Wall Street Journal Fuels Sanders Socialism Plus, Harvard, Yale endowments try selling off some private equity Ira Stoll
My morning Wall Street Journal had a box on the front page with a graphic headlined “The Rich Get Even Richer,” teasing a news article inside under the headline “Richest of Rich Gain $1 Trillion.”
That eight-paragraph article on page two included six paragraphs that contained mention of or attribution to Gabriel Zucman, an economist at the University of California, Berkeley. The page-two graphic, which is bigger than the story, is also attributed, in fine print, to “Gabriel Zucman, analysis of Forbes, Fortune, and Federal Reserve data….”
This is garbage on so many levels it’s hard to know where to start.
For one thing, Zucman is just one economist of many, and he’s not super-credible. The New York Times reported in 2020: “Other economists, including some who held top jobs under past Democratic presidents, have attacked Mr. Zucman and Mr. Saez over their research methods, their policy conclusions and their data. Conservative economists say their proposals would cripple economic growth. Last year, the faculty at Harvard’s Kennedy School of Government voted to offer Mr. Zucman, 33, a tenured position. But Harvard’s president and provost nixed the offer, partly over fears that Mr. Zucman’s research could not support the arguments he was making in the political arena, according to people involved in the process.”
For another thing, the present tense of the front-page and page-two headlines isn’t supported by this year’s reality, at least to date. The richest of the rich have taken a hit this year so far owing to the stock market downturn related to the Trump tariffs, Congress’s slow motion on a tax cut bill, the Federal Reserve’s decisions to stop cutting interest rates since Trump’s inauguration, or whatever else you want to blame it on. Zucman wants to talk about how much richer the rich got in 2024 because it supports his policy agenda of raising taxes, but he doesn’t want to talk about how these same people saw their wealth plunge in 2025 because so much of their assets are at risk, tied up in stock of companies that they built. The Journal items would have been good headlines four months ago. Now, they read like old news. And anyone who has been on one of those Forbes lists can tell you how reliable or unreliable they are. They are not exactly chacarterized by super-high high precision. When I was at the New York Sun we once figured out that Forbes was counting Michael Bloomberg as worth $5 billion when the real number was more like $20 billion. In its prime, the Wall Street Journal did its own research on this stuff, rather than rely on some left-wing economist’s regurgitation of numbers from Forbes. Garbage in, garbage out, as they say in social science research.
I rolled my eyes and put the newspaper away. The editorial page is so strong—Ruth Wisse!, etc.—that I cut the news columns some slack.
Then I opened up X on my phone and saw Bernie Sanders, the socialist senator from Vermont, making a talking point out of the Journal story.
“Today in America, the rich are getting richer & working families are struggling. What is Mr. Trump doing about this? He’s getting ready to give tax cuts to billionaires while making it harder for Americans to access the Medicare, Social Security & veterans benefits they earned,” Sanders posted, with a screenshot of the Journal story and the “WSJ” logo.
The “today in America” part is not accurate—the study is about what happened in 2024, when Joe Biden was president.
Newspaper editors and owners have to constantly be on guard against this sort of stuff, which has a tendency to creep in if one is not vigilant. It’s not even always driven by ideological bias of reporters and editors, though it sometimes is. Sometimes the news organizations get played by the sources. Some left-wing economist or their publicist comes along and says, hey, I got this story here, would you be interested in an exclusive on it? And the reporter says “you bet,” and the publicist says “great, here it is,” and the reporter then doesn’t have any short-term professional incentive to call skeptical other economists because that, the thinking goes, just downgrades the value of her own scoop.
What it all winds up doing, unfortunately, is providing grist for socialist senators and publicity for left-wing economists, rather than enlightenment or trustworthy information for Journal readers.
Endowments start dumping private equity: Yale, whose endowment under David Swensen pioneered private equity investing, is reportedly preparing to sell off up to $6 billion of those private equity holdings. Harvard, whose endowment as of June 30, 2024, was 39 percent in private equity, according to its roadshow slides for a recent bond offering (“Harvard Is Borrowing Money To Invest in Private Equity and Hedge Funds”) is “in talks to sell $1 billion in private equity stakes,” Bloomberg’s Gillian Tan and The Great Janet Lorin report.
The Bloomberg story says “Harvard Management Co., which runs the largest fund in US higher education, is working with Jefferies Financial Group Inc. to offload the portfolio to Lexington Partners in a so-called secondaries transaction.” The Jefferies involvement is interesting because if you look at the offering documents for Harvard’s recent tax-exempt and taxable bond offerings, there are a lot of firms involved—Goldman Sachs, Morgan Stanley, Barclays, Wells Fargo, BofA Securities, J.P. Morgan, RBC, TD Securities, Huntington, Loop Capital Markets, Drexel Hamilton—but not Jefferies. Maybe there’s some mundane explanation. Or maybe someone concluded it could create some regulatory or reputational risk for an investment banker to be selling clients municipal bonds supposedly backed by a $53 billion endowment while also simultaneously running around trying to offload some of the private equity part of that endowment at a discount. (That risk doesn’t seem to have stopped Harvard’s governing board or its officers, but they have different obligations and responsibilities.)
How much of a discount, if any, the private equity holdings are going for is unclear. It could be that Harvard just wants the liquidity now that its federal funding stream is more uncertain and now that private equity funds are increasingly requiring investors to invest in follow-on funds as a condition of getting their money out of an existing fund. Another interesting story from Bloomberg: “Buyout shops, under pressure from high rates and a shaky economy, have been asking for commitments to future funds as a condition of allowing existing stakes to change hands, according to investors…Typically the buyer of the stake is asked to provide the future investment pledge, known as a staple.” It reminds me of Hotel California: “You can check out any time you like But you can never leave.”
The Wall Street Journal’s Jason Zweig had another analogy about this the other day: “Let’s imagine you have two friends who according to their doctors are dangerously overweight…Should you believe that the person who hasn’t stood on a scale in months is at less risk than the one who checks every day? …Likewise, a fund shouldn’t claim to be less volatile merely because it measures the value of its portfolio less often (or because the underlying assets themselves report their values less frequently). The values are still fluctuating even if the fluctuations aren’t reported in real time.”
Harvard and Yale are stepping on the scale with at least some portion of their holdings. It’s more than just an Ivy League or higher education story. It’s a market story. If some of the other institutions—pensions and endowment funds—that have moved into private equity in recent years watch Harvard and Yale and decide to shift their allocation back into more liquid and frequently valued assets—like, say, U.S. stocks, which have been on sale over the past few months and are still available at a discount from their recent peaks—that could help push the public markets back up.
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