Thursday, August 25, 2011

Yeshivos Are Not Businesses

A Guest Post by E. Fink

Cross-posted from my home blog:

On, Malcolm Gladwell is critical of the owners of NBA teams. Currently, the NBA owners have locked out the NBA players. The collective bargaining agreement expired and the owners want a better deal this time around. Small market owners are claiming that they are losing money. They want to cut costs. The players have not assented to the terms of the owners, namely, lower salaries so that the owners can make more money.

On the face of it, the owners seem to be taking out frustration with each other on the players. If they want to pay the players less money they should simply pay the players less money. The exorbitant salaries for players who are being overpaid are not the fault of the players. They are the fault of foolish owners and bad management.

Further, there is an easier solution for NBA owners to make more money. Revenue sharing. That is how it is done in other sports. The NBA should follow suit and create a more equitable revenue sharing model.

Gladwell however, believes that the owners entire premise is wrong. His opinion is that NBA owners have no right to demand that their teams make money. The reason someone buys an NBA team is not to make money. Billionaires buy teams to satisfy a different need; not financial gain. This is called a "psychic benefit". Gladwell compares it to owning a Van Gogh. One does not buy a Van Gogh as an investment. One buys a Van Gogh simply to have the Van Gogh. If the painting does not increase in value, that is not really a concern. After all, you have the Van Gogh.

The argument is compelling and he might be correct.
Gladwell is basically saying that NBA owners have no right invoking economic principles when discussing their costs and profits. They did not buy the team as an investment so they can't complain when their non-investment is not turning a profit.

Reading the article and thinking about the argument reminded me of a guest post on DovBear from last year. The guest poster is an administrator at a Yeshiva and he expressed displeasure with another guest poster complaining about tuition costs. Further, he expressed frustration with parents who don't pay their bills as per their tuition contracts and prioritize their spending by placing education near the bottom of the list.

A serious, sometimes passionate discussion ensued in the comments. Perhaps the most salient point of all was made by DovBear: (And I paraphrase) "A school should be treated like a business and if it cannot run efficiently then it should not run at all."

I think Malcolm Gladwell would disagree. Not everything that looks like a business is a business. An NBA team is only somewhat like a business. But it is more like a Van Gogh. You cannot apply standard rules of economics to NBA teams. Yeshivos also look like businesses, but I think Gladwell's point about NBA teams can be applied similarly to our yeshivos.

People don't open schools to make money. They are not an investment. The standard rules of economics cannot be applied to yeshivos.

Yeshivos are opened for to serve the community. They are opened simply so that there are yeshivos for our children to attend.

I think it might be unfair to try to apply the common rules of economics to our schools. They do need to be run efficiently. They do need to be able to stay afloat. But above all, they need to stay open so that our children get the education that they need.

Certainly, we can demand excellence and we can demand responsible spending of communal funds. But I don't think we can demand that our schools run like an investment firm, supermarket, hospital or coffee shop.

Unfortunately, most of our yeshivos are not (yet) "Van Goghs", but practically speaking, they really are.

Link: Grantland

Search for more information about # at

No comments: