Harvard is the best because it's Harvard.
Yes, that's the answer. Maybe it seems too circular to some readers. Here's an attempt at a longer answer. The prestige of a school is based on the success of its alumni. Harvard has the most successful alumni. Because of this, Harvard attracts the best students who after they graduate, combined with the prestige of their degree, get the best careers and become the most successful themselves. The cycle perpetuates itself.
Harvard alumni control the best career opportunities. If you want to work at the Queens DA's office, a lousy low paying job, you can go to St. John's law school. The ADA interviewing you probably went there hiself. "Wow, you also went to St. John's! Cool, you're hired." But if you want to work at an elite law firm like Cravath Swaine & Moore, then you need to go where the partners of Cravath went, and they went to Harvard.
Harvard has the largest endowment because it's alumni are richest so they have the most to give. Theoretically Harvard could use this mega-endowment to make Harvard even better than it already is, but Harvard chooses not to do that.
In fact, there has been talk in the blogosphere of a Harvard Paradox. According to the Coyote blogger, who attended Harvard Business School, Harvard treats its students like garbage. "I do not think it an exaggeration to say that had Harvard scoured every post office in the country for employees, it could not manage to provide worse customer service day-to-day."
I don't think this is a paradox at all, it's an expected result of a business with monopoly power. Everyone knows that monopolies treat its customers like garbage. Take your local electric company, for example. They know you can't buy electricity from anyone else. So you get treated like garbage.
Because Havard is is head and shoulders above all other schools, there is no substitute for Harvard. (As one of the characters in the movie Soul Man exclaimed, "Havard! There's no subsitute!") In this sense, Harvard has a monopoly. If you are at one of the shoulder schools, you can defect to another shoulder school, so they have to treat the customers better.
At Arizona State University's business school (now called the W.P. Carey School of Business), from a prestige perspective this school is in the stomach. But they sure did treat the students well! They signed us up for classes with a complete minimum of hassle, occasionally treated us to dinners at places like the Pinnacle Peak Patio and the Stonebridge Manor in Mesa. We didn't even have to shop for textbooks. At the beginning of each semester we'd just show up at a private bookstore near campus, give the person behind the counter our name, and they'd hand us a package of all the textbooks needed for the semester, free of charge.
So would I recommend anyone get an MBA from ASU? Hell no, not if you can get into Harvard or another elite school. An MBA from Harvard will get you an elite six figure job at an elite firm where one day you may make seven figures or even eight figures. An MBA from ASU gets you the same garbage job opportunities you had before getting the MBA. Better to get treated like garbage by Harvard for two years, and then after you graduate you make the big bucks and get to pass along the misery and treat the rest of the world like garbage.