University Expansion and Innovation Ecosystems

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You could think of it as an indie TV talk show on YouTube We are very excited about it. and we're looking for free economics Rio listeners who want to pre screen episodes and share their feedback. We will select one hundred people to take an early look. If you are interested And being an extension of our production crew, please go to the link in the show notes and sign up. We will have a lot more to say very soon about this new show Now here is today's episode of free economics Radio. Right now is a hard time to lead just about any institution, and leading a university is particularly hard You've got your campus protests, your financial pressures, including federal funding cuts. You've got legal pressure from the Trump administration, which contends that universities have become captured by left wing ideologies And it's not like the American people are rushing to support you. According to Galluop surveys, public trust in higher education is near a historic low A lot of university leaders have crumbled under all this pressure. many have been pushed out. But some campus leaders are Let's put it bluntly. They're winning Over the next two episodes, we will talk to two of these winners First up My name is Daniel DMeer, and I'm the chanceor of Vanabbilt University Vanderbilt is a major research university in Nashville, Tennessee with about seven thousand three hundred undergraduates and six thousand three hundred graduate and professional students Its graduate programs in medicine and education are world class. Its business and law schools are also very well regarded On the undergraduate side, it's already highly selective and applications continue to surge Vanderbilt is also expanding under Deeremeyer with four new or planned satellite campuses Even its football team, which is usually a laggard in the powerful southeastern conference they've been winning big lately Perhaps most strikingly, Deeremeyer and Vanderbilt seem to have dodged the federal government's ongoing assault on the broader university system We're a little bit of an outlier on that and we have been able to Dal with the situations quite well, but that is not typical So today on Freak Eonomics Radio, we ask why? Why does everything seem to be going Vanderbilt's way According to Deermeyer, one key to their success is their embrace of a policy called inststitutional neeutrality, a policy that has made Deermeyer one of the most polarizing figures in higher ed Not everybody agrees with me, but my strong belief and I think there's increasingly evidence now that is supplied almost on a weekly basis that points out that we have a problem is the problem in American universities and is institutional neutrality the solution? Let's find out starting now This is Freakonomics Radio, the podcast that explores the hidden side of everything withith your host, Stephen Dubner Daniel Deermmeyer grew up in Germany but has spent most of his academic career in the US as a political scientist and a scholar of management At the University of Chicago, he became a dean and then provost. It was at U Chicago where the modern doctrine of institutional neutrality was born. The University's Calvin report commissioned in nineteen sixty seven and still famous in some circles. said that, quote, The university is the home and sponsor of critics. It is not itself the critic So what does that actually mean at a university today We'll start with what Deeremeyer says is an important and often overlooked question problems were universities like Vanderbilt created to solve Vanderbilt was founded about one hundred and fifty three years ago Cornelius Vandibold, hence the name We were founded by Vanderbilt really with the explicit purpose to create a great university to bring together all the parts of a divided country which of course, was post civil warar. We were a great regional university. Our nickname always has been The Harvard of the South, which we have mixed feelings about. And then about twenty five years ago, my predecessor decided we' going to be a great national university. and we have been on that path over the last twenty five years. We are very happy in where we are We've had probably the best year in our history last year Whenever we look at things like student demand, fundraising, research activity, ability to attract talent We're in a very good place right now I have seen polls showing that seven in ten Americans believe the higher education system in the US is headed in the wrong direction. I assume you are not one of those seven No no, I'm not. Well, let me put it this way. I think there are real issues that need to be addressed The fundamental purpose of the university is a noble purpose. It is about providing breaking research and the transformative education And that is absolutely critical for the country. We should never forget that. There's plenty of evidence that universities deliver on these promises, but there also are problems that we need to address and that I think were some of the root causes that have led to the erosion of trust. Name the biggest problems to address? There is a general concern about affordability and whether universities prepare as students for careers. that's something that is kind of bipartisan, but also questions about inequality. That usually comes from the left side of the political spectrum And then there is from the right side of the political spectrum, ongoing concerns over ideological drift, intellectual monocultures lack of viewpoint diversities, theseese are all different ways to talk about that universities have basically become politically biased to the left What kind of relationship do you have with President Trump and his administration Oh we talk to everybody. We have great relationships with our mayor. We have great relationships with our governor. We have great relationship with our fellow delegation We believe that order to have a positive impact on the political environment for universities, we need to be at the table. I think this was really validated this belief doing the endowment tax All right, let's talk about the endowment tax. In Trump's first term, he introduced a tax on the returns from university endowments. This was a small tax, just one point four percent. But in the second term, he turned up the heat quite a bit. I know You have spent time in DC on that issue. What was the outcome and how did you try to influence that outcome? Yeah. So I was in Washington every other week Sometimes alone, sometimes together with other university leaders This was a proposal that came out of the House Waays and Means Committ The highest tax would be twenty two percent and then it would go down The critical thing here to understand is endowment is accumulated philanthropy. Okaykay? This is like what people have done to support the mission of the university So if you're taxing the endowment, you're taxing philanthropic intent And so we spend a lot of time trying to talk to members of Congress to just basically plplain that this would have very negative consequences, especially on financial aid and especially on the research profounding for universities. And we were able to, at the end of the day,, we meaning a whole bunch of university presidents that were active in Washington We have now two bands rather than four and at the highest is not twenty two but eight. But we're affected by the endowment tax and it will have a material impact on university Give me a general assessment of how reesearch funding toward universities is flowing or not flowing right now. I did speak with a Vanderbilt professor who's in the medical school who Lkes you, by the way. goodood He said that there's a lot of concern that NIH funding in particular is pretty bottlenecked. The Trump administration has plainly come after a lot of universities, including major research universities in the Ivy League. You are a major research university too, and that A lot of funding. So tell me where things stand. multiple things going on all at the same time The battle would between the Federal administration and Harvard is just one example. So this is about a group of universities where there's ongoing conflict and battle between the Trump administration and universities That's one bucket. Then the second question is research funding overall. There were quite a few cuts post as part of the budgetary process, we ended up with appropriations that actually increased NIH funding by about three hundred million dollars. and as F went down a little bit, but not dramatically so And I think what that shows is that there is strong bipartisan support for research funding, and that's great because that is the right policy Th then there are questions about speed with grants being improved and money is being spent. there's clear delays. I mean, we see it Is that because there were so many people left the NIH you just have kind of, you know, bottlenecks because personnel shortages That's what we're being told That needs to happen again because we can bridge some of the cash needs in the short term. But again, if this takes longer, then it will have a material impact Have you seen material impact yet good financial position, but that is not true for all universities We're one of the few universities, maybe the only one in our peer group have not done any layoffs or anything like that That is not true across universities. I mean, there are some universities that have laid off a lot of people because of funding cuts in particular segments, which is a whole not conversation. or because of the general uncertainty and the financial strain that's put on universities Dfenders of this administration say that they are esssentially restoring sanityity to America. That's the argument, including to the university system that they argue got way off the norm Critics, meanwhile, of which there are many from different sides, but one central critique Especially when it comes to financial matters is that the Trump administration is essentially running the biggest grift in American history, way too much self dealing Where do you come down overall as a political scientist? There have been problems And the problems have manifested themselves in an erosion of trust on both parties, but has been catastrophic among the conservative segment of the electorate concern there which goes back years is that universities have drifted ideologically. the left that there is lack of viewpoint diversity, intellectual monoculture, wokeism. These are all different words that talk about the same thing That is pre President Trump, and I frankly have seen it manifesting itself in different ways. That is a real thing We have a problem particularly in fields where I would say society reflects upon itself. Those are the humanities, the kind of qualitative social sciences, anthropology, soology, parts of the law school and kind of adjacent areas We need to address that. And if we don't address that, We will not regain the trust of the American public. It doesn't matter whether it's the Trump administration or anybody else in there This is a serious problem. Underlying concern over the ideological rift, monoculture is a real thing and we as university leaders need to address that. That's what we need to do That's our job and we need to get on it. The American Association of Colleges and Universities published an open letter last year speaking out against the unprecedented government overreach and political interference now endangering American higher education. This was signed by hundreds of college presidents, but not you. whyy not The way we always think about this is that We need to do the work of being clear about our principles and then have real conversations. okay I'm a little more skeptical that a big proclamation will do anything. point of view is that I want to be at the table and I want to do the hard work on our campus. and I want to try to convince my fellow presidents and chancellors that there's a really issue that needs to be addressed and If you're being perceived as the villain Politicians will attack you cause makes them the hero. That's the way this works. You have to ask yourself honestly Are there real issues? and then how do we address them There is a group of universities that think there's nothing wrong that everything's great and that this is entirely an attack by an authoritarian or quasar authoritarian government. And we need to all stand together and resist. I disagree with that position, and I've made that clear in public before Let's get back to what you have described as the political drift of universities in the US over the past couple decades How would you think about the causes and especially the consequences of that drift The causes are complicated. I think the way you want to think about this is that Most faculty members are motivated by doing their work. you're a biochemistry professor and you want to be in the lab fourteen hours a day and do your work. o. and you may trend political left. But in some sense it doesn't matter because biochemistry is really not about political issues And secondly, that political identity is pretty moderate and it's not part of who you are you choose between Democrats and Republicans on the ticket for presidential tick, you tend to vote Democrat. fine. And then there is a group on campus. and their point of view is that Our world is structured fundamentally in an unjust fashion That it needs to be understood in terms of power dynamics or pressor or pressed structures. and that is critical to who they are critical to their work. And they talk about it of putting their teaching and research in service political agenda They have very often taken over professional associations in this field The reason why that's important because it's consequences for publication, awards, and of course, curriculum You know, what's happened in syllabus, including what happens in PhD programs And then on the right The right is not the right word here necessarily. There's some people that are conservative, but it's also like a kind of classic free speech kind of Joon Stewart Mill advocates They exist, but they tend to be isolated and scattered and there are like three in the law school and two in economics and a bunch in the business school. they're not coordinated, they're not organized. And so as a consequence of that You have a very motivated, well organized group that has been able to act in concert and universities just have been drifting. So unless you had a president like my boss at the University of Chicago, the great Bob Zimmer, was of course, a free speech advocate. It's clear about that and has an aligned board on that Universities will drift because many university presidents or their boards, don't want any drama. Well, they may not want to deal with these issues or They have different agendas for whatever reason. And so they cut deals. So you do this over twenty years and the shift starts drifting in a bad direction. Okay, so that was a very good answer to the causes. The consequences, I'm curious to hear you talk about, especially when I think about Vanderbilt and I think about going back to the mission of Cornelius Vanderbilt, this desire to start a university to unite people after the Civil War. The universities in this country have contributed not only to the innovation economy and the economy generally, et cetera, et ceter. But there have been huge social contributions. Economists always like to talk about positive externalities and there aren't that many, but education really is one tends to make everything better. So I'm curious how much you think that part of the university accomplishment or mission has been damaged When we talk about a transformative education, We mean that the students acqu skills particular area, their majors or whatever the field that they're studying that they're ready for a meaningful career And then the third thing we think about that they are prepared to be citizens and leaders in a free and democratic society. Those are usually the way we think about a transformative education, Jast that Vanable The problem is that there's a subordination of scholarly standards under an ideological agenda that manifest themself in research and in teaching I'll give you just two examples of that that I thought were both very striking I'll give you three actually. One was, look at a statement made by the American Anthropological Association. where they basically say the following It is the professional standard frontropologist their research and teaching in service of dismantling institutions of colonialism So basically saying to be anthropologist, you have to be aligned with the decolonization agenda. That is a striking thing to say Why That may seem obvious to you, but why? Well, decolonization is a particular ideology, right? It has a particular content It is not the definition of anthropology. It's an ideological agenda the The second example is we've seen these studies now on syllabi We can do now because we can use large language models. So there was a A particularly striking example done by two professors at Claremont They looked at Silabyine and they basically picked three areas, criminal justice, Israel, Palestine, abortion And then they asked basically, what is the relevant kind of different point of views on that? Well established in the literature And all these point of views actually reflect an undergradic curriculum. So the example was the book the New Jim Crow which I'm really simplifying there, but makes the argument that the mass incarceration after The war on drugs basically was intend and had the consequence of suppressing African American communities Very controversial book. Of course there was back and forth and people criticized it. That's what the accademy should do. No problem You should have that book in there because It's important to understand to take a provocative contribution there and you want to debate it. But now you have to have the criticisms as well What they found is that ninety four percent of the syllabi only had the book, but none of the criticisms What would actually pair it with even more kind of radical points of view. So if you are now taking a class on criminal justice as an undergraduate, you believe that the state of the field, but it's not the state of the field. It's a particularly biased view of the field There are a lot of academics who would argue that that's not an ideological position they're taking. It's just a factual one that racial discrimination in policing and law enforcement in America has a long and deep history and it's a bad thing and therefore, people need to be educated about it and we don't necessarily need to spend time defending the previous status quo or looking at modern critiques of the current argument That's an assertion, right? That's an assertion about facts. And our job is to now kick the tires on that and see is that true? And to what extent and other mitigating factors Once you do a proper statistical model and you control for other factors, do these things still stand up? I mean, that's what will work Means, right So this widespread embrace of a certain kind of text, where does that come from in your view? Is it pressure? Is it the chilling effect we hear about? Is it Maybe more of a natural expression of the kind of people who become university professors. We have certain disciplines now basically looking at the world from one point of view only is the belief that our world is structured in a fundamentally unjust fashion and that these structures of oppression need to be dismantled That's the position Then it manifested itself in multiple different ways Number one the free speech crisis that we had a little over ten years ago And I lived through the University of Chicago. The way this was manifested is that we had the speech codes and we had the shouting down of speakers we're not in line with this point of view or we're challenging that the so called controversial speakers That's better now. it's not done B don't know Why? Because Principles, Chicago principles It wasn't so easy anymore, It wasn't free anymore to basically cancel speakers. So that was chapter one. chapter to is institutionalutrality. We had it since the late sixty seventies, Chicago had it in the Calvin repeport in nineteen sixty seven, but it came to the forefront Really after october seventh Because the debate there was, what the activist group wanted us to do was to take a position, which is to denounce Israel genocide, divest, cut ties with vendors that had any connection with Israel That's much better now too, because we had a clear principle, institutional neutrality And there was this pressure that came from alumni Jewish community that basically said, look, universities, you got to get out of this position taking game And the political pressure probably played a role The third chapter now is what happens in the classroom, what happens in research journals, what happens in the practice of research and teaching? That's a much harder problem All these three things are manifestations, I think of the same problem Let's talk about you a little bit more in your research. So you're a political scientist by training and the work of yours that I've always found Especially interesting, although I haven't read all your work. Well, we have to fix that. It's riveting. Okay, I'll try to read some more. But the work I do know is around reputation and reputational management. You write about moral outrage. So to me it seems like you are made for these times. I'd love to hear you apply your research lens to your administrative job now I have done multiple things in my life, but I think the two areas that I'm most known for is the one you just mentioned. So that's about understanding reputation, particularly in crisis settings, the relationship between Companies and society and of course, as you just point out, that applies to university just as much. The second area of my research was on studying institutions. So I was trained as an applied game theorist and then did a whole bunch of empirical work as well. There I try to understand how institutions work So I was particularly interest in political institutions, legislatures, coalition governments and so forth. And what do you learn there is that the details really matter. Setting things up the right way can make a big difference and you have to be very, very conscious on that Now Neither one of these areas when I was a researcher, I had any inkling that this would be related to my later work as a university leader. and of course, I didn't know I would be a university leader, but even being in those roles I think it was pretty clear that the reputation crisis stuff was immediately valuable Reputation for a university is absolutely critical When families make a decision where they sent their sons or daughter for university, it is one of the biggest decisions they will make as a family For many people, that's the second biggest investment that they will make their house And very often, they will have No personal experience with the university And even if they are alumps, they were alumps thirty years ago. It's a different place. So reputation is really critical It's critical for appants for hiring great faculty. It's critical for fundraising 's critical for tracing. reesearch grants. so everything that is Driving the success of a university is driven by its reputation Having studied reputation and moral outrage Why do you think that the Palestinian cause became a flashpoint on so many US college campuses Very, very good question We had underneath already some tensions that were and are ready to explode. That had to do with a certain radicalization of parts of students and also parts of the faculty And then the questions is, what's the trigger October seventh was a particularly horrific event And As you may remember They were very quickly statements by students at Harvard and so forth I would say putting the blame more on the Israeli government that created a lot of drama at Harvard Usually when you have student protest or activism It's the students against the administration. That was not true in this case. You had student groups against student groups or alumni groups against faculty or faculty against faculty The campuses were split in some cases, ripped apart That was different. And that I think created a tremendous amount of additional pressure and difficulty I think many universities were not ready for that There was mission drift, there was lack of consistency, there was lack of clarity One reason I think why we got through this much better than most universities is because we had years ago thought hard about What is our purpose? What our operating principles And then when the challenge came, We were basically ready to put them into action to apply them. We didn't have to think this through. Okay, so what is your purpose? and what are your operating principles The way we think about this is that the purpose of a great research university is to provide pathbreaking research and a transformative education That's what we believe. So We do not think that universities are political parties and they are not members of political or social movements And this is something that you've become known for as a practitioner of institutional neutrality. Do you like that term? That's one of the operating principles in order to have pathbaking research And in order to have a transformative engation, you must have an environment of open inquiry where ideas can flow freely. And so we believe that there are three pillars on that The first one, which we call open forums, which is about free speech That's very similar to the Chicago Principles. We had it actually very early already. It's not something that is new to Vandabuilt. We had it already in the sixties For example, we have a policy on campus that student groups and faculty can invite speakers as they see fit. they don't have to be checked. In the nineteen sixty seven our students brought Stokely, Carmichael, Storm Thurman and Alla Ginsburg all to campus at the same time. nineteen sixty seven in Nashville. That must have been a fun night. It was interesting. Okay, So I was very young at the time, but that's a pillar that has been with us for a long time Second pillar is the institutionalutrality piece whichich means that universities University leaders will not take positions on policy issues or political issues unless they directly affect the core function of the university.? But the university presents who do get involved with political statements say, well, everything affects the core mission of a university because We're teaching young people how to think about the entire world. So your response to that would be what We wanted to teach how to think, not what to think We want to create an environment where our faculty or our students can take different positions on something and do the hard work of figuring things out We don't want to tell them from the top that's the right answer and that's not If I give you an example, the DOobbs decision on abortion There are some universities that have said that this decision is inconsistent with the values of the university. That is not institutional utrality How would you think of a point of view institution autality on that? You would say We have people that have different points of view on the Dobs decision on campus. including among a faculty. For example We have members of the law school that may have the following position. They may say Abortion should be safe, legal and rare It's not the Supreme Court that should decide that decision, but Congress or state legislature And they may say that Ro V Wade was not decided correctly on judicial grounds. That's an argument that constitutional lawyers will make That is a well established position among people in Moscows No, I want that position be debated. I'm not going to see Fr the point of view of the president, you're wrong You know, if you as a university president say This is the right outcome, then it chills debate. That is a real thing Have you seen that in your academic career Well, I was fortunate enough to be at Chicago and at Vandbilt, so we are committed to institutional neutrality. But you're interacting with professors and researchers from all these other institutions. Oh yes. Did you feel it from your peers elsewhere? Absolutely, abbsolutely. You hear it from faculty kind of Soto Vulter, you know, when they talk to you This is particularly a problem for young faculty members are tenure or for graduate students, it creates the sense of a party line or institutional orrthodoxy, that is a terrible thing to have at a university. The point of universities is to do the hard work. all about expertise We really look into details and we have gone through a lot of process of learning and research. We are certified as experts in a particular field That's what entitles you to teach in a law school. I come in and I say the DobS decision is inconsistent with the values of the university. I'm basically pretending I'm a constitutional lawyer, which I'm not. I'm sending exactly the wrong signal to a faculty and our students So institutional autrality is really about leaders There's a separate question about what happens in research areas The institutional trility really needs to be understood as a restraint on university leaders, presidents, provvos, board members, but also deans, department chairs and so forth. You were giving three pillars. We got through two The third one is Vandabbilt's commitment to civil discourse are a community that lives and learns together that uses arguments use this fact based reasoning? That has a commitment to listen to each other, that doesn't demonite each other just because we have a different point of view That's more a cultural thing In addition to principles, you need to foster culture. We do an enormous amount of work on that with our students And those three pillar together have really served as well as we were trying to navigate the last few years Coming up after the break, how much of Daniel Deereermeyer's perspective comes from his own history There were landmines. There were fences that if you touch them, you're automatically killed by automatic machine guns. The whole thing was just horrible I'm Steven Dunner, this is Freeconomics Radio. We will be right back F Economics Rio sponsored by Ozempic. Innovation happens through rethinking what's possible. and when it comes to GLP ones, Ozempic Pill does just that Learn more about Ozempic semiglutide tablets four and nine milligrams by calling one eight three three ozempic or visit ozempic dot com to view the medication guide and ask your doctor what's possible with FDA approved Ozempic pill Fre economics radio is sponsored by LinkedIn Ads Ever invested in something that didn't live up to the hype? Marketers know that feeling. They optimize for the numbers that look great, like impressions, but then they don't see revenue LinkedIn has a word for that Bull spend. Instead, you can get the highest rowad of major ad networks with LinkedIn Bull spend advertise on LinkedIn. spepend two hundred and fifty dollars and get a two hundred fifty dollars credit. G to LinkedIn d. com slash free economics, terms apply Free Economics R videoo sponsored Hotels dot com dot Hotelsot com gives you access to hundreds of thousands of hotels worldwide. and when you join for free, you can save up to twenty percent instantly with member prices Plus every stay earns rewards. so when you book one trip, you're already lowering the cost of the next one Hotels. com is simple, rewarding, and designed to help you get more out of every stay Sign up for free and book todayay hotels. com all in the name Vanderbilt's campus sits a mile south of downtown Nashville. But on the day that I interviewed Daniel Deeremey, that is not where he was I'm in Munich today. Munich, Germany What are you doing there? I attended a technology conference and then I had lunch with my mom earlier today She lives right outside of Murich so was a wonderful day for me So you grew up in West Berlin, is that right? That's true. Okay, tellell me about your childhood. Let's start with when you were born and I'm curious what your parents did for a living. Born in sixty five I think there are really two aspects of my childhood that were important to me that motivate me to this day. The first one was that I was a first generation student. I'm actually the first of my family to graduate from high school. My dad was trained as a tailor and then became a middle of the range, moderately successful fashion designer. So not even Son noir, but something much more moderate than that And my mother did drawings for fashion magazines. That's how she met him. And then she raised me and my system is his distributician. There is really nobody in my close family that really had any academic inclination So what happened to you? How did you become such an outlier? That's a good question. So I loved school right from the beginning. I was one of the kids that couldn't get enough. I couldn't decide between classics and history and physics and biology. So everything was of interest to me And that really became then the goal to become an academic And then the second thing is where I was born. So I was born in West Berlin The divided city. We all know it from John L Caray novels and the wall and all of that and What was formative as a young person was the experience of living in a free society right next to a totalitarian state And this was a nasty border We may not remember this very well, but The wall, of course went right to Berlin There were landmines, there were fences that if you touched them, you automatically killed by automatic machine guns, there were German shepherd dogs, AK forty. The whole thing was just horrible And of course, it was a border that was not intended to keep people out but to keep people in So there were many examples of people trying to flee East Germany, tragic stories, stories of incredible heroism And so that was an important experience. And then later on, When I was in my teenage years, I would go to East Berlin frequently. Oh and as Germans wen't go through checkpoint Charlie, we had to take the subway Friidlichglasser and you leave this buzzling vibrant West Berlin and you come out on the other side and all the color is sucked out. there's no Street life, there are no cars, there no cafes, there's nothing Why did you go there? What were you doing there? I was just so interested. You have to remember the experience when you growrew up in Berlin, at the time as you go for a restaurant, you have a great time You stand right in front of the wall and then each German bordiler guard is looking down on you So that's constantly there. You want to go on vacation You have to cross the border twice. It's a scary thing So it's a constant part of your consciousness in your daily life I wanted to understand the ideology behind it, you know Marxism Leninism. and all of that was, I think a tremendous fascination to me. but Then the final chapter of that was when I was able to get a fellowship to the United States. I was there for one year. and then came back to Germany and then the wall fell And I was in Berlin when the Brand Brigade opened And the same nasty East German border guuards that would give you a hard time a day earlier, the next day when it was possible to cross the border with only any checkpoints We're the nicest people you' ever going to meet. They would take pictures, pololaroids at the time There were immediately markets that sprang up where people were selling The uniforms of their insignia It was an amazing thing. And I think the Lesson to me was people are people and institutions are really important Okay, there's a lot in there I want to ask a few follow up questions about because that's interesting and that puts you in an unusual space for an American university president plainly. Here's a big ish question. What lessons do you think there are to be learned positive or negative about the way that East and West Germany and East and West Berlin were unified, reintegrated Oh, that's a big question I remember these days very, very well The first thing was Absolutely amazed I was by just the skill of getting this done. I was there when the brand Bgade opened I was on top of the wall I ripped my jacket actually getting up there. still still remember to this day What you would expect the Beethoven's lines and cheep champagne and all of that, but There was a transancer call. President Bush forty one and foran Swamiter run walking by maybe ten yards away from me And I remember very vividly how Well this was executed. this was a tricky, tricky situation with the Weakening and then collapse of the Soviet Union with reservations from Prime Minister Margaret Thatcher, with Mitolon, the whole question of European unification at the same time What I take away as a big lesson was people were absolutely clear on what they wanted And Chancellor Cole, I think was very clear that he felt that that was a moment for German unification and it had to be seized no matter the cost. And I think particularly the American foreign policy leadership at the time was absolutely incredible Th there was also hugely important a lot of trust that was established because These were tricky two years And the personal relationships that the German chancellor had built, particularly with Francois Mitteron There was a famous scene when they held hands in front of the battlefield of Verdin There was a lot of personal trust that really was necessary to get this enormous accomplishment done You say that with some marvel in your voice, so I recognize that you appreciate how important that was and maybe unlikely Let's say you're going into a situation right now where there's very little trust between whether countries, people, corporations, the university and the public, whatever How do you think about creating or building a trust where there has been such a stark division? And I ask as an American who's fairly concerned about these things on the macro level When I was in high school There was a lot of criticism of Chancellor Cole. and I was certainly not big supporter of his politics when I was fifteen or sixteen and you just have your own ideas and you start thinking about politics, but he was almost made a figure of ridicule me a while who really appreciate what he brought to the table. And there's something I think humongously important. is countries are lucky when they have the leaders that are required for this moment. So Cole was not a great economist. I think he underestimated the economic cost of the German unification. and there were a lot of mistakes that were made. But he was a historian He understood history And he understood that this was a historical moment that needed to be seized. The second point was, which brings me back to your trust question. is what Cole realized is that Strategy is important. inststitution is important But leadership is important Personal trust between leaders is critical Be the French government fromr Samiterome had to trust call if you will, wave through, approved the German unification, and then had to trust him that they would not give up on European integration because these things were out of sync, if you will So what's the big lesson here It's very, very easy to demonize the other side and to focus on what divides us. And to see like, well, you know, if you have this point of view I'm outraged by that. and then there's what somet is called a rush to righteousness often in politics So we not only disagree, but we think that the other person really is immoral based on having those beliefs. And my strong sense from this is that There are so much we have in common as people And we need to emphasize that. And what he did, he emphasized the history, the personal suffering from the Second World War as a motivator for European and German unification That brings people together. shharing a meal brings people together, familyamily stories brings people together. There are these very important things that just remind us that we are we're all people and we all have our stories and we all have our struggles And creating this commonality is enormous important You said that having a leader for the moment is important. I think we can all recognize and appreciate that. How do you see Donald Trump as a leader for this moment Well, I think what we have is the tremendously polarized country right now And I think the politics of our country reflect the polarization Do you think Trump is more an emblem of that as opposed to a primary driver of that or no Politicians in a democracy are They're both a reflection and they can reinforce things. When you're lucky, you have someomebody who is exactly the right person There's so many complicated aspects to this, how we think about the political situation right now No doubt is that having a focus on Polarizing, bringing people together is a very good idea So I really understand polics. I know why people take positions on that. I see it in variety of different ways I see it in different levels of government, but Our job, I think, as people that have responsibility in particular parts of society is to focus on what we are supposed to do in my case universities and then look at how we fit into the broader issues and the dangers of having countries ripped apart by polarization are non tririvalial. Let's say someone in the Trump White House is listening to this conversation and says, Dmeyer gets it and he's got the history with Germany. He's got a political science background And he understands how institutions work, how they rise and fall, and how trust is a main lubricant of that. And we in the Trump administration think that we have some work to do. So let's bring him down here. Let's bring him in, sit with the president and make him a trust czar for a couple of weeks or months. What do you do Well, I think the key thing is always to focus on the concerns and the goals that people have in common So just to bring it a little bit back at a more manageable scale for me in Nationalille, Nashville is a Democratic mayayora Then we have a Republican governor, we have a Republican state legislature. and of course, now we have Republican feedllow government and we had before a democratic one We need to work with everybody that is absolutely essential for us. And the way I think you do this as a leader is you find the type of things that people can agree on the magnets, if you will, rather than the wedges So what are the magnets in the US right now Well, I think there's critical questions about economic competitiveness, national security Of course, there are issues such as innovation in general. Universities can play an enormously important role in that in addition, to the educational mission. And they have almost every technology that we can think of right now either was invented or had a tremendous contribution being made by university researchers That's an important thing. and that is not a partisan issue So universities as this massive contributor historically in the United States, especially to the innovation economy. It's pretty obvious if you think about it for a minute, Silicon Valley wouldn't exist without Stanford and You can see that across the country. How do you look at that contribution right now? Do you think it's declining a little bit or a lot? orr maybe you're going to tell me it's not That I think is going really well of the multiple ways in which universities and society interact The innovation machine of university is really humming. Whether you look at cancer therapies, whether you look at quantum addvanced manufacturing National security. I mean, every aspect of that you can think about N AI, of course Universities are doing great work. And so That is going super well. From the outside, I could imagine that there's concern though only because it seems like the momentum is moving out of the universities now. If you're a really good university researcher, you're going to be targeted by private firms immediately. and maybe you won't leave, mayaybe you'll just take on a consulting role. But your time may certainly be divided. Also, we hear more and more about the kind of researchers who would come to the US from elsewhere and are no longer coming in such number or are maybe leaving and so on. So Give me some data to back up your continuing enthusiasm for this movement It's very hard to get systematic data on that there's multiple things that one needs to look at. One of them is what's the transition form university researchers to the private sector. whereere we do see that to some extent is in AI, right withith a hyperscaest and so forth Now again, not the first time we've seen this We've seen, for example, when the birth of Google and eBay and so forth. there was a sudden interest in people to understand auction design and things like that. That is perfectly fine. But you can also see, of course, is two years ago, everybody would have said insatational demand for programmers and now people are cutting their workforce So this is just the way this goes. It's like if there's a particular demand in a particular development need where university professors or researchers, that level of talent is needed to compete on that and then as the businesses move on and there have other challenges, that changes again. So that doesn't bother me so much. The more fundamental question is that the tools that are being provided by, you know, open eye anthropic and so forth They will have a revolutionary impact on doing research. That's for sure. And that we're seeing, and they were to a large extent not developed inside of universities But again, it's not the first time in history this happened When we had particle accelerators, they were developed by national labs. and then university research would participate in that negotiating this relationship is complicated Th thingsings tend to happen in waves We're certainly not seeing a big exodus The second stream is like People leaving the country Again, very hard to get data on that. We have to be careful that this anecdote or that is not kind of dominating the conversation. really have to have systematic data on that. When you look at what are the opportunities right now? And by the way Nobody should relax about the threats to funding and the funding uncertainty and all of these things that are going on with research funding right now That's a big deal Is that enough so that people will pack up and you know, go to Britain, go to Germany, go to Canada or go to China. Moving to a different country, if you have, you your researcher, that's a big deal They have tremendous funding challenges in the UK The Middle East, of course, with the war there is not an attractive place to be. And then you go to France or you go to Germany, it's an entirely different thing and the funding levels are just not comparable to what you have in the United States. And unless you are like a Chinese national of Chinese origin, do you want to go to China? So my worry is more like about the other side, attracting talent, particularly for graduate students and postdocs the ability to attract The world's leading scientific talent is absolutely essential for the country, always has been certainly since the Second World War So it's especially interesting to hear you say that as a German, because of course, Germany had the most influential university system in the world for most of the nineteenth century, part of the twentieth century. I don't know whether you would attribute the decline and fall to Hitler per se, but how do you think Universities today, including your own and others in the US stack up to that model. And do you see Germany as a cautionary taail in any way hundred percent, it's a very cautionary tale. I mean, the University of Berlin which was found in eighteen ten was the model for the great modern research University had heavily influenced the creation of places like Hopkins in the University of Chicago. and was the greatest university in the world. They had like one fourth of all noble laureates were from that one university Flank was there, Einstein was there, was unbelievable. And then of course, the Nazis destroyed it and then That created this tremendous exodus of scientists to the United States and you just look at the names for Neumann Fermmi, just on the physics site. amazing talent That was absolutely critical for establishing science leadership in the United States, including in the Manhattan proroject, of course, manyany of them were foreign born So o Be a destination for the world's great talent is really a good idea becausecause you're getting the best and the brightest You're getting the very, very top from around the world, they have received a lot of education already and they're motivated and they're willing to take risks 's a tremendous asset. So where would you put the US now? Because there are some people who say that the Trump administration and the general public turn against the mission of the university is severe enough to really damage the US university reputation. Well, I think these are two different things, right? There's one question about the reputation of the universities, which we need to dig in a little bit deeper That is a very serious question. and of course The reputation leads also to actions being taken by the administration and by Congress If we just focus on the research funding, my sense is is that It's a bit of a flesh wound right now If it continues for longer, that would really be destructive because we cannot be a scientific superpower without funding and without being a destination for the world's great talent Coming up after the break, Vanderbilt University may be coming soon to a city near you. I can't replicate this in Nashville. You need to be there on site to take advantage of this I'm Steen Dubner. This is Free economics Radio. We will be right back with more from Daniel Deeremeyer Economics Studio sponsored by Avantech. 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It's battery optimized for the way you work with built in intelligence that quiets distractions when you need to focus. Your laptop will help keep you locked in even when it's bring your dog to work day Built for those who stay in the flow, the Dell pro, built for you. Dell d. com slash deell dash proro Daniel Deermyer became Chancellor of Vanderbilt University in July of twenty twenty. He recently had his contract extended through twenty thirty five, a major vote of confidence from his board So most university presidents, including you, start off as university professors and at some point you get chosen for or steered toward the administrative path, Do you think makes sense because Running university these days is like running a midsiz corporation or maybe a conglomerate And no offense to you or your peers, but most people who set out to be professors have very little experience in that realm. So I'm curious what you think of this process for choosing presidents or Chancellors It's a very good question. People sometimes say it's the hardest shop in America. I actually disagree with it. I think it's a great job The reason why I think it is so challenging, especially today is because it's really three jobs Job One is you have to have domain expertise and you have to constantly make decisions on that. How do we think about from an education from pointiewint on AI? do we want to invest in quantum? yes or no And then there's all the intricacies of just running an academic institution Number two is you are basically the CEO of a midsiz business and it's a complicated business. It has educational part and that's what most people think about. They think the university chancellor or president is like a headmaster of a school but a little bit bigger. We have a one point three billion dollars research activity every year. We have a corporate real estate function, which is extensive We have an asset management business, if you want to call it that, that's our endowment. We have a relationship with a hospital. We don't run the hospital, but we have a close partnership. It's almost kind of a private equity relationship. And then oh yes, we also have college athletics at the highest level in the SEC And then the third role is you are like a mayor of a small town, you're a politician. all the challenges that comes with that. and you have to have relationships with the real mayor of Nashville. So These are different skill sets and great presidents in some sense are able to do all three. So You're correct that most academic leaders come from the first pillar, if you will They are academic leaders and they know this very well. They've been usually deans or provvosts or something like that Now they may not have run a complicated business and that's a challenge. and they may also not know or may not like to go to Washingon and interact with members of Congress of the administration, which is a whole not skill set Now the question is if you pick somebody who is a CEO or people sometimes pick military leader or senior politicians to run a university No you're missing the first one whichich means in practice that the Pvost is running the academic site because it's too complicated And I think the analogy you want to think about is Let's say a big law firm. Lawyers are not trained as managers either. They usually have a career as a partner in a law firm, and then they're being picked in a managing director My sense is that we absolutely must do a better job educating academic leaders in the nuts and bowls of the business side and the political side, But I think it's very difficult to do that without having real academic domain expertise. Fair enough, but let's say you do have great academic expertise and someone is identified, someone like you who plainly was identified as having those other abilities as well. I mean, you were teaching in a business school, correct? That helped. Yes. But let's say someone doesn't have that. I mean, universities have been around a long time. Why has a better training channel not been set up for that to take the talented academics who you want to be running an academic institution, but don't necessarily have those administrative skills and train them up. because to me, it seems like a fairly random process at the moment. I'll be honest with you. I think that's a fair point What's the reason? I can only speculate. I don't have any data or anything like that I think it is a little bit you have to be bilingual or trilingual If you don't want to talk about balance sheet or the income statement or the HR function Even training will not get you there I think you have to have a taste for it. If you save fifty thousand dollars on elevator repair, you can take the fifty thousand dollars and change the life of a nursing student forever And so a lot of colleges and universities are failing going out of business or in deep financial distress. I just read a piece in maybe the Chronicle of High Eed about how a lot of schools are hiring interim CFOs to stop the bleeding. Vanderbilt, meanwhile You're expanding. There's a new San Francisco area campus from the California College for the Arts There is a New York City campus opening in former seminary buildings in Chelsea. to me about this expansionist appetite, how you're able to do it goals are We're doing four things at once You mentioned San Francisco, you mentioned New York. We are also in the process of building a campus in West Palm Beach. And we are also in the process of building what we call a quantum campus in Chatanooga Tennesse And each one of them There's a strategic vision behind these four entities, but they all have their specific instantiation and way to think about them The premise is that Great universities today and for the future need to be deeply integrated with their innovation ecosystems Once you believe that Then where you are matters. I was fortunate enough to start my career at Stanford from ' ninety four to ' ninety seven So I was there when the internet was born And it was this incredible symbiosis between Stanford and Silicon Valley Magic was created and we've seen this in a couple of other areas of the country as well. Pittsburgh and roobotics as an example. So we're not trying to do people sometimes call a franchise system. We're not trying to do what we're doing well in Nashville and now do that in San Francisco as well You're also not opening satellites in the Middle East, which many universities have done No, we're not doing that. And why is that? other than the fact that it might be seen as a pure cash grab We never even thought about it seriously. Whenever we do something, it needs to be a clear strategic rationale. What's their strategic rationale in Chattanooga? I start with that because that people usually that's kind of, well, why Chatanooga? It's just hour and a half away Well, We have the capability and the possibility to be one of the leaders in the quantum revolution, quantum engineering, quantum science Trag Ner fifteen twenty years ago built the best fiber optics network in the Western hemisphere And in the last few years, they have developed a quantum test bed. and already some kind of corporate partners there They have difficulty attracting PhD level talent at the level that we can attract. So we're going to have about fifty faculty there one hundred students, mostly graduate students, but also destination for undergraduates. because you need to be there on site to take advantage of this. In New York, it's very different. In New York, we think that our students and our faculty would benefit to have the ability to spend some time int a great global city Because if you want to work in healthcare, or you want to work in entertainment, or you're going to work, for example, in mobility, Nashville is fantastic. It's great. But if you want to work in media You want to work in the arts, you want to work in finance. New York is fantastic So this is a campus for students to go for four years or more to rotate through. No, no, no, think about study away Let's say you are a senior, you really have an interest in a career in the media And so it's very important that we're deeply connected with internships and with companies there. We can house around one hundred students per semester. We have faculty there So that's what the campus does. That's New York. Florida is really very different. West Palm Beach is exploding and there we're interested in Business, particularly the intersection of business and technology. and certain areas of engineering