Abstract
In this incisive Forbes opinion piece, Columbia Business School professor Shivaram Rajgopal examines the potential consequences of the Trump administration's proposals to tax university endowments and cut research funding. Framed through the lens of basic research, which universities are uniquely positioned to conduct.
Drawing on National Science Foundation data, Rajgopal illustrates how universities concentrate on fundamental research that private industry typically cannot justify to shareholders. A compelling economic argument is made that this research ultimately fuels private sector innovation, as evidenced by Silicon Valley's proximity to premier research institutions.
Highlighting that U.S. R&D spending represents just 3.4% of GDP (compared to China's rapidly growing 2.68%), with basic research comprising an even smaller fraction. Rajgopal warns that hobbling university research capacity would force institutions to either raise tuition, abandon crucial research, or lose talented academics who bring cutting-edge knowledge to classrooms.
While acknowledging concerns about potential waste in university spending, the piece concludes with pragmatic recommendations: implementing more targeted funding cuts based on research outcomes and improving university transparency through stakeholder value-add reporting that better communicates their economic and societal contributions.