Category Archives: political economy

University Funding and University Overhead

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Maya Sen, Professor of Public Policy at Harvard’s Kennedy School of Government, thinks the Trump administration’s insistence on a cap of 15% for “indirect costs” as part of all Federal research grants to colleges/universities is too low for too many such institutions; such caps should continue to be negotiated school by school. She insists, for instance, that Harvard needs its 69% cut of research grants for its indirect cost.

An across-the-board 15% cap, she insists, ignores any individualized considerations, leaving schools with higher costs in the lurch. And, she claims,

University research depends on federal money—11% of Harvard’s operating revenue comes from such grants.

Her alternative:

There’s a better solution than a blanket cap. Universities could instead commit to addressing administrative bloat and shoring up research integrity—both reasonable points that academics themselves have flagged.

Couple things about that. One is Harvard’s $53.2 billion endowment with its 2024 return on investment of 9.6%—a fairly typical ROI for Harvard; even if its yearly ROI varies quite a bit around that figure. That’s a lot of money carefully not being used for the school’s operating revenue, or its grant “indirect costs.”

The other is that proposed Universities could instead commit to addressing administrative bloat and shoring up research integrity. We’ve seen already the value of those commitments—empty virtue-signaling words in far too many cases. See for instance, Sen’s own Harvard and its refusal to enforce its commitment to protect Jewish students from Harvard’s population of pro-terrorist “students.”

Bonus thing regarding those schools with higher costs about which Sen worries being left in the lurch: any lurch is solely the product of those “higher cost” schools. They can straightforwardly cull their administrative bloat and adjust their spending allocations to deal with remaining costs. All that would take is a modicum of courage, with backbone injected via reduced revenues caused by reduced Federal froo-froo included in any research grants.

No. The administration’s across-the-board 15% cap needs to be implemented.

How to Handle Federal Lands

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Terry Anderson, of Stanford University’s Hoover Institution, has some thoughts on how best to handle Federal lands, a unaggregated expanse of some 640 million acres, 28% of US land. In their essence, his ideas are to handle those lands in a business-like manner.

…three options: raise the price of goods and services (timber, minerals, visits to national parks), reduce labor costs and liquidate money losers.

He’s right, but those are the second steps that need to be taken, not the first step.

Twenty-eight percent is far too much of American land to be retained by the Federal government. The necessary first step is the transfer of those lands to their respective States.

Anderson’s ideas, fleshed out some in the fulness of his op-ed, does recommend [t]urn[ing] ownership of some federal lands over to the states, but that’s wholly inadequate. The vast majority of those lands should be turned over.

The amount that might be retained by the Federal government, to suggest a percentage for opening discussion, would be less than 5%, and the retention purposes might be limited to protecting some historical and scenic areas for public park use, to finishing cleaning up Superfund sites of their contamination—following which those sites should be returned to the States—to maintaining (and I say expanding) our Strategic Petroleum Reserve, to siting military installations, and to setting up, or finishing, nuclear waste storage sites.

The Federal government has no legitimate interest in withholding from State and private use so huge an expanse of our land. Selling it to the States and to private citizens would raise funds for paying down our national debt, too. The modern equivalent of a dollar an acre comes to mind for a suitable sale price—that original one dollar price wasn’t so much for raising money—though it did for that then small Federal budget—than to transfer the land to owners who, by paying for it, would have some incentive to make economic-based use of it.

The retained land then should be managed IAW business principles.

Reciprocal Tariffs

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National Economic Council Director Kevin Hassett says that negotiations are underway with a variety of nations regarding tariffs.

Reciprocal tariffs are absolutely a high priority for the president, [they] have been forever. You know, our trading partners charge us way more in tariffs than we charge them. And it’s something he talked about before[.]
…
And there’s got to be a lot more action on it today[.]

A lot more action. Recall that, during his first term, President Donald Trump (R) offered the G-7 nations and EU a tariff-free trade zone. All of those nations and the EU blew him off.

It’s time to renew that offer: let tariffs reciprocally drop to zero and create a true free trade zone. See if those nations, and especially the EU are serious about doing honest business with us. American producers will have no trouble competing in that zone.

Two More Panic-Mongering Lawsuits

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Newly installed OMB Director and Acting CFPB Director Russell Vought has moved to curb the abuses of the CFPB by ordering staff to issue no more new rules, to stop new investigations, and to suspend existing investigations and litigations pending a general review of the CFPB’s activities. Vought also has authorized DOGE personnel to audit CFPB’s financial activities, including its payroll.

The National Treasury Employees Union is mightily upset, and it has filed two suits to stop these cease and desists and the audit. The NTEU alleged in the first case

It is substantially likely that these initial directives are a precursor to a purge of CFPB’s workforce, which is now prohibited from fulfilling the agency’s statutory mission[.]

In the second case, the union alleged that the CFPB

granted access, and by extension, disclosed employee records to individuals associated with DOGE without employee consent to such disclosure.

I will be brief, and the NTEU will not find it pleasant.

The union’s first case is entirely speculative as no harm has yet occurred, nor has the union alleged any harm actually has occurred. The suit should be tossed on that ground alone. Regarding the union’s allegation of prohibition, this is pure fantasy: the activities are HIAed, not prohibited, and whether the CFPB is functioning as statutorily required in this context is a political assessment, not one that is justiciable.

In the second case, the union’s allegations are, once again, purely speculative, and no harm has yet occurred, nor has the union alleged any actual harm has occurred. All it has done is raise a series of scary boogieman possibilities for some time in a nebulous future. This case ought to be tossed on that ground as well. Regarding the consent allegation, the CFPB’s employees—all Federal government employees—agreed to have their pay records audited on demand when they signed on to their government employment. That allegation also should be tossed even if the larger case is continued.

The evident frivolousness of these two suits is one more reason why government unions are destructively counterproductive and why the sinecure nature of civil service jobs needs to be severely curtailed.

Defanging the PRC

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At least by a little. As part of the People’s Republic of China’s economic war that it’s waging against us, they have moved to block important mergers involving American and non-PRC companies and today are threatening our major tech companies (and by extension our smaller tech companies and those companies that supply or otherwise do business with these).

Beijing has already said it is investigating Nvidia and Google over alleged antitrust issues. Other American companies in its sights include Apple, Silicon Valley tech company Broadcom, and semiconductor-design software vendor Synopsys, said people familiar with the matter. Synopsys has a $35 billion acquisition awaiting approval by Beijing.

And

[The PRC] said it had opened an antitrust probe against Google.

And

In 2018, amid US-China trade conflicts in the first Trump administration, Qualcomm terminated its proposed purchase of Dutch chip maker NXP Semiconductors after failing to obtain clearance from China.

And

US chip maker Broadcom’s takeover of VMware, valued at $61 billion when it was unveiled in May 2022, was in peril until a meeting between Biden and Chinese leader Xi Jinping in November 2023.

If these companies did no business with companies domiciled in the PRC and did no business within the PRC, that nation would be unable to go after them at all, including having no ability to block mergers between US and non-PRC companies. The PRC’s ability to damage our economy would be restricted commensurately. Of course, withdrawing from the PRC would be expensive in the short run, but it’s a large economic world, and while the PRC is a major player in it, that nation is not the only player. The magnitude of its role, too, would shrink as we reduce our economic ties with it.

Another, central, question is this: what’s the cost of letting an enemy nation have so much influence over our economy?