Squandering America's Intellectual Capital

It is ironic that, at a time when a new international survey by the Organization for Economic Cooperation and Development has reminded us that America's K-12 educational system is failing our youngest citizens, Congress is now jeopardizing America's greatest resource for education and competitiveness -- our research universities.

Fueled by resentments about how elite universities are bloated or unresponsive to society, Congress recently moved to lower "indirect costs" reimbursements for basic research that universities perform for the Department of Defense; and it may soon attempt to defray tuition increases by coercing schools to spend larger amounts of their endowment savings.

Such efforts to make universities leaner risks ridding them of muscle, not fat. Some fallacies must be addressed, using a leading research university such as USC as an example.

First, tuition does not make our top universities rich -- it does not even cover the costs for educating a full-paying student.

USC, for example, recovers only 69 percent of its educational expenses from tuition and fees. The educational experience for every student is subsidized -- ranging from an 11 percent subsidy for a full-paying student from a wealthy household, to an average subsidy of 31 percent for students who need a portion of the $280 million financial aid pool that USC administers. (Sixty percent of USC students receive aid.)

USC maintains a savings account consisting of roughly $4 billion in endowment funds (which is 1/5 to 1/10 the size of the largest university endowments). These funds can cover roughly less than 5 percent of USC's general educational expenses. The remainder of annual endowment income is legally restricted by donors, mainly to fund specific academic or research programs.

As for limiting reimbursements for university research expenses, Congress is beginning to scuttle a research and education model that has served America well since the end of World War II. The rest of the world envies this model, with roughly 50 top American universities at the center, like it envies nothing else in this country. The result of this model has been the pioneering of new sectors of the economy, the guiding of the computer and communications revolutions, and a position at the forefront of coming revolutions in the medical and life sciences.

The federal government funds roughly $350 million of research at USC each year; a significant portion of that consists of the recovery of indirect costs, or overhead expenses, that are necessary to conduct state-of-the-art research. Congress' move to reduce those reimbursements means that, just as elite universities must go in search of outside funding to subsidize the education of its students, they now must go in search of outside funding to subsidize research for the Department of Defense. This may diminish not only our national security but the stream of economy-strengthening innovation from our research universities.

Jim Clifton, the head of the Gallup Organization, has observed that most leading economists, whether liberal or conservative, predicted a quarter-century ago that American economic growth would fall behind Japan and Germany by 2007. They estimated that Japan's gross domestic product would be roughly $5 trillion by now, with Germany at around $4 trillion, and the United States at roughly $3.5 trillion.

The predictions for Japan and Germany were reasonably accurate. But America grew to $13 trillion.

The economists had based their guesses on a nation's quantity of natural resources, not on the quality of its intellectual capital. America innovated while other nations imitated, and thus grew spectacularly.

The economists also failed to account for the migration of the world's best minds to America. The innovation that fueled America's surprising growth has been traced back to some 1,000 brilliant rainmakers -- some 60 percent of whom were born overseas but educated in American research universities.

The location of the world's best universities on these shores has allowed our best intellectual talent to overcome America's K-12 educational deficiencies, and has enabled us to attract the best talent from other nations. Together, the best American minds and the best foreign minds have performed the basic research and innovation that drove the dizzying American growth of the past 25 years.

We must summon the collective will to strengthen our universities and to see the education of the best minds -- from America's inner cities to the islands of Asia -- as core to our mission as a nation.

This is hardly to say that research universities are above refinement. They must always be mindful of finding ways to improve processes, and to make student and faculty bodies more open to a greater diversity of backgrounds and beliefs. But lest we be overcome with an unhelpful zeal, we must remember that market forces, in the form of competition among research universities for students and research grants, are already keeping universities more efficient than many other enterprises.

The key is that any new improvement efforts must polish our universities, not grind them down. The elite aspects of universities will at times make them targets for those with populist streaks -- but the elite aspects of our universities are what can continue to make our nation elite.

Comments

[TommyMcCarthy]

It was always true..thes­e days it's on display for all to see.......

If you think education is too expensive.­...try ignorance.­......tm

[docmandingo]

Cons have been waging a war on higher ed for decades now. It is little more than a vindictive display of their mean spirited pettiness, damn the consequences.

And what have universities done to invoke their ire? Universities remain the last set of institutions that have not been over-run and dominated by right-wing troglodytes. From the national & state legislatures to the judiciary to local school boards to religious institutions, right-wingers have steadily seized control. Their inability to seize control over universities has fueled the spread of a rabid hatred of universities, the professoriate, intellectualism, and academic inquiry & science in general.

Bush is a case study in contempt for intellectuals. While his admission to both Yale and Harvard were bought and paid for, he didn't receive the white-glove treatment to which he is so accustomed. Can you imagine his outrage as he filled his transcript full of poor grades? For the first time in his life, his record of stupididty, laziness, and arrogance was met by something other than a slap on the back and an "Atta boy W!" He has spent his adult life doing everything he can to even the score.

[Ladyrantsalot]

Only 2 publically funded institutions in America remain top-notch: the military and the research university. They are top notch for a lot of reasons, not least of which is the fact that they are not starved of financial resources as are most other publically funded American institutions (as Provost Nikias notes, even private research universities rely heavily on public financing). Excellence is very, very expensive. Mediocrity, of course, is very affordable.