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Academia is an incredible industry to be in if you are a rent seeker. Universities' top lines (revenue) consist of a few major areas: beyond tuition and any st

Academia is an incredible industry to be in if you are a rent seeker. Universities' top lines (revenue) consist of a few major areas: beyond tuition and any state aid (for state schools), research grants are a huge source of funding. Most of that comes from the federal government. Most research grants have an itemized budget and, alongside the itemized budget, "indirect costs" that are often between 30-60% of the direct budget. Schools do, of course, have indirect costs associated with conducting research, such as facilities and actual administration (secretarial work, accountants, etc.). But these costs are not itemized and included in research grant budgets! It's just a percentage of the research budget. Naturally, this both incentivizes institutions to maximize the size of the research budget and creates a large pool of nebulously-allocated money for rent seekers to try to socially capture. At this point, I can't help but think that the federal agencies that write grants are somewhat complicit in this process.

randomsearch 4y ago
Yep. Wage of postdoc U.K. (real scenario) £40K. Uni charges govt over £100K. £60K “overheads”.
- TylerE 4y ago
  That’s not that out of line from what typical in the private sector in the US, once you factor in everything from HR, to building expenses, to health insurance premiums.
  - pclmulqdq 4y ago
    Academics who see this as an academia-only thing don't understand that the same growth of bureaucracy that happened to them has happened in every large company too. It's kind of the natural order of things once the dedicated bureaucrats get a foothold.
    - bumby 4y ago
      Someone else has already alluded to this, but do you think it's possible for any organization of appreciable size to not develop "dedicated bureaucrats"?
      - Ambolia 4y ago
        One answer to a stagnant oligarchy is a populist king/dictator that gets absolute executive power and massively reduces complexity. But that can get very ugly...
    - randomsearch 4y ago
      I’m not an academic.
  - randomsearch 4y ago
    No idea why you’d include health premiums in that figure. Remove that and I just don’t believe you, outside of the most bureaucratic and exceptional companies (eg Google, where the money printing machine has led the company to insane levels of “overhead”). I’ve worked plenty in the private sector and it’s nonsense to suggest overheads are similar In general.
    - TylerE 4y ago
      Every company I’ve ever worked for paid 50%+ of health insurance. That’s thousands per year.
      - randomsearch 4y ago
        The figure I gave doesn't include health insurance... the UK doesn't do that, generally speaking. So you'd have to take that out.
        TylerE 4y ago
        Why, given that I'm comparing to the US private sector?
        auggierose 4y ago
        I guess his point is that your comparison is pointless.
adastra22 4y ago
What do you mean by complicit? I was on a team in a federal agency which did large research grants to universities. We knew the overhead rates of the universities we contracted with and factored that into our grant allocations. If the team needed $1m to do the research but the university takes half, we allocated them $2m. It was just the cost of doing business.
- lmm 4y ago
  > We knew the overhead rates of the universities we contracted with and factored that into our grant allocations. I read this and thought you meant you preferentially allocated grants to universities with lower overhead rates, and was hopeful for a moment, but then: > If the team needed $1m to do the research but the university takes half, we allocated them $2m. It was just the cost of doing business. Right, that's exactly what being complicit is! You're the problem!
  - adastra22 4y ago
    We did try to be cost conscious. Often there were multiple ways of allocating funds, especially supplemental funds for specific events. The typical overhead was 50%, but if we were coving the cost of a conference then often we could use a different grant mechanism which had a lower overhead, like 30%. Our staff secretary was really good at knowing all the tricks to lower overhead. I don't know what you expect us to do though? We are required by law to make these grants to universities. It's an actual line in the federal budget. The awards are competitively selected, and overhead cost has to be disclosed and is a factor in consideration. But it's a choice between bad, and worse. No organizations have good overhead rates, although the non-profit orgs were generally better than the universities. I agree there should be reform here, but talk to the GAO or your congressional rep. The worst was our own contractor overhead. My boss was a civil servant, but everyone else on the team was an employee of Lockheed Martin or one of its subcontractors. If we had to go through the Lockheed contract for anything (which sometimes we were forced to do), they'd skim another 15%. For doing nothing except cutting a check. That ought to be illegal IMHO, and we avoided it whenever we could.
- i_am_proteus 4y ago
clarkmoody 4y ago
> the federal agencies that write grants are somewhat complicit in this process. Academia provides a vital service to the government, namely producing research that helps further political and regulatory aims. Indeed, this phenomenon is widely known as The Alliance of Throne and Altar.

randomsearch 4y ago

Yep. Wage of postdoc U.K. (real scenario) £40K. Uni charges govt over £100K. £60K “overheads”.

TylerE 4y ago
That’s not that out of line from what typical in the private sector in the US, once you factor in everything from HR, to building expenses, to health insurance premiums.
- pclmulqdq 4y ago
  Academics who see this as an academia-only thing don't understand that the same growth of bureaucracy that happened to them has happened in every large company too. It's kind of the natural order of things once the dedicated bureaucrats get a foothold.
  - bumby 4y ago
    Someone else has already alluded to this, but do you think it's possible for any organization of appreciable size to not develop "dedicated bureaucrats"?
    - Ambolia 4y ago
      One answer to a stagnant oligarchy is a populist king/dictator that gets absolute executive power and massively reduces complexity. But that can get very ugly...
  - randomsearch 4y ago
    I’m not an academic.
- randomsearch 4y ago
  No idea why you’d include health premiums in that figure. Remove that and I just don’t believe you, outside of the most bureaucratic and exceptional companies (eg Google, where the money printing machine has led the company to insane levels of “overhead”). I’ve worked plenty in the private sector and it’s nonsense to suggest overheads are similar In general.
  - TylerE 4y ago
    Every company I’ve ever worked for paid 50%+ of health insurance. That’s thousands per year.
    - randomsearch 4y ago
      The figure I gave doesn't include health insurance... the UK doesn't do that, generally speaking. So you'd have to take that out.
      - TylerE 4y ago
        Why, given that I'm comparing to the US private sector?
        auggierose 4y ago
        I guess his point is that your comparison is pointless.

adastra22 4y ago

What do you mean by complicit? I was on a team in a federal agency which did large research grants to universities. We knew the overhead rates of the universities we contracted with and factored that into our grant allocations. If the team needed $1m to do the research but the university takes half, we allocated them $2m. It was just the cost of doing business.

lmm 4y ago
> We knew the overhead rates of the universities we contracted with and factored that into our grant allocations. I read this and thought you meant you preferentially allocated grants to universities with lower overhead rates, and was hopeful for a moment, but then: > If the team needed $1m to do the research but the university takes half, we allocated them $2m. It was just the cost of doing business. Right, that's exactly what being complicit is! You're the problem!
- adastra22 4y ago
  We did try to be cost conscious. Often there were multiple ways of allocating funds, especially supplemental funds for specific events. The typical overhead was 50%, but if we were coving the cost of a conference then often we could use a different grant mechanism which had a lower overhead, like 30%. Our staff secretary was really good at knowing all the tricks to lower overhead. I don't know what you expect us to do though? We are required by law to make these grants to universities. It's an actual line in the federal budget. The awards are competitively selected, and overhead cost has to be disclosed and is a factor in consideration. But it's a choice between bad, and worse. No organizations have good overhead rates, although the non-profit orgs were generally better than the universities. I agree there should be reform here, but talk to the GAO or your congressional rep. The worst was our own contractor overhead. My boss was a civil servant, but everyone else on the team was an employee of Lockheed Martin or one of its subcontractors. If we had to go through the Lockheed contract for anything (which sometimes we were forced to do), they'd skim another 15%. For doing nothing except cutting a check. That ought to be illegal IMHO, and we avoided it whenever we could.
i_am_proteus 4y ago

clarkmoody 4y ago

> the federal agencies that write grants are somewhat complicit in this process. Academia provides a vital service to the government, namely producing research that helps further political and regulatory aims. Indeed, this phenomenon is widely known as The Alliance of Throne and Altar.