The Exchanges

Q in universities, and you mentioned this, and they are, um, I mean, unbelievable. So, uh, Harvard's endowment, 53.2 billion. Stanford, where we are, 37.6 billion, a little less, but you can still do a lot with that money. Why are we complaining about university funding? Shouldn't these very rich institutions, which have effectively become financial institutions in and of themselves, just fund all the things they're asking the government for?

A Well, endowments, uh, under our, um, nonprofit status, we pay out a certain amount of the endowment every year, and it covers, uh, mostly, uh, a whole range of, uh, activities. But do you know how much of that endowment is actually restricted? That is the, of that 37 or thirty eight billion, a lot of that money was given by people who gave it very specific things, and you can only use that payout for very specific things. So those are big numbers, but they're, it's not as flexible as people think. The other thing is that endowments were, ah, structured to make sure that universities lasted, ah, for perpetuity. That's the whole idea of the endowment. And I'll give you an example of one time that Stanford had to invade the endowment. We had a major earthquake in 1989 called the Loma Prieta earthquake. We had at the end of that earthquake a hundred and fifty seven million dollars in unfunded, ah, because we were self-funded, unfunded damage to the earth. The, the four quad corners were down. The museum was down. Ah, you could drive a truck into a pothole, ah, on the streets. We actually did take down more of the endowment payout To be able to finance the rebuilding of the campus. So when you think about something like that, you think these endowments have to be there for, ah, keeping the university in perpetuity. But the main point that I would make is that they're a lot less flex…

AI assessment note: “a lot of that money was given by people who gave it very specific things”

Q Now I think a lot of people will take issue with my first question. They'll be like, the U.S. is not in the lead, or who cares? And it's not important. The U.S. can develop technology. China can develop technology. So why do you think it's important the U.S. stays in the lead, and what are the consequences if it falls behind?

A Well, we're in an arms race in technology because, ah, there are many things about the U.S.-China relationship that are not adversarial. They are the two largest economies. We are going to have to find a way to trade together. But, ah, in security policy, we are adversaries. And, ah, I would say that's largely a decision that Beijing made. So as a result, the technology race, ah, is also adversarial at the high end. You know, I think one of the really kind of silliest, ah, Statements that I made, or maybe I, I would say kind of a dumb speech, if you will, is when Xi Jinping said that they were going to surpass the United States in frontier technologies like AI and quantum, and he gave a date within essentially 10 years. So what did he think was going to happen? We were going to get our backs up, we were going to start to think of it as an adversarial race, and, um, I am one who believes that if somebody's going to win the race on these frontier technologies, it had better be a democracy. Because if something goes wrong in AI, and it's quite possible that something will, as a matter of fact, it's probable that something will. Maybe it's even predictable that something will. We will have, um, investigative reporting. You'll probably be doing it on your show. We'll have, uh, congressional hearings. The Chinese will do what they did with COVID. They'll hide it. They'll lie about it…

AI assessment note: “if somebody's going to win the race on these frontier technologies, it had better be a democracy.”

Q international students in a moment, because it's, it's not pretty, and we should discuss it in more depth. But let me ask you, how do you, why do you think this is happening? Um, I'm gonna give the Trump administration's rationale in a moment. Um, but just from a philosophical level, how do you get to the point where you start to see university funding as something you can pause?

A I've been a university professor for more than 40 years, right? They hired me when I was 11. I just want that to be understood by your audience. But, but, um, I think universities have become detached from society and from reality as well. And, uh, so it's not just, uh, it goes a little bit both ways. What do I mean by that? Uh, clearly we haven't made the case very well for what we do. Maybe it's that, uh, people take for granted Some of the, ah, innovations that have come out of universities, but if you walked and asked even a very highly educated, ah, member of the attentive public about how the research system that we just described worked, they probably wouldn't know. So maybe we shouldn't take that for granted anymore. Maybe we should make it clear why this is happening. Ah, secondly, I do think that, ah, universities and elites sometimes have looked down On people who, quote, weren't their own kind. I do think that the stories that come out about the running down of American values, American institutions, America is too racist, America's, you know, people get tired of that, and they don't like the attack on their country, and they don't like the attack on their culture, and unfortunately, it's become a little bit associated, it's become a lot associated with elite universities. So, I would say to us, let's look in the mirror a little bit, too.

AI assessment note: “I think universities have become detached from society and from reality as well.”

Q tech CEOs like Jack Ma and effectively disappeared him for chunks of time. And still they've been able to push forward with some of the Innovations that I mentioned at the beginning of our conversation. So what is happening in China from a work ethic perspective or what cultural values do you think they have or, or policies do they have that we can learn from here in the US?

A Well, I'm glad you said policies because I'm actually not much for cultural explanations. I've seen cultural explanations. These people have to work in a particular way. I, I usually find those explanations don't work. What does work Is do you set up an ecosystem in which the incentives are such that you get the right output from, uh, from your economy or from your workers? And there, I'll say that, uh, it's been up and down in China. You mentioned what happened to Alibaba and Jack Ma, what happened to Tencent. China once led the world in online education startups. They shut all of it down. Why? Because the Communist Party Like all authoritarians, cannot tolerate the idea of alternative sources of power, and Jack Ma was showing up in Davos a little too much, and he was getting a little too popular, and so I think there are inherent weaknesses in an authoritarian system. Uh, first of all, they try to do everything from the top down. We have the advantage of distributed innovation. You mentioned three, four companies that are trying to Press the, the front edges. We're always going to have a more distributed approach to innovation and to research, and I think that's a very good thing, and that's how we'll continue to lead. But we shouldn't underestimate that when it comes to not just copying, but kind of that next iteration from something maybe we've invented, and then you iterat…

AI assessment note: “I'm actually not much for cultural explanations... What does work is do you set up an ecosystem”

Q withheld for a long term, we could see, again, a harm in our ability to innovate. And the innovations coming out of China that I read in the beginning of this conversation were before any of this happened. Is it surprising to you that it's Republicans who are traditionally pro-business Are seeding what could be the, the, um, the roots of a decline in business because they're kneecapping the university?

A Well, I think a couple of things are happening. Uh, people, some people are angry about the kinds of things we've been talking about, and so, uh, and universities become then a kind of easy mark, uh, because they have made so many mistakes. I, I also think that, um, again, there's a, something of an educational mission here to really draw the line from That funding, that federal refund funding for university research to where we are as a country in terms of innovation. When I go to the Hill to talk to people, there are certainly any number of senators and congresspeople who understand that, and they are trying to hold the line. You know, people are also looking for money in these budgets to be, to be really clear about it, right? So, so some of the cuts are coming because people are just looking for money because you can't cut entitlements, so you find Uh, the smaller ways to do it. But I've, I've been a, a voice for, we really, really have to, uh, recenter ourselves on how important the innovations that came out of a very smart, specific system that we created 80 years ago. And I just want to repeat, we don't have a plan B. So we really do have to make sure that we're adequately funding federal research. And, and it's not By the way, just biomedical or engineering or what happens here in the valley, but a lot of defense capability is going to be dependent on what we do in term…

AI assessment note: “some people are angry... and universities become then a kind of easy mark”

Q is in Taiwan. And if you put restrictions on China from taking this core material being made in Taiwan, I think the US even believes Taiwan is, or says Taiwan is part of China, um, and says, you can, you tell China, you can't use these chips, the most important material and the most important technology moment. You don't think that China is gonna go invade Taiwan to get them?

A Well, let me unpack that for a moment because I think there's several important points, uh, there. The first is that you asked how do we win or how do we, uh, deal with the fact that China is, we run harder and faster. That's how we do it. And, uh, we get out of our own way. Um, I'll give you just one example. Um, I was talking to some people in the administration, the Trump administration, who tried to get A preemption on states having their own laws about, ah, AI, their own restrictions on AI. Can you imagine if you're a young AI company, and you've got restrictions in Delaware, and Texas, and California, and they're all different. So, we have to be careful that we don't just get in our own way, and we have to continue to innovate and innovate quickly. Um, I'm a national security type, so I continue to believe in, ah, restrictions of some kind, and I continue to believe that Export controls can have a purpose in slowing what the Chinese can do. We know that the Nvidia chip, which was prohibited for sale in China, it probably slowed it, but we would be on a fool's errand if we think it's going to eliminate the ability of the Chinese to do these things. If we were going to stop Chinese indigenous development, we would have had to do that 1015 years ago before they really did Develop the ability to innovate indigenously. But, ah, the first thing is get out of your own way and ru…

AI assessment note: “The first is that you asked how do we win or how do we”