Categories Finance

Rajiv Sethi: The Compact on Naked Capitalism

This is Naked Capitalism’s fundraising week. Currently, 934 donors have supported our mission to fight against corruption and abusive practices, particularly within the financial sector. We invite you to contribute through our donation page, which details how to donate via check, credit card, debit card, PayPal, Clover, or Wise. To learn more, read about our fundraising objectives, achievements from the past year, and our current aim, bonuses for our distinguished writers.

Recently, the administration has initiated campaigns directed at universities, pressuring them to align with its vision for America. This vision includes limits on international student admissions and an enhancement of science programs. The key demand, as detailed by Sethi, emphasizes:

“The compact requires universities to filter out applicants who show hostility towards American values.”

These values seem closely tied to pro-Zionist principles. Examples from institutions such as Harvard, Columbia, and the City University of New York illustrate the impact of such pressures, with these universities intensifying their response to protests against genocide and implementing stringent antisemitism training following threats from the Trump administration regarding federal funding. In many cases, they have sought guidance from the Anti-Defamation League and other Zionist groups to mitigate the implications of genocide.

As previously highlighted, Northwestern University has placed holds on the registrations of over 300 students who declined to complete a new mandatory antisemitism training video. Here’s a quick recap of that situation:

  • The video equates criticism of Israel to antisemitism, even likening critics to David Duke, and relies on a contentious definition of antisemitism (Guardian).

  • It controversially states that Israel was established “on British land” and reintroduces the occupied West Bank as “Judea & Samaria.”

  • The film is produced by a pro-Israel advocacy organization, JUF, and Northwestern has declared it a requirement.

  • The university justified the rollout by citing Trump’s Executive Order from January 29; despite this, $790 million in research funding was still rescinded (Guardian).

  • Jewish students opposing this training expressed that it “reinforces, rather than mitigates,” bias against them on campus.

This backlash reflects a broader trend: as Israel and the U.S. attempt to enforce a pro-Zionist agenda, resistance is growing.

By Rajiv Sethi, Professor of Economics, Barnard College, Columbia University; External Professor, Santa Fe Institute. Originally published at Imperfect Information.

According to media reports, the federal government has sent a memorandum of understanding to nine research universities, promising significant benefits—including preferential access to grants and federal student loans—for those agreeing to its terms. This document is titled the Compact for Academic Excellence in Higher Education. The selected institutions reportedly include MIT, Penn, Brown, Dartmouth, Vanderbilt, USC, and the flagship public universities of Texas, Arizona, and Virginia.

Why were these particular schools chosen? According to White House advisor May Mailman, it was because they are regarded as current or potential “good actors,” led by “a president who is a reformer or a board demonstrating a commitment to high-quality education.” 1 This narrative suggests that the nine recipients are fortunate, a sentiment echoed by at least one governing board chair who agrees. However, institutions that receive this memorandum but choose not to sign it may find themselves in a worse position than if they had never received it at all.2

In some ways, the compact resembles agreements reached with Columbia and Brown (and reiterated in a presidential memorandum).3 However, this compact presents new demands as well as refinements of previous ones. It presents a mix of reasonable expectations (like maintaining academic integrity and offering tuition refunds for students who withdraw from their first semester) and intrusive privacy requirements. For instance, the memo asks that universities ensure a “diverse range of ideological perspectives… not only within the whole university but also across all fields, departments, schools, and teaching units.” It’s unclear how this can be implemented without requiring faculty to disclose personal ideological beliefs unrelated to their job performance.

That said, I believe that many Americans have underestimated the federal government’s capacity to impose its will and the arsenal of measures at its disposal. While this compact may be rejected or revised dramatically, it contains elements likely to be executed on a large scale. One such element is a cap on international student enrollment at 15 percent, with a restriction of no more than 5 percent from any single country. Another is a preference for students enrolled in “hard science programs,” possibly even including tuition waivers.

There appears to be an inherent contradiction between these two goals. The largest source countries for international students in the United States are India and China, accounting for over half of total enrollees. Many students from these nations specialize in computer science and engineering, among other fields. International students inject billions into the U.S. economy through their tuition and living expenses. If access to American academic institutions is curtailed, it may worsen the country’s trade deficit.

Arguments for limiting foreign student enrollment can be made, even from perspectives not aligned with the current administration. These arguments deserve careful consideration. However, restricting foreign student admissions carries risks, as these individuals may not simply take the exclusion passively. Numerous institutions around the world would eagerly vie for their enrollment, competing for both students and the faculty they wish to learn from. Notably, my alma mater has established a campus in Delhi.

Many university leaders may align with certain elements of the compact. For example, both Dartmouth and MIT have reinstated the requirement for standardized test scores with applications. Harvard has instituted strict institutional neutrality, and Stanford has emphasized its zero-tolerance policy against disruptions from those opposed to controversial speakers on campus. Despite potential agreement with some of the compact’s demands, I suspect many university leaders will view the entire exercise as an unacceptable dose of overreach that illegally favors specific institutions in the distribution of federal funds.

In response, universities could craft their own compact, aimed not at federal authorities but at the American populace. Building public trust and confidence in these institutions is currently a more pressing priority than preferential access to taxpayer money. It is crucial to demonstrate that heavy-handed interventions in university governance could ignite movements among faculty and students, transforming American higher education and jeopardizing its global position.

To conclude, while the compact calls for universities to eliminate applicants who show hostility toward American values, this raises significant questions about the definitions of those values. One of the most compelling aspects of American traditions is their creedal foundation. The Declaration espouses universal equality, and our Constitution enumerates rights that uphold this ideal. I contend that innovation, economic progress, and sustained prosperity are outcomes of free expression. My opposition to censorship—both external and self-imposed—remains steadfast. Yet, many of these values are heavily contested. When I observe the detainment and attempted deportation of a foreign student for lawful speech, I question whether that represents adherence to or betrayal of American values. The answers to these questions will shape the trajectory at this critical juncture in American history.

***

1 For instance, an opinion piece by Dartmouth president Sian Beilock, who previously led Barnard College, is positively referenced in a footnote.

2 Public universities facing pressure from state governments might be inclined to sign the compact or a similar version. The University of Texas at Austin is particularly likely to do so, as it faces a trifecta with the state government.

3 As previously outlined in earlier settlements and proclamations, the compact prohibits universities from using factors like sex, ethnicity, race, religion, sexual orientation, and gender identity in admission or hiring choices, while mandating publicizing anonymized data regarding quantitative achievements. It also requires that students be categorized based on “reproductive function and biological processes” when accessing single-sex spaces and participation in sports. The document further calls for reshaping or dismantling institutional units that target conservative thought and demands responses to disruptions with “swift, serious, and consistent sanctions,” suggesting robust measures may be needed. The phrase “badge of inferiority” appears without irony, paralleling its historical context in the Plessy v. Ferguson decision, where the majority argued against perceived inferiority amongst races.

Print Friendly, PDF & Email

Leave a Reply

您的邮箱地址不会被公开。 必填项已用 * 标注

You May Also Like