Capitalisn’t: Trump’s War on Universities

Nicholas Dirks: I do believe that we need to think about all kinds of new ways to provide high-quality education for students at a much lower cost than we currently are able to provide it for.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: This is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Bethany: Capitalisn’t is returning to the topic of universities, not because Luigi is obsessed with it. Well, he is. But also, because we think it’s going to be a crucial policy issue in 2025.

In a recent interview with Bari Weiss, Peter Thiel, the whisperer of the first and probably the second Trump administration, announced that he would cut almost all of the universities’ overhead, the money that goes to anything other than research and teaching.

In spite of his academic pedigree—he has a law degree from Stanford—he’s been a harsh critic of universities. He’s one of the many backers of the University of Austin, which was cofounded by Bari Weiss in 2021, based on the idea that other colleges are not providing open places for discourse.

Luigi: It turns out that Peter Thiel was just the tip of the proverbial iceberg. As Axios wrote the other day, “Under President Trump, it’s total warfare on all aspects of higher education, from student life to hiring to athletics. “

Axios quoted Jeremy Young, the Freedom to Learn program director for PEN America, saying, “The federal government is coming for higher education, and if you are one of America’s 4,000 college presidents and you stick your neck out, it’s going to get cut off.”

Speaker 8: Angry and worried: that is what local university students say they’re feeling after President Trump threatened to cut off funds from universities that allow what he called illegal protests. The president even warned he’d expel, imprison, and deport student protesters.

Bethany: What exactly is an illegal protest?

Luigi: A protest he doesn’t like.

Bethany: Right. That’s what I’m worried about, that it’s any protest that the administration frowns on.

Luigi: I think that this is the beginning of the Inquisition. Twenty-five-year-old Luigi would think twice before coming to this country. I think many more like me will think the same.

It’s basically like the Chinese national security law that says if you say something against China, you can be expelled. Of course, it is in the eye of the beholder, what is against China. Then people can interpret it in the way they want.

Bethany: Right. The New Yorker just ran a piece about Harvard asking if Harvard—Harvard—could survive the storm. Andrew Crespo, a professor at Harvard Law School, told the magazine: “This is not about any one institution. It’s about higher education in the United States and whether it’s going to survive and thrive or fade away.”

Luigi: Stanford, MIT, Columbia, and Vanderbilt are just a few big-name institutions that are freezing hiring or cutting back on PhD students they accept as they hear of Doge’s proposed cuts to federal and medical research.

Other colleges and universities in our association are suing the Trump administration over those cuts. The New Yorker noted that “two-thirds of Harvard’s sponsored research funding—nearly $700 million, or more than the growth in the university’s unrestricted endowment assets—came from the federal government, which supports everything from cancer studies to art instruction in museums.

“The figure isn’t unusual. Federal funding also supports three-quarters of Stanford’s research projects and half of all research at both the University of Wisconsin-Madison and UC Berkeley. ‘There is no university in the country that could survive the loss of federal money,’” Brian Leiter, a professor of law and philosophy at the University of Chicago, who writes a popular blog on philosophy and the academy, told the magazine.

Bethany: The Trump administration is also trying to rescind all race-based programming. In January, Trump signed an executive order barring public funding from any efforts devoted to diversity, although a federal judge has since temporarily blocked that order.

In mid-February, citing Harvard’s recent affirmative-action case, the new acting assistant secretary for civil rights at the US Department of Education gave universities a two-week deadline before which to end DEI programs or face possible funding cuts. There are lawsuits trying to stop all of this as well.

Luigi, as huge as these things are and as fatal as they may be to some aspects of universities, do you think they’re going to the heart of the problem with higher education?

Some people think so. Hedge fund manager Bill Ackman, who has been, as many people know, a player in the Harvard saga, told The New Yorker: “I think it’s great. The government withdrawing funding will cause Harvard and the Harvards of the world to reform themselves.”

Is Ackman right? There are major problems like the escalating cost of a college education, which, of course, exacerbates the cost-benefit issue.

Luigi: First of all, I’m not a disinterested observer because I’m in the middle of the storm.

I have to say I’m very worried about this contingency of federal funding based on the ideology of the government in charge—not because I particularly love DEI programs, but because I think it sets a terrible precedent.

Once you start in this way, the next government will say: “Oh, by the way, we want you not to write about X or about Y. We want you to do research only on these topics. We want your research to be politically correct or not politically correct.”

The problem is not the specific ideology; the problem is the principle. Once you pass the principle, there’s no way back.

Bethany: Yeah, in a weird way, it seems like the Trump administration’s actions are diametrically opposed to their own supposed philosophy of free speech—which, of course, is sometimes the case with people who celebrate free speech, by which they often mean the speech that they like.

Luigi: Yeah. This is not to say that universities had not gone a bit crazy on this DEI issue—not because diversity issues are not important. It’s just they made a profession of pushing them and creating administration, and it became a bubble on its own.

I’m sympathetic to a bit of a reduction in that, but I’m not sympathetic that the government comes in and decides what free universities do. At the end of the day, the notion of a private university is private in name only, because in practice, the government provides so much funding that it can decide in any moment what the university should do.

Bethany: Do you agree with Bill Ackman that the government’s withdrawal of funding will cause universities to reform themselves, or will it make it more difficult for universities to reform themselves? I think I could argue it either way.

Luigi: It is hard for me because, as I said, I’m in the middle of the storm. At some level, I can be sympathetic to some discipline in funding, particularly if you start saying we should tax some returns from the endowment, which is one of the proposals on the table.

No matter how painful it’s going to be for all of us, I can see from an equity argument to say, wait a minute, especially after we massively reduced corporate taxation, endowments have benefited tremendously. At least as an individual, you don’t pay taxes at the corporate level, but once the distribution takes place, you pay a lot of taxes at the personal level. But as an endowment of a university, you get all of this basically tax free.

Imposing some discipline can be a good thing. The problem with universities is that they don’t have a good governance system. There is basically no way to take one over.

They can merge, but if a university does very poorly and has a large endowment, it can continue to do poorly for ages. It’s very difficult to restructure and change. So, I think a bit of a shake-up could be useful.

However, two things must be kept in mind, and this is very important. Number one, we should not mix this with trying to push ideology into universities. Then it is not a rationalization issue; it becomes a freedom-of-expression issue, which is very severe.

Number two, universities—and particularly the scientific parts of universities—produce enormously valuable research that has a very positive spillover. Subsidies to research and development are very useful for the country overall, and we don’t want to cut them. Even less so would we want to use them as a political tool.

Bethany: You’ve made the point often that universities had a lot of challenges that predated the Trump administration.

Luigi: Donald seems to be abandoning them, and so are the students. Since 2010, college enrollment has declined 12 percent, and the rate of enrollment among new high school graduates declined 7 percent since 2018.

If this were not enough, several states are curtailing their support for public universities. Before the global financial crisis, the state of California was covering 34 percent of the University of California budget. Now, it’s only 12 percent.

Bethany: Luigi, do you think that these Trump administration moves can help or hurt these underlying issues, or do you think they’re just two separate things?

Luigi: I think they’re two separate things. An attack so blatant and so direct to the core of the universities makes it very difficult to have any serious reform or change. Everybody needs to close quarters and protect the core of the university. If, in any moment, you’re seen as even giving an inch to the Trump position, then you’re seen as a traitor, as somebody who does not value what universities are about.

In my view, the universities have been resting on their laurels for too long and not seeing the storm coming. I blame a lot of institutions for their shortsightedness, but this is not the time to attack the presence of universities. It is the time to defend them.

Bethany: Yeah. This line in the New Yorker piece struck me: “Universities are the reason that this country has been able to attract talent, chase breakthroughs, and respond to change.” Maybe that’s a little grandiose, but it’s not entirely grandiose.

I do wonder, just like with research funding and the sheer idiocy of those who want to chop it, not understanding what it’s done and what it’s contributed . . . It doesn’t mean you can’t look at it closely. But to pretend that it’s all useless spending shows an obliviousness to history.

With the quality of universities in this country and the number of people that they have attracted here . . . I’m not saying the system doesn’t need some change, but monkeying with that might result in a very high cost.

Luigi: Bethany, can I indulge in a wonky, nerdy historical comment?

Bethany: No, you? Luigi, never.

Luigi: One of my entertainment passions, not active research at the moment, is trying to understand why the scientific revolution that started in Italy failed completely in Italy and in all of southern Europe.

The father, in my view, of the scientific revolution is Galileo Galilei. Florentines after him created an academy called Accademia del Cimento, whose motto was “Trying and retrying.” They were really the first to think about the experimental method.

The problem was that this stuff lasted only 10 years and then dissolved itself, while both in France and in England, you had the Royal Society in England that started roughly at the same time and took over, and then you had the Accademia de France, very much pushed by the government to try to do the same.

The question is why Italy lost the moment. My understanding is because the atmosphere in Italy became unbearable as a result of the Inquisition and the influence of the church. There was so much scrutiny of what people were saying that nobody wanted to sponsor research, and the few people who wanted to do research were moving away from Italy and going somewhere else.

I fear we are reliving this situation in the United States. As for the consequences, Italy still has to recover from that over centuries.

Bethany: So much in our society is so intertwined, and it does point to the primacy of educational institutions. To act like they can just be put in a separate box, and that their survival and their thriving can somehow be separated from society—in all sorts of ways, the obvious ways and the less-obvious ways—is a mistake.

Anyway, we thought we would continue our discussion with past college presidents. As Jeremy Young pointed out, it’s awfully hard to talk to current college presidents because they’re afraid, and rightly so, of getting their necks chopped off.

Today we’re going to interview Nicholas Dirks, a historian and anthropologist. He was the vice president in charge of Columbia’s Faculty of Arts and Sciences, and then he was named the chancellor of UC Berkeley, where he served between 2013 and 2017. He also published a book on his experience, which is called City of Intellect: The Uses and Abuses of the University.

Luigi: Your book is permeated by a great love for the idea of universities, yet the idea of the research university was born in a world where knowledge was expensive to access, and research was not funded by almost anybody.

Now, most countries are engaged in and finance research in some form or another—and so is the private sector, which, by the way, steals some of the best talent from universities. Most knowledge is freely accessible: think about Wikipedia, Khan Academy. Is the Humboldtian idea of a research university still valid in the 21st century?

Nicholas Dirks: Yeah, really interesting question. The more we see the new kinds of forums and platforms for information, the more, in fact, one can make the argument that universities—and research done in universities—are more important than ever because what we don’t have, and certainly what the internet doesn’t afford, is any kind of curation of the information that exists.

So far, even though there are privately funded research institutes of different kinds, it’s never come to the point where they’ve in any way begun to substitute.

Universities, of course, produce research that is open, that is subject to the peer review that goes both into publication and into the adjudication of what is important, what is worth pursuing, what is right, what is wrong, through established mechanisms that now involve a global community of universities, which does not exist in the private sector in the same way.

Bethany: That Humboldtian model was also based on a world where only the elite went to college and, thus, the number of educated people it was producing was somewhat limited.

Is that still justified now, when we want to send everybody to college, or at least a great majority of people to college, and when you have English majors graduating who are famously working as baristas at Starbucks because there simply isn’t the demand in our economy for the skills with which they’re coming out of universities?

Nicholas Dirks: For many years it was the case that a college degree, whatever the major might be in, would lead to a fairly ample supply of possible career options.

The example you give of an English major, it strikes home in particular. I have a son who’s an English major. He’s actually doing just fine, but he’s teaching English in a high school.

The English major is pulled out constantly to show the fact that we’ve turned the corner, that, if anything, a liberal-arts degree is a luxury that can only be afforded by people who can throw away both four years and $250,000.

But when I was chancellor at Berkeley, I got to know a lot of the people who were recruiting new people to join some of the technology companies, and they often preferred to have liberal-arts majors, even to computer-science majors, because they had been taught to think.

Those kinds of skills continue to be valuable—if anything, even more so, with the capacity that now we see AI having for coding work. Students actually need to have general-education courses that would be in fields like history or English or philosophy—or, for that matter, some areas in the humanistic social sciences—to both understand themselves and understand the world, and to get a better sense of the core issues that they’ll have to deal with, from living in a democratic society and taking on the responsibilities that attend to that, to better understanding the economic system or better understanding one’s own goals in life, in terms of what it means to live the good life and find some kind of meaning.

Luigi: I do believe in the importance of the humanities, but first of all, I would like to see more humanities taught even earlier in life.

I think that the high schools miss that big time. As my name and accent give away, I come from Italy, and there, high school gives you enormous preparation for the humanities, so much so that you don’t need so much of the humanities in college.

I feel there is a strange cross-subsidization going on in universities, because the universities that break down the cost of tuition by course don’t differentiate between humanities and STEM. However, the cost of a STEM course for the university is much higher.

Why? The salaries of the STEM professors are higher, and they come with very expensive labs. The humanities are much cheaper. So, why do university presidents charge the same price for something that costs different? It seems almost like a tax on the humanities.

If I am a student and I have to accumulate a lot of debt, I want to get the highest immediate return on investment, which is from STEM and not from the humanities, especially if the cost of the two is the same. If we were to price the cost of the humanities at a marginal cost, a lot more people would likely take humanities classes.

Nicholas Dirks: It’s actually even more complex than you just described. Yes, it’s true, a faculty member in STEM needs to have a laboratory that is incredibly expensive to run, but a lot of that is paid for by federal support.

If faculty don’t bring in grants from outside, they typically don’t stay in the university. They don’t get tenure unless they have a good track record of securing support for the research they do in STEM fields. At the end of the day, there are lots of different funding mechanisms that support a differentiated faculty across a comprehensive university. We actually try to put together a menu that is ultimately part of the basis on which a diploma is given. It’s given for a holistic education.

Now, if you say it’s cheaper to teach humanities, that may be true, but again, the way we price it in the university is that there’s cross-subsidization of different kinds. Even though it may be cheaper in the short term, it’s part of the overall cost of the overall institution, and you socialize those costs accordingly because the overall set of drivers for cost goes beyond the actual cost of any particular faculty member.

There are a lot of things you do to support students. For better and for worse, there’s been a significant growth in administrative costs in universities because you have so many administrators who have to be hired to provide mental-health services for students or support for different kinds of students.

STEM also increases that cost, which may be going against my argument here. Nevertheless, in STEM you need huge numbers of people thinking about compliance and research protocols and the different bureaucratic issues that are entailed in running a major research enterprise.

My point is there are a lot of different costs, a lot of different drivers for it. If you began to price different courses like different products in a department store, it would be a radical change for the university. I’m not sure it would be for the good.

Luigi: You witnessed at Berkeley a deterioration of the support from the state of California. In part, this was the result of the global financial crisis, but it never bounced back.

What is the future of state universities? Now, the University of California covers only 12 percent of the budgets of the California university system while imposing a lot of constraints on raising tuition, et cetera. Today it’s not a public support but a public burden to the university system.

Fundraising became part of the revenue structure of most universities, including the public ones. It went from a nice -to-have to a have-to-have.

Did this change the governance of universities? Now, the donors are not simply people that on their deathbed decided to leave a donation. They are people involved who give money in exchange for fulfilling certain objectives. This is really getting into the freedom of the university. How do you see that?

Nicholas Dirks: It’s an old question. It didn’t just occur recently, but of course, it has recently become prominent in the news, partly because there have been some donors, often on boards of trustees or advisory boards in universities, who have used their donations to put conditions on universities, to put pressure on universities—in some instances, to actively try to fire the university president, as happened at the University of Pennsylvania. In any event, they have tried to influence university policies about everything from which faculty should be kept to what kinds of courses should be and should not be taught.

The slippery slope that you just characterized is indeed a slippery one because on the one hand, yes, universities have become really reliant on philanthropy, but when they then use that influence, use that relationship, to put pressure that begins to potentially compromise academic freedom, it is really a very critical issue.

Bethany: Peter Thiel suggested in a recent podcast that you could address a lot of the cost issues with universities simply by stripping away a lot of the administrative costs. When you think about the universities seen through your eyes, is that a valid suggestion? What can you get rid of, and is that the right road to go down?

Nicholas Dirks: I think it’s a difficult issue partly because, of course, it gets entangled with a lot of the current debate about diversity and inclusion initiatives of different kinds.

There are places, clearly, where universities could cut back. Probably, they could only do that if they begin to think about it collectively in terms of what is expected of universities to provide. Of course, if universities think collectively about anything about costs, they get hit with antitrust. They tend to get hit more by antitrust regulatory concerns than many other industries. Often just discussing what the levels of tuition should be for different universities that are competing for students together is seen as antitrust. But the impulse behind that is, in part, to see if there could be some kind of collective action.

Your coauthor, Bethany, has written a lot about university athletics, and I’m a big critic of the kind of expenditure that goes into intercollegiate athletics, in part because it was one of the big struggles I had at Berkeley. Balancing our athletic budget was always a major problem.

There were alums, however, who would have risen up in unison in protest had we cut even a single sport, and we had 30—actually, 31. But the truth is that in order to help fund many of those athletic programs, many of which produce the bulk of the American participants in the US Olympics . . . If you take USC, UCLA, Berkeley, and Stanford, you take their intercollegiate athletics programs, they provide close to half of US Olympic athletes.

But they do so in sports that just lose money: track and field, gymnastics, and so on. What do you use to pay for the rest of the athletic budget? You use football and you use men’s basketball and, increasingly, happily, women’s basketball as well.

I say that because, obviously, people look at football, and they look at big football and the Power 5 conferences. They get very concerned by the fact that it’s a business racket, and student athletes should be participating in the racket, at least to some extent. Yet it was actually the only way at a place like Berkeley that we were able to defray and cover some of the costs of other sporting programs.

The overall question is, can universities and colleges work together to think about what is mission critical and what isn’t at the level of administrative support? It may involve a total culture change, not only in terms of how universities think about themselves, but also how the public imagines what the universities will provide.

There was a time when there were far fewer and lower expectations as to what the quality of the food would be when you went to college or what was the nature of your dorm room or what kind of gym you would have, let alone what kind of therapist or mental-health facility you might be able to use.

As cost keeps going up, and as the crisis of cost in higher education just gets more and more demanding, we have to look at everything, and I think this is a place to look. It’s a roundabout way of saying I actually, for once, would be in agreement, at least in part, with something Peter Thiel said.

Bethany: A follow-up of sorts to that question: when you watched the protests ripping through campuses last year, including at your former institution, Columbia, and you saw the heads of institutions summoned before Congress to testify, what went through your head, and was there anything that you wish somebody had said?

Nicholas Dirks: Yeah, it was so painful to watch the congressional hearings. Of course, if you actually watch the whole hearing, even the first one, where Liz McGill and Claudine Gay and Sally Kornbluth were all being interrogated by various and sundry people in Congress, you realize that, of course, it was just the sound bite at the end that got picked up and then became viral.

You nevertheless wanted to be able to say: “How is it that we can translate the way we characterize, the way we represent, some of the core values of the university, which include academic freedom? How do you translate that into something the public will understand?”

It’s not clear that there was any winning strategy. When the president of Columbia, Minouche Shafik, went and learned from the experience of those who had gone before, she did the obvious thing at the beginning, which was to condemn any kind of call for genocide.

That was the kind of thing you wanted the others to have been able to say without qualification, even though the way that would come across and the way the cross-interrogation would subsequently go, all the qualifications would ultimately be asked for and would come out and would seem to muddy the picture and so on and so forth.

The real task, the real challenge, that university leaders have is trying to find a language that can convey and express the fundamental meaning of some of the basic commitments that we have without making it appear to be either ridiculous or politically retrograde or just far left or whatever.

It was very difficult to watch. Look what happened. Nobody really managed to get out of there unscathed. The number of people who lost their jobs last year, for one reason or another, or who threw in the towel is incredible.

Four of the presidents in the Ivy League now, of the eight university presidents, are interim. The searches that would ordinarily be taking place are not taking place because the boards just simply don’t know how to run a successful search in the current environment.

Of course, this is all before the new administration comes in. Now, we’re confronting a situation in which there’s the possibility, the very real possibility, that there will be calls for massive tax increases on university endowments, massive efforts to control and potentially cut off the supply of students from around the world who want to come to universities in the US, efforts to control what courses, what kinds of subjects, can be taught and how they might be taught.

That was then. The future is even more uncertain now. There are lots of different reasons to be concerned about the failure that we as academic leaders have experienced in terms of actually translating the core values of what we stand for.

Luigi: President Trump has proposed creating a free online university called the American Academy, which would offer high-level courses and accept transfer credits from other colleges and universities, helping to push back against rising tuition costs and student debt. Are you in favor of this idea?

Nicholas Dirks: Judging from the past record of Trump University, I would be deeply skeptical.

Speaking seriously, Daniel Coit Gilman, the first president of the University of California and then president of Johns Hopkins, later president of the Carnegie Foundation, actually advocated for a federal central university in the US, and he lost that particular battle. But there have been many arguments for why the federal government should consider both establishing and then subsidizing a central university.

Online forms of education do provide opportunities to cut costs in significant ways. The problem, of course, is that the impulse behind that proposal is in large part to control the curriculum and mandate what would be, in the view of the new president, a politically acceptable curriculum. Any kind of political control over what is taught and how it is taught in universities would be a big challenge to academic freedom. It would ultimately be a big challenge to academic quality, and it would look more like propaganda than education.

One is deeply concerned about the impulse behind this kind of proposal. But the bare bones of it is actually not a bad idea. I do believe that we need to think about new ways to provide high-quality education for students at a much lower cost than we currently are able to provide it for.

Luigi: The question I find interesting is why the liberal-arts colleges are not competing on price. If their cost structure is much lighter than the one of universities, they should be able to offer the same quality of product at a lower price. Maybe some people don’t want this, but they could go much more down-market, if you want, in that direction.

My fear is that universities are selling a bundle of goods because they’re selling education, but they’re also selling sorting. I always tell my students that it’s not very flattering to me, but it’s much more important who you have in the class than who your teacher is because those people are going to form you much more. Even if you have something that costs much less, you don’t really want to sell it low because you might attract a part of the market you don’t want.

Bethany: I also think that part of the problem is that you have a fairly cost-indifferent consumer in a way that isn’t . . . I know that people are going to say: “Wait, what do you mean? The cost of education is a huge issue.”

It is, but certainly, at top schools, that’s not the issue because you have, at the very high end, people with a lot of money who will pay anything for their kid to get into the best school and who don’t really care whether it’s $50,000 or $60,000 or $90,000. Then you have another subset of scholarships where people aren’t being faced, and couldn’t and shouldn’t be, with the sticker.

At the most elite institutions, I think you have, for very different reasons, a fairly cost-insensitive customer. Those kids in the middle class, at least at the most elite colleges, are increasingly not getting in because their families aren’t wealthy enough to pay the full freight or to promise a huge donation to the college later on.

It’s increasingly segmenting, and the result is a consumer who is not conscious of costs. I think that’s maybe part of the problem. My argument doesn’t work as you go down the rankings of colleges, but maybe the attitude does trickle down in some way.

Luigi: I think that the political consequences are also important, because it keeps the top universities for a small elite, a coastal elite, more and more detached from the rest of the country. The rest of the country sees these universities as distant, elitist, unaffordable. I think a lot of the resentment against Ivy Leagues that we see in the Trump administration is coming from there.

Bethany: I agree, and I actually think that might be fixing itself. A lot of my friends have college-age kids, and the shift is pretty remarkable. The list of schools that high-achieving kids want to go to has broadened dramatically in the last five or 10 years. In that sense, the market is sort of fixing itself, but that’s just a narrow segment of what we’re talking about.

I think that broader representation and broader social diversity will be important, but that doesn’t change the crisis. Or maybe it slowly starts to help the crisis of legitimacy that universities and colleges are facing, but I don’t think it fixes the economic issues that are going to continue to plague them.

Something we didn’t talk about in the podcast that Nicholas mentioned toward the end was this idea that if the Trump administration halts the flow of immigrants into the country, a lot of schools have a great deal of their tuition money coming from wealthy overseas kids, and I wonder what that does across the board to both boarding schools and to colleges.

Luigi: You are absolutely right, but I think the part that would be affected the most are these master’s courses that are mostly sold to foreigners as a way to get into the American system. I think there is a little bit of exploitation of that niche.

As usual, the Trump administration may be excessive, but it’s not completely crazy in touching on that aspect because there are some schools that basically sell a bundled product, which is some education but mostly access to the United States, and then you pay for the two together.

While we want to attract the most talented people here, we don’t want to be in the business of selling access. Or, if we are in the business of selling access, at least we want to do it well and have the federal government profit from it, not the universities.

Bethany: That still does open up another enormous question about the future of a lot of colleges and universities across the country. Did you come out of this conversation feeling like you had any clarity on what we should do or what the way forward should be? If you could write the rules and redesign the educational system, how would you do it?

Luigi: No, I certainly don’t have the solution. I actually think that a massive use of online courses is necessary to bring down the cost.

There is nothing as valuable as a one-to-one encounter with a teacher when you do frontier research or stuff like that. But when you have to teach first-year calculus, an online course is probably better than an in-person course.

I remember that when I took my first year of calculus in college, I did not have a great teacher. The first time she explained some ideas, I had to go back to my father and try to get some understanding because I couldn’t understand what she was saying.

Today, my kids open Khan Academy, and they have beautiful explanations. I remember once I entered my daughter’s room, and she was watching YouTube. I said: “You are supposed to be studying. What are you doing?” She said, “No, no, I am studying.” I said, “Yeah, sure.”

“No, no, I am studying.” And she showed me a YouTube video from Khan Academy where they were explaining how to integrate by parts, and it was wonderful.

Then I said: “Wait a minute. I’m paying the school to teach you this, and you get this free from YouTube.” That becomes an important question that we are dodging, but eventually this will come to the forefront.

Bethany: What you just said may have contradicted your earlier point about the value of other people in the classroom. I came to college as a kid from a northern Minnesota mining town who had no idea how to work and how to study. I was lucky enough to make two good friends my freshman year who, on a Thursday night, would say, “We’re going to the library.” So, off to the library I marched.

I really credit my friends Caroline and Eliza with my great interest in academics that I got out of college, and also the fact that I graduated instead of spending my four years going out to keg parties on Thursday nights.

I think that the quality and the other people you surround yourself with can be a really integral part of the college experience. I feel a little guilty recommending something for other people without which my life would have been very different.

Luigi: You are absolutely right. I’m glad you caught what I think is an apparent contradiction because I think it’s true that who you are learning with is, as I said, more important than you’re learning from.

But there’s nothing that prevents bringing people together. Like you would watch a movie, you watch an online class, and then together you do stuff. You don’t need a physical professor to follow each one of you. That will cut down costs tremendously.

Bethany: Isn’t this an interesting idea? Maybe this could be Luigi and Bethany’s University of the Future, where we actually do provide a campus with the things that kids want. This could become really dangerous really quickly, but we provide a campus and then all the teaching is online, but the kids get the college experience in the sense that they are actually on a campus with each other.

Luigi: Yeah, I think, even better, you do that in an exotic country. In the process, you learn something from the country that you wouldn’t learn at home.

It shows independence in thinking because there is a lot of signaling going on in universities. You go to a university because the top firms recruit from those universities, and the top firms recruit from that university because the best students tend to go there.

What is shocking, if you look at the statistics, there’s basically no firm—maybe Exxon—that was on the list of the top firms in the United States in 1900 that is still at the top today. But if you look at the list of universities that were top in 1900, it is the same, maybe with the entry of Stanford, as it is today.

Bethany: Luigi, you and I should go off and launch the Luigi and Bethany University, and then maybe in a decade we, too, will be investigated by federal authorities for failing to graduate our students because they will go off to their exotic locale in our beautiful living facilities and spend four years having a grand old party, and we’ll be indicted for misuse of federal funds. What do you think? Does that sound like—

Luigi: We don’t want any federal funds. We want to do it all privately.

Bethany: Well, then our private backers will be suing us for failure to educate the kids.

Luigi: I don’t remember how much we discussed the issue of the online academy, the American Academy that Trump wants to create. I think that is both a brilliant and an evil idea at the same time.

The idea is to create a free online university in the best possible ways by the federal government. It could be simply a phenomenal way to bring education to people at a very cheap price, especially if they mandate somehow that all universities should accept some of these classes as substitutes for the existing courses.

I can go to Columbia, and instead of taking the Western civilization class at Columbia, I take the American Academy Western civilization class. This serves a couple of purposes. Number one, it is an extremely popular move because it cuts down the cost of college tremendously.

I pay by course. If I take half of my classes at Columbia online, I cut the cost of my education in half. That’s fantastic for most students. It’s also fantastic for the Trump administration because they can use, especially the humanities classes, as a way to—if you are negative, you say indoctrinate—or present their side of history in their courses. Of course, they will control the content.

But the third-order effect is that imagine now that a lot of students at Columbia decide to take the Western civilization class online. They probably are not going to take the most advanced medical-style biology class online, but they’re going to take the Western civilization class online.

All of a sudden, the demand for humanities is going to plummet at every college, and so, they’re going to shrink the humanities and push up STEM education. With a very simple initiative that would cost very little, they can have a gigantic impact on the entire university system.

Bethany: But do you think that’s a good thing? I know you’re a little more pro shrinking humanities departments than I am and probably a little bit more pro-STEM. Especially in the age of AI, is that really the outcome that we want?

I could be wrong about this, but when I think about what’s likely to be replaced by AI, it’s precisely STEM, and what’s not likely to be replaced are human capacities for reasoning that are the foundation or are developed through a liberal-arts education. Do I sound like somebody who went to a small liberal-arts school? I do. I am.

Luigi: No, I think that you misinterpreted my thinking a bit. I am sympathetic to the idea of bringing education at a lower cost to a lot of people. That initiative would be revolutionary. It would put, in my view, the right pressure on universities because we would need to rise to the occasion and show we can deliver better than that.

In the same way, if you provide free medical care, the doctors that provide medical care would have to become much better at producing that in order to survive. That’s on the positive dimension.

I’m very worried about the indoctrination component, and I’m very worried about the strategy behind this recomposition.

Now, on the flip side, I do believe that in many colleges, some groups of humanities . . . and I love humanities. I think, especially in the world of AI, they do play a very, very important role. However, they got kind of insulated from any market pressure.

As a business-school professor, if we don’t really teach something that is relevant, people don’t come to us. But in most colleges, you go to college to have the stamp of the college. Whether you took the most in-depth class about English literature or some very light class on transgender studies, it doesn’t really matter. As a result, I think many departments went all in for transgender studies, which are important, but I don’t think they should necessarily have that weight in the overall offering of the university.

Competition is good. At the business school, we have this great rule, in my view, that every course must have an alternative. Nobody should be required to take my class, particularly. They might be required to take a course in microeconomics, but they can take it from me. They can take it from somebody else; they can substitute, so that there is an alternative. If you have a monopoly, you’re going to indulge in that monopoly.

Bethany: I think the other problem that the humanities face is that there’s not a near-term value, necessarily, in the job market other than the stamp of approval from an elite college that may get you a job offer.

But your learnings in that area become more and more valuable later in life. Of course, you could always teach yourself, but the foundation that you establish in college makes you a different person, I think, and makes you open to things and interested in things later in life.

I think far more about what I learned in my English major or my philosophy classes than I do about my math major, whereas it was probably my math major that got me a job—which it shouldn’t have done, by the way, since I was not a very good math major.

There’s a very long tail. There’s no immediate gratification with a humanities degree, but the value comes later in life.

Luigi: You are absolutely right, and I’ve been advocating for a long time at Chicago, but nobody listened to me, that in addition to the teaching ratings that we do now, which evaluate the professor at the time, we should have delayed teaching ratings, like 10 years or 20 years down the line.

We have the alumni who come back, and I think we should have surveys of which classes you found most useful. Sometimes it’s too late to reward those people, but I think it would be nice to have the statistics to see what you really value in a course or in a curriculum.

Bethany: I really like that idea, assuming any of us have the memories that are capable of that. But I really like that idea.