Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg BusinessWeek
Speaker 1: with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: Corporate finance is a staple of any business school degree.
Speaker 2: You must learn how to discount cash flows and the
Speaker 2: language around it, the weighted average cost of capital, dividends
Speaker 2: and more. Don Chu can discount cash flows in his sleep.
Speaker 2: He's founding editor and editor in chief of the Journal
Speaker 2: of Applied Corporate Finance, as well as one of the
Speaker 2: founding partners of the corporate finance advisory stern Stwart and Company.
Speaker 2: He's also the author of the book out in February,
Speaker 2: The Making of Modern Corporate Finance, A History of the
Speaker 2: ideas and how they help build the wealth of nations.
Speaker 2: Don joins us from New York. Don good to have
Speaker 2: you on the program. Why should people who are not
Speaker 2: in finance care about corporate finance?
Speaker 3: You, guys, corporate finance has tremendous power to affect their
Speaker 3: live The productivity of corporations is what ends up paying
Speaker 3: for the health, welfare and general well being of the
Speaker 3: rest of US. Private sector productivity is Adam Smith told
Speaker 3: us two hundred and fifty years ago that really creates
Speaker 3: economic and social wealth.
Speaker 4: What specifically about the US and US corporate finance has
Speaker 4: kind of pushed up the stock market and the economy
Speaker 4: in the United States over the last few decades.
Speaker 5: Really.
Speaker 3: Yeah, Now, I argue my book that the corporate America
Speaker 3: was failing in the seventies because it had turned itself
Speaker 3: into bloated conglomerates, collections of unrelated businesses that were unable
Speaker 3: to respond to the high inflation that was the result
Speaker 3: of bad public policy.
Speaker 6: This led to a at.
Speaker 3: That point, court investors had virtually no control over these companies,
Speaker 3: and so what we saw in the eighties was a
Speaker 3: reassertion of investor power over corporations, the ability to tear
Speaker 3: apart these inefficient conglomerates. Basically a restoration of what corporate
Speaker 3: finance was like in the nineteen twenties when JP Morgan
Speaker 3: used to own large positions debt and equhen he sat
Speaker 3: on boards made strategic decisions for fifty years, especially going
Speaker 3: through Glass Stiegel and the Great Depression, professional managers gradually
Speaker 3: assumed control of all decision making. So this was a
Speaker 3: reversal of a trend, you know, going back after fifty
Speaker 3: years to allowing investors to reassume control of corporations, and
Speaker 3: the American system is almost unique in the sense that
Speaker 3: investors really have voice and power and control. So I
Speaker 3: would argue that shareholder activism is the secret sauce of
Speaker 3: the the productivity of the US economy.
Speaker 2: Where do you see things moving right now? You mentioned
Speaker 2: Otis Smith, So that's where I gotta go, because I
Speaker 2: don't think out of Smith would approve of the tariff
Speaker 2: policy of the Trump administration. Certainly he writes aboutations. Yeah,
Speaker 2: I mean, what do you what do you make of it?
Speaker 2: And what do you make of what's happening in Washington?
Speaker 2: And what does that mean for corporate finance?
Speaker 3: I think I think our American institutions are stronger than
Speaker 3: Donald Trump. They're stronger than Joe Biden. They will they
Speaker 3: are flexible, They're lean and mean, they will respond to
Speaker 3: virtually anything that politicians can do to them. You know,
Speaker 3: I'm being uguistic here, but I understand Trump's capacity to
Speaker 3: reduce the market value by two trillion dollars of the
Speaker 3: stock market. But nonetheless, every macro economist I know four
Speaker 3: years ago was saying we were bound to have a recession.
Speaker 3: Now we're starting to hear again the threats we're going
Speaker 3: to have another recession. My response is corporate America knows.
Speaker 6: How to deal with it.
Speaker 3: They will respond, and they will They will cut back
Speaker 3: on failing investments, but they will continue to invest in
Speaker 3: their growth opportunities as they have for the past forty
Speaker 3: five years.
Speaker 4: Don speaking of kind of macro statistics, you have a
Speaker 4: whole chapter in your new book about micro based attempts
Speaker 4: to make macro relevant. Tell us about, you know, this
Speaker 4: argument that you're making because of course we pay a
Speaker 4: lot of attention to macro statistics, or that.
Speaker 3: You read that chapter.
Speaker 6: First of all, I don't think I believe that there's.
Speaker 3: A chasm between macroeconomics and microeconomics. I have not seen
Speaker 3: anybody really pointing to this, and I find macro statistics
Speaker 3: to be almost you know, they have major limitations. They
Speaker 3: don't tell us anything about productivity that they're really There
Speaker 3: are records of transactions. What you see in GDP is
Speaker 3: you know, sales and transactions.
Speaker 6: But what we want to know is.
Speaker 3: The productivity of these expenses. What we want to know
Speaker 3: the consumer surplus. How much would customers actually be willing
Speaker 3: to pay for some of these goods. None of that
Speaker 3: shows up in the conventional macro productivity statistics. So the
Speaker 3: result of this is that macro is a lagging indicator.
Speaker 3: Macrostat stats are the last thing to tell us about productivity.
Speaker 3: Robert Solo said, we have productivity today everywhere, but in
Speaker 3: the productivity statistics. Well, my argument is that if you
Speaker 3: want to know where productivity is going, look at the
Speaker 3: stock market. Look at stock prices, because they reflect consumer surplus.
Speaker 3: They reflect the productivity of expenditures. And I argue China
Speaker 3: has had no productivity growth since the global financial crisis.
Speaker 3: The US has had remarkable productivity growth for the last
Speaker 3: forty five years. It's not in the status.
Speaker 2: Don you have a PhD in English and American literature.
Speaker 2: I think people who don't know you and they see
Speaker 2: you write this book might be surprised to hear that
Speaker 2: somebody with your background, I mean that education background. How
Speaker 2: does that make you better at analyzing companies?
Speaker 5: Well?
Speaker 3: It in the act of writing this book. I've been
Speaker 3: at it for three years now, you know, I've I've
Speaker 3: been editing the Journal of the PLI of Corporate Finance
Speaker 3: for forty five years, and this, this book caused me
Speaker 3: to go back and revisit all these old studies, all
Speaker 3: the things I thought about corporate finance, and then the
Speaker 3: need to actually put it down on paper and formulate
Speaker 3: it in a way that you think other people might
Speaker 3: be able to grasp. It has been really valuable for me.
Speaker 3: Mike Milkan once said to me, don you know I
Speaker 3: want I would like you to write a book on
Speaker 3: corporate finance that could be, that could be it's brought
Speaker 3: down to the level of Walt Disney. And I said, Mike,
Speaker 3: I can't do that, but I can. I can try
Speaker 3: as hard as I can. And I really tried to
Speaker 3: make this book something that, you know, a smart, curious
Speaker 3: person would be able to understand. There's only five equations
Speaker 3: in the book, and I apologize for every one of them.
Speaker 2: Hey, we only have about thirty seconds left. But I'm
Speaker 2: wondering about the evolution of corporate finance the way you
Speaker 2: studied it as an MBA in Rochester to what you
Speaker 2: have seen now. Has it evolved significantly? Has it changed significantly?
Speaker 3: Well, you know, it has evolved from Milton Friedman's version
Speaker 3: of capitalism as the pursuit of profit to something that
Speaker 3: I call that Michael Jensen has called enlightened value maximization
Speaker 3: and that it's really it's long run value maximization. It's
Speaker 3: completely consistent with Freedman's view, but it means that the
Speaker 3: corporation had to pay much more attention to all their stakeholders,
Speaker 3: you know, their employees, their suppliers, the regulators, tax collectors,
Speaker 3: but they also you know, you have to do it
Speaker 3: in such a way that you're not reducing the value
Speaker 3: and the competitive strength of the firm. Do good things
Speaker 3: for society, but make sure you're not destroying value.
Speaker 2: Don appreciate you joining us, congratulations on the new book.
Speaker 2: Don Chu was founding editor and editor in chief of
Speaker 2: the Journal of Applied Corporate Finance. He's also the author
Speaker 2: of the new book, The Making of Modern Corporate Finance,
Speaker 2: A History of the ideas and how they build the
Speaker 2: Wealth of Nations. US stocks climbing for a second day.
Speaker 2: They extended that recovery from a sharp drop that reached
Speaker 2: ten percent last week. Industrial and energy shares rallied on
Speaker 2: economic data that well missing forecast was able to quell
Speaker 2: concern about an imminent recession. More than ninety percent of
Speaker 2: the companies in the S and P five hundred rows
Speaker 2: overshadowing a slide in most megacaps and perhaps exemplifying that.
Speaker 2: Check this out. An equal weighted version of the benchmark
Speaker 2: climbed one point three percent from where we bring in
Speaker 2: Leslie Mark. She's chief investment officer of Mackenzie Investments. She
Speaker 2: joins us from Toronto. Leslie, good to have you this afternoon.
Speaker 2: Is the worst of this slide behind us?
Speaker 6: Well, nice to be here.
Speaker 7: And I'm not sure if the worst of this slide
Speaker 7: is behind us.
Speaker 6: It's hard to say.
Speaker 7: I mean, I think we're going to see a lot
Speaker 7: of clarity leading into April second, when we will get
Speaker 7: more information around reciprocal tariffs and potential sectoral tariffs. So
Speaker 7: I do think that the best case scenario is sort
Speaker 7: of oscillating market on the equity side between now and
Speaker 7: April second. It's hard to see market surge materially higher
Speaker 7: between now.
Speaker 4: And then, Leslie. To go really short term, we saw today,
Speaker 4: you know, some of these megacap tech stocks falling, Wall
Speaker 4: small caps were higher, the equal weighted index was higher.
Speaker 4: What does that kind of tell you about what's really
Speaker 4: driving investors right now?
Speaker 7: Well, I think it's really a concern around growth and
Speaker 7: a lot of the megacap stocks obviously have had high growth,
Speaker 7: high momentum, high valuation, and what we have been seeing
Speaker 7: for a while now, not just since we've had this
Speaker 7: sort of tariff situation, has been a rotator and a
Speaker 7: broadening out in the market and looking towards better valued opportunities.
Speaker 7: And that's really been a theme within the United States,
Speaker 7: but also also globally, and that's where you've seen big
Speaker 7: moves in areas like European equities as well.
Speaker 2: Is this the year finally for European equities? Or maybe
Speaker 2: a better way to ask this is, is this finally
Speaker 2: the year that the US doesn't overperform the rest of
Speaker 2: the world.
Speaker 6: Well, I think that there.
Speaker 7: Is actually a very strong thesis that would support that.
Speaker 7: You know, for the last few years or the last decade,
Speaker 7: maybe I should say, the thesis has really been about valuation.
Speaker 6: And the thing is valuation is never really what drives
Speaker 6: a rotation.
Speaker 7: There always has to be a catalyst, and I actually
Speaker 7: do think we have a catalyst here, and that catalyst
Speaker 7: is a real change and shift.
Speaker 6: You know, there is a thesis around US.
Speaker 7: Exceptionalism really being driven by fiscal spending and driving the
Speaker 7: deficit higher and obviously what we're seeing right now is
Speaker 7: a period of disruption, the period that comes from moving
Speaker 7: spending away from the fiscal side to business investment, which
Speaker 7: is actually, you know, a policy that makes a lot
Speaker 7: of sense, particularly when your deficit is so high, it's
Speaker 7: a necessity to do that, So you know, I think
Speaker 7: that that policy makes a lot of sense.
Speaker 6: But on the other hand, it.
Speaker 7: Is creating a bit of a spending gap here that's
Speaker 7: going to impact US GDP growth. Conversely, you're seeing the
Speaker 7: opposite happen in Europe. You're actually seeing where there's been
Speaker 7: more fiscal restraint. Now what we're starting to see is
Speaker 7: sort of an opening up of the fiscal wallet, something
Speaker 7: we haven't seen for a long time, particularly in.
Speaker 6: Germany with defense spending.
Speaker 7: And that's what's really driving the equity investment or focus
Speaker 7: on European equities. So there actually is a fundamental investment
Speaker 7: thesis that does support the outperformance for European equities.
Speaker 4: Right now, you mentioned GDP and I'm wondering how you're
Speaker 4: thinking about GDP projections. We have the FED meeting later
Speaker 4: this week where the Central Bank will release its SEP
Speaker 4: projections and they will project where they think US growth
Speaker 4: is going in US inflation. What's on your mind now
Speaker 4: when you think about GDP.
Speaker 7: Well, I think the Fed's in a bit of a
Speaker 7: difficult spot because it's really focused on the information that
Speaker 7: it has today and there is a lot of uncertainty
Speaker 7: coming with the economy now going forward in the growth projections,
Speaker 7: and I just can't see the FED really being preemptive
Speaker 7: about that. So the Fed's going to assess the data
Speaker 7: that it has and that's going to tell them to
Speaker 7: stay on the sidelines.
Speaker 6: On the other hand, they do have.
Speaker 7: To be prepared for a big shift because what we're
Speaker 7: starting to see signs of is almost like a freezing
Speaker 7: in behavior. The consumer is starting to freeze, businesses are
Speaker 7: starting to freeze. Without policy certainty, people are having a
Speaker 7: hard time making spending decisions. I mean, I'm sure you
Speaker 7: see it, you feel it yourselves, see it in your communities.
Speaker 6: But we're also hearing.
Speaker 7: This pretty consistently from corporates as well, that when they
Speaker 7: think about making, you know, five, ten, fifteen year capital decisions,
Speaker 7: they need to have more visibility on what that is
Speaker 7: going to look like for them and what the return
Speaker 7: profile will be for them.
Speaker 6: So I do think that we are going to.
Speaker 7: Have several areas of the GDP formula that could be
Speaker 7: at risk for lower expectations over the short to medium term.
Speaker 7: But that doesn't mean that we're not set up very
Speaker 7: well over the longer term. And this is really the
Speaker 7: sort of short term pain for long term gain thesis.
Speaker 2: Has Powell's job gotten any easier given what we've seen
Speaker 2: with financial conditions over the last couple of weeks, a
Speaker 2: little bit of a sell off in stocks, We've seen
Speaker 2: a rally in rates, yields come down. This is this
Speaker 2: make his job easier?
Speaker 7: Well, Powell can join the long lineup of people whose
Speaker 7: jobs have become much more difficult over the last couple
Speaker 7: of months.
Speaker 6: Yes, I mean it's.
Speaker 2: Because you think his job has become more difficult.
Speaker 6: Yes, yes, yes, yes, I think I think. I think
Speaker 6: it's definitely more difficult.
Speaker 7: Because he's he's in a situation where he's, you know,
Speaker 7: having to make decisions on backward data that could look
Speaker 7: very different from forward looking data.
Speaker 6: I think, you know, central bankers around the world.
Speaker 7: Are experiencing a more challenging environment right now as we
Speaker 7: see all of these shifts around how money is spent.
Speaker 7: And you know, as I use the German example of
Speaker 7: a shift from more you know, lower interest rate monetary
Speaker 7: stimulus towards fiscal The US is sort of in the
Speaker 7: opposite situation where it's moving away from fiscal and eventually
Speaker 7: if it's experience, if the United States experience is a
Speaker 7: slowdown in GDP, growth will have to move towards easy
Speaker 7: monetary policy. So you know, that's likely in the cards
Speaker 7: for the future, depending on how growth plays out.
Speaker 6: But we have seen more and more views.
Speaker 7: Around you know, of course, there are people that are
Speaker 7: calling for potential for recession. I would say even calling
Speaker 7: for a soft landing will make the FED want to
Speaker 7: think more dubvishly about the future.
Speaker 4: I want to go back to tariffs for just a moment,
Speaker 4: because you know, I'm looking back at the notes that
Speaker 4: you send over to us about how you know, there's
Speaker 4: this on and off again reddick about the tariffs, and
Speaker 4: everyone right now feels kind of frozen. If you're an investor,
Speaker 4: if you're a business leader, you just are kind of
Speaker 4: in like a wait and see mode to see what
Speaker 4: happens with the tariffs. When do you see markets kind
Speaker 4: of moving on from tariffs? How long are you're going
Speaker 4: to have to be kind of like dealing with headlines,
Speaker 4: and investors is going to have to be waiting on
Speaker 4: the sidelines until things are smoothed out.
Speaker 7: Yeah, well, I do think the next catalyst, as I mentioned,
Speaker 7: is April second, when the President will have all of
Speaker 7: the trade reports on his desk and he will be
Speaker 7: working with his team to make a decision around the
Speaker 7: way forward as pertains to reciprocal tariffs and sectoral tariffs.
Speaker 7: Maybe something else that's quite encouraging is today we heard
Speaker 7: from Jamison Greer that there's the sense of wanting to
Speaker 7: bring a little bit more process around the approach towards tariffs,
Speaker 7: and so for an investor or for the investment community,
Speaker 7: that's really important because the strategy might be a good strategy,
Speaker 7: but so far the execution has been very chaotic, and
Speaker 7: so what we want to see is process and methodology
Speaker 7: around the tariff decisions, and then I think will feel
Speaker 7: more comfortable with the outlook for the market when they
Speaker 7: know what the scope of tariffs is going to be. Today,
Speaker 7: to your point, we really don't know, and we've had
Speaker 7: environments over the last month or so where that has
Speaker 7: really changed day to day and in a very surprising
Speaker 7: way I would.
Speaker 2: Say, Leslie, you're joining us from Toronto. So I'd be
Speaker 2: remiss if we didn't ask just about what the scuttle
Speaker 2: but has been with regard to the way the President
Speaker 2: has been talking about Canada over the last few months.
Speaker 2: What are you guys talking about at work? How are
Speaker 2: you thinking about his comments about Canada becoming the fifty
Speaker 2: first state, the change in leadership in Canada and the
Speaker 2: way that Mark Karney has promised to prevent that from happening.
Speaker 2: What do you make of all this?
Speaker 7: Well, Canadians are very proud about their country and they
Speaker 7: certainly don't see themselves And I'm generalizing, but I would
Speaker 7: say the majority, the overwhelming majority of Canadians, do not
Speaker 7: see themselves becoming a fifty first state. We have a
Speaker 7: democratically elected prime minister, we will have an election soon.
Speaker 7: We feel very strongly about the potential for our country,
Speaker 7: the important and we recognize the importance of our relationship
Speaker 7: with the United States as a trading partner. So I
Speaker 7: think for most Canadians, they've been very surprised by how
Speaker 7: things have gone in the first six weeks or so
Speaker 7: of this administration, and they're definitely thinking about how we
Speaker 7: need to look at the future around our relationship with
Speaker 7: our biggest trading partner, and it's been a mutually beneficial
Speaker 7: relationship and I think most people that participate in that
Speaker 7: relationship would.
Speaker 6: Agree with that statement.
Speaker 7: And so that's what we want to see, going back
Speaker 7: to that mutually beneficial relationship, where there is a mutual
Speaker 7: respect towards our leadership, towards our people, war's our relationships.
Speaker 2: Leslie Marx really appreciate you joining us today. Leslie Marx
Speaker 2: is a CIO of Mackenzie Investments.
Speaker 1: This is Bloomberg Business Week, insight from the reporters and
Speaker 1: editors that bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news as it happens. Bloomberg
Speaker 1: Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: It is Bloomberg BusinessWeek. I'm Tim Stenevek and that is
Speaker 2: Emli Gerfao in for Carol Masser this afternoon. The big
Speaker 2: question I have is is there a worse time to
Speaker 2: be a college president? As public opinion on higher education
Speaker 2: continues to sour and the Trump administration threatens huge spending cuts,
Speaker 2: to say nothing of the royling protests or crippling sticker
Speaker 2: shock campuses are on edge, so right, Anne, Riley Moffatt,
Speaker 2: and Bradstone for Bloomberg Business Week. Bradstone is the editor
Speaker 2: of Bloomberg Business He joins me here in our San
Speaker 2: Francisco bureau. Talk about timing for this story. I mean,
Speaker 2: this was kind of perfect timing to see.
Speaker 5: Yeah, we actually interviewed five We brought together five university
Speaker 5: presidents at the end of February, and that was one
Speaker 5: week before the federal government, before the Trump administration threatened
Speaker 5: to withdraw four hundred million dollars in funding from Columbia University.
Speaker 5: So yes, in some ways the timing was great because
Speaker 5: there was these these clouds were on the horizon. In
Speaker 5: other ways, this publishing this package on higher education has
Speaker 5: is like trying to jump onto a moving horse. Things
Speaker 5: are moving very quickly.
Speaker 1: Yeah.
Speaker 2: I mean even today we got Harvard News and we
Speaker 2: got like, you know, exclusive schools selling bonds at a
Speaker 2: really high rate. Right now, the move the news is
Speaker 2: happening very quick. The decision makers you spoke to at
Speaker 2: these top universities, they were public and private schools, They
Speaker 2: were large schools and small schools. They were liberal arts
Speaker 2: schools and state schools. It really runs the gamut. Who
Speaker 2: are these people?
Speaker 5: And they're the brave few. We put out the call
Speaker 5: far in line and look, I mean, this is a
Speaker 5: tough time for university presidents. You said it in the introduction,
Speaker 5: maybe the hardest job in America right now. Not only
Speaker 5: the pre Trump factors of rising tuition costs, dropping mail enrollment,
Speaker 5: the ambiguity around test scores, protests in twenty three and
Speaker 5: twenty four, and then the kind of post Trump factors,
Speaker 5: the specter of an endowment tax, NIH cutting funding, and
Speaker 5: now the threats around DEI and anti Semitism. But really
Speaker 5: it's the administration viewing universities as a source of elitism
Speaker 5: and something of the enemy. So yes, we got the
Speaker 5: presidents of New York University, Marist University, Grinnell College, the
Speaker 5: University of Colorado A Boulder, and the University of Rhode
Speaker 5: Island all together in a room in New York City
Speaker 5: to hash out these issues.
Speaker 4: Rad I found it interesting that this word crisis came
Speaker 4: up multiple times in your article. I mean, how much
Speaker 4: of the job of being a college president is now
Speaker 4: a job of crisis management?
Speaker 6: I don't think Historically it was one.
Speaker 5: I mean, I think this was you know, this used
Speaker 5: to be the statesman role. I don't know if we
Speaker 5: could say it was ever particularly easy. But the thing
Speaker 5: that has really happened, I think probably starting with October seventh,
Speaker 5: twenty twenty three, and the attack on Israel from Hamas,
Speaker 5: there have been a set of constituencies at universities that
Speaker 5: are all whose interests are all diametrically kind of opposed.
Speaker 5: You have students, particularly at some of these elite universities,
Speaker 5: particularly at mi alma mater Columbia, inheriting the mantle of
Speaker 5: student activism and protest. And then you have alumni that
Speaker 5: are very much against us on campus activism, that feel
Speaker 5: like the college community experience has been co opted. You've
Speaker 5: got the federal government now with its agenda, saying that
Speaker 5: the campus has moved too far left. These are places
Speaker 5: of liberal thought and anti conservative thought. You know, take
Speaker 5: those arguments or leave them. But if you're a university
Speaker 5: president right now, you're kind of buffeted by all these
Speaker 5: different wins. And I think it was on display when
Speaker 5: the presidents of Harvard and Yale and eventually Columbia were
Speaker 5: asked to testify in twenty twenty four and basically ended
Speaker 5: up all losing their jobs because there's really not an
Speaker 5: easy way out of all this conflict.
Speaker 2: Yeah, it's been pretty remarkable to watch, and I guess
Speaker 2: when you explain it that way, it makes sense as
Speaker 2: to why university presidents were a little reticent to get
Speaker 2: in a room and speak with the editor of Bloomberg BusinessWeek.
Speaker 2: It goes beyond though protests, Brad, because there are questions
Speaker 2: you raised in hear about shifting demographics, things that have
Speaker 2: been playing out over the long term, but also recently
Speaker 2: of funding losses for these schools and the importance of
Speaker 2: these universities providing employees and leaders for the next generation
Speaker 2: of American businesses. And there seems to be this tension
Speaker 2: right now that's playing out with maybe a lack of
Speaker 2: understanding of the importance of that federal funding going into
Speaker 2: training those people who make the next innovations.
Speaker 5: And that's where I think the roundtable really really was
Speaker 5: an excellent exercise. I mean, they came together and they
Speaker 5: really made the argument that universities matter, that these are
Speaker 5: drivers of scientific and medical research, that this is a
Speaker 5: magnet bringing the best and brightest from around the world
Speaker 5: to the United States and making the case for knowledge
Speaker 5: for research and saying this strengthens the United States and.
Speaker 6: Why would you ever kneecap it?
Speaker 5: And so yes, there was also the private industry argument,
Speaker 5: Justin Schwartz, the chancellor of University Colorado a Boulder, saying
Speaker 5: that business needs a human capit supply chain, and that
Speaker 5: is the role of universities. And then if you undermine that,
Speaker 5: talent gets cut and you handicap the US in its
Speaker 5: direct competition with China and other countries. They also made
Speaker 5: the point that you know, the US is already kind
Speaker 5: of lagging a little bit. We used to lead in patents,
Speaker 5: in the number of research papers published.
Speaker 6: We're not number one anymore.
Speaker 5: So they're making the argument this should be a time
Speaker 5: of reinvestment and not curtailing for political reasons. The financial
Speaker 5: foundation of these universities.
Speaker 4: You asked a very short and pointed question, is college
Speaker 4: too expensive? What did the presidents have to say to
Speaker 4: that question.
Speaker 5: I think they all agreed. You know that there are
Speaker 5: investments that they have had to make to keep up
Speaker 5: with rising expenses and the quality of life for students.
Speaker 5: They also make the point, maybe somewhat cheapishly, that this
Speaker 5: is still a great ROI that college is one of
Speaker 5: the best investments a young person can make.
Speaker 6: But they talked about alternative.
Speaker 5: Things are trying to do, like no loan financing for
Speaker 5: students and making sure their students aren't graduating with a
Speaker 5: load of debt that weighs them down in their careers.
Speaker 5: But I think it's sort of an unsolved problem, and
Speaker 5: it's interesting to me that these are the best minds
Speaker 5: in the country and the challenge of rising tuition is
Speaker 5: one that has yet to be solved.
Speaker 2: Linda Mills, when asked about the increasing number of people
Speaker 2: questioning the value of college, she referred to the college
Speaker 2: as a whole in universities as a whole, as an industry.
Speaker 2: And I'm wondering how you view that word is higher
Speaker 2: education in industry?
Speaker 5: So yes, Linna Mills is the president of NYU. It
Speaker 5: is an industry, right.
Speaker 6: I mean, these are.
Speaker 5: Massive, massive institutions with incredible endowments and investment arms, and
Speaker 5: particularly in New York City, great real estate holdings, and
Speaker 5: they are corporations under themselves. They operate with a very
Speaker 5: unusual set of circumstances. They're generally nonprofit institutions, and as
Speaker 5: we've been really finding out this week, they get an
Speaker 5: enormous amount of their income from the federal government, and
Speaker 5: I think in some cases it's almost like one one third.
Speaker 5: And so they're also they had they serve a high
Speaker 5: profile public purpose, and they're quite politically vulnerable in this
Speaker 5: in this environment, and so I think what we're seeing
Speaker 5: now is a lot of these universities really try to
Speaker 5: get on the right side of of the Trump administration,
Speaker 5: as many companies are doing. Perhaps that's the best evidence
Speaker 5: that it is in industry. Just like many companies are
Speaker 5: scrubbing their websites and they're all their public communication of
Speaker 5: the phrase DEI. You know, a lot of universities are
Speaker 5: doing that as well.
Speaker 4: Brad, What were the presidents hopeful about? They are obviously
Speaker 4: working with, you know, the future generations of America. What
Speaker 4: jumped out to you in their responses?
Speaker 5: Yeah, we did, We did ask that, But look, I'm
Speaker 5: not going to pull any punch here. I think that,
Speaker 5: you know, this is a tough time for them. You know,
Speaker 5: there were things that we talked to them about, like
Speaker 5: declining mail enrollment that they you know, it's sixty forty
Speaker 5: on some college campuses that they just don't have an
Speaker 5: answer to right now. They say, you know, these problems
Speaker 5: are starting in early education, that men lack role models.
Speaker 5: Right now, you know, the political situation is becoming increasingly
Speaker 5: difficult for them. You know, we did ask them what
Speaker 5: they were hopeful about the fact that you know, they
Speaker 5: still have you know, dynamic campuses and tens of thousands
Speaker 5: of students engaged in you know, cancer research and finding
Speaker 5: the next drug and understanding you know, maternal health and
Speaker 5: all those topics that are so important that that keeps
Speaker 5: them going. But you know, by and large their attention
Speaker 5: has had to be diverted to some of these much
Speaker 5: more difficult issues.
Speaker 2: Brad Stone he's the editor of Bloomberg a business Week.
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