Alan M. Garber

0:00The David Rubenstein podcast is sponsored by Wells Fargo. We're building communities for families, Hudson Yards, Phase 2. We'll have over 4 ,000 new housing units. 625 will be affordable. Wells Fargo has a very strong focus on affordable housing. We're also rebuilding the Fulton and Elliott Chelsea houses and building affordable housing at Willett's Point. Discover how Wells Fargo is helping Related and other clients reach The Next Horizon at Bloomberg.com slash The Next Horizon. The oldest university in the United States is Harvard University. It's also one of the most respected universities in the United States.

0:38But recently, there's been some challenges by the federal government to the way Harvard is operating. I had a chance recently to sit down with Alan Garber, the president of Harvard University, to talk about the challenges the federal government now faces and the challenges of American higher education. Harvard is America's oldest university, founded in 1636. It's a very famous university, maybe the most famous university in the world. But recently it's been in the news because Harvard sued the federal government, which was a very unusual thing for Harvard to do. Why did Harvard sue the federal government, and what's the status of that case?

1:12Well, I can only tell you a little bit about the status of the case, except what's publicly known, which is that we received a favorable judgment in district court. And I think you're referring to the lawsuit in which we alleged First Amendment violations as well as procedural violations by the federal government when they cut off our funding. And we sued because they cut off our funding. We should be very clear about that. It was done in a precipitous manner without any real process. We really had no choice because we had hundreds of millions of dollars at stake. And I want to point out one other thing.

2:00This was not in the form of gifts or subsidies. It was payment for research that we were performing at the behest of the federal government. We were fulfilling our obligations under the terms of the grants and contracts that the federal government issued. So how much money was frozen? It's a little bit hard to be precise, but on the order of$600 million. All right,$600 million was frozen. Some of that has now come back to Harvard? Yes. So to make up the gap, is Harvard getting that money and giving it to the people doing the research out of its own funds, or you have special fundraising, or how do you make up the gap?

2:41There was a long period in which we did not have the funding, and the Central University used its resources to help the investigators continue at least some of their work. Not all of the work could be funded by the university and the schools that are part of the university. What's important to recognize is that there was very critical work that could not be stopped, but we could not really afford to make up for all of the lost money from the federal government. Now, people sometimes say, well, Harvard has an endowment that's, let's say, over$50 billion, so you have plenty of money. Why couldn't you just take some of that$50 billion and use it for the research?

3:22Well, of course, the endowment is a very important source of revenue. One thing that is important to realize about the endowment is that it's heavily restricted. So, for example, we have funds to pay for individual professorships. We have funds that are dedicated to a particular research center, funds of that kind. They cannot be used for other purposes. So that's one restriction that makes it very hard to treat this like some giant piggy bank where we can take out funds when we need them on a rainy day. There's a second consideration as well, which is that most of the terms under which people gave money for the endowment include an obligation that this should be sustainable.

4:12And what that really means is that future generations should have access to the same resources that we have today. So that limits how rapidly you can spend from the endowment. There's an endowment tax that was put in under the first Trump administration, and it was increased in this current administration. Do you see any real justification for that tax? And is it impacting Harvard adversely or other schools like Harvard? The endowment tax, clearly, it's a substantial tax, particularly for universities like Harvard that are expected to be in the top tier. And, of course, it's damaging because, for example, so much of our financial aid, the scholarships that we give our students, are funded through the endowment.

5:00And it funds the research, it funds all kinds of activities in the university. So yes, it's quite damaging. In terms of addressing the problems that we are accused of, and that I believe was part of the rationale for passing the endowment tax, the tax is only going to make it harder to address these issues, not easier. In the early days, Harvard and most universities in the United States didn't get money from the federal government. After World War II, the federal government dramatically increased the amount of money given to universities for research. Do you think that was a good thing for the U.S.

5:40government to do that? And you think the universities became too dependent on the federal government, or do you think they've benefited and it's really been good for the country to do this? The period that you're referring to was really set into motion by a report by Vannevar Bush who had written a book called The Endless Frontier and he argued that it would be more efficient for the federal government to support research by working with universities than pursuing more of a European style model where there would be independent research institutes, the federal government would pay for everything.

6:19That's what set in motion what became a real boom in innovation and science and technology in the United States. I would add that in addition to the funding that went to universities to conduct research, the country benefited from an influx of immigrants who were some of the greatest scientists in the world, largely in the post-war period and actually during the war and just before the war, largely European scientists. That combination made the U.S. the world leader in science and technology. Well, in the early part of the 20th century, if one were to say what were the greatest universities in the world, the United States might not have had the top universities.

7:04And is that because the federal government's been supporting and also because the endowments have grown? I would say it's all of the above, but I would also say that we have had over the past many decades a relentless focus on attracting the best talent in the entire world. It takes resources, but the resources are not only financial. The resources are human resources, and we have done an amazing job in attracting great talent from all of the world. So that combination is what enabled the U.S. to be so successful. Harvard was sued for discriminating on admissions, ultimately went to the Supreme Court.

7:50The Supreme Court ruled against Harvard. How has Harvard changed its admissions policies to conform with what the Supreme Court now says is the law? Well, we had announced in the first official communication upon the release of the Supreme Court's decision that we would adhere to the law, not change our values and principles, but we would certainly adhere to the law. The specific measures that we've taken have been many. We've made sure that in the admissions process, nobody involved in making a decision about admissions has access to the check the box, what's your race, what's your ethnicity, et cetera.

8:31So they don't have access to that information. Of course, if there's an interview and an essay, aspects of identity will come up, But we do not provide that information to the admissions officers where people identify. And I would add that we train them to make sure that they don't consider these characteristics that are prohibited from consideration through the SFFA decision. You're talking about immigrants and how the major universities have brought a lot of immigrants over, and they were great faculty members and researchers. What about getting foreign students today to American universities?

9:13Do you actually feel that foreign students are now afraid to apply because of visa problems, or they think they won't get in because there's going to be some discrimination against foreign students? How has the whole concern in Washington about foreign students and foreign faculty affected Harvard? For many programs, there is a lot of hesitancy about attending college or attending graduate school in the U.S. because of uncertainty about visa status and whether that could be taken away. At the same time, this year, we've had a lot of success, and the students who were actually admitted from other countries, virtually all of them have been able to attend.

9:56So it's too early to have a confident answer to your question, but we are worried. And I want to say one other thing. they aren't strictly speaking students but postdocs, that is the postdoctoral fellows who work in our labs, in the hospitals, and in other parts of the university, there is some evidence that fewer of them are applying for jobs in the U.S. The hostages have now come back in Israel, but it was the events that led to the hostages being taken and all the people who were killed on October the 7th that led to protests on campuses. Harvard and other universities had encampments and other types of protests.

10:39What has Harvard done since that time to address the concerns that some people have that Harvard was not sufficiently dealing with anti-Semitism or that Harvard's ability to let people protest wasn't appropriate? How have you changed things, if at all? We've done a lot to address these issues, And one of the challenges we faced from the beginning concerning the protests is that people claimed that our rules were unclear. What's permissible in a protest? And so one of the first things we did is to develop a set of guidelines, basically, that drew upon a document called the University Statement on Rights and Responsibilities, which was created in the early 70s that outlined how we protect protest, but also enable the members of our community to carry on their work without disruption.

11:33So we provided some clarity there. For anti-Semitism and also for the complaints that we heard about anti-Muslim, anti-Arab, anti-Palestinian incidents, I created two presidential task forces to study the issues and make a set of recommendations. Both of those task forces took their work very seriously. It took a lot of time, but they gathered data. They did hundreds upon hundreds of interviews, and then they came up with a very lengthy set of recommendations, which we have implemented. We're well on the way to... Our sponsor, Wells Fargo, recently spoke to Jeff T. Blau, CEO of Related Companies, about his firm's development of affordable housing across New York City, including at Hudson Yards, the Fulton and Elliott Chelsea Houses, and Willets Point.

12:26Related started in affordable housing. Today, we're one of the largest owners of affordable housing in the United States. Wells Fargo became a partner with us in working with the New York City Housing Authority, speaking to the city, to the state, to really help us make this happen. Discover how Wells Fargo is helping Related and other clients reach The Next Horizon at Bloomberg.com slash The Next Horizon. So you're the 31st president of Harvard University. You were a Harvard undergraduate. Did you ever think when you were a Harvard undergraduate you'd wind up as president of university someday?

12:58Well, back those days we would have said, what are you, smoking? Let's talk about your background for a moment. Where were you born? In Illinois, Western Illinois. And your parents, were they Harvard graduates? Well, my father didn't go to college, and my mother went to the University of Wisconsin. So when you're growing up, did people say, Alan is really, really smart. He should go to Harvard. Did you always think you were really talented as an academic kid in high school, and you knew you were going to get into Harvard? If people said I was a really talented kid and I should go to Harvard, they didn't say it to me.

13:40I was a good student. What class were you at Harvard? Well, I entered with the class of 1977, so I started in 1973. Were any prominent people in your class at all? I may sound like I'm bragging. There are a lot of alumni here in the audience, and I bet every one of them is proud of their class. But here, let me brag about my classmates. The person whose face was beneath mine in the freshman Facebook was Bill Gates. What happened to him? He dropped out. Dropped out. When he dropped out, you'd think you'd ever hear of him again? Yeah, I'd say some of us have heard from him. Steve Ballmer, the Chief Justice of the Supreme Court, John Roberts.

14:29Pretty good class. Other university presidents. There's a lot of familiar names in my class. So it normally takes four years to graduate from college. How many years did it take you? Three. Three. So after three years, what do you decide you want to do? You go to graduate school? Do you want to do something important like private equity, go into business school, or you didn't want to do that? What did you want to do? Well, I couldn't make up my mind, so I did a Ph.D. in economics and an M.D. Your Ph.D. in economics and an M.D., but the Ph.D. in economics was at Harvard. The M.D. was at Stanford.

15:03So isn't that bi-coastal a little bit difficult? I had a great experience studying economics at Harvard. I had done enough of the graduate courses at Harvard that I could shorten the time it took to get a PhD. And what I learned in the applications process is that other PhD programs would not recognize, they would not give me credit for the Harvard courses. So you got an MD from Stanford, a PhD from Harvard. What led you back to Stanford? You taught at Stanford, is that right? Yes, for 25 years. 25 years. So you're living in California. The weather is very good. It's a beautiful campus. What propelled you after 25 years to come back to the East Coast to be the provost at Harvard?

15:48Well, I think a lot of people in this audience know Drew Faust. And let me just tell you, she's a very persuasive person. And I was chair of the committee to visit the Harvard Medical School and Harvard School of Dental Medicine. That's how I met Drew. And it brought me back here about once a year. And it was through that that I met her and she asked me if I'd be interested in looking at the job of provost when it opened up. My initial answer was no. But somehow she got me to change. Okay. So you came back as provost from Drew Faust. And then when Drew retired, Larry Bacow became the president of Harvard and you stayed as the provost.

16:34That's right. And then when Claudine Gay became the president of Harvard, you stayed as the provost. So how many years were you the provost at Harvard? Twelve and a half. And for people that don't know what a provost is, what actually do you do when you're a provost?

16:51The provost is the number two officer of the university and the chief academic officer. At Harvard, it's a relatively new role. There was a provost briefly at the end of World War II because President Conant was in Washington and the provost kind of ran the university. Very temporary arrangement. But it really started in modern times in 1991. It's a job that expanded pretty much monotonically over time. And when I took on the job, the provost was responsible for all of the inter-faculty initiatives. The deans reported to both the president and the provost. And the provost had a huge role in faculty appointments and promotion.

17:36Claudine Gay stepped down as president. You were put in as the interim president of Harvard, and now you're the president of Harvard. What's the pleasure of being the president of Harvard? I was asked on January 1st to step in as interim president on January 2nd. And I knew that being provost was a pretty demanding job, pretty much 24-7. And I was about to do two jobs that were 24-7 until I could put a new provost in place. So there's just the sheer volume of work was daunting. And then there's the fact that we were in a crisis, that we were under attack. My answer in normal times would be, these are the advantages of being president, this is what's annoying.

18:20What I learned by serving in this time is that serving in a time of crisis, I believe, is far more rewarding than serving in normal times. And it's rewarding because you can really make a difference. There is no time like the president to do the job. In the early days of the country, there were a few private universities. They were all private pretty much in the early days. But in recent years, Harvard has, in size and breadth and depth, really gone way past the other major universities that you could argue. What enabled Harvard to become such a big university relative to, let's say, Princeton, which is a great university but not quite as broad as Harvard?

19:02What did Harvard do that enabled it to grow to the point where when people say, I want my smart child to go somewhere, they say I want my child to be able to go to Harvard. Well, David, I actually think that the top research universities in the U.S. are all incredibly accomplished, and I don't feel as though Harvard is so far ahead of any other institution. We're stronger in some areas than Princeton and maybe not as strong in others, But the fact is, we're a very different institution from Princeton because Princeton has PhD programs, but they did not invest heavily in professional schools. So they're covering a different part of the waterfront.

19:44But I would say that we've been fortunate in a number of ways, including the generosity of our alumni and friends has helped us. That's been true for the other preeminent research universities as well. Many members of Congress think that Harvard, Yale, Princeton, Stanford, other major universities that are well-known are too liberal. How does Harvard address that, and how do you get a faculty that has more people that are not, quote, liberal, and is it really unrealistic to do that? I think that the core issue is really a question. Are our students exposed to the full range of serious views about important issues?

20:29It could be in science, it could be in my field of economics, it could be in political science, in all kinds of areas. And there's a risk if the faculty lean all in one direction politically that they won't be capable of presenting views other than their own and therefore our students won't be exposed. Oftentimes, my professors would not reveal what their personal views were. Sometimes they did, but it was never with the idea that you would say only certain views are correct about this issue. That's the problem we have to solve. I think that to fully address this, we do need a wider range of views on campus.

21:13It's not just about liberal conservative. It's on all kinds of dimensions. We need a diversity of views. We need many different views, and we need to create an environment in which our students can speak freely. Because actually for students, I would say the most pernicious issue about this fear that the faculty are all from one part of the political spectrum, the fear is that the students who disagree can't express those views or they will be ostracized in some way. We have to overcome that, and I think we're making progress. What percentage of students who come to Harvard College are on some kind of scholarship?

21:53The assumption might be that they all are from wealthy families or most of them. What percentage are actually on some kind of scholarship? It's on the order of 60 % receive financial aid. And I would add that students from families that earn less than$200 ,000 a year can attend Harvard College tuition free. Speaking of tuition, many people criticize the high tuitions of private universities in particular, saying that they're all very, very high beyond the means of most middle-class families. Why is tuition so high? The cost of providing an education at the kinds of universities that you've mentioned have gone up and up over time.

22:35In real terms, for many of our universities, that is inflation-adjusted terms, the tuition has gone down. And I'm talking about the nominal tuition for the students who don't receive any financial aid. When you take into account financial aid, it's gone down. But the cost of educating one of these students that you educate, is it higher than the actual tuition? Yes. And you think the American universities today are in danger of not becoming as important to the country or the world as they were 10, 20 years ago because of challenges to the universities? but you still think the universities are so strong that they can overcome some of the current challenges and criticisms?

23:18I am optimistic about that, but what I think is extremely important is for Harvard and our peer institutions, for particularly other research universities, to reestablish trust in our institutions and our mission. because what we've accomplished really would not have been possible without this incredibly successful partnership with the federal government, which has driven the research enterprise, as I said before. So one final question I want to ask you is I have a seven-year-old granddaughter, and she's very smart, and I'm just wondering, is there an early, early, early decision process that Harvard has, or would you consider starting one?

24:06So, I mean, she's very talented. So would you consider early, early decision for people of that age or not? Well, David, I have to ask you, how's her pitching arm? It's better than some of the pitchers that I have. There you go. Maybe she could be on the athletic teams. But if you had to do it all over again, when they asked you to be the president of Harvard, would you have said yes or no? I would have said yes with less hesitation. Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.