of senators to block the loophole-closing bill, thus creating today’s hostage situation.

These are people who will never be satisfied until they are paying zero taxes, even if beggars are roaming the streets like in Victorian England.

Kravis is currently married to Marie-Josée Drouin, although it might make more sense to describe it as a geopolitical pact rather than holy matrimony. Drouin is a high-profile economist originally from Canada who has a position at the Hudson Institute, a powerful righwing think tank, and who was previously married to conductor Charles Dutoit. Back in 2001 she wrote an op-ed in Conrad Black’s National Post newspaper. Black is even more evil than Rupert Murdoch, as hard as that is to believe. Drouin/Kravis was hoping that the Bush tax cuts for the rich would be passed:

As President George W. Bush ponders education reform and abortion funding, Congress is about to debate a tax-cutting bill introduced by Republican Senator Phil Gramm of Texas and Democratic Senator Zell Miller of Georgia that might be bigger than the tax plan advocated by candidate Bush. Bipartisanship may be bearing fruit after all, although the Democratic leadership has, predictably, vowed to scale the proposed package back substantially.

Like her creepy husband, this is a woman who can’t seem to get enough. Like a latter-day Marie Antoinette, she would urge the poor to eat cake.

In addition to handing out fortunes for Columbia to bolster its business schools, so as to turn out a new generation of Henry Kravis’s and Glenn Hubbard’s, Kravis maintains a high-profile on the boards of some of N.Y.’s premier cultural institutions. He’s on the board of the Metropolitan Museum, alongside Bruce Ratner, the real estate developer who also occupies a seat on the Bard College board of trustees. Like Columbia, Ratner used his political clout to ram through a huge development project in downtown Brooklyn using eminent domain over the objections of the community. Someday, there will be day of reckoning for such thieves and it won’t be pretty.

8 Comments »

  1. Capitalism 101, Lou. They won’t be happy until they have converted the world into a combination of a plantation and a sweatshop…a “plasweat” global empire is their goal. They abound here in Houston as everywhere else where they laugh, backslap, and give one another civic awards and honors. They are international Mafia racketeers in pin-stripe. Keep calling them out and chip,chip chipping away at them.

    Comment by Gulfmann — October 5, 2010 @ 8:48 pm

  2. louis – on an unrelated note, did you see that botstein was on colbert tonight?

    Comment by dermokrat — October 6, 2010 @ 3:59 am

  3. Li Ka-shing is similarly throwing money around on the West Coast, at Stanford and UC-Berkeley. He made his fortune through a vast network of Chinese sweatshops starting in Hong Kong and then mainland China.

    Comment by purple — October 6, 2010 @ 7:22 am

  4. It’s like we’re back in the 1890’s era of Robber Barons again. So much for all those stupid asshole professors I met over the years in college who argued that “effective American anti-trust laws disproved Lenin’s thesis of imperialism’s tendency toward monopolization.” I remember telling them that I thought “anti-trust laws in America were about as effective as anti-sodomy laws.”

    Comment by Karl Friedrich — October 6, 2010 @ 8:01 am

  5. But surely you support the right of the State to impose eminent domain, Louis — or do you oppose it in the name of upholding property rights? If property rights are evil, then what does that gas station owner and that storage company have to protect them from Columbia and KKR?

    Comment by Questioner — October 6, 2010 @ 12:38 pm

  6. Actually, I don’t find much basis for a “community” struggle that opponents of the Manhattanville land grab posit. There is virtually no resident housing in the affected area as opposed to 1968. In terms of the evil that Columbia does, I find this one of its lesser sins.

    Comment by louisproyect — October 6, 2010 @ 1:32 pm

  7. If you check out the legal brief that civil rights lawyer Norm Siegel submitted to the lower court that originally blocked Columbia from moving forward on its 17-acre land grab Columbia Business School/Kravis Hall construction project in West Harlem, you’ll notice that unethical means were apparently used by Columbia to both drive out neighborhood residents and prevent new low and moderate income housing from being introduced into the neighborhood during the last 40 years. And, in fact, the land that Columbia is grabbing in 2010 actually contained more resident housing than the non-residential Morningside Park land that Columbia attempted to grab for its gymnasium construction project in 1968.

    Both the text of Norm Siegel’s legal brief and an article from 1992 about Columbia’s Kravis/KKR connection can be found or will eventually be fully posted on the following blog link:

    http://bfeldman68.blogspot.com/

    Comment by bobf — October 9, 2010 @ 1:21 am

  8. the land that Columbia is grabbing in 2010 actually contained more resident housing than the non-residential Morningside Park land that Columbia attempted to grab for its gymnasium construction project in 1968.

    Right, but that park was important to the people who lived in Harlem. Meanwhile, I am walking all around Manhattanville every day for the past 3 years at least and I see not a single apartment building. It is all warehouses, parking garages, car repair shops, tuck-it-away, etc. I hate the Columbia administration but I could never view this in the same terms as 1968.

    Comment by louisproyect — October 9, 2010 @ 10:19 pm


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