On political correctness


Sometime ago, when he was the president of Harvard University, Larry Summers got fired for comparing intellectual abilities of men and women. He said that on average, women and men have the same intellectual ability, but the standard deviation is much higher among men, and so there are more geniuses and more morons among men. For some reason, this innocuous remark got twisted, there were street protests and Summers got fired.

The University became very politically correct, appointing Drew Gilpin Faust as the first female president. As a historian who has recently written a book on the American civil war to rave reviews, she was unlikely to make any remark on standard deviations.

The University ran an endowment fund of $36bn, whose long run performance was second only to Yale. For nearly 14 years, it was run by the brilliant Jack Meyer, who was hounded out by old Harvard alumni as he paid himself too much (too less, given the fund´s performance). Meyer left to create a hedge fund, and Mohammed El Erian became the new Chief Investment Officer. In the only year he ran the fund, he made nearly twice as much as Yale, a better performance than even Meyer.

Then Harvard combined its political correctness and its endowment and hired a woman, Jane Mendillo to run its endowment. Mendillo´s performance as the CIO of Wellesley´s $1bn fund was poorer than average. But this university did not want to speak of averages and standard deviations when it comes to women, anyway.

The results are here. In just four months (Harvard´s fiscal year starts on July 1), Mendillo has lost $8bn or 22% of the fund.

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