Crisis in Higher Ed & Why Universities Still Matter
a16z2024-01-13
36K views|4 months ago
💫 Short Summary
The video discusses the structural and business aspects of universities, their role in society, and the impact of elite institutions like Harvard. It highlights the evolution of modern universities, challenges in higher education, admissions criteria changes, and the value of college degrees. The segment also covers the impact of federal funding, hiring practices, research mechanisms, and concerns regarding academic integrity. Discussions include DEI programs, morality in education, and issues like grade inflation, student debt, and the declining trust in universities. The video concludes with suggestions for reform, innovation, and improving student outcomes in higher education.
✨ Highlights
📊 Transcript
✦
Importance of universities and colleges in society.
00:41Universities are viewed as an industry, business, and organization with customers and industrial logic.
The segment suggests looking at universities from a business standpoint and considering incentives.
Focus on the structural and business aspects of universities rather than current hot topics or news drama.
✦
Reasons for improving universities and the importance of American universities as a global model.
02:21Perspectives from university governance and venture capitalists on the need for improvement.
Consideration of industry transitions and potential new competitors in the university sector.
Acknowledgment of criticisms towards the American university system but recognition of its positive outcomes.
Graduates from American universities often hold influential positions in society.
✦
Influence of elite universities like Harvard and Yale in shaping public policy and producing key leaders.
04:59Elite universities have a significant impact on the country's future by training elites who end up running various sectors.
Understanding the implications of decisions made at these institutions is crucial for universities, stakeholders, and the general public.
History and evolution of modern universities, particularly Harvard, are highlighted as centers of knowledge and influence over centuries.
✦
Evolution of Harvard's Educational Model
08:07Harvard began as a religious institution training Protestant Puritan leaders, but later incorporated elements of classical education from English universities.
The university focused on disciplines such as politics, history, economics, philosophy, and literature.
Around 120 years ago, Harvard adopted the German model for technical education, emphasizing training for scientists and engineers.
Harvard's approach of combining liberal arts with technical education has become widespread in elite universities in the US.
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Evolution of Universities in Modern America.
11:23Universities in modern America are a mix of religious, classical education, humanities, and technical education institutions.
Divide between liberal arts and engineering campuses at universities like University of Illinois led to differences in building quality and student perceptions.
Since the 1960s, universities have taken on social, political, and ideological roles.
The hybrid model of universities reflects the changing nature of higher education and the diverse influences shaping modern universities.
✦
Evolution of bundles in business involves adding and subtracting elements to stay relevant.
12:07Bundling concept, like Cable Bundle, predates the internet and was revolutionized by it.
Universities are adapting to changing landscapes similar to Cable Bundles adjusting to streaming services.
Libraries were once a key feature for universities, providing unique research opportunities.
Continuous assessment and potential unbundling of existing structures are necessary to remain relevant in a rapidly evolving world.
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Key topics related to universities include credentialing agencies, education courses, research, role of professors, policy think tanks, moral instruction, and social reformer roles.
14:07Universities focus on setting public policy, inculcating values, fostering citizenry, and implementing social reform directly.
The speaker discusses the hot topic of DEI (Diversity, Equity, and Inclusion) within universities.
Foreign students play a role in immigration agencies related to universities.
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Importance of International Students in University Economics
17:35Foreign students often pay full tuition, contributing significantly to university revenue.
Universities may have separate programs and criteria for international students.
Universities serve as social hubs for students, providing adult daycare and dating opportunities.
Congressional investigations are ongoing regarding government funding and university practices, raising concerns about potential consequences of federal funding cuts on academia.
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Debate on College Education Value and Challenges in Measuring Employable Skills.
18:30The 'sheep skin effect' theory suggests that the diploma itself is valuable in the job market.
Brian Kaplan's book challenges the idea of college degrees solely for learning.
Changes in research grant processes impact universities economically, leading to minimal layoffs during downturns.
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Importance of Completing Full University Program for Higher Salary.
21:58University graduates who complete seven out of eight semesters earn significantly less than those who finish the full program, indicating the value of the diploma.
Economist perspective emphasizes the importance of being admitted and graduating for the credential's value.
Silicon Valley also values the admission aspect of university education.
The 'sheep skin effect' suggests that even if an individual did not complete the program, the credential still holds value.
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Shift away from standardized testing for admissions in universities.
24:29Growing emphasis on factors beyond IQ, such as conscientiousness.
Employers valuing traits beyond academic performance.
Trend of grade inflation leading to easier graduation.
Impact on perceived value of credentials and ability to identify strong candidates.
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Impact of Grade Inflation on University Credentials.
25:10Instructors are pressured to give high grades due to student evaluations, leading to grade inflation.
Lack of strict grading standards and organizational evolution contribute to the trend.
Donations from parents and future donors influence professors' grading practices.
Administrations may avoid strict grading to appease donors and parents, creating complex dynamics in higher education grading systems.
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Consequences of angering parents who donate money to schools, receiving bad grades, and potential complaints from students and parents.
27:54Grade inflation has been a growing trend for 50 years, potentially damaging the value of credentials.
Difficulty of getting into prestigious schools like Harvard and Columbia, contrasting them with extension schools that admit larger numbers of students taught by non-professors.
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Ambiguity of degrees from schools like Columbia University causing confusion for Chinese employers.
31:00Lack of distinction in credentials raises concerns about the value of education and its impact on employers.
Profit-driven nature of universities with no scholarships or financial aid leads to a diluted education system.
Internet accessibility highlighted as a tool for Chinese employers to navigate challenges in evaluating university credentials.
Potential shift in traditional value of university credentials due to emerging technologies and globalization.
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Shift in Hiring Practices towards Diversity and Inclusion.
34:02Companies are now open to candidates from diverse educational backgrounds, moving away from the traditional requirement of degrees from elite institutions like Stanford, Harvard, or MIT.
Employers are considering individuals with varying educational backgrounds, including those who have not completed school or have only graduated from high school.
This change suggests a potential shift towards valuing skills and experience over traditional credentials in the future.
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Companies like Google are moving away from requiring college degrees and instead implementing their own testing methods for hiring practices.
37:24Job-specific tests are becoming more common than general IQ tests during the hiring process.
The discussion includes various types of education such as humanities, STEM, social sciences, and the hybrid field that combines humanities and STEM.
The speaker emphasizes the evolution of these educational categories and their respective origins.
✦
The distinction between science and other fields like law, medicine, business, and performing arts is discussed in the video segment.
39:50Specific curricula within educational courses are examined, along with the concept of the 'sheep skin effect' where education may not be as crucial as perceived by employers.
The segment highlights the pressing issue of the student loan crisis, emphasizing the burden of debt on American college graduates.
The inability to discharge student loan debt through bankruptcy is addressed, along with the debate surrounding federal student loan debt discharge and recent bailouts.
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Concerns over taxpayer-funded bailouts disguising debt forgiveness.
42:14Debate over student debt forgiveness and implications for those who have paid off loans.
Questions raised about the value of college degrees and job preparedness.
Many degrees are deemed not worth the cost, leading to misled young people about higher education benefits.
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The unsustainability of rising tuition costs for degrees, particularly in the US.
44:42Tuition rates are increasing at two to three times the general inflation rate, making the value proposition for students seeking jobs uncertain.
The high cost of education may not justify the credential obtained.
The cost of a four-year private college degree could potentially reach a million dollars in the near future, creating a significant financial burden.
The inflation of costs is expected to persist, resulting in students being trapped in a cycle of debt with no apparent solution.
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Impact of Cost Structures on College Attendance and Degrees
46:20Cost structures impact application rates and discussions on college attendance and degrees.
Tiering system in colleges affects institutional quality, credential value, job offers, and income levels.
Computer science degrees offer better economic opportunities compared to liberal arts degrees, despite similar costs.
University resources allocation influenced by student demand, fundraising, and political factors, leading to shortages in engineering slots and excess in other areas like liberal arts, creating challenges for students seeking specific degrees at prestigious institutions.
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Pressure to disaggregate college into different tiers and types of degrees is growing, influenced by economic factors.
51:10State systems are reducing economically unviable degree programs, leading to debates and disagreements.
The purpose of universities is being questioned, focusing on balancing job readiness with a well-rounded education.
Criticism arises over the neglect of humanities education and its impact on societal issues.
The significance of research in shaping educational policies and practices is emphasized.
✦
Influence of German and American models on research universities.
52:10Vannevar Bush and colleagues designed the modern research university post-1945.
Establishment of federal funding complex including organizations like NSF and DARPA.
Three million academic papers published annually, undergoing editorial and peer-review process.
'Publish or perish' culture in universities for academic advancement based on research.
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Challenges in Academic Publishing
54:26Concerns about the quality and impact of research are raised due to the pressure to publish papers in academia.
The replication crisis, brought to light by John Ioannidis in 2005, shows that a significant portion of research results cannot be replicated.
Many published papers go uncited or unread, casting doubt on their impact and relevance.
Controversies surrounding self-opinionated research articles like autoethnography spark debates on the validity of academic publications.
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Crisis in research engine within humanities and liberal arts.
56:33Papers lacking future citations and not contributing to knowledge.
Replication crisis in science leading to potential fraud and deliberate lies in research.
Government funding for research deemed corrupting, with bureaucrats approving only incremental and shallow ideas.
Need for a reevaluation of research practices and funding mechanisms in modern universities.
✦
Importance of private funding for research and issues with government funding processes.
58:11Successful projects funded by private institutes from universities.
Emphasis on directing funding towards essential research and avoiding pointless endeavors.
History and impact of policy Think Tanks dating back to Woodrow Wilson's era.
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Evolution of Policy Making Process from 1880-1920
01:01:31Prior to 1920, experts from universities did not provide information to the media for policymaking.
Older societies had smaller governments and lacked modern systems like healthcare and education.
Development of modern systems between 1880 and 1920 led to mass media and manufacturing.
Shift towards modern policy issues being more complex and interconnected.
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The need for a Priestly class of secular experts in handling complex issues like healthcare policy is discussed.
01:03:20Politicians are tasked with communicating recommendations to the public, sparking a historical debate on the effectiveness of this method.
Data reveals a significant imbalance in political affiliations among faculty members, leading to extreme partisanship in policy recommendations.
The current polarization in American universities raises concerns about the future acceptance of universities as political advisers.
The speaker questions the viability of universities as political advisers due to this polarization.
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Research on police brutality, race, and the defund the police movement.
01:06:50Despite being a respected black genius, the professor's ideas were dismissed.
Rise in murders of black people due to the suppression of certain truths.
Trust in universities collapsing, especially among the right-wing population.
Impact on political credibility and the voter base.
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Importance of moral instruction and social reform in universities.
01:09:15Legal challenges and controversies surrounding Diversity, Equity, and Inclusion (DEI) programs and admissions.
Emphasis on the complexity of morality across different societal scales, referencing religious texts like the Bible and the Quran.
Mention of the need to balance preserving valuable research in universities with addressing societal issues.
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Importance of questioning systems and assumptions in debates about morality and new moral issues.
01:11:55Accusations of apostasy or blasphemy can hinder discussions on morality in modern society.
Emphasis on diverse criteria in hiring practices and starting from a non-racist, non-sexist assumption.
Effective recruiting methods and networking are key in creating a diverse workplace.
Unique approach to DEI has led to the creation of a highly diverse Venture Capital firm.
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Importance of expanding the scope to find talent and creating a diverse work environment.
01:15:13Universities using race and gender as explicit hiring criteria can lead to negative outcomes and retention issues for diverse candidates.
Emphasis on moving away from assumptions and focusing on finding talent based on merit rather than arbitrary criteria.
Detrimental effects of a system built on racist and sexist assumptions.
Advocacy for a more inclusive approach to hiring.
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Importance of criteria in hiring practices for selecting the best talent and avoiding retention issues.
01:17:40Emphasis on open discussions and designing programs based on experience rather than outdated doctrines.
Evolution of trends in moral positions and programs from the 1960s to recent times, leading to a moment of reevaluation and potential change.
Questioning whether the current moment is an opportunity for progress or if it will lead to more of the same in the future.
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Challenges of implementing change in institutions like universities.
01:20:15Leaders facing backlash for questioning the status quo.
Importance of being a systems thinker and practitioner in challenging established norms.
Personal experience of facing resistance when addressing diversity and inclusion within an organization.
Emphasis on leadership and risk-taking in driving meaningful change.
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Harvard banned the use of RAC in admissions but allowed for adversity programs.
01:22:33Legacy admissions at Harvard require donations of $10-20 million, favoring wealthy donors over merit.
Concerns are raised about corrupting credentials and selling false promises to new students.
The system creates a hierarchy based on wealth rather than merit, impacting the university's integrity.
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The commercialization of college sports leads to concerns about the true nature of college athletics.
01:26:34College football TV ratings exceed NBA ratings, emphasizing the industry's importance.
Coaches such as Jim Harbaugh earn multi-million dollar salaries, while athletes receive no pay despite dedicating significant time to practice.
Athletes spend 40 hours a week on practice, leaving minimal time for academics.
The blurred line between student and athlete raises questions about the core values of college athletics.
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College athletes being exploited and the introduction of the transfer portal in college football.
01:28:10Some college athletes receive compensation for their name and likeness while others debate whether student-athletes should be paid for their contributions.
The transfer portal allows players to switch teams freely.
The current system is questioned for fairness in compensating student-athletes.
Revenue generated from college sports programs, particularly football, significantly funds other sports at universities.
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The impact of alumni donations on school budgets, especially at big schools.
01:30:44Loyalty of athletes and supporters towards their alma mater, like the dedication to Stanford.
Contrasting experiences of young adults in college versus those entering the workforce directly.
Importance of college credentials in securing better jobs.
Challenges faced by those without a college education.
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Jonathan Haidt discusses entitlement and indulgence culture among graduates.
01:33:30Shift towards victimhood and oppression narratives leading to lack of personal responsibility and control over life.
Increase in reported mental illness rates and need for mental health services.
Recurring scandals on campus involving a do-it-yourself justice system raise concerns.
Serious issues like sexual assault being handled outside the legal system.
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The segment highlights the flawed system of universities adjudicating rape cases on campus.
01:36:40Due process, objective evidence, lawyers, and defense are often lacking in these campus proceedings.
Incidents are sometimes adjudicated in a kangaroo court environment due to the influence of alcohol and drugs in college.
Concerns are raised about the emotional distress and implications for workplace culture resulting from this flawed system.
While affecting a small percentage of the population, the impact is widespread due to the lack of proper credentialing and values instilled in individuals.
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Importance of Behavioral Screening for Employers in Response to Emotional Distress Among Students.
01:37:55Despite concerns, college graduates hired have been exceptional.
Significant taxpayer money involved in federal student loan and research funding programs.
Tax exemptions for nonprofit institutions at operating and endowment levels are highlighted.
Emphasis on accreditation for institutions to access federal support and funding.
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Accreditation process by third-party associations creates barriers for new universities.
01:41:04High tuition rates at accredited universities are driven by operating cost inflation.
Ability to escalate tuition rates rapidly due to government lending policies contributes to high costs.
Culture of needing a college degree for a good job has led to unlimited credit availability.
Unlimited credit availability enables universities to raise tuition without consequences.
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The impact of federal backing on university tuition costs.
01:42:32Tuition costs are driven up by the increase in administrative staff rather than student or research expenses.
Large universities like Stanford have a higher number of administrators than students.
Endowments are not a free source of money for administrators as they are designated for specific programs by donors.
Universities are not heavily in debt but rely on a variety of funding sources.
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Decline in Public Trust in American Universities
01:45:34Public trust in American universities has decreased from 57% to 36% in eight years.
This decline is evident among all demographic groups, including those without a college degree.
University leaders are concerned as they rely on public support for funding.
Media coverage and external factors are contributing to this decline, posing challenges for higher education institutions in the future.
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Potential consequences of dropping popular support for institutions, such as universities, from 36% to lower percentages.
01:48:07Concerns raised about political will and funding structures if support for institutions decreases.
Fear that a candidate could win based on promises to defund institutions, leading to loss of tax breaks, research funding, and student loans.
Impact of partisan politics on institutions highlighted, emphasizing the need to address existential questions about their future viability.
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Importance of leadership and willpower in addressing challenges in universities.
01:49:31Reform opportunities and potential for creating new competitive institutions.
Entrepreneurial opportunities through unbundling components like credentialing and research.
Addressing shortage of slots in universities and exploring alternative funding models.
Potential for founders and startups to play a role in various sectors of the education system.
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Importance of Creating Startup Companies and Nonprofits for Innovation and Research.
01:51:27Exploring different funding models, such as increased philanthropic contributions, to support research initiatives.
Reference to the funding of a biotech research institute by Patrick Hson.
Emphasis on the crucial role of students in universities for the success of research institutions.
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Refocusing universities on value proposition, attracting top talent, and ensuring graduate success.
01:54:17Challenges include university hierarchy, administrative obstacles, and lack of central authority.
Assets such as campuses, faculty, and global reputation offer a strong foundation for improvement.
Emphasis on addressing real problems within universities to enhance student outcomes and overall success.
00:00we as a society are running a scam and
00:03ripping off a huge percentage of our
00:06young people who are going to college
00:08with the clear expectation that they're
00:10going to get a higher quality job and
00:12being able to pay for college but that's
00:14absolutely not the case and if we don't
00:16address that it doesn't he could forgive
00:18this batch but what about the next batch
00:20and the next batch and the next batch
00:22and the next batch it's still not worth
00:24the money and I think that's the great
00:27thing that has to be reckoned
00:28with
00:31[Music]
00:33hey folks uh welcome back uh to the mark
00:35and Ben show um today we are going to uh
00:38tackle one of the hot topics of the
00:39moment um which is the topic of uh the
00:41university system uh University and
00:44colle
00:46University very hot topic it's been in
00:48the news a lot lately um couple things
00:50we wanted to say up front so first of
00:52all I think in general we're going to
00:53have a very kind of American perspective
00:54so when we talk about you know the
00:56universities and colleges we're most
00:57familiar with are American so you know
00:59asum we kind of have a maybe a little
01:01bit of a parochial view just in terms of
01:02what country we're talking about um but
01:04look the the the the most important
01:06thing is kind of why we want to talk
01:07about this um and you know I guess what
01:10I would say is like look like
01:12universities um and I would say
01:13especially the really good ones um they
01:16matter tremendously um and they matter
01:18tremendously to the world um and to the
01:21country um and to everybody in the
01:23country um and they matter a lot to us
01:25and I just want to say up front like
01:26they matter a lot to me you know I'm I'm
01:28where I am because I I got a mod
01:29University of education at the
01:30University of Illinois they M they
01:32matter a lot I know to Ben uh who can
01:34talk about his own experiences um and so
01:36so they really matter you know they're
01:38they're they're obviously in in some
01:39state of of sort of Crisis right now um
01:42uh I think our opportunity is to talk
01:45about them not so much in terms of like
01:47the topics that are like super hot in
01:48the news so we're not necessarily going
01:50to weigh in on the same stuff that
01:51you've been reading about uh if you've
01:53been following the you know the last
01:54couple months of of drama but you know
01:56we're going to do kind of what we do
01:57which is we're we're going to we're
01:58going to talk about it structurally so
01:59we're we're going to think about sort of
02:01universities as an industry um and as a
02:03business and as a form of organization
02:06um and as something that has customers
02:08um and has constituents and and has a
02:10structure and has an industrial logic um
02:13and incentives right so you know
02:14thinking about this a little bit more
02:16structurally more from a business
02:17standpoint um and then the other thing
02:19is um uh there there's two specific
02:21reasons we want to get into this today
02:23so one is um both Ben and I have a lot
02:25of friends um and uh colleagues all
02:28across the country that are trying to
02:30basically make universities better and
02:32and some of these are people who are on
02:33boards uh or are running um uh you know
02:37University presidents or endowment heads
02:39um or other people alumni um you know
02:42professors uh you know people who have
02:44been kind of scrubbing and hard uh to
02:46try to make universities better and so
02:48we we hope maybe sharing some of our
02:49perspective might help them um and then
02:51the other is since we are Venture
02:52capitalists you know there there is
02:54always the possibility you know that
02:55higher education is an industry and
02:57there's always the possibility of
02:58startups um and so one of the you know
03:00interesting questions always is when an
03:02industry is going through you know kind
03:03of structural Transitions and when when
03:05when when sort of a lot of things are
03:06flying um there's always this question
03:08of like well should there be new should
03:09there be new competitors um in the
03:11industry or or actually should the
03:13structure of the industry itself change
03:15uh and maybe you know things that have
03:16been bundled in the past should be
03:17unbundled and so forth and so we'll
03:19we'll we'll get into that a little bit
03:20as well and there there may be
03:21entrepreneurs listening to this who may
03:22may have ideas coming out of it um so
03:24Ben let me let me let you let you also
03:27add introdu I'll just add you know was a
03:30uh trustee at Columbia University um I'm
03:33a trustee emirus now I think they call
03:36me um so I have a huge interest in in
03:40kind of helping uh the system improve
03:43and kind of get over its current issues
03:46um the other thing I'd say about you
03:48know American universities in particular
03:50is they are you know to a large extent
03:52the Envy of the world and that you know
03:54when I travel the world um you know many
03:57countries you know the the government
03:59officials and the the the highest
04:01ranking people in the country send their
04:03children to American universities to
04:05study you know even if they're going to
04:06come back and um kind of you know
04:09literally run the country at a future
04:11date uh so you know it's really been an
04:14amazing system and produced an awful lot
04:17of good so you know we're going to do a
04:18lot of uh dissecting deconstructing
04:21criticizing of it but it's in that
04:25context yeah and and yeah and I think a
04:27great case study of that Ben is I think
04:29she J Ping's daughter goes to Harvard I
04:32believe which is one incredible case
04:34study and then of course particularly
04:36when we talk about the top universities
04:38right um which are you know of course
04:39the ones that draw most of the press
04:40coverage but you know they they they
04:42they they have what economists call an
04:43externality which is you know their
04:45graduates end up running a lot of the
04:46country yeah right um and so like you
04:49know basically like almost every Supreme
04:51Court Justice you know either you know
04:52went to one of a very small number of of
04:54super Elite you know law schools usually
04:56Harvard to Yale um you know cea if you
04:59look at the C The Fortune 500 if you
05:01look at you know top politicians
05:02presidents I think Harvard alone is
05:04responsible for eight presidents um and
05:07then there's this we'll talk about this
05:08later in the in the in the session but
05:10there's this policy setting function
05:11that they play where you know the ex the
05:13expertise at the universities in the
05:14form of the professors and the research
05:16um is used to set a lot of public policy
05:18um and so the the the decisions made at
05:21these places basically basic basically
05:24end up determining a lot of the future
05:25of the country for sure it is I mean
05:27they are they are Elite universities
05:29that produce the
05:30elites yes that's right and the elites
05:32end up running a lot of things so yeah
05:35so anyway so so that's why we want
05:37another reason we want to talk about
05:38this is the the the implications of sort
05:40of what's either going right or wrong at
05:41the top universities matters not just
05:43for the universities and for the people
05:44who go to those universities or teach at
05:46those universities but also you know the
05:48the citizenry as a whole um you know is
05:49sort of very exposed For Better or For
05:51Worse to the to the implications of what
05:53happens to these places so certainly a
05:55topic that I think everybody should be
05:56uh you know should should should at
05:58least you know think about somewhat so
05:59structure for what we're going to do
06:00today is so um I've made my list of the
06:02uh uh the dirty dozen or 12-step program
06:06u i I made a list of the Dozen um uh
06:09sort of key functions uh that that I
06:12think are kind of most Central to what
06:13modern universities are and I and let me
06:15start by saying um you know basically
06:17like where did the modern University
06:19come from is actually quite an
06:21interesting story in and of itself um
06:24you know the very short form of it is
06:25that the original universities well the
06:27original universities started in like
06:28you know England like 800 900 years ago
06:31um uh uh the American universities
06:34actually started 400 years ago American
06:35universities are actually in some cases
06:37older than the country um and so Harvard
06:39in particular is sort of the the leading
06:41case study on this is uh and I think
06:42Harvard's the I think the oldest current
06:44one uh Harvard is I think 400 years old
06:48um and um and then and basically what
06:50happened is the the these institutions
06:52have been evolving for for hundreds of
06:53years um and so what they basically are
06:55today is they're sort of a bundle um of
06:58function and you know products and
07:01services um and um you know Staffing um
07:05and economics that sort of been you know
07:07evolved over the course of literally
07:08hundreds of years right and so and I'll
07:10just give you a sense of The
07:11evolutionary steps quickly you know just
07:13take Harvard as a case study Harvard
07:15started as a as a religious institution
07:17started out basically training uh
07:19religious training for uh you know for
07:20basically for Protestant Puritan um uh
07:22religious leaders in the US and that was
07:24the knowledge at the time right the
07:26Bible was the best source of knowledge
07:28in the world
07:30yeah if you read if you read the yeah if
07:31you read the original charter of Harvard
07:33this is all you know right there on the
07:34Wikipedia page it basically was
07:36chartered as actually an actual
07:38religious instruction uh right religious
07:40institution uh religious training U you
07:42know they kind of went it went hand
07:43inand with sort of the the sort of
07:45creation of the you know at the time
07:46what what became known later as sort of
07:48the WASP sort of anglo-american
07:49aristocracy you know that sort of
07:51colonized uh New England and ran you
07:52know basically and basically ran ran the
07:54country um you know and basically
07:56conducted the Revolutionary War
07:57ultimately um and you know that was very
07:59kind of heavily Protestant Puritan um uh
08:02and and and Harvard was sort of a key
08:03note in the propagation of those values
08:05and of that culture and of that religion
08:08um so it ran that way for a long time um
08:10you know it then broaden it it and its
08:11peers then broadened out and they they
08:13basically through the course of the last
08:14150 years or so they they basically
08:17threaded in um two uh foreign models uh
08:20elements of two overseas models so one
08:22was the sort of classical education
08:24model from the English universities and
08:26so particularly Oxford and Cambridge
08:28right and so the idea basically teaching
08:30you know sort of a classic classical you
08:31know um you know politics history
08:34economics um you know basically the the
08:36you know uh uh philosophy literature you
08:39know kind of the the the key topics that
08:41you know in England for a long time have
08:42been viewed is sort of the way that you
08:43train leaders like basically every every
08:45leader in England you know every prime
08:47minister basically essentially came
08:48through this particular program they
08:49have I think at Oxford called PPE uh
08:52which I think it's like it's like
08:53politics philosophy and forget what uh
08:55economics I think are the three um uh
08:58and so you know the the sort of
09:00classical education role of these places
09:01kind of came from the English model and
09:03then more recently you know starting
09:05about 100 I don't know 120 years ago the
09:07the influence started showing up much
09:08more also of the German model um and the
09:11German model was for technical education
09:13right um and so the German model was for
09:15basically training scientists and
09:17Engineers um and so um you know most
09:20most most elite universities in the US
09:21now at large universities you know they
09:23sort of famously have both sort of
09:25liberal arts component to what they do
09:26but they also have a what we now call
09:28stem um you know science technology uh
09:30education or uh engineering mathematics
09:34um and so the the the modern American
09:36University is sort of a hybrid of it's
09:37sort of a hybrid of a religious
09:38institution a classical education
09:40institution uh or Humanities education
09:43institution and then a technical
09:44education institution um and at least
09:46like the place I you know I went to
09:48University of Illinois and like it was
09:49actually very interesting as there were
09:50actually two physical sides to the
09:51campus there was the liberal art side
09:53and then there was a street that divided
09:55and then there was uh the Engineering
09:57campus the other side now Illinois where
09:59the stem buildings uh kind of much less
10:02nice than the liberal arts building
10:04because that was the case at
10:05Columbia I so at so so at Illinois the
10:08engineering buildings were much nicer oh
10:10they were nicer okay interesting so it
10:12depends who gave the money yeah yeah so
10:14this was and this was actually a big
10:16deal at least at Illinois this is a very
10:18big deal because I can tell you the
10:19liberal arts people were very mad about
10:20this uh liberal arts people the liberal
10:22arts buildings were just collapsing they
10:25were ancient and collapsing and there
10:26had been this building frenzy at the at
10:28the at the engineering department over
10:30the preceding 10 years before I got
10:31there and there were all these just
10:32incredible shiny spectacular buildings
10:34and people I remember people people on
10:36the other side of the street were like
10:37super mad about this oh that's really
10:39funny because you know when I was out of
10:40Columbia and Columbia has built a
10:41gorgeous new campus now so it's it's a
10:43little different but um the old
10:45buildings were gorgeous you know they
10:48were from when however Alexander
10:50Hamilton days uh and the new building
10:54was just like the ugliest thing you
10:56could ever see and that was the
10:57engineering building yeah maybe that
10:59tells you that maybe that's a different
11:01difference between the l Grant uh you
11:03know fundamentally Technical University
11:05yeah the sort of T tacked on liberal
11:06arts versus a liberal arts legendary
11:08institution maybe at some point tacked
11:10on tacked on technology right
11:12exactly yeah that's right and so yeah so
11:15these are good examples of kind of this
11:16hybrid this this hybrid that's emerged
11:18and and then of course you know we'll
11:19we'll talk about this some but you know
11:20since the 1960s in particular you know
11:22the universities have kind of Taken on a
11:23sort of a you know you might call sort
11:25of a more potent set of like you know
11:26kind of social political ideological
11:28roles
11:29uh you know which we we we'll talk about
11:30as we get into so there's a modern take
11:32on this too but but anyway the point of
11:33this is as a result of how these uh
11:36institutions evolved is they're bundles
11:38right and so if you look at it as an
11:39industry they're they're bundles they do
11:40a lot of different things um and the
11:43bundle evolved so the good news is the
11:45bundle evolved and in general in
11:46business that's kind of a good way to
11:47kind of figure out what you should do is
11:49to like let Evolution work on your side
11:50and figure out what works and what
11:51doesn't and add to the things that work
11:52and subtract the things that don't but
11:54you know the other thing that happens is
11:55you know sometimes you just like inherit
11:57the bundle um and sometimes as a leader
11:59you want to kind of relook at the bundle
12:01and whether this actually is the bundle
12:02that makes sense or whether things
12:03should be split out or whether things
12:05should be added uh to the bundle and so
12:07we're going to kind of talk about it in
12:08terms of the current bundle and then
12:10we'll talk about the potential
12:11unbundling yeah and I would say like you
12:12know one of the very interesting things
12:14with regard to the bundle um you know
12:17and and you can think of the bundle as
12:18like the Cable Bundle you know where you
12:20get your ESPN and HBO and all the things
12:23in one um is that the the bundle was of
12:27course created pre- internet
12:29and uh you know when you and I went to
12:31school that was significant because
12:34there was this thing where you could
12:35only get
12:37knowledge like the best books the best
12:40information was all you had to go to
12:42school to get it in fact if you wanted
12:44access to the internet when we went to
12:46school you had to go to university it
12:48was the only place that had the internet
12:50um yeah and so we're in a really
12:52different world than we were even you
12:54know 35 years ago uh which is you know
13:00and and so that puts tremendous pressure
13:02on the bundle yeah that's right yeah a
13:05great example is Illinois you had a
13:06famously huge library and I remember it
13:08was actually in the marketing material
13:09for both uh recruiting students and
13:10professors was the quality of the
13:12library because if you went there you
13:13could do certain kinds of research that
13:15were not possible if you didn't have
13:16access to the library yeah yeah which is
13:19very different world but like the Cable
13:21Bundle right like you could only get HBO
13:23if you had cable so that made the bundle
13:25very different than if you can get the
13:26HBO app like those are not the same
13:30worlds uh and I think the university is
13:32in that same situation but people don't
13:35point it out as much yeah that's right
13:38so let's dive into the bundle and I've
13:40identified my dozen um you know kind of
13:41things in the bundle and then Ben you
13:43can you know we can we can add things as
13:44we go there are actually many things we
13:46could easily think we just thought of
13:47one the library I didn't even have in my
13:49list um but um you know there there are
13:51many I'm sure there are many many more
13:53kind of you know elements of the bundle
13:54that I haven't even prioritized here but
13:56you know these are kind of the Dozen
13:57that are top mind for me so and actually
13:59Ben let me just run you through I'll
14:00just give you the headlines on these
14:01real quick so people can have a road map
14:03to what we're about to talk about yeah
14:04and then I'll just come back to the
14:05first one and we'll dive in so number
14:07one credentialing agency um so
14:10credentialing students graduates for
14:12employers uh number two the actual
14:15courses themselves the education um uh
14:19uh number three uh I call the research
14:21Bureau right which is the research
14:23component that most modern universities
14:25have right most universities are ALS
14:26they're also a hybrid of teaching and
14:27research yeah
14:29huge Charter is to create new knowledge
14:32um and often how the kind of technical
14:34part of the University distinguishes
14:36itself from industry um you know they
14:40they kind of refer to Industry as
14:41applying knowledge that was created at
14:43the University although not always true
14:45but it's a it's the Paradigm they love
14:48yeah that's right and and profess you
14:50know Prof we'll talk about this but
14:51professors become professors get hired
14:53and get tenure in large part of the
14:55basis of their research um uh in
14:56contrast to their to to their teaching
14:59um it's not uncommon to have you
15:01professors it will not surprise anybody
15:02who's been in a college environment that
15:03you have professors who maybe are better
15:05at research than teaching um yeah as the
15:08student sometimes you wonder who who got
15:10the good part of the deal um fourth what
15:14I call the policy Think Tank um and so
15:16this is the role of the universities in
15:17sort of setting public policy which
15:19we'll talk about um number five is what
15:21I call the moral instructor um and this
15:23is the sort of legacy of the fact that
15:25these institutions actually started the
15:27original one started as religious
15:28institutions um and so kind of and and
15:30you know today in most mission
15:31statements in most universities they
15:33might not outright say that they're
15:34teaching religion or morality but you
15:36know they'll say things like that
15:37they're trying to inculcate values right
15:39or they're trying to you know basically
15:40Foster citizenry they'll use terms like
15:42that and that's basically all code for
15:43moral
15:44instruction uh number six is what I call
15:46the Social reformer role and this is the
15:48role where they not just they they not
15:50only instruct morality but they also try
15:51to implement it themselves directly um
15:54uh and you know this is where this very
15:55hot topic of of Dei in particular comes
15:57in that we'll we'll spend a little bit a
15:58little bit of time on um number seven
16:01what I call the immigration agency um
16:03and so this is the key role actually
16:04played by Foreign students uh which is
16:07actually really critical and not not
16:08talked about enough because it turns out
16:10that uh foreign students at universities
16:12generally pay full Freight um and so
16:15it's a it's a big deal International
16:16recruiting of students now is a very big
16:18deal and very core to the economic
16:20structures of these things and there's
16:21another aspect that we'll get into when
16:23we talk about credentialing which is
16:26they pay full Freight and they don't
16:27always go to the ual University they've
16:30the universities have set up these
16:31parallel universities
16:33um with different criteria which is very
16:37interesting yeah that's right and and
16:39this actually turns out to be very
16:39important in the economics of these
16:41places because it's not clear that these
16:42places work without these kind of you
16:44know kind of let's just say Associated
16:45programs we'll talk about uh number
16:47eight Sports League um and I'm not the
16:49sports guy but Ben very much is and so
16:51Ben will weigh in very heavily on that
16:53and there's been a lot of controversy
16:54around college sports in recent years uh
16:57number nine the hedge fund which is to
16:58say say the endowments um which have
17:00become a very big deal over the last you
17:01know 30 years in particular uh number 10
17:04what I refer to and I I went to college
17:05so this was me uh as I refer to as adult
17:08daycare uh or young adult daycare and so
17:10this is sort of you know where you send
17:12the 18 to 24 year old um as sort of a a
17:15substitution for just like going out and
17:17getting a job yeah to get them out of
17:18the house exactly um and then uh number
17:2111 is I call the dating site right which
17:23is the role that the universities have
17:25played actually both in being a place
17:27where people actually date and and and
17:29choose mates but also they also get the
17:32credential uh for future choosing of
17:34matate we'll talk about that because
17:35that turns out to actually matter quite
17:36a bit um and then we'll close on what I
17:39call the lobbying firm which is
17:40basically the role the government plays
17:41in all this and in particular the role
17:43that uh Government funding plays and all
17:44this and then what that means for the
17:45relationship of of the of the government
17:47and the universities and of course
17:48that's a very hot topic you know there's
17:50a very there's a there's a there's a
17:52current you know very active
17:53Congressional investigation going on
17:54into the universities right now uh over
17:57all this recent drama and so there
17:58there's always this kind of question in
18:00the back of everybody's heads in in in
18:02Academia I think which is like okay you
18:04know we we we really do we in Academia
18:06really do run on federal funding and
18:08what you know what would what would ever
18:09happen if that ever got compromised or
18:10cut off yep yeah no and it is a freak
18:13out whenever it pops up it popped up a
18:15little during the Trump Administration
18:17um and I cannot I was a trustee at the
18:20time and like it was a
18:24fairly scary situation why don't you
18:27describe what because that that gives
18:29you gives people a sense of the stakes
18:30of what we're talking about yeah so well
18:32you know Trump was talking about um a
18:36variety of things you know one was an
18:38endowment tax um and then there were
18:41kind of other things to kind of change
18:43the way the the research research uh
18:47Grant process worked uh and and the
18:49amount of money that got allocated to
18:51various schools and that just has huge
18:53effects on the economics I mean it's
18:57uh you you know universities rarely you
19:00also have to understand almost never do
19:03layoffs um so they only get
19:05bigger uh and so a kind
19:09of what what you would kind of regard as
19:12like a kind of
19:14run-of-the-mill business downturn is
19:16like something that they're not really
19:18equipped to handle at a university I
19:20would just put it that way yeah okay
19:21well we'll come back to that um so let's
19:23start with the credentialing agency um
19:25and so this this is a very interesting
19:27topic and actually a lot of I know on
19:28this I learned from there's an economist
19:30named Brian Kaplan who's written a book
19:31called like the book is he's a he's a
19:3310ar university professor at George
19:35Mason University he spent his life in
19:37Academia so he's not exactly a bomb
19:38thrower um but he gave his book a very
19:40provocative title called the case
19:42against education um but it's a very
19:45kind of comprehensive walk through the
19:46economics of Education how the system
19:47works um and uh I was very struck by I
19:51just sort of relay the argument that he
19:53basically makes in the book or at least
19:54what I what I how I interpreted it which
19:56really stuck with me which is you know
19:58the sort of default view of sort of the
20:01value of a college degree is the
20:03learning right so you go to four years
20:05or whatever and you get the learning
20:06that you get and that gives you the
20:08learning sort of translates to
20:09employable skills and then you get a job
20:11and employers you know recruit kind of
20:12on that basis evaluate on that basis um
20:14it actually turns out it's actually very
20:16hard to validate empirically the value
20:17of the learning um and the the the the
20:20reason for that the the evidence for
20:22that is there's something called the
20:23sheep skin effect uh that economies talk
20:25about economists talk about and the way
20:27the sheep skin sheep skin here refers to
20:28the diploma um the the actual right the
20:31actual actual you graduated you actually
20:33got the diploma um and the observation
20:36is that um if you go to college X and
20:38program y um and you you go for eight
20:42sem you know you go for four years you
20:43go for eight semesters say two semesters
20:45per per year um and you graduate you
20:47make you know whatever say you make you
20:49know $100,000 a year or whatever coming
20:51out the other side as an average salary
20:53um it turns out if you compare those
20:56graduates to students who go for seven
20:58of the eight semesters uh it turns out
21:00like on average it's something like
21:01they'll get something like half the
21:02salary yeah um so for those graduates
21:04they kind of zero in at like if the if
21:06the if the full if the full if the full
21:07graduate amount is is 100,000 they
21:09they'll come in at like 50,000 or
21:10something like that it varies by field
21:12but it kind of It kind of roughly
21:13correlates to that um and so what what
21:16the argument I think Brian Kaplan has
21:17made is if you if you basically if you
21:19look at that if you stare at that there
21:20are two possible explanations for it uh
21:23right um because what you'd expect is if
21:25the if if it this is just all about the
21:26education the the the GR who the person
21:29who didn't graduate but took seven of
21:30the eight semesters should get seven e
21:31seven e of the income yeah right instead
21:34they get half the income and so there's
21:35two possible explanations either a full
21:37half of the actual valuable information
21:39is delivered in that last semester yeah
21:41right the senioritis
21:44semester yes and anybody who's been
21:46through college knows that's not true
21:47because that's the semester everybody
21:48slacks off um and so if anything the
21:51opposite is true um uh or the Sheep
21:54Canin effect which is the actual value
21:56is more in the diploma
21:58um it's it's more in the fact that you
22:00actually graduated right um and so the
22:03the way that I think the economist view
22:05on this basically is um the the the main
22:07credential of a of a University degree
22:10um is basically in two parts um it's in
22:12the fact that you were admitted um and
22:14then it's in the fact that you were that
22:16you graduated um by the way on the
22:18admissions thing you can see that same
22:19thing in Silicon Valley where there's
22:21this credential in Silicon Valley that's
22:22become very popular which is I was
22:23admitted to you know MIT but I didn't go
22:26yeah right or I was aded and I went for
22:28a year and dropped out and it turns out
22:30like there's no penalty like you know
22:32for for for for VCS like us like
22:34actually the fact you got admitted MIT
22:36is itself or credential yeah even if you
22:38never went right even if you never
22:39actually completed the thing so so it
22:41links back to the sheep skin effect
22:42anyway so so basically like the the the
22:45sort of objective clinical view of the
22:47value of the credential basically is
22:48that the education plays some part but
22:50there's these two other really critical
22:51things there's the admiss the fact you
22:53got admitted and then there's the fact
22:54that you graduated in psychological ter
22:56psychological testing terms so they call
22:58psychometrics what that basically means
23:00is that the admissions process is
23:02basically an IQ test come back to that
23:04in a second and then the graduation
23:06actually getting to the diploma is a
23:08conscientiousness test yeah right and so
23:10and the reason we can be confident in
23:11saying that admissions is an IQ test is
23:13that traditionally admissions was based
23:14on standardized testing which is like
23:17tests like sat act GRE and those tests
23:21from a from a from a from a just a
23:23clinical standpoint like in sort of
23:24Clinical Psychology um psychometrics um
23:27those tests all proxies for an IQ test
23:29those those are all sort of those are
23:30all sort of roughly equivalent to just a
23:31straight IQ test highly correlated
23:33results yeah highly correlated to an IQ
23:35test you know point eight or more you
23:37know kind of correlation to an IQ test
23:39and so basically historically the fact
23:41that somebody got you know whatever 1400
23:44or 1500 on the uh sat and that
23:46correlated to an IQ of 130 or something
23:48and then therefore they were qualified
23:49to go to you know a certain a certain
23:51tier of University like like that was a
23:53that as long as that standardized
23:55testing component in there and those
23:56tests are real like that that's a real
23:57signal
23:58of like basic intelligence and then the
24:00fact that they completed the fouryear
24:01degree is a real signal of
24:03conscientiousness and I think there's a
24:05really kind of fundamental thing that's
24:06breaking right now that's not getting
24:08enough attention that employers are
24:10starting to really think about but I I
24:11think a lot of people who run
24:12universities are not thinking about
24:13enough yet which is we're thinking about
24:16it we're thinking about it yes both yes
24:19we're thinking about this both for
24:21ourselves uh and then also for all of
24:23our companies who hire um which is I
24:25think a lot so a lot of universities
24:26number one um they are voluntarily
24:29ending the use of standardized testing
24:30for admissions um and there's a whole
24:32political social kind of overlay as to
24:34why that's happening but at a lot of
24:36even the top institutions now they very
24:37deliberately are not doing admissions
24:39based on any sort of standardized
24:40testing which means they're not applying
24:41the IQ test uh which means which mean by
24:44the way maybe that's the right thing for
24:45them to do but what it means is they're
24:46giving up on that as part of the
24:48credential like that that that that the
24:49IQ component of the credential is is
24:51being voluntarily surrendered and then
24:53the other thing that's happening and
24:54this is very clear in the data is just
24:55great inflation um and so you know the
24:58trend over the last 50 years has been
25:00increasingly that just everybody gets
25:01A's and everything um and of course if
25:04you just get A's and everything of
25:05course it's a lot easier to graduate um
25:07right you're much much less likely to
25:08drop out or get forced out and so I
25:10think what's happening is colleges
25:11universities in the US right now are
25:13voluntarily surrendering both the uh
25:15admissions IQ component of the
25:16credential and the graduation grading uh
25:19component uh of the credential um and I
25:22and I think the implication of that in
25:24terms of what that credential means in
25:26terms of future employment is I think
25:28very uh underestimated yeah so Ben over
25:31to you yeah and what do you think drives
25:33the great inflation the most I've been
25:36thinking about that quite a
25:38bit do you have a view on that from what
25:40you saw at Columbia yeah I mean I think
25:42that you know a lot of it has to do with
25:44incentives right so if you're an
25:46instructor um you get you know the the
25:49big new thing is they have these student
25:51evaluations of teachers and they get
25:53published in these books and then um you
25:55know you get if students don't like like
25:57you you you're regarded as a crap
26:00Professor or whatever and the easiest
26:03way to get a high student evaluation is
26:05to give him an
26:06A and so like and the amount of stress
26:13and you know just that you have
26:16to deal with if you give somebody a d uh
26:19because they're going to come to you and
26:20complain and harass you and so forth you
26:23know like why do it you don't have to so
26:26just give everybody an a you get a high
26:28evaluation so like the incentive there
26:31is no incentive for an instructor to
26:32give a hard grade um and then there is a
26:36kind of once one Professor starts give
26:39kind of taking that easy incentive then
26:43everybody kind of does it uh and you
26:46know we see this in companies where you
26:48know you have a soft manager promotes a
26:50bum
26:51employee then every manager goes every
26:54other employee goes well that bum got to
26:56be a vice president and why not me and
26:59then you know that that takes off so I
27:00think it's kind of like a natural
27:03organizational Evolution if you don't
27:05have some very strict standard on
27:09grading um and so like like I think it
27:12just naturally went there but I I'm not
27:14sure well I'll give you two other I
27:16think that's right and like the role of
27:17like I think it's like rate my
27:18professor.com like I think is pretty
27:20Central now um but I give you two other
27:22incentives I think I would suspect uh
27:24one is development uh don future
27:26donations right which is the other
27:28constituency here is the
27:31parents and then and then by the way
27:33these students and then these students
27:34later later on becoming donors right um
27:37and you know like I think that the the
27:40professors most professors are not that
27:43directly connected to the fundraising
27:45process though I think but yeah that
27:46that could be certainly yeah but it also
27:48but there here you go to like here would
27:50be a reason for the administrations to
27:51not be holding the line on on um yeah
27:54you know angry parents like the last
27:56thing you want to deal with is an angry
27:57parent who donated a ton of money
27:59that's like that's no fun at all so so
28:03in that way definitely the same thing
28:04yeah yeah and then the third is you know
28:06look the other version of this I've
28:08heard I've heard this from professors is
28:09like look if you could you for bad
28:10grades you can be hul in front of
28:12administrative proceedings you can get
28:14in trouble right because you can open
28:15the door to Fair fairness right um
28:18Equity um you know classroom conduct
28:21yeah um you know complaints like the the
28:23students and their parents can complain
28:24and they can give you a false you know
28:27harassment complaint or something
28:29because d right yeah yeah hostile
28:31classroom you know like uh you know
28:33there are the HR the sort of HR you know
28:34the HR policies basically provide an
28:36Avenue you know and by the way there's
28:38Avenue for legitimate complaints but
28:39also if you're a professor you must you
28:41must be thinking about boy I you know
28:43what what's the last thing I need in my
28:44life is to open the door to somebody you
28:46know saying something like that um and
28:48so yeah I think that's to me that I
28:50think that that's my analysis is just
28:52and this is the thing the great
28:53inflation thing like the great inflation
28:54thing has been it's been a like a
28:5550-year trend like the the charts there
28:57are like actually pretty linear yeah so
28:59this this has been growing for a long
29:00time people have people have known about
29:02this um and it's just it's not a problem
29:05as long as the credential is still
29:06intact right um but I think it's at the
29:09point now where I I think it's damaging
29:11the credential right it's slip slip slip
29:12all at once yeah and I think that um
29:15well so there's another thing which I
29:18got in a huge kind of argument about
29:20when I was a trustee and you know to
29:22Columbia's credit they uh I I you know
29:25they did the right thing in that case
29:27but
29:27all of the schools so there's you know
29:30kind of whatever Harvard College
29:32Columbia College like these things are
29:35almost impossible to get into you know
29:37they accept a thou on the order of a
29:38thousand students a year every you know
29:41high school graduate in the world wants
29:42one of these slots um they're very hard
29:45to get and you know that's the
29:50credential but there's also a these
29:54things the extension schools which are
29:56not taught T by professors um they're
30:00taught by like whatever somebody from
30:03Goldman Sachs who's you know wanting to
30:05do a little side education work or this
30:08and that um and they can let in tons of
30:12people they're far larger than the
30:14actual University kind of college
30:16program um you know har and they all
30:18have them Harvard has it you know
30:20Columbia etc etc
30:23and they are mainly foreign students so
30:26it's mainly like Chinese students and
30:28then they purposely and this is where I
30:31got into the argument they purposely
30:33labeled the degree so it's very hard to
30:36tell that it's not the credentialed one
30:39so it's Columbia
30:40University Master's in statistics was
30:43the big kind of debate that we kind of
30:46got into at the extension school because
30:48the people in the engineering school
30:49were like what the hell like that's the
30:53same degree that we're giving out in
30:56title like how is an employer going to
30:58distinguish and the truth is the Chinese
31:00employer cannot distinguish like that's
31:03like really hard for them um and so you
31:07know you do that
31:09enough and you know it it It ultimately
31:12Waters down the gree now in the United
31:14States like we can distinguish you know
31:17we got a student coming from Harvard we
31:18like talk to other Harvard students make
31:20sure they knew them like
31:22like it's possible to sort but it's not
31:25possible to sort for everybody um and
31:27they're purposely obfuscating it um
31:30because it's a huge Money Maker these
31:32schools everybody pays full Freight
31:34there is no scholarship there is no
31:36financial aid there's none of that and
31:38so you know it's a and and then it's
31:41very scalable because they can let in as
31:43many students as they want because
31:44they're not taught by professors and
31:45there's no none of this credential idea
31:49um but it ricochets back into weakening
31:52the
31:53credential yeah and a lot of this you
31:55alluded to it but I'll just focus on for
31:57a second a lot of this is a lot of these
31:58are then International students yeah um
32:01and the core of a lot of this as you
32:02said is this is yeah if you're if yeah
32:04if you're a Chinese employer you might
32:05not understand the gradations here yeah
32:08now having said that Chinese employers
32:10can use the internet just like everybody
32:11else or at least in this I'm sure for
32:12this you know for this purpose they can
32:14yeah um and so that that's the kind of
32:16information asymmetry um that the
32:19internet historically has been very good
32:20at demolishing yep yeah yeah know and I
32:22think that that is I mean which kind of
32:25is going to be thematic in this disc
32:27discussion which is a lot of the things
32:30that the university kind of could rely
32:32on um get undermined by the internet and
32:37uh you know that which is causing things
32:41to come to a head I think you know maybe
32:44not right now but certainly soon yeah
32:47coming and then Ben on the on the on the
32:49overall credentialing Point um so yeah
32:51what's your view you know we we deal
32:53with both a lot of tech companies and
32:54also a lot of non- tech a lot of big big
32:55non tech companies also um like where
32:57are CEOs and hireing managers in
33:00corporations on on this topic of like
33:03the value of the University credential
33:04Now versus 10 years ago and then where's
33:06it going it it it hasn't changed
33:09materially yet uh in my view but for the
33:13first time in my career people are
33:16really discussing it and you hear CEOs
33:19going wow the kids coming out of college
33:22this year are not what I'm used to um
33:26they're not you know and I'm getting
33:29kids from weird places you know not
33:32Harvard not MIT like it used to be in
33:34Silicon Valley I think Facebook you're
33:36on the board of meta they used to only
33:38hire people from uh Stanford MIT I think
33:42or Harvard Sanford MIT like they had
33:45like strict rules on uh nobody has that
33:49role anymore like that rle is gone like
33:51I I don't know any company that you have
33:53to be Stanford Harvard or MIT to like be
33:56an engineer there
33:57um and you know more and more people are
34:02you know not finished school coming
34:04straight out of high school uh so so I
34:07would say the aperture which is really
34:09great by the way has opened but the
34:11other thing is um that I I am hearing a
34:15lot just anecdotally is you know
34:18Stanford students aren't what they were
34:20uh you know like I got a engineer from
34:23Sanford but they're
34:25not they're they're they're not ready
34:28you know steady they're not ready to go
34:30in the way they were before um and so I
34:33think that it's all already there's
34:36definitely a credential degrading that's
34:39already occurring with this first time
34:42though with this class coming that just
34:45came out so well it's pretty nent and
34:49it's not I don't think it's really
34:51changed hiring practices much other than
34:54people are casting a wider net um but
34:57they're not like still like a Stanford
34:58degree is very powerful very powerful uh
35:03but you could kind of see it's like a
35:05glimpse of the future for the first time
35:07like I've never never heard that before
35:09I mean you know like and if we project
35:11forward if nothing if if current trends
35:13continue yeah um like what what do you
35:15think will be the the the take among
35:16sort of Leading Edge Employers in five
35:18years well I think look I I think if you
35:20take out the
35:22SAT
35:24um that's a pretty big change um and and
35:27so it's a little unpredictable
35:29because okay what are they admitting
35:33People based on you know like you know
35:36do you have to have high scores on the
35:38AP exams do you you know do you have to
35:41have very rigorous curriculum um you
35:44know I know at Colombia it really
35:47mattered the quality of the high school
35:48that you went to even when you know they
35:51had SATs so the the question is is that
35:57whatever rubric of criteria that they're
36:00using to replace the SAT as good um at
36:05uh you know identifying very gifted um
36:09students or is it not as you know is it
36:11worse and and I think we don't know that
36:13yet yeah but like would you predict in
36:15five years that employers are still just
36:17basically deferring to the degree the
36:18question of a c of a of a recruits IQ
36:21and conscientiousness or are they feel
36:22like they're going to have to validate
36:23that
36:24otherwise I kind of think they're going
36:26to have to validated I mean I just
36:29because it's different uh yeah
36:32and on kind of entrylevel
36:36jobs you can do some like fairly
36:39rigorous testing particularly you know
36:41for an engineer or something like that
36:43in in the interview process um but you
36:48know look Stanford you have just a huge
36:50benefit of the doubt I mean look I think
36:54meta at one point took any engineer from
36:57Stanford you know what I mean like
36:59because they were that that good of a
37:01that good of a signal yeah yeah it was
37:03amazing signal so I I don't think
37:05they'll do that anymore I think Google
37:07just to close on the topic I think
37:09Google Now formerly does not take
37:11college degrees into account or at least
37:12they said they're they're neutral or
37:14ambivalent or don't care they'll they'll
37:16they'll equally rank people without
37:17degrees they they do their own testing
37:19um and they go on those house yeah yeah
37:22yeah so I think that um I think that's
37:24going to become much more of the norm
37:26where companies do their own testing U
37:29and it won't
37:30be you know it's not legal at least for
37:33sure not in California to do a general
37:35IQ test for a specific job but you can
37:39do pretty rigorous job specific tests
37:42that you know certainly kind of you know
37:45include something that's going to you
37:47know ability to process information
37:49quickly etc etc okay um well I'm sure we
37:52this will come back up again so we'll
37:54move to number two so the actual the
37:56actual education the actual education um
37:58the courses themselves so so here I
38:00would just say um you know one one lens
38:01on this is actually the the Again part
38:03of the bundle here there's actually a
38:04bundle of four different kinds of sort
38:06of education and coursework um at least
38:10four but I would say there's there's
38:11four big ones um so there's the sort of
38:13classic Humanities uh or liberal arts
38:16which as I said is sort of derived from
38:17the the English model um there's what we
38:20now call STEM um science technology
38:22engineering math which is as we said
38:24originally derived from the German model
38:25and and that's you know pH physics and
38:27everything from physics to engineering
38:28and so forth um then there's social
38:30sciences which is a bit more of an
38:32American innovation which was social
38:33sciences are like a hibrid of humanities
38:35and Stam and so these are Fields like
38:37psychology sociology economics public
38:39health education that were kind of
38:41developed as quote unquote Sciences yeah
38:43anything that has science in its name
38:45isn't science is is the joke right like
38:48you know there's no physics science or
38:50chemistry science it's only political
38:54science yes yeah so the polit the CL the
38:57classic tension is the political
38:58scientists absolutely insists that
38:59they're scientists just like the
39:00physicists yeah and the physicist insist
39:02no absolutely you're not no you're not
39:04because it's not science right like it's
39:06not like I have a p hypothesis that's
39:08testable and I can run an experiment and
39:11find out if I you know my predictions
39:13come true like so if it's not that it's
39:16not science but whatever capital S
39:18science um and there's a whole
39:20degression we could go on about where
39:21where this all came from but yeah they
39:22sort of they're in the middle somewhere
39:23and then and then there's what I would
39:25call the trade school um which is
39:26basically um uh law medicine business
39:29and Performing Arts um which is
39:31basically like you know if you go to one
39:33of these places for specifically for a
39:34law degree like that's a very specific
39:36obviously set of courses credential um
39:39or for you know to become a concert
39:40pianist or something like that or a
39:42doctor um and so there there is this
39:44kind of bundle even within the bundle uh
39:46overall bundle there's this bundle
39:47within the educational courses component
39:49of it which is these are actually Four I
39:50would say four quite different kinds of
39:52curricula yeah um and then that
39:54basically takes us to sort of the the
39:56the problem here um so one problem here
39:58is the sheep skin effect we already
39:59talked about um which is basically you
40:02know at least a very strong suggestion
40:04that at least for at least for some
40:05degrees and some institutions the
40:07education is not as important uh as
40:09people might think or let's just say the
40:11the market the market of employer
40:12certainly doesn't doesn't think it is
40:14because you just look at the
40:14compensation data and it shows that but
40:17then there's this other monster problem
40:18and again this problem has been
40:19discussed at length for decades but it
40:21feels like it's also coming to a head
40:22here getting much more politically
40:23potent um which is the student loan
40:25crisis um which is you just have a very
40:28large number of graduates um of American
40:31colleges universities where they're
40:32carrying these large amounts of student
40:34debt and in you know in the really bad
40:36case it's actually debt because of the
40:37high interest rates it's actually debt
40:39that compounds and kind of grows initely
40:41over over the life of the student and
40:43you can't get rid of it with bankruptcy
40:44yeah yeah well so that right well so
40:47this is very interesting so so so on the
40:48one hand there's been this big
40:50controversy there's been a lot of heater
40:51on this question politically which is
40:52for a long time student loan debt
40:54federal student loan debt specifically
40:55cannot be dist charge the bankruptcy and
40:57it's the one form of debt that can't on
40:59the other hand though you now have
41:00direct bailouts um so in the last three
41:04years right the current the current US
41:06Administration has been doing a series
41:08of bailouts uh where they've been doing
41:10arbitrary top- down eraser of the debt
41:12which you know and of course they call
41:13it they call it you know forg they use
41:15this very clever word forgiveness which
41:16makes it sound wonderful of course what
41:17it just means is it means other
41:18taxpayers right other people are going
41:20to are going to put put the bill for it
41:22um and that's always sensitive in the
41:24American system at least because of
41:25course theic poity is composed in part
41:27of people who went to college and in
41:29part who didn't yeah um and so people
41:31who didn't go to college might not be so
41:33Keen about having their text money
41:34getting used to forgive you know student
41:36debt for nonproductive degrees and then
41:38and then honestly there's also a moral
41:39hazard issue that comes up which is
41:41among people who took on college debt
41:43there's the people who paid it off
41:44versus the people who didn't yeah they
41:46the people who paid it off don't get
41:47forgiven and so then there's a s there's
41:49this thing there's this weird incentives
41:50thing where it's like well okay if this
41:52is the new way that it goes then I'm a
41:53sucker if I pay off my own student loan
41:55debt because in the future there will be
41:56another bailout yeah and I'm not so so
41:58anyway so this has become like a pretty
42:00potent political issue but I think
42:02underneath this is this question of like
42:03okay like are all of these degrees and
42:06all of these institutions actually
42:07generating graduates who can actually
42:09command Market wages that actually make
42:11this entire thing basically an
42:13economically and politically viable
42:14proposition yeah that I think that's the
42:16exact that's the question that is the
42:20thing we should be debating
42:22because the the whole forgiveness thing
42:25is insane say in the sense that you're
42:28not actually addressing the real issue
42:31it's the ultimate Bandit yes you're
42:33buying votes yes you're giving some
42:35people
42:36relief but the fundamental issue is it's
42:39now become clear that for a large swath
42:42of the population college is not worth
42:44the money you would not have a college
42:47uh student loan crisis if whatever you
42:51paid for college paid you back in the
42:54form of a job that was worth far more
42:56than the degree um but what's happened
43:00is for a huge percentage of the degrees
43:02the degree is worth less than uh than
43:06the job so it's you know
43:08basically we as a society are running a
43:12scam and ripping off a huge percentage
43:16of our young people who are going to
43:18college with the clear expectation that
43:20they're going to get a higher quality
43:22job and being able to pay for college
43:24but that's absolutely not the case
43:27uh and um that's the real issue and if
43:30we don't address that it doesn't he
43:32could forgive this batch but what about
43:34the next batch and the next batch and
43:36the next batch and the next batch it's
43:38still not worth the money and I think
43:40that's the great thing that has to be
43:43reckoned with and that's a big big issue
43:47because tuition you know the quality
43:50degree has got to be pretty hard to pay
43:51back you know
43:53$300,000 yeah that's a lot of money for
43:56you know even in the kind of in today's
43:59inflationary world to go make back up
44:02you know working for a living which I
44:04think kind of gets
44:06into the student
44:08customer right there there's many
44:10customers which we'll get into but like
44:12as a student what do I want well there
44:16are maybe 1% of the students want to
44:20become Scholars and then 99% of the
44:22student want
44:24jobs and for that set the value
44:27proposition is getting extremely shaky I
44:31think across the university system um
44:34which is why we have the student loan
44:36crisis and there's been an amazing
44:38inflation of tuition which has grown at
44:42I think tuition rates have grown at two
44:45or three times the uh General inflation
44:47rate which is insane in the face of
44:51technology that ought to be able to
44:53reduce the cost of Education
44:55dramatically as we've kind of talked
44:57about like it's all on the internet and
44:59it's all in chat gbt like there is no
45:02knowledge that you can't just like get
45:05from your smartphone very cheaply and
45:07easily and so why am I paying
45:10$300,000 and you know it is for like the
45:14credential um but the credential itself
45:17um depending what you get your degree in
45:20may not be worth $300,000 at all or and
45:22it's clearly not worth $300,000 at all
45:24and that's a big problem
45:26then add a couple things to that so one
45:28is you know this inflation thing um
45:30maybe we could put post a chart to go
45:31with this um that shows this but this
45:33the the cost of the degree Rising faster
45:35than inflation is a continuing process
45:37yeah um and so and compounding you know
45:40here really gets you right um and so if
45:42you compound forward like 300,000
45:44$300,000 $350,000 is like the cost of a
45:47four-year private college degree right
45:48now in the US but if you if current
45:50trends continue and there's no reason
45:52right now to expect that they won't
45:53that's on its way to a million dollars
45:55yeah like and relatively quickly because
45:58of the compounding even if you work for
46:00us that's hard to pay
46:02off exactly exactly and so like this
46:06there's a it's right now it's a one-way
46:07treadmill and we'll talk we'll talk
46:08later on at the end about the overall
46:10fiscal structure of these of these
46:11places but like they they the the
46:13financial structures of these places you
46:15know generally assume that this kind of
46:17sort of super inflation of cost is going
46:19to continue and and and they're building
46:20cost structures that kind of assume that
46:22yeah and that's starting to show up
46:24right that's TR starting to show up in
46:26the application rates of the kind of
46:28percentage of kids applying to school
46:30already I
46:31think so then this also goes to this
46:33thing and we we've been I've been guilty
46:35of this already it's just so easy to do
46:36which is it's so easy to talk about
46:38whether kids should go to college or not
46:40yeah and then whether kids should get a
46:42degree or not but of course underneath
46:44both of those is like which college and
46:47then which degree right um and if you
46:49dig into each of those if you dig into
46:51which college of course there there's a
46:52tiering in the college system where
46:54there's you know four five six different
46:55tiers of institutional quality and you
46:57know quality of the credential and then
46:59corresponding income you know come you
47:00know job offers coming out the other
47:02side and then degrees as I was you know
47:03kind of walking through you know a
47:05computer science degree and an English
47:07degree and you know like they just you
47:09know the English degree maybe as like
47:11spiritually valuable as the computer
47:12science degree but it just doesn't carry
47:14the same economic you know kind of
47:16opportunity out the other side and and
47:17those are two very different Financial
47:19propositions as a as a consequence well
47:21and they cost the exact same amount that
47:23they you know which is you
47:26part of the weird thing and it and it
47:30also gets
47:31into you know again to the customer
47:34question you know one of the very
47:36interesting things for me and being
47:37involved in universities um both at
47:39Columbia and at
47:41UCLA is that the way that uh the slots
47:46got allocated so the demand for computer
47:48science degrees is extremely high
47:52compared to the you know demand for you
47:56know you name it anything that ends in
47:58studies degrees um but that's not how
48:01the resources at an University get
48:03allocated necessarily they get allocated
48:06based on this you know and it's sort of
48:08a function of the way they're run but
48:11there's the student demand thing but you
48:13know a lot of it is fundraising you know
48:16can you get an alumni to you know give
48:19you like Grant you a professorship or
48:21whatever and then can you politic your
48:25way into more resources within the
48:27university system um which is you know
48:31you know at that level extremely
48:32political and who gets what and so you
48:35end up with generally a shortage of
48:38engineering slots and a plethora of
48:41other slots so now you want to go to
48:43Harvard but you can't you know or you
48:45want to go to particularly like UC
48:47Berkeley or UCLA the public schools um
48:51you know you want a computer science
48:53degree you can't get into computer
48:54science but you can get into Berkeley
48:57but you got to pay the same amount and
48:59you know this is where it gets really
49:01wacky yeah so I think there's I think
49:03there's pressure building and we could
49:05we could spend a lot longer on this
49:06topic but I think there's pressure
49:07building to kind of disaggregate the
49:09question of college into like what tier
49:11of college um and then I think there's
49:13going to be growing pressure to
49:14disaggregate okay what exact kind of
49:16degree um and there's really it's really
49:18a there really a matrix there really a
49:19two-dimensional Matrix there and the
49:21economics of of both the student view on
49:23this as well as the institutional view
49:25on this actually VAR a lot depending on
49:26where you land in that two- dimensional
49:27Matrix and that's that's not that's not
49:29generally how this stuff is discust or
49:31analyzed it really gets to you've got a
49:33huge bundle that you provide to a huge
49:37you know very diverse weird set of
49:40customers not not diverse uh rationally
49:43but you have to satisfy students
49:47donors um
49:49faculty sports fans everybody right uh
49:53and so it's it's a pretty hard product
49:56to
49:56build yeah and then some State systems
49:59have started to carve back on some of
50:01the degre they're starting to cancel
50:02some of the degree programs that they
50:03think don't pay off yeah economically
50:05that and that's been cont in those
50:06States I know that's been controversial
50:07because of course that's going to tend
50:08to hit Humanities liberal arts the
50:10hardest yeah yeah um and then that
50:12becomes very controversial which is are
50:13these institutions walking away from you
50:15know kind of their core education
50:16Mission if they're only focused on the
50:17economics and so I think there's a lot
50:19of potential future pressure here yeah
50:21it gets kind of a little bit what is the
50:23purpose of the University right so
50:25through the lenses of the student you
50:27know they really want a job and if
50:28they're going to Fork over that kind of
50:30money they really need to get a job
50:32whereas like the University was free
50:34then it would be a different story um
50:38and then what is its function in society
50:41and to build the right morals to
50:44well-rounded people all these kinds of
50:46things come up and you know there was
50:48been a lot of criticism of us in our
50:51world that we're not um well-rounded
50:53enough uh in this this kind of thing
50:56right like that's been a a pretty steady
50:58criticism from the press that if we had
51:00majored in Humanities then you know we
51:02would have designed social networks in
51:04particular to be uh
51:08better um not sure about that but that's
51:10a criticism anyhow yes exactly I will I
51:14will not take the bait
51:16um okay number three uh number three um
51:20uh research Bureau so um and and this is
51:24sort of the the research this is sort of
51:25the research that's done um and again
51:27here there's a there's sort of a tearing
51:28or there's a set of different things but
51:30this is the sort of University level
51:32research that happens for sure in the
51:34hard Sciences um but like physics and
51:36chemistry and math and then also
51:38computer science then also in the social
51:39sciences and the social sciences you
51:41know whether the physicists would agree
51:42with it or not the social science
51:44scientists think you know think that
51:45they're doing the same kind of research
51:46and then you know even in the humanities
51:48that same research approach you know
51:49that same you know the humanities
51:51professors you know um grad students
51:53write papers and you know publish in
51:55journal
51:56and get evaluated in in a very similar
51:57way so that same kind of at least the
51:59workflow um and form of the product is
52:01basically the same um you know this this
52:04concept of the research University um
52:06like I said is somewhat derived from the
52:07German model but particularly the
52:09American Research University is heavily
52:10based on uh the thinking of a of a guy
52:13named vanar Bush um who was uh famously
52:16FDR he's actually a character in
52:18Oppenheimer um Matthew modin I think
52:20played him um he was um uh FDR science
52:24adviser and he was sort of the FDR's
52:26main guy at the level of the federal
52:27government overseeing the Manhattan
52:29Project um and science policy in the US
52:31and then he basically he and his kind of
52:33you know colleagues basically designed
52:34the modern research University as we
52:36understand it today coming out of 1945
52:38and created the sort of modern Federal
52:40funding complex of things like the
52:41National Science Foundation National
52:43Institute of Health DARPA and so forth
52:45for funding funding research yeah and
52:46those those are very important we we
52:48need to get into that because that
52:50that's corrupted some things
52:52itself exactly so the the sort of um you
52:56know the sort of way I think of looking
52:57at you know sort of how is this going um
53:00you because this is so Central to the
53:01model um is uh right now globally there
53:06are three million published uh academic
53:08papers a year
53:11um how many are
53:13red so this is the thing so um three
53:16million and specifically published in
53:18journals yeah right and so these aren't
53:20like PDFs on the internet these are like
53:22published in journals um right so they
53:24go through editorial process a
53:26peerreview process like they go through
53:27that full process um you know
53:29universities American universities
53:31famously have this process for for for
53:32new professors they call publish or
53:34Parish um which is you're you're
53:36evaluated you know for for to get
53:37promoted you know you start out a
53:38assistant professor professor full
53:40Professor tenure uh and then at some
53:42point maybe an endowed chair and the way
53:44that you kind of climb the ladder as a
53:45professor is through your research and
53:46the way that you demonstrate your
53:47research is by publishing papers and so
53:49if you talk if you talk to professors
53:51actually they complain about this a lot
53:52which is there's just a lot of pressure
53:53to publish papers you know whether
53:55there's anything actually meaningful in
53:56them or not is is sort of is sort of
53:57secondary you know and again this is
53:59their complaint um and then there's this
54:00question of like okay like where are the
54:02results right like how do how do we
54:04score you know this is like a if you if
54:06you chart like the number of papers per
54:08year over the last 50 years it's one of
54:10these lines that's like straight up to
54:11the right are the results up to the
54:12right and you know there have been lots
54:14of studies over the years Robert Gordon
54:16is an American Economist the famous who
54:17wrote this big book about this that
54:19basically says you know that the the
54:21actual amount of scientific progress
54:22coming out of that if you try to measure
54:24that is BAS basically like flat and
54:26maybe
54:27down um and so it seems like there's
54:29some Divergence that's taking place
54:31there um there's a couple ways to think
54:33about that um one is there's What's
54:36called the replication crisis um and
54:38this uh kicked off in I think 2005 when
54:41a Stanford Professor named John ionius
54:43wrote a now famous paper uh with the
54:46title half of all published research
54:47results are wrong um where he did a
54:50statistical analysis and basically
54:53basically asserted that claim there have
54:54now been extensive replication studies
54:56in many fields um and you know it varies
54:58by field but somewhere between like a
55:00third to On On The Low End like a you
55:03know a quarter to a third and on the
55:04high end like up to twoth thirds or
55:05three quarters of all published research
55:07doesn't replicate uh which is to say if
55:10you run the same experiment again you
55:11don't get uh you don't you don't you
55:13don't validate the results and so there
55:14there seems to be like an actual quality
55:16control issue which we could talk about
55:18then there's the impact question Ben
55:20that you brought up which is how often
55:21are these papers cited uh and that you
55:24can do citation counts and it turns out
55:26most most papers are never cited and
55:27then that you can also do readership
55:29counts like Library lookups Journal
55:31lookups and it turns out that like it's
55:32like I don't know half the papers are
55:33never even read um and then you've got
55:36this additional problem and this is
55:37where things get controversial but you
55:39know look you you have you have you have
55:41a lot of published Journal articles
55:42these days that are for example in this
55:44category they call Auto
55:45ethnography um which is basically people
55:48talking about their own opinions on
55:50things um and sort of observing
55:52themselves as like subjects um and this
55:54is a l lot of the research that happens
55:55in the S of humanities and liberal arts
55:57these days and those papers you know you
56:00could have an opinion of them which is
56:01just like wow this just seems like you
56:03know sort of n you know Naval gazing not
56:04that you know there nothing really just
56:06you know it's like I have an opinion you
56:07have an opinion let's let's both write
56:09our opinions right and publish them and
56:10call them papers but these all this also
56:13the reason I bring this up is not just
56:14to pick on them it also just turns out
56:15they have like basically they generally
56:17have zero zero future citations yeah um
56:20and so they're they're not cited by
56:21anybody else they're not they're not
56:23there may be something brilliant in them
56:24but they're not leading anything there
56:26something adding to the knowledge of the
56:28world right if right if they were being
56:30read and cited that would be a good sign
56:32but they're not in a lot of cases being
56:33read and cited um and so if you add all
56:35this up I mean you can and and you know
56:37and look you and I both know you know
56:38people who come have come out of the
56:39University system who who would would
56:41would Express this quite strongly which
56:42is like it it does appear that there is
56:44some sort of Crisis going on um which is
56:47um you know basically the the there's
56:49something broken in the research engine
56:50not in the process but in the outcome um
56:53and um and in particular the replication
56:55crisis at the heart of it like if the
56:58science doesn't replicate it's not
56:59science like it's not real like
57:00something you know something else
57:01happened along the way and then that
57:02opens the door to like well did was this
57:04no you know there there look there have
57:06been cases of overt fraud you know there
57:07have been you know criminal cases that
57:08have flowed from this where it turned
57:10out that people were you know
57:11deliberately lying in a lot of cases it
57:13appears they're not lying maybe they
57:14just like don't realize that they're
57:15publishing fluke results anyway like the
57:18the just say this there there is a long
57:20there's been a 20 coming up in 20 years
57:22now of debate in the scientific
57:23Community as to what's going on here um
57:26and so yeah let's let's pause on this
57:27topic because it's so Central to the the
57:29the mission of the modern University on
57:31the negative side the other problem is
57:33you know Government funding uh turns out
57:35to be highly corrupting because what
57:37happens is uh the way the funding works
57:40is there's a panel of government
57:43bureaucrats that takes proposals for
57:46research um and then approves them and
57:50like you know as venture capitalist you
57:52know that's not going to lead to
57:53anything good because they're basically
57:56only funding ideas that they understand
57:59um which are very very incremental
58:02shallow uninteresting things to research
58:05as opposed to real breakthroughs um and
58:07I'm I know this very well because I'm on
58:09the board of pisy which is Sean Parker's
58:11Cancer Institute and we've adopted the
58:14model of the Howard Hughes Medical
58:16Institute which also funds research um
58:19and we pick
58:21researchers so you know it's like
58:22picking an entrepreneur pick the
58:24smartest researcher and let them do
58:26their and fund them to do their work as
58:27opposed to because science is not I'm
58:31going to do this and I do this it's I'm
58:33gonna go explore this problem and I may
58:35discover something and that's how
58:36everything's been discovered you never
58:38kind of do what you set out to do and so
58:42the whole Government funding process is
58:44incredibly corrupting and bad um and
58:47massive uh and drive so much of the
58:50research that's done in universities
58:52because it's a gigantic it's like a
58:53gusher of cat cash uh so it cannot be
58:56resisted but it's it's set up in a very
58:59horrible way um so that's that's a
59:03problem I will say you know like we I
59:05mean we should um state that uh we have
59:08funded many things that have emerged
59:10from universities uh including you know
59:12we've uh funded um you know a company
59:16doing crisper from the kind of inventor
59:18of crisper we
59:20funded you know data bricks out of
59:23Berkeley which was a search done you
59:25know on computer science and scalable
59:27systems in their uh basis in their
59:30amplab um we discovered uh funded any
59:33scale which is out of the basis lab we
59:34funded Martine out of the uh Stanford
59:37out of Nick mccuen's lab um and so like
59:42obviously our money is where our mouth
59:43is and there's some very good things
59:45coming out of University still like you
59:47know a really important break through
59:49research Technologies things that save
59:51lives um so it's not a zero I just want
59:55to like make sure that we're clear on
59:56that I think that it's massively
59:58inefficient um a lot of the research is
01:00:01completely useless a lot of the fields
01:00:03that are being researched are completely
01:00:04useless uh but um you know I I do think
01:00:09you know on this
01:00:10one there are so many genius scientists
01:00:14in universities that we we have to be
01:00:16kind of careful to sh you know you know
01:00:20as a society shift the money to uh
01:00:23funding the the the people who really
01:00:25need the you know whose research we
01:00:27really need and away from this just
01:00:30Wasteland of
01:00:32ridiculousness um good okay let's uh put
01:00:34it tie that off for the moment um and
01:00:36then let's go to number four so number
01:00:38four policy Think Tank um so this is a
01:00:40very interesting thing that happened
01:00:42this started about a hundred years ago
01:00:43this a wood Wilson idea right wood yeah
01:00:47it's a wi Wilson era thing almost 100
01:00:49almost exactly 100 years ago is when
01:00:50this started um and in particularly
01:00:51there's there's a book called public
01:00:52opinion written by a guy Nam Walter
01:00:54Litman that sort of Define this at the
01:00:56time what I'm about to describe and so
01:00:58um just introduce the topic by saying
01:01:00the following which is um you know today
01:01:02it's just like totally normal to like
01:01:04read in the newspaper that like there's
01:01:06some social issue um you know poverty or
01:01:09something something health or something
01:01:10right um and then they will quote in the
01:01:12newspaper experts um in that field and
01:01:15those experts by definition
01:01:17are they're University professors right
01:01:20like by by default those are always
01:01:21University professors um and and so the
01:01:25the professors are kind of the Oracle of
01:01:26wisdom in that in that in that area and
01:01:29then the the media so basically the
01:01:31media picks up the expertise from the
01:01:33expert professors out of the
01:01:34universities and then the politicians
01:01:37basically receive that through the media
01:01:39and then and then and then the media and
01:01:41then the politicians basically that's
01:01:43the content for the proposals that the
01:01:44politicians take forward like that's
01:01:46where the that's where the proposals
01:01:47come from um and then when you're trying
01:01:49to pass the law you're like well this is
01:01:50based on Research like this isn't just
01:01:51like my opinion this is based on like
01:01:53research that took place in the what
01:01:54ever you know political you know such
01:01:55and such and such Health Policy
01:01:56Department at Harvard or whatever it is
01:01:58right um and so it's it's it's it's
01:02:00validated now if you go back
01:02:02historically like prior to about 1920
01:02:04this was not how things worked like in
01:02:06like 1850 if somebody's trying to pass a
01:02:08law or something they're not quoting a
01:02:10Prof like if you quote a professor it'
01:02:11be like quoting a like it just would
01:02:13have been very in congruous like kind of
01:02:15thing just not something people would
01:02:16have done it's crazy yeah like Rand yeah
01:02:19some like some random person right um uh
01:02:23but basically so what Walter did in this
01:02:24book is he basically the the claim at
01:02:26the time basically was and I think you
01:02:29know look I think this made some sense
01:02:30at least at the time was basically you
01:02:32know in the old world like system
01:02:35societies were simpler everything was
01:02:37smaller countries were smaller you know
01:02:39the pre- earlier you know you didn't
01:02:40have modern techology smaller yeah
01:02:42governments were smaller you know and
01:02:44you didn't have all these systems you
01:02:46didn't have like you know you didn't
01:02:47have modern you didn't have fully modern
01:02:49developed economies you didn't have like
01:02:51healthare systems you didn't have
01:02:52education you didn't have all these
01:02:53systems that got built these systems
01:02:55kind of got built between like you know
01:02:561880 to 1920 in a lot of cases you
01:02:58didn't you know everything mass media
01:03:00and mass manufacturing and all these you
01:03:02know big systems and so basically what
01:03:04what he said was like look like the
01:03:06modern policy issues are are now more
01:03:08complicated than normal people can
01:03:10understand um and so there's just no
01:03:12normal person and particularly there's
01:03:13no normal voter in their day-to-day life
01:03:15who's going to be able to have like a
01:03:16coherent opinion on like healthcare
01:03:17policy um and so he's like basically we
01:03:20need essentially a Priestly class of
01:03:22secular experts um who actually have
01:03:25full-time skills knowledge bandwidth to
01:03:27be able to do all the work to understand
01:03:28these issues and then make the
01:03:29recommendations to the politicians um
01:03:31and then the politicians basically their
01:03:33job is to sell that to the public um and
01:03:35he said basically that will be a
01:03:37superior method of governance than than
01:03:39letting actually voters decide anything
01:03:41um you could make a Steelman argument to
01:03:44say that that worked really well at that
01:03:46time because you know if you had like
01:03:48you know super smart people in the these
01:03:51various you know positions um and you
01:03:53know maybe it's better well so
01:03:55interesting question right um you know
01:03:56there's a lot of dispute over even what
01:03:58happened in the3 around that idea was
01:04:00immediately followed by the Great
01:04:02Depression I'll just point out the Great
01:04:03Depression exactly in World War II right
01:04:05so yeah exactly right and so there
01:04:07there's like a historical debate about
01:04:08whether that worked then but then
01:04:10there's a pressing debate as to whether
01:04:12that's working today um and I would just
01:04:14say that like you know there's just a
01:04:16very obvious kind of flaw in that logic
01:04:18today which is it's it's an empirical
01:04:20observation that the faculty at American
01:04:23universi is now radically polarized on
01:04:26in in one political Direction um and
01:04:29radically and we could also post a graph
01:04:30on this maybe which is the numbers are
01:04:32like really radical there's there's
01:04:33fields in which it's like you know 30
01:04:34to1 you know uh liberals to
01:04:36conservatives or 50 to1 or 100 to one
01:04:38right um and then basically you know
01:04:40it's it's just kind empirically in the
01:04:41data the the idea of having conservative
01:04:43faculty these places is basically is
01:04:45basically no longer no longer the case
01:04:47they can't get hired they can't get
01:04:48promoted they can't get tenure and so
01:04:50increasingly the policy recommendations
01:04:52coming out of the policy Think Tank
01:04:53components these universities are very
01:04:55sharply partisan and extreme um and and
01:04:58and look if you're on that side you're
01:05:00obviously in favor of that but it it
01:05:02it's it's just it it's hard to believe
01:05:04that that that that that therefore the
01:05:06universities will continue to be
01:05:07accepted by the political process RIT
01:05:09large um as the as the advisers in the
01:05:11way that they have in the past yeah no
01:05:13and I you know and also well you this
01:05:16kind of brings up like interestingly I
01:05:18hate to get into today's politics but
01:05:20the Roland frier case right where yeah
01:05:23you know here we have probably you know
01:05:25one of the most important issues of um
01:05:30you know our generation which is this
01:05:32whole question of police brutality and
01:05:36you know how does race play into that
01:05:38and so forth and literally one professor
01:05:41in the country did definitive research
01:05:43and not just a professor but you know I
01:05:46think one that you know most people in
01:05:48the field require you know regard as a
01:05:51true genius of the of the field and not
01:05:53only that an accept exceptionally hard
01:05:54worker who ran a great lab and all that
01:05:56kind of thing and and it also happen
01:05:59happened to be black and and was black
01:06:01so kind of uh you know credible on on
01:06:04that front and you know he he he came to
01:06:08some very interesting definitive
01:06:10conclusions or or like you know
01:06:13conclusions that that that I think were
01:06:14important because
01:06:17um you know they got to like what is the
01:06:20root cause right like what what is the
01:06:23root cause of the problem and uh you
01:06:26know he he got basically steamrolled by
01:06:28the politics at Harvard uh and you know
01:06:32and and and by the way then you know
01:06:34what happened subsequently is his
01:06:36recommendation or his kind of ideas were
01:06:38not uh taken by Society what was taken
01:06:41were people who were kind of who did far
01:06:43worse or no research um and but were
01:06:47experts and you know kind of the result
01:06:50was the defund the police movement and
01:06:52the uh subsequent like radical increase
01:06:56in murders of black people over the last
01:06:58two years which is you know probably the
01:07:01the the greatest domestic tragedy that
01:07:03we've had uh
01:07:06and you know and that's what the system
01:07:09put out so I think to your point um the
01:07:12truth can't come out uh or like the
01:07:16truth is somewhat illegal in the current
01:07:18University policy system uh depending on
01:07:21what it is and not not all truths are
01:07:23illegal but some are are way illegal and
01:07:26the consequences are dire uh and uh you
01:07:29know like it's something that you know I
01:07:33you know is very personal to me but um
01:07:37you know I think this you know it's not
01:07:39this just happens to be one of the more
01:07:40visible kind of times the system failed
01:07:43but I'm quite sure it fails in in in
01:07:46other cases that are just as
01:07:48important yeah and I'll talk about this
01:07:50at the end but the if you look at the if
01:07:51you look at trust ratings uh trust
01:07:53gallop does TR trust survey of of
01:07:55American voting population uh view of
01:07:58universities and the the numbers are
01:08:00just I'll talk about this the numbers
01:08:01are in collapse uh but in particular the
01:08:04numbers are in collapse among the people
01:08:05on the right um and you know again if
01:08:08you're like on the left you're like okay
01:08:09that's fine it doesn't matter but you
01:08:11know it turns out people on the right
01:08:12also vote they're also a big part of the
01:08:14tax base um and if the system loses
01:08:17credibility among half the population
01:08:19half the voter base um it's hard to see
01:08:21how there will be continued political
01:08:23support for the level of funding that
01:08:24that currently exists yeah yep yeah yeah
01:08:27no I think uh
01:08:30yep you know that so definitely a big
01:08:33problem but I I I would just say again
01:08:35like you know there's obviously great
01:08:38research going on in universities um and
01:08:41so which is a huge asset to the country
01:08:44and um ought to inform you know the
01:08:47great research Auto and for policy and
01:08:49and so we we do have to be careful with
01:08:51the baby and the bathwater on this one
01:08:53because there there's not really another
01:08:55um set of in or there's not another set
01:08:57of Institutions that does this kind of
01:09:00work so and then I'm going to bundle the
01:09:01next two together so moral instruction
01:09:03and then I'm just going to go straight
01:09:04to social reformer so I say moral
01:09:06instruction is like I said there's this
01:09:07historical role that a lot of univ a lot
01:09:09of American University started actually
01:09:10as religious kind of moral uh
01:09:12institutions um they you know they're
01:09:14not formally religious institutions
01:09:15today but they maintain sort of a moral
01:09:17instruction role um and then what I call
01:09:20the Social reformer and social reformer
01:09:21is sort of the implementation of the
01:09:22moral instruction um so they they they
01:09:25take a step back past simply having an
01:09:27opinion about the ordering of society
01:09:28they're actually taking actions to try
01:09:30to change the ordering of society and in
01:09:32particular this of course the the Hot
01:09:33Topic here is is uh is is Dei and of
01:09:36course Dei is very hot political topic
01:09:38right now for two reasons one is the
01:09:40massive controversy over um the Supreme
01:09:42Court case on Admissions and the use of
01:09:44diversity or adversity you know kind of
01:09:46scores and Dei programs generally um
01:09:49legal challenges on those and there's
01:09:50going to be more cases like that coming
01:09:51up um and then the other is this current
01:09:54you know kind of Crisis obviously about
01:09:55you know kind of the more the more
01:09:56recent events but um I am going to um
01:09:59I'm Ben knows far more about this stuff
01:10:01than I do so Ben why don't we uh yeah
01:10:02let's talk about what you think is is
01:10:04most important here well so like you
01:10:07know just kind of starting with morality
01:10:09um you know one thing about humans is uh
01:10:13you know morality is complicated very
01:10:15complicated and it's complicated at you
01:10:16know different scales of society it
01:10:18changes and and these kinds of things
01:10:20and so you know I think Lindy strong
01:10:24moral values are actually like fairly
01:10:27important you know which is why you know
01:10:30the the Bible gets a lot of criticism
01:10:33you know like uh these days you know
01:10:35mainly for you know things that they
01:10:39they said in those days you know
01:10:40particularly about you know like various
01:10:42topics that we've changed our minds on
01:10:44since um but you know like in totality
01:10:48for you know something that's that old
01:10:51and you know it's you know the same for
01:10:53the Quran
01:10:54like it did get a lot right and that
01:10:56stood the test of thousands of years um
01:10:59and so now we we're kind of inventing
01:11:01morality as we go and you know I I I
01:11:05would just say what happens when it
01:11:06becomes a moral issue is you can't
01:11:09debate it right like this was a problem
01:11:12with the Bible too right like you can't
01:11:13debate what's in the Bible it's what God
01:11:15said like what are you talking about
01:11:16like shut the f up um and I think that
01:11:18these new moral issues are also hard to
01:11:20debate um you know for many reasons and
01:11:24on Dei let me just kind of talk through
01:11:27where that gets problematic so it's very
01:11:30hard for people to question any of the
01:11:34Dei or Orthodoxy because you get cons
01:11:37you know not of um being on a apostate
01:11:40or Blasphemous but of being racist or
01:11:42sexist and that's probably in modern
01:11:45society I'd say worse than being an
01:11:47apostate or or
01:11:49Blasphemous um and so people don't
01:11:52really think about how the systems
01:11:55around that work and just to give you an
01:11:58example so you kind of have to think
01:12:00about Dei like if
01:12:03you're an employer and you're trying to
01:12:07hire the best most talented Workforce
01:12:10possible you know what are your
01:12:12assumptions about your Dei program that
01:12:16you go into with and you know this is
01:12:18something as as you know that's I'm I've
01:12:21studied extremely hard in my life in my
01:12:24career and you know what we implemented
01:12:27at the firm you know nothing on this
01:12:29kind of thing is anywhere near perfect
01:12:31but look we're the most you know like
01:12:34fact most diverse uh Venture Capital
01:12:37firm in the world like and we know this
01:12:38from Maxine Waters who requested all the
01:12:40diversity numbers and basically played
01:12:43that back to us you know and we're at
01:12:45Large Scale 550 people so it's
01:12:47diverse we as you know do not have a
01:12:50head of Dei and so forth and it's
01:12:52because we we start from a different
01:12:54assumption than um than these di
01:12:58programs start from and our ironically
01:13:02the assumption that we start from is the
01:13:04non-racist non-sexist Assumption which
01:13:06is we believe the talent is out there
01:13:09and if you believe the talent is there
01:13:11is talent in the world that is in kind
01:13:15of different categories um then the
01:13:19approach you take to the system is
01:13:21basically three-fold one is you have to
01:13:23have the right criteria for the various
01:13:25jobs which means that not we're not uh I
01:13:30think Caris switcher had this thing the
01:13:31mocracy well like you and I don't hire
01:13:36ourselves for every job because one like
01:13:39we're not that great at networking and
01:13:42like we have a firm that like its whole
01:13:44business is networking and we hire
01:13:47people for that and that's a very
01:13:49different criteria than like something
01:13:52that we would just like replicate
01:13:53ourselves on secondly you know from a
01:13:56recruiting standpoint you need to go far
01:14:00and wide and find the best talent like
01:14:03if you look in the exact same place if
01:14:05you hire everybody um you know you're
01:14:08going to get the same kind of people so
01:14:09you have to kind of expand the scope of
01:14:12like where you going to go find the
01:14:13talent and then the third thing that you
01:14:15have to do is you have to create a work
01:14:17environment where and this is where the
01:14:19universities go horribly wrong that's
01:14:22great for people to work who are from
01:14:24different backgrounds like that that's
01:14:26kind of how you would design the system
01:14:28and that's sort of how we've designed
01:14:29our system and you know when we think
01:14:33about the diversity in Andre and
01:14:35Horowitz we never think of it in terms
01:14:38of oh this person is as good as the
01:14:40white man who would do the job right we
01:14:43think of there's no white man that could
01:14:45do that job like that could have built
01:14:48the cultural leadership fund like that
01:14:49that's not even possible um and so
01:14:52that's a it's a very different lens but
01:14:54it starts from a belief that talent that
01:14:56I need is out there and in like
01:15:00different populations if you were on the
01:15:03other hand took the assumption that the
01:15:04talent is not there You' do exactly what
01:15:06the universities do and I know this from
01:15:08their the way they hire their faculty is
01:15:11what would you do you'd make race and
01:15:13gender explicit criteria so two things
01:15:17that objectively have nothing to do with
01:15:19the actual job that you're hiring for
01:15:21but are sub stitutes for the fact that
01:15:24you don't believe the talent is there
01:15:26and that's what they do and then the and
01:15:28then what is the side effect of that and
01:15:30the side effect of that and this is
01:15:32what's happened in all the universities
01:15:34is if I
01:15:37am the whatever diverse candidate I am
01:15:40the women Professor the black professor
01:15:42Hispanic professor as soon as I get
01:15:43there everybody knows what our process
01:15:45was what our hiring criteria was and I'm
01:15:48a second class Citizen and that's the
01:15:50worst and so then the ret
01:15:53retention is bad and like I saw this at
01:15:55col like the retention is terrible for
01:15:57all your diverse hes it's way worse than
01:15:59your retention for your regular hires um
01:16:03and then how do you fix that more racism
01:16:07so then you go well like we need to make
01:16:09it you know we need to start not
01:16:11bringing in anybody who's not of this
01:16:14criteria and that kind of thing and then
01:16:16you're you're just in this weird
01:16:18degenerate State based on a
01:16:20morality um that you weren't allowed to
01:16:23discuss and so because you know like
01:16:26luckily because I run the firm I discuss
01:16:28it with you we can get around that and
01:16:30we can do things um but like they're all
01:16:34starting from like a racist sexist set
01:16:37of assumptions that like the only way to
01:16:41bring in diverse people is to make race
01:16:43and gender
01:16:45criteria which by the way isn't true um
01:16:48and it's objectively not true because
01:16:50like I mean we're 550 people more than
01:16:52half our women
01:16:54you and I are the founders we're like
01:16:57white men Jewish does not count as not
01:17:00white um but like we just had the right
01:17:04criteria we were very very careful on
01:17:05our criteria for the job we had many
01:17:07things in the criteria that we don't
01:17:09have we have a whole process for
01:17:10generating criteria that um basically
01:17:14aims to make sure that we can find the
01:17:16best talent wherever it is and then we
01:17:19go get that talent and then because
01:17:21everybody in The Firm is hired in any
01:17:24given position on the exact same
01:17:26criteria we have no retention problems
01:17:30among like any of our you know kind of
01:17:33various people we have here and like
01:17:34we're just all A6 zers we're not like
01:17:37the you know we don't have ERG groups we
01:17:40don't need any of that like that's not a
01:17:42thing and so and long long way of
01:17:46saying you know if you can't discuss it
01:17:50you can't design the right program and
01:17:53that you know this is the whole problem
01:17:54with morality right like if if morality
01:17:56becomes
01:17:57religion you just have to have faith in
01:17:59the doctrine but this Doctrine was
01:18:01invented by like a bunch of people who
01:18:03just made the up like two weeks ago
01:18:05not people from 2,000 years ago who have
01:18:08stood the test of time right and like
01:18:10that that whole Doctrine in the Bible
01:18:12lasted many years before they ever read
01:18:14it down and so it had kind of they only
01:18:17wrote down what they could remember that
01:18:19worked and so like that's why it worked
01:18:22and like don't have that process now and
01:18:24and it's a huge I think it's a huge
01:18:26problem um and and I think that has to
01:18:30do with like every moral position in the
01:18:32University which is and and it becomes
01:18:34very quickly indefensible which is
01:18:36what's happening right now yeah so you
01:18:39know as as everybody knows so you know
01:18:41this is now a hot time you know the the
01:18:43the sort of set of trends that you're
01:18:44discussing you know have been building
01:18:45growing for a long time like some of
01:18:47these programs were created as far back
01:18:48as the 1960s and they've been kind of
01:18:50escalating and evolving you know over
01:18:52the course of even even longer than
01:18:53actually you and I have been alive in
01:18:54some cases um you know and then the last
01:18:5610 years they intensified you know
01:18:58tremendously um and then you know just
01:19:01in the last like three months all of a
01:19:02sudden there's this kind of moment where
01:19:04at least some people are kind of you
01:19:05know throwing up a flag and saying okay
01:19:07it's time to like rethink this yeah um
01:19:10like what's your do especially based on
01:19:12your experience kind of being inside the
01:19:14tent uh at one of these places in the
01:19:16past like what do you have like a
01:19:17prognosis of the next couple years of
01:19:20like you know lip service and then more
01:19:22of the same or like is this the
01:19:24opportunity for
01:19:26rethinking so to to rethink it requires
01:19:28real leadership Even in our firm like
01:19:31it's important um like I I always keep
01:19:34explaining it because it's so important
01:19:36and it's so different and and look we
01:19:40own the firm like nobody can fire me
01:19:42nobody can fire you it's much harder you
01:19:44come in as
01:19:46a you know a president of a university
01:19:49first of all you can get a no a vote of
01:19:51not no confidence from the fact faculty
01:19:53you can get fired by the trustees um so
01:19:56there's a lot of ways you can lose your
01:19:57job they're very prestigious
01:20:00cushy jobs nobody wants to lose them um
01:20:03and so the level of leadership and risk
01:20:07that you'd have to take to
01:20:10overturn you know essentially the
01:20:12current uh University religion I think
01:20:15is is pretty risky uh and you know like
01:20:19and people have seen people like Larry
01:20:21Summers famously got fired from Harvard
01:20:23for questioning the religion um in like
01:20:26a not even questioning the religion
01:20:28right he just made a
01:20:29statement that said well like if you
01:20:31look at the data this is what it says so
01:20:34that could be a possible explanation I
01:20:36think it was some something along those
01:20:38lines um and he got fired and so I think
01:20:42it's pretty hard to change unless you
01:20:46know public sentiment really really
01:20:48swings on it I don't know like I I I I
01:20:50think it'd be very hard for Colombia to
01:20:52change uh on that front you know it's a
01:20:54great University
01:20:56but I like when I was there I brought it
01:20:59up I was like
01:21:00look can we start with like I remember
01:21:03the conversation at the Board of
01:21:04Trustees I was like can we start with
01:21:05the fact that we have a bad attrition
01:21:08problem among our black faculty that we
01:21:12hire
01:21:14like don't we think that's a problem
01:21:17like before we figure out how to recruit
01:21:19the next one shouldn't this be a good
01:21:21place to work for the the last one like
01:21:24why don't we start there and how do we
01:21:26get to that um and it was they shut me
01:21:30down you know like and I shouldn't say
01:21:32they it's 24 people and so forth but the
01:21:34leadership was like shut the up
01:21:38like you're going You're so far outside
01:21:39the religion that like we can't even
01:21:42hear a word you're saying and you know
01:21:45that was one of my kind of points of
01:21:48high frustration there but like it's
01:21:49really hard it's a big system and
01:21:52everybody believes one thing and it's
01:21:54been drilled into them uh and you know
01:21:57look there's a lot of literature on it
01:21:58and there's and so forth it's hard to be
01:22:01a systems thinker if you haven't
01:22:02designed large systems if you haven't
01:22:03run large systems and you haven't dealt
01:22:05with the consequences of them being
01:22:07wrong and I think that you know that's
01:22:09one of my biggest lessons in life is
01:22:12that if you're not a practitioner in
01:22:15that and right and not just designing
01:22:17and running a system but dealing with
01:22:19the consequence of it going bad uh then
01:22:23right you're never going to face that
01:22:26reality yeah yeah that makes sense and
01:22:28then there's going to be just one final
01:22:29note would be this is let me look
01:22:30Harvard Harvard ruled Harvard ruled
01:22:33against the use of uh RAC and admissions
01:22:36um uh but um they did open the door to
01:22:39the use of uh so-called adversity um uh
01:22:42so the the diversity programs are in
01:22:44some cases illegal now the adversity
01:22:46programs are being created to replace
01:22:47them yeah so the the the admission thing
01:22:50is a whole right another world world
01:22:52than the kind of hiring one um yeah and
01:22:56one that you know I have to say I'm not
01:22:57as familiar with but you know other than
01:23:00you know reading the Supreme Court court
01:23:02cases and so forth because you know the
01:23:03trustees weren't really involved in
01:23:05admissions so I would just say
01:23:07University admissions are pretty weird
01:23:12um you know from my reading in it like
01:23:15that's one of the things I mean the
01:23:17other one that's really interesting is
01:23:19which I think is misconstrued or or
01:23:21misunderstood is this Legacy thing
01:23:23because people think well if you're a
01:23:24legacy you get it's not being a legacy
01:23:26it's being a giant
01:23:28donor and you're really a giant donor if
01:23:32you know you're those tend to be
01:23:35legacies but that's really what it is
01:23:37they kind of OBS skate it and the
01:23:39universities do this by calling it leg
01:23:41we have this many Legacy they're not
01:23:43legacies they're like people who gave
01:23:45them $10
01:23:46million uh and that's I think that's the
01:23:49price10 million to get your kid into
01:23:52Harvard or maybe it's 20 million now
01:23:54it's inflation um and it's a pretty big
01:23:58percentage of the students because it's
01:24:00not that big a class right a thousand
01:24:02students and who are your giant donors
01:24:05and all of 100% of the giant donors get
01:24:07their kids
01:24:09in and so that's a real knock on the
01:24:13meritocracy itself and then if you then
01:24:16add in the adversity program and so
01:24:18forth like
01:24:19eventually the people who
01:24:23you know objectively would qualify
01:24:26in there's not many right there's Fe
01:24:29slots for them and everything else is
01:24:32like some kind of like weird thing and
01:24:35that you know back to your original
01:24:37point or the original discussion is like
01:24:39well what does that do to the credential
01:24:40like the original Harvard students made
01:24:43a lot of money and so you have this huge
01:24:45donor base um right but then does that
01:24:48corrupt the ability for the NEX set to
01:24:50make money by destroying the credential
01:24:53yeah yeah yeah and then by the way are
01:24:54you selling a b you know are you
01:24:55effectively you know have you ended up
01:24:57in a position position where you're
01:24:58selling a bill of goods to the new
01:25:00students promising them that they're
01:25:02going to be valued that way and then it
01:25:03turns out employers are gonna you know
01:25:05figure this out or figuring out real
01:25:06time right and then and you already have
01:25:08that you know problem in many schools
01:25:10right where the degree is not worth the
01:25:11money we have student loan crisis and
01:25:12all this thing and and then you're gonna
01:25:14really right exacerbate it um okay good
01:25:17I'm going to skip uh I try to pick up
01:25:19the pace here a little bit to close it
01:25:20out I'm going to skip immigration agency
01:25:22because talked about that um Sports
01:25:24League let's spend a moment on that
01:25:25because that's a uh there was a um
01:25:27Sports has become such an integral part
01:25:29of how a lot of these places operate and
01:25:30part of the financial structure and then
01:25:32I'm not a sports guy but I've been
01:25:34following there sort of it seems to be
01:25:35recurring I don't know uh might say both
01:25:38tension and Scandals around uh
01:25:40compensation for um uh student athletes
01:25:42and in the recruiting
01:25:44process yeah well it's changed too
01:25:46recently so so like historically so it
01:25:48started out very innocently you know
01:25:52your University you have sports you know
01:25:54Athletics I think is a kind of great
01:25:57part of the well-rounded education it's
01:25:59kind of you know goes back traditionally
01:26:02all the way to the Greeks I imagine um
01:26:06and you know and then you know it's a
01:26:08great experience to play col everybody
01:26:11and it's amazing like if you look at the
01:26:13donors by the way this is another thing
01:26:14I know from being a trustee a crazy
01:26:17percentage of the donors are people who
01:26:19played college athletics at the school
01:26:20so it's like really the people have the
01:26:22most school spirit um are the athletes
01:26:26by far like not even close uh and so you
01:26:31you know it's a like a really um kind of
01:26:34important uh component of the University
01:26:37historically but what happened is you
01:26:39know professional sports then emerged
01:26:41you know kind of after college sports
01:26:44and then college sports became feeders
01:26:47to the professional sports and then
01:26:49college sports basically became
01:26:51professional sports eles so uh you know
01:26:55college
01:26:56football television ratings are much
01:26:58higher than NBA ratings um for you know
01:27:01any given game so it's that big uh and
01:27:05then the coaches right it's not like and
01:27:08they call it amateur Athletics whatever
01:27:10but the coaches like Jim Harbaugh who
01:27:13just won the whatever National he makes
01:27:15like $10 million a year so like that's
01:27:17not a University salary that's like a
01:27:20professional football salary that's as
01:27:23much as any professional coach makes so
01:27:27then the athletes get paid nothing okay
01:27:30but they're students right well they're
01:27:31not students because to play on you know
01:27:34at Michigan or Alabama or any of these
01:27:36schools practice is 40 hours a
01:27:40week so when the hell are you studying
01:27:43that's a great question um and you're
01:27:46practiceing games and travel and the
01:27:48whole thing and so you've got this
01:27:52obviously you're running out of the back
01:27:54door you know out of the backyard you've
01:27:56got a professional like a major
01:27:58professional sports League where you're
01:28:00using essentially slave labor like
01:28:02you're giving them free tuition some of
01:28:06them but like and they're taking great
01:28:08like health risk and so forth so like
01:28:10that that that just became a whole issue
01:28:13and then in
01:28:14California they uh so a couple of things
01:28:17happened they kind of made legal I think
01:28:20first in California now nationally this
01:28:22name and likeness thing so it used to be
01:28:24the colleges won't let you sell your
01:28:27name and likeness like they could sell
01:28:30it they could sell your you can sell
01:28:31your jersey um and so that changed so
01:28:34some of the very very top guys the most
01:28:37famous college athletes which is a tiny
01:28:39handful of the whole population make a
01:28:42lot of money now or like like real money
01:28:44like you know good compensation and then
01:28:47in college football they have this thing
01:28:49called the portal which you can sign up
01:28:51for you can just transfer schools like
01:28:53trade yourself to another
01:28:55team like whenever you want um or you
01:28:59know once a year whatever and so it's
01:29:02fully professional sports like there's
01:29:04no hiding it you've got some guys
01:29:05getting paid you've got transfer portal
01:29:07and so forth but not everybody gets paid
01:29:09a lot of them don't get paid
01:29:11and and it seems really unfair right
01:29:14like you know there are labor laws in
01:29:15the United States of America and then
01:29:17there's also um you know you ought to be
01:29:21able to bid for salaries on athletes
01:29:23because you know anything else is pretty
01:29:27unamerican right like you can't restrict
01:29:29somebody from getting a job it's clearly
01:29:31a job it's not an education um and you
01:29:35know not like there's little schools I
01:29:36mean Columbia football is not like that
01:29:38it's it's more like high school football
01:29:41um but you know for sure University of
01:29:43Michigan Alabama um you know Georgia
01:29:46like the these are professional programs
01:29:48and so what do you do about that you
01:29:50know do you actually share the money
01:29:52with the student athletes who are your
01:29:54employees or do you continue to run this
01:29:58essentially a scam um and you know have
01:30:02them play great injury risk put in a
01:30:05huge amount of time make you a ton of
01:30:07television and you know money and keep
01:30:10going so it's a it's certainly coming to
01:30:13a head now and it's fair to say that the
01:30:16revenue from these programs is
01:30:17substantial as a percentage of the
01:30:18operating budget oh yeah yeah yeah like
01:30:21it pays football football basically I
01:30:23think the economics are football pays
01:30:25for every other Sport and lensa yeah you
01:30:29the big schools
01:30:30so yeah and so if if like for example if
01:30:33if I you know not that this would happen
01:30:34per se but just to illustrate it if if a
01:30:36law were passed that universities didn't
01:30:38have sports programs anymore they would
01:30:40lose some significant percentage of
01:30:42their budget yeah yeah yeah and
01:30:44particularly at the big schools and and
01:30:46alumni donations like so a big part of
01:30:48alumni donations is for sports as you
01:30:51know
01:30:52uh your father-in-law was a huge uh
01:30:55booster uh you know supporter of
01:30:56Stanford and um and sports programs
01:30:59there right like and and sports you know
01:31:02he's very attached to it and by the way
01:31:04really great example he was a great
01:31:07College athlete at Stanford Stanford
01:31:09gave him that scholarship he always felt
01:31:11tremendous loyalty to the school there's
01:31:13very few people who aren't athletes that
01:31:15feel that loyalty so it's a it's a
01:31:18tricky problem because it's it's not
01:31:20just the economics from the football
01:31:22Revenue it's the economics from the
01:31:24donations that the football that
01:31:27football generates both from you know
01:31:29from alumni who want that program to be
01:31:32good because they went there and they
01:31:34played for that team um I'm GNA skip the
01:31:37just a couple more left I skip skip the
01:31:39hedge fund um um spent a moment on adult
01:31:42Adult
01:31:43Daycare um so I just highlight a couple
01:31:45things in the adult daycare theme so um
01:31:48just I you know maybe everybody knows
01:31:49this but I just from where I grew up is
01:31:51just kind a very clear um there's two
01:31:53very different young adult adult
01:31:55experiences for people in the US there's
01:31:56the go to college and be in a college
01:31:58campus environment between the ages of
01:32:00like 18 to 22 or even 18 to 24 um and
01:32:03kind of be in this kind of not quite
01:32:05adult you know you're it's like a
01:32:07supervised environment yeah um a lot of
01:32:09things taken care of for you so there's
01:32:11there's you know the sort of it's it's
01:32:12it's not the real world um and then
01:32:15there's just this totally different
01:32:16experience that you know people in
01:32:17middle middle lower you know lower
01:32:18middle class or lower class have they
01:32:19just don't do that and so you're and you
01:32:22get a job and like you get an apartment
01:32:24and like it's you know you're you're in
01:32:25like real life and so there's this big
01:32:28you know discrepancy and of course the
01:32:29lucky kids are the fortunate ones are
01:32:31the ones who are you know go through the
01:32:32go through the college part yeah um you
01:32:34know they just have a like completely
01:32:35different and I tell you much more
01:32:37pleasurable experience uh for the course
01:32:38of that you know going to work than just
01:32:41going to work right um in part because
01:32:44of the jobs that you get like if it go
01:32:45because of the credential if you don't
01:32:46go to college the job isn't even as good
01:32:47and so you you have to start working
01:32:48sooner and the job isn't as good right
01:32:50yeah you're doing something hard yeah
01:32:52you're out in the heat you know it's
01:32:53like it's your real your real life um
01:32:55and then you know like a lot of people
01:32:58have observed and you know we we hear
01:32:59this you mentioned we hear this from
01:33:00employers but like a lot of people have
01:33:02observed that like there there there is
01:33:04something happening there's an
01:33:06entitlement Indulgence culture that has
01:33:08gotten very intense um that a lot of
01:33:10people are experiencing from gra
01:33:12graduates and that's probably been the
01:33:13case for a long time and we're we're
01:33:15probably you and I probably examples of
01:33:16it at one point in our lives but like it
01:33:18seems like it's gotten much worse in the
01:33:20last decade um Jonathan height you know
01:33:22has written about this at length who's a
01:33:24professor I think at NYU studies this
01:33:26issue and he's a psychologist and he the
01:33:28way he describes it is he says basically
01:33:30the way that these environments are run
01:33:31now he refers to it as uh reverse CBT uh
01:33:35is sort of reverse cognitive behavioral
01:33:37therapy um and so what he says yeah I'll
01:33:40spend a moment on that so what he says
01:33:41is cogni so cognitive behavioral therapy
01:33:43CBT is the one form of therapy that
01:33:45clinically replicates um so it's it's
01:33:47the one form of therapy that will
01:33:48reliably make people like basically
01:33:50function better um psychologically um
01:33:53and it basically it's it's essentially
01:33:54applied stoicism it's basically taking
01:33:56responsibility for your own life um and
01:33:59so it's basically getting you out of the
01:34:00mindset of blaming other people for your
01:34:02problems and more into the mindset of
01:34:03taking charge of your own life and
01:34:04figuring out how to process through your
01:34:05issues and and focus on outcomes and so
01:34:09he he says the culture at universities
01:34:11now in a lot of cases for especially for
01:34:12undergrads is what he calls reverse CBT
01:34:14which is is teaching you that basically
01:34:16you're a victim um and you're oppressed
01:34:19um and if anything bad happens to you um
01:34:21you know it's it's be it's somebody
01:34:22else's fault right it's it's it's
01:34:23systemic oppression right or it's bias
01:34:26it's you know it's this or that or it's
01:34:27you're in the wrong group
01:34:29microaggression microaggressions or
01:34:31whatever it's this entire cluster of
01:34:32basically things um that have people uh
01:34:34you know basically convinced that they
01:34:36that they basically don't have control
01:34:38um right that that basically life is out
01:34:40of their control and then he he he
01:34:41points to this like rapid escalation in
01:34:44reported rates of like reported mental
01:34:46illness and reported you know basically
01:34:48like need need for therapy mental you
01:34:50know mental illness Mental Health
01:34:52Services um and so he you know he
01:34:54basically says something is going very
01:34:55wrong and then you also have these
01:34:56recurring scandals happening on campus
01:34:58with you know what you might call the
01:34:59do-it-yourself on campus justice system
01:35:01right which is you know if you don't go
01:35:03to college and you're 19 and you get
01:35:05accused of sexual assault like you
01:35:06you're dealing with the police um you
01:35:09know if you're 19 on campus and you get
01:35:10accused of sexual assault you're dealing
01:35:12with basically campus HR yeah yeah the
01:35:15university is actually required to
01:35:17adjudicate rape yes correct so yes so
01:35:20basically line Department of Education
01:35:22requires universities to adjudicate rape
01:35:24cases on campus and other other forms of
01:35:26of you know potential alleged offenses
01:35:28like that um but no university has its
01:35:31own court system yeah we like
01:35:33try and make it up as we go yeah it's
01:35:35it's it's not good so there's there's no
01:35:38there's no there's not even a formal so
01:35:40therefore there's no guarantee to Due
01:35:41Process there's no objective standard of
01:35:42evidence there's no lawyers there's no
01:35:44defense um you don't have you don't have
01:35:46a right to an attorney um uh and so
01:35:49there you know there have been kind of
01:35:50recurring scand in in lots of different
01:35:52directions on this and so so there's
01:35:55this house kind of psychological legal
01:35:58HR environment that's been created that
01:36:00again just according to objective
01:36:01metrics of things like reports of of
01:36:02mental distress seems like it's going
01:36:04very badly sideways um yes so let me let
01:36:07me pause there and see what you think I
01:36:08definitely agree with that I mean I
01:36:09think that um you know and look the
01:36:12other thing
01:36:13that you have to throw in there is like
01:36:17um you've got students no parents um and
01:36:22a lot of alcohol and drugs in college I
01:36:25mean and so the look I mean we know from
01:36:29the work environment like that the if
01:36:32you want sexual harassment like serve a
01:36:34lot of alcohol at company events right
01:36:36like that's the way you get it um and so
01:36:40it's that you know you just you you
01:36:42create an environment with like drinking
01:36:44and drugs um where you actually do have
01:36:48like no matter how whatever good the
01:36:50kids are you just end up with incidents
01:36:52and then those
01:36:54incidents are adjudicated in some kind
01:36:56of weird kangaroo court and
01:36:59then you know and all that implies and
01:37:02then the Savvy students can obviously
01:37:05manipulate that system if they you know
01:37:09wanted to and and and and and so yeah
01:37:12like it that that part
01:37:15although you know again like it's really
01:37:17tricky because this is um an I think
01:37:21college it's a tiny like percentage of
01:37:25the population that gets involved in
01:37:27that um
01:37:30but everybody knows about it um so it it
01:37:33has an effect yeah well again just
01:37:36reason I bring out it just goes back to
01:37:38the again once again goes back to the
01:37:39credentialing right which is just like
01:37:40what what are you getting what what what
01:37:42kind of person what kind of human being
01:37:44are you getting on the other side of
01:37:45this who's been through a system that
01:37:47sort of you know inculcates a set of
01:37:48values that result in very high levels
01:37:50of emotional distress
01:37:52um like you know what does that mean for
01:37:54employ you know employment workplace
01:37:55culture you know what like are employers
01:37:58going to have to like screen more
01:37:59aggressively for Behavioral
01:38:00characteristics if more and more of the
01:38:02of the graduating students have like
01:38:03experienced very high levels of
01:38:04emotional distress kind of going through
01:38:06this process yeah I have heard about
01:38:08that more recently you know in hiring
01:38:10College grads I have to say that you
01:38:12know the College college graduates we've
01:38:15hired at the firm I haven't seen that at
01:38:17all I mean like they're like the young
01:38:19people we have
01:38:21you know I think like wow I'd never get
01:38:23a job here um these these kids are so
01:38:26good so in terms of direct experience I
01:38:29don't see it yet but um I'm sure it's
01:38:31out there or it seems like it it's
01:38:34likely yeah okay and then I'm gonna skip
01:38:36dating site which is one of my favorite
01:38:38topics but we we will tackle that
01:38:39another time um and we go to the final
01:38:41one which is lobbying firm so let me let
01:38:43me out outline a bunch of thoughts here
01:38:45and then and then Ben I'll get your take
01:38:46so so most importantly like look
01:38:48everything we've described the entire
01:38:50bundle runs Onex taxpayer money um so uh
01:38:53and basically there's there's and
01:38:54there's multiple streams of taxpayer
01:38:56money but there's four big ones that I
01:38:57always focus on so one is federal
01:38:59student loan funding which is now in the
01:39:01trillions of dollars of subsidies uh for
01:39:03federal student loans so in other words
01:39:04like students would not be able to
01:39:05afford the anywhere near the level of
01:39:07attendance rates that they have without
01:39:09without that program which is hugely
01:39:10expensive to the tech to the taxpayer
01:39:12and which now has direct bailouts
01:39:13attached um and so that's a very
01:39:15expensive taxpayer program uh Federal
01:39:17research funding which is very large um
01:39:19and by the way very significantly
01:39:21Federal research funding isn't just
01:39:22funding for research the administration
01:39:24uh takes a rake um of uh at these
01:39:26institutions of of of the research
01:39:28funding that's actually quite large and
01:39:29so the they they get a big a big
01:39:31percentage of it and so that goes to pay
01:39:32for a lot of a lot of administrative
01:39:34expenses and administrator salaries um
01:39:37and then there are two key tax
01:39:38exemptions there's a tax exemption at
01:39:40the operating level uh which is these
01:39:41are these institutions are are
01:39:43nonprofits um and then there's a a tax
01:39:46exemption at the endowment level where
01:39:47which is their their endowments Compound
01:39:49on a on a taxfree basis uh like a
01:39:51foundation um and then there's a really
01:39:54critical kind of detail to kind of who
01:39:56gets access to all this like which
01:39:58institutions get access to all this
01:39:59Federal support and all this money and
01:40:02uh that's the technical term is
01:40:03accreditation um these are uh the
01:40:05institutions that have access to
01:40:06everything I just described are all
01:40:07accredited institutions if you dig into
01:40:10the detail of that there's a very
01:40:11interesting little Quirk to it which is
01:40:13these are institutions accredited by the
01:40:14Department of Education but the
01:40:15Department of Education federal
01:40:17department of education does not itself
01:40:19do the accreditation um what it does is
01:40:21outsources the accreditation to um
01:40:23associations um the thirdparty
01:40:25associations um that that do the
01:40:27accreditation and those third party
01:40:29associations are made up of and you will
01:40:31never never guess the universities right
01:40:34and so just as an example um just to
01:40:36pick an pick an example uh Harvard I
01:40:38looked it up last night Harvard is
01:40:39accredited by something called the New
01:40:41England Commission on higher
01:40:42education uh that that commission is a
01:40:45nonprofit which is composed of 200
01:40:47colleges and universities such as
01:40:49Harvard um and so the the the that makes
01:40:53it kind of hard to start a new
01:40:55accredited
01:40:56University correct this is this is sort
01:40:59of viewing this as a venture capitalist
01:41:00that that's exactly right like could you
01:41:02start a new University and get a credit
01:41:03to today and the answer is almost
01:41:04certainly no so it would get no federal
01:41:06funding and and it would be
01:41:08non-economically viable right um and so
01:41:11and then of course in in in economic
01:41:12theory you have a term for this which is
01:41:14cartel um and so there's an education
01:41:16cartel you know in much the same way
01:41:17that there's like an oil cartel or
01:41:19whatever so like that that that that
01:41:21that that's the setup um the fiscal
01:41:24situation at these places is actually
01:41:25quite interesting um so we talked
01:41:27already student the cost uh student
01:41:29costs tuition and everything else
01:41:31increase much faster than inflation um
01:41:33but these are nonprofits and so they're
01:41:35not trying to drop money to the bottom
01:41:36line so instead of what they do is they
01:41:38also inflate their operating costs to go
01:41:39right along with the student costs and
01:41:41so what they're doing basically is
01:41:43they're they're as because they're able
01:41:44to escalate tuition rate so dramatically
01:41:47they can escalate the entire cost base
01:41:48at the equivalent rate and they're able
01:41:50to
01:41:51I I think it's important to note they're
01:41:52able to escalate uh tuition rates so
01:41:56fast because um believe it's in the
01:41:59Obama Administration the federal
01:42:01government basically said that the
01:42:03government would lend anybody the money
01:42:06to go to college who needed it so
01:42:08basically so with
01:42:10unlimited credit uh the University's
01:42:13just basically raised tuition because
01:42:16you have to go to college like it's in
01:42:18the um or it got into the ethos of the
01:42:21culture that you can't get a good job
01:42:23without going to culture college so
01:42:25everybody has to go to college everybody
01:42:27can afford College because we'll lend
01:42:28you the money and so therefore we can
01:42:30charge whatever we want yeah it's a you
01:42:32have an infinite Federal you have
01:42:33multiple trillions of dollars infinite
01:42:35Federal back stop um for for the for the
01:42:37for the student uh for the student side
01:42:39of it yeah including now with with the
01:42:40bailouts um and so you basically just
01:42:43like you get to write a you get to write
01:42:44these checks to yourself from the
01:42:46taxpayers only for accredited
01:42:49universities for accredited universities
01:42:51uh for the the universities that the
01:42:53credit themselves um and then what
01:42:55happens is a lot if you talk to anybody
01:42:56involved in these places what you find
01:42:58is that a lot of the expense uh
01:43:00escalation is not where the expense
01:43:02escalation is not going is towards
01:43:04taking on more students um right or for
01:43:07that matter taking on more research
01:43:09where it's going is to take on more
01:43:10administrators um and so the sort of
01:43:12administrative component of these places
01:43:14you know the the the sort of
01:43:16bureaucratic structure like that's where
01:43:17the cost inflation is like really kind
01:43:19of going wild um there are multiple
01:43:22large institutions too that have been
01:43:23identified in public Stanford and that
01:43:25now have more administrative staff than
01:43:26they have
01:43:28students right and so and so and the the
01:43:30joke the joke at those places is like we
01:43:32could literally replace we could
01:43:33literally have a personal con for every
01:43:35student and so you know you're talking
01:43:37you know tens of thousands of of uh of
01:43:39Administrators um and again the
01:43:41administrators are raking funding from
01:43:42every other part of the complex
01:43:43everything from Sports to research to
01:43:44tuition everything else um and so so
01:43:47anyway but the the point is like the the
01:43:49the the the operating cost is is
01:43:51escalating these places are not running
01:43:52on high margins they're actually
01:43:53spending the money that's coming in yeah
01:43:55um and then the endowments you know the
01:43:57endowments are big but they're not that
01:43:58big relative to the expense base right
01:44:01um and so and there's only like 10 big
01:44:03endowments in the country right and
01:44:05there's only 10 big endowments and then
01:44:07there's one other trick there's one
01:44:08other twist um which is a lot of the
01:44:10assets of university endowment are
01:44:12restricted um they are yeah they're
01:44:14earmarked exactly right they're
01:44:16earmarked by the donors for specific
01:44:18programs yep um and so they're not it's
01:44:21not the endowment is not a giant pot of
01:44:23money that the administrator can do
01:44:25whatever he wants with it it most of
01:44:27that money is actually off limits if you
01:44:28talk to people who run these places they
01:44:30will I'm not saying anything I don't
01:44:31think that they would agree with like
01:44:33these places are actually quite they're
01:44:34not levered in terms of debt but they're
01:44:36levered in terms of a very high
01:44:38dependency um on on on the entire
01:44:40structure that they have in place right
01:44:41now and if there is ever a crack in you
01:44:44know and and the number of students if
01:44:47there's a crack in access to Federal
01:44:48Loan funding if there's a crack in
01:44:49research funding if there's a crack in
01:44:51sports funding if there's a crack in the
01:44:53tax structure like these places are not
01:44:55as fiscally stable as they seem from the
01:44:58outside um and and they seem you know
01:45:01quite frankly just from the outside they
01:45:02seem unable to constrain any of this
01:45:03they just they seem like they're on a
01:45:04one-way treadmill on on everything that
01:45:06we're describing um and then now on top
01:45:08of that at least some institutions you
01:45:10have these donor strikes right um and so
01:45:12you know you have this kind of open
01:45:13question as to whether the the the donor
01:45:15flows are going to happen and then let
01:45:16me add add one more thing which is where
01:45:17I I start to get worried uh for my
01:45:19friends who run these places so Gallup
01:45:22uh does this uh they do these they do
01:45:24these surveys every year on trusting
01:45:25institutions among the American voting
01:45:27public um in 2015 57% of American voters
01:45:32um had a positive view of American
01:45:34universities 57% in 2023 that's
01:45:3736% whoa statistically significant drop
01:45:42yes so that is a that is a yes for the
01:45:44math majors in the audience that is a
01:45:4521% drop in eight
01:45:48years um and so if you're running a
01:45:51business like you're at that point
01:45:53you're like you're freaking out right
01:45:54like you're you you're tearing your hair
01:45:55out and ending up with a haircut B and I
01:45:57half because like you you that that's
01:45:58just like oh my God what's happened I'll
01:46:00just give you a couple other data points
01:46:02on that there are there are you can see
01:46:04find this on the Gallup website there
01:46:05are drops in every subgroup um so
01:46:07there's no subgroup that has a higher
01:46:09view of um of universities um every
01:46:12everyone is is a drop and then among
01:46:14people with no college degree um it's a
01:46:1725 Point
01:46:18drop um and and of course if you're
01:46:21running a college you're not used to
01:46:23thinking about people with no college
01:46:24degree because they're not your
01:46:25constituent but the problem is they are
01:46:26voters um and they are taxpayers and
01:46:29they are a large percentage of the
01:46:31population um and you do need their you
01:46:33you you do need their support in order
01:46:34to keep the sort of funding aspect of
01:46:36this of this rolling um and so and then
01:46:39there's this question of like okay 57 to
01:46:4136% you know 21 Point drop in eight
01:46:43years is that anomalist or is that going
01:46:45to continue and like you know you could
01:46:47hypothesize that that was a one-off but
01:46:49you could also say why wow like you know
01:46:51well and that's before the current media
01:46:54blitz on oh this is all pre yeah this is
01:46:57all pre- October October 7 this is all
01:46:59pre the recent stuff yes the
01:47:00Congressional
01:47:02hearing so if you pull today yeah if you
01:47:04pulled today it'd be hard to imagine the
01:47:05numbers are higher it' be easy to
01:47:06imagine that they're lower but let let's
01:47:07even say you know so what's the Baseline
01:47:10is is the Baseline a 3% drop per you
01:47:12know if you just go in the last eight
01:47:13years eight years
01:47:1521% um you know it's like a whatever two
01:47:17two to three you know two two two and a
01:47:19half two something perc uh drop um you
01:47:22know per year and so if you project that
01:47:25forward in the next decade you know you
01:47:27could lose another 25 points so that 36
01:47:29that 36 could drop to 11 yeah by the way
01:47:3111 11 is like where Congress is right
01:47:34like right and so like there are
01:47:36institutions in the US that have like 11
01:47:3810 nine eight% people don't pay for them
01:47:41or like don't pay for them
01:47:43directly Congress has a huge Advantage
01:47:45they get to set their own laws um you
01:47:46know the rest the rest of us are subject
01:47:48to that and so I think there's a really
01:47:50fundamental I I think if I were a leader
01:47:52of one of these organizations or on the
01:47:53board or or just as a public spirited
01:47:55you know citizen as I am like and I want
01:47:57these institutions to succeed um I think
01:47:59there's a really fundamental critical
01:48:01thing that you have to look forward you
01:48:03have to look out you know the next five
01:48:05to 10 years and say okay what if these
01:48:07current trends continue and if popular
01:48:08support drops from 36% to 30 to 20 to
01:48:1110% which is a real possibility like is
01:48:14there therefore the political will in
01:48:17the country and support to maintain the
01:48:18current structure and particularly the
01:48:20current funding structure um and I think
01:48:23you need to close your eyes and imagine
01:48:24that you lose the operating tax break
01:48:26you lose the IND dominant tax break you
01:48:27lose the potentially the research
01:48:29funding you lose the the student loan
01:48:31like all these things could come to
01:48:32political head I think essentially at
01:48:34any moment uh with with the pressures
01:48:36the that are in place right now um and
01:48:38basically like candidate could win you
01:48:40know based on a promise to defund the
01:48:43university if you're not careful right
01:48:46yeah exactly and of course again we
01:48:47we've tried to not talk that much about
01:48:49partisan Politics on this on this on
01:48:51this in this in this thing but you know
01:48:52to the extent that these places have
01:48:54become very partisan political actors
01:48:55themselves you know they're they're
01:48:57having an Al you know maybe their
01:48:58supporters feel better about them but
01:48:59they're having alienating effect on a
01:49:01large part of the of the voter base and
01:49:03and a large part of the political
01:49:04structure in the country um so I think
01:49:06there's a I think there's an existential
01:49:08question um and it's not look it's not
01:49:09that these places don't have lots of
01:49:10levers that they can pull and and lots
01:49:12of things that they can rejigger but you
01:49:14know to your point like you know kind of
01:49:16what's the level of what's the level of
01:49:18sort of predictive power in you know
01:49:20sort of leadership willpower that you
01:49:21need to get in front of problems like
01:49:23this and I think that's a very open
01:49:24question right now yeah yeah no it's
01:49:27it's scary I mean you know you have to
01:49:28like I would just go back to the like
01:49:31gigantic amount of goodness that's in
01:49:33the universities and you know all these
01:49:35problems could could certainly undermine
01:49:39that in a kind of fundamental
01:49:40existential way if uh if this if these
01:49:45trends go
01:49:46unchecked uh very very bad things could
01:49:49happen so
01:49:50which gets into you know okay what do
01:49:53you do yeah so we're pushing we're
01:49:56coming up in two hours and so I think we
01:49:57should probably not have the long form
01:49:59what do you do conversation this time um
01:50:01I would just volunteer you know add
01:50:03whatever You' like but I would volunteer
01:50:04two things which is one is well there
01:50:06actually three questions which is one
01:50:08one is the reform question which is like
01:50:09okay what if you were on you know if you
01:50:11were if you were still on the board of
01:50:12Columbia what would you be trying to do
01:50:13and like what what's the reform
01:50:14opportunity um and you know look which
01:50:16of these problems do you actually want
01:50:18to tackle and you know whatever um so
01:50:19forth all all the interesting questions
01:50:21that flow from that uh Second question
01:50:23should be you know would be like you
01:50:24know look like in you know should should
01:50:26there be more universities like you know
01:50:28one of the issues is just like there
01:50:29just aren't as you said there just
01:50:30aren't enough slots um you know maybe
01:50:33part of the answer is create new
01:50:34institutions um and you know maybe you
01:50:36figure out a way to get them accredited
01:50:37and so forth but or figure out another
01:50:38funding model or maybe they you know
01:50:40happen in other countries or whatever um
01:50:42and so you know could you start new
01:50:43competitive institutions that maybe are
01:50:44able to solve some of these problems if
01:50:46it's too hard to to uh reform the
01:50:48current ones and then the third and this
01:50:49is probably we should set up another
01:50:51session on this but you know then then
01:50:52there's also like the is there a
01:50:54potential is there basically potential
01:50:55for entrepreneurial opportunity here
01:50:57that would basically be a side effect of
01:50:59unbundling um and so for example could
01:51:02you take the credentialing component of
01:51:03it and have a business or entity of some
01:51:06kind that just did that could you take
01:51:08the educational course thing break that
01:51:09out separately could you take the
01:51:11research part break that out separately
01:51:12the policy part right the immigration
01:51:15part the sports part um you know the
01:51:17social aspect of it um and you know then
01:51:20there by the way and there are you know
01:51:21Founders and startups in in in a bunch
01:51:23of these sectors yeah yeah yeah we we
01:51:25fund it overtime which is doing that in
01:51:27the sports area yeah exactly and so like
01:51:30does does it make sense to think about
01:51:32either startup more startup companies in
01:51:33these sort of unbundled categories and
01:51:35by the way maybe it's not all for-profit
01:51:37companies maybe also we just need like
01:51:38literally more nonprofits uh you know
01:51:40maybe you need actually sort of
01:51:41independent entities maybe you know
01:51:43maybe hypothetically there should be
01:51:44more independent research institutes or
01:51:45independent science institutes um you
01:51:48know you mentioned hhmi like maybe maybe
01:51:50funding should go to you know maybe
01:51:51maybe there's a different way to do
01:51:53research funding um you know maybe there
01:51:55should be a much bigger pH philanthropic
01:51:57component to research funding in place
01:51:58of of the government's role um you know
01:52:01and there are people Patrick hson has a
01:52:02big in you know and his wife have a have
01:52:04a big new biotech fun Research Institute
01:52:06at Stanford along those lines or
01:52:08associated with Stanford but a separate
01:52:10thing that they're funding and so
01:52:11there's there's these very kind of
01:52:13interesting questions along the way so
01:52:14anyway for the entrepreneurs the
01:52:15audiences you're listening to this is
01:52:17just think okay think about each of
01:52:18these sort of fun F components of the
01:52:20modern University like historically when
01:52:23there's sort of this sort of systemic
01:52:25situation going on there's often
01:52:26entrepreneurial opportunities to kind of
01:52:28split off aspects of it and break them
01:52:29out into into separate
01:52:31categories yep um I think those are all
01:52:34good I mean just kind of going back to
01:52:36your question for me which is okay if I
01:52:37was a trustee still at Columbia what
01:52:40would I advise them to do and I think
01:52:41that like you know I kind of think that
01:52:44a huge or or or a very large part of the
01:52:47problem is the number of
01:52:50constituencies that a university has so
01:52:53you have you know as we kind of alluded
01:52:55to you've got the student you've got the
01:52:57parent you've got the donor you've got
01:52:59the uh you have the trustees you've got
01:53:02the um sports fans you've got the
01:53:05faculty uh and you're kind of trying to
01:53:09optimize this very elaborate bundle for
01:53:12all those
01:53:13constituents and I think that that is
01:53:16that's got to be focused and I think the
01:53:20way out is to focus on the student
01:53:22because the student is the thing that if
01:53:24you B basically the way I would look at
01:53:27it if it if it was my business um you
01:53:30know and a university is different than
01:53:31a business but it's got a lot of the
01:53:33same
01:53:35characteristics I think if you lose the
01:53:37student you're done that's the end of
01:53:39the whole thing like doesn't matter what
01:53:42the faculty think it doesn't matter what
01:53:43the alumni think it doesn't matter what
01:53:46the donors think it doesn't matter what
01:53:47anybody thinks if you're not attracting
01:53:51and developing um the brightest Minds in
01:53:54the world like if that's no longer
01:53:56happening um then that's it like game
01:53:59over and
01:54:01so my view would be I would try to
01:54:04refocus the whole university on the
01:54:07value proposition to the student um and
01:54:10then the kind of student that you know
01:54:14we produce um like how do we attract the
01:54:17best give them a value proposition so
01:54:19when they come out
01:54:20they make you know an outstanding living
01:54:22easily pay back their student loan and
01:54:25um and everybody wants to hire them and
01:54:28like let's go back to that and and I
01:54:32think you know if you had that as the
01:54:35focus
01:54:36then you know a lot of the problems
01:54:39would solve themselves now very
01:54:42difficult to do because you know
01:54:44University is a hierarchy and it's not a
01:54:46hierarchy you know it's kind of like
01:54:48there's an admin Administration there's
01:54:51faculty you know faculty have
01:54:53tenure when you have tenure you're very
01:54:56hard to remove um you know and uh and
01:55:00you know there's just a huge
01:55:03constituents of Administrators and
01:55:04politics and and uh and everybody is
01:55:07hired like there is nobody owns there's
01:55:10no owner there's no founder like these
01:55:13things were founded a long time ago
01:55:14there's no founder left there's nobody
01:55:16who can just exert their moral authority
01:55:18to get that done so I think that it is a
01:55:21hard problem but
01:55:23I you know it is solved because the
01:55:25assets are so strong I mean you know
01:55:26they've got the gorgeous campuses the
01:55:28amazing faculty the you know like
01:55:30incredible reputations um Global
01:55:33reputations so there there there's a lot
01:55:36to work with but um these are real
01:55:38problems yeah yep I think that's a good
01:55:41uh point to end on all right great well
01:55:43thank you I hope you enjoyed it and and
01:55:45we'll be back to talk about how to solve
01:55:47it good so good thanks
01:55:50[Music]
01:55:58[Music]
01:56:01everybody
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