My question was a little bit deeper. I understand why we have elite schools.

Harvard's an easy one. Rich and powerful people look smart by association with smart people. Smart people gain access to powerful social networks.

My question was why this was a good idea for society. MIT was funded through federal grants, financial aid, and philanthropic donations. It's a 501(c)3. If it's bad for the world, we ought to have some mechanism to fix it.

We don't, and that's a deeper discussion about how we want to organize society. We ought to. In the limit case of a self-perpetuating endowment harming the world, there ought to be some way for that to be repurposed to help the world.