Henry Kravis’s surname is everywhere at Claremont McKenna College. It adorns both the campus’s biggest building and its most sprawling student resource center: the Kravis center, a megaplex of classrooms and offices, and the Kravis Leadership Institute, an endowment that sponsors a sophomore “changemaking program,” dispenses quarter-million dollar awards to non-profits, and hands CMCers their most CMC-ified resume ornament, the leadership studies sequence.
On Thursday night, then, I was surprised to see it appear in a place far, far removed from the refuge of learning and civil discourse in Claremont: Trump’s twitter feed. Alongside a torrent of personal musings, ravings about leakers, and philippics against the failing New York Times and other fake media, Trump tweeted, “Big interview tonight by Henry Kravis at The Business Council of Washington. Looking forward to it!”
This flattering sentiment would not at all be out of place in Claremont. The student body and administration alike fete Kravis whenever he comes to campus. Students throw him softball questions at Ath talks, and the administration gushingly thanks him for his support at awards dinners. Trump would feel at ease in this lovefest. He proposed Kravis as an ideal treasury secretary as far back as June 2015, to which Kravis meekly responded, “that was scary,” and then again last May. Kravis’s name persisted as a top choice even weeks after the election, according to financial insiders reached by the New York Times.
As a student, I hadn’t thought much about the cult of personality around Kravis. He and his cousin George Roberts were showering CMC with money, transforming the architectural landscape with a super-gym and an administrative flagship, but also rewarding the goodly works of non-profits and gilding the path to success with paid internships for a next generation of “changemakers.” Where is the harm in such benign philanthropy?
In view of Trump’s presidency, his avowed respect for Kravis, and staggering disrespect of all principles held dear by the humanities and liberal arts, this money takes on a darker sheen. Trump, after all, can’t even take the time to read a book. What does it say about CMC that such a man adores the same person whose largesse is attributed with defining the ethos of the campus?
Kravis, it goes without saying, uses his spare cash for more than just charitable donations to his alma mater. In 2012, he dropped at least $200,000 into Mitt Romney’s Super PAC, and in the current election cycle, he took advantage of a new tenfold increase in the maximum allowable donation to a party to fatten GOP coffers with $334,000. Kravis’s love of leadership extends to the political sphere as well; in 1997, he founded the Republican Leadership Council.
Now, it appears his decades of promoting unbridled free market policies under Republican politicians could pay off in a major way.
Kravis and the private equity company he co-founded, K.K.R., are at the forefront of a private-sector push to buy up chronically underfunded public services, improve them, and then flip them for a profit. Trump has touted this sort of public-private partnership as a model to offset the costs of his trillion dollar infrastructure plan.
In recent years, K.K.R. has tested the business advantages of buying failing public infrastructure in Bayonne, New Jersey, and Middletown, Pennsylvania. In both cases, it bought a 90 percent stake in the rights to maintain and operate municipal water systems over 40-year and 50-year periods, respectively.
K.K.R. claims these deals have brought residents better service and modernized technology without tax increases. But the contracts also guarantee revenue to the company, which means taxpayers do have to pay for the project through higher user rates that go towards meeting the firm’s revenue baseline. This helps ensure that private equity companies investing in water systems earn returns of anywhere from 8 to 18 percent, more than what a for-profit water company would make.
When residents of Bayonne used less water than predicted, the burden fell on them to make up for the revenue shortfall, and rates jumped 28 percent, according to a New York Times analysis.
As a Republican-controlled government eschews public funding and looks to the private-sector instead, what happens to the people these policies are supposed to benefit?
“My reaction was, ‘Oh, so I guess I’m screwed now?’” a mother of two who lives in Bayonne told the Times. Already, K.K.R. is reportedly shopping its profit-making venture around to potential buyers.
Has CMC also put its future in the hands of K.K.R.? Judging by the campus’s architecture, the prominence of the Roberts Day School and plethora of Kravis scholarships and grants, you’d be excused for thinking so.
To be sure, CMC has an imperative to collect donations, and endowments from Kravis and Roberts have funded scholarships for countless students, but there comes a point where an overwhelming infusion of money from one set of donors begins to shape the fundamental experience of learning at CMC. It is manifested in the buildings, in the immense pull that economics and finance exerts over underclassmen, in the absence of any discussion of alternative theories of political economy. It is threatening to subsume the school’s many other excellent, critical-minded departments.
The problem is not that CMC accepts donations from Kravis, but the manner in which it celebrates that money. Absent a critical debate, it can be difficult for students to see what companies like K.K.R. are doing to the U.S. economy—shifting wealth from the middle class denizens of places like Bayonne to corporate boardrooms—when the fruits of that extraction are also flowing to CMC.
Now that Trump has taken office and sung the praises of Kravis as well, he is holding a mirror to CMC and the company it so strongly identifies with. Maybe Kravis does deserve a hero’s welcome, and his acquisitions of public works are a solution, but at the very least, an honest debate is in order.
Henry Johnson CM ’14 was a history-government dual major. He now works as a Cairo-based journalist.