But this comes down to your personal values.
I think that Harvard attracts some of the the world's best and the brightest, especially in the sciences. While MIT has engineering and applied science departments, Harvard has pretty robust physical sciences and life sciences departments, and is trying to grow its engineering schools.
To me, this is a good thing. And I am of the belief that the problems of humanity are going to be solved through science. As much as I would like to think that global warming could be addressed through policy, a technical solution that can cool down the planet would be much preferable (and realistic). Similarly, imagine cheap and easily available food sources, simple water purifiers, cures for AIDS and cancer, space flight and so on.
The truth is, investing in the future of science and engineering at one of the world's top schools is one of the best investments one can ever make.
If anything, Paulson should be lauded -- he is not throwing his money away at non-profits with fat bureaucratic administrations to address short-term solutions. He is investing in the future. The majority of the money will go towards equipment, paying faculty, and graduate students. How is this not a fantastic thing?