Harvard’s Fight Isn’t About Democracy. It’s About Federal Funding and Constitutional Principle

I was surprised by Emily Chamlee-Wright’s paean to Harvard, “Harvard’s Fight Is a Defense of Democracy and Civic Virtue,” as the university stands up to its federal benefactors.

I should mention at the outset that I’ve known Dr. Chamlee-Wright for almost 20 years. She has provided the best practical articulation of Austrian economics that I have had the pleasure of reading, in the introduction to her co-edited book on post-Katrina recovery. We are friendly on the conference circuit. This critique, therefore, is written in a generous spirit of disagreement. But the disagreement is fundamental. It cuts to the core of what it means to live in a liberal society.

Dr. Chamlee-Wright comments on the Trump administration’s freeze of research funding to universities, along with threats to suspend their tax-exempt status and visas for their international students—pending compliance with White House requirements. She specifically mentions Harvard University, but the case is generally applicable.

She writes:

What is under attack is the rule‑of‑law scaffolding that lets any voluntary association – PTA or synagogue, start‑up or labor union – pursue its mission without waiting for White House permission slips or fearing punitive retaliation. A university that surrenders control over whom it may admit, hire, or teach ceases to be a university; it becomes a subordinate creature of politicians and the ever-changing whims of election results.

There are several problems with this line of reasoning.

First, it’s not clear that Harvard University is really a private institution, despite Harvard president Alan Garber’s assertion that “neither Harvard nor any other private university can allow itself to be taken over by the federal government.” To be sure, Harvard is nominally private. But it receives about 11 percent of its revenue from the federal government. That may seem to be a trifle. But it’s more revenue than Harvard receives from tuition, room, and board.

It’s one-third of non-endowment revenue. It’s a whopping 70 percent of Harvard’s research revenue. And it’s more than Harvard receives from all of its other current donors (Eight percent of revenue; all those wealthy alumni pale in comparison to the American taxpayer). On top of this direct revenue, there are other sources of federal funding of Harvard’s activities. Indeed, 20 percent of Harvard undergraduates are recipients of federal Pell Grants, and a good portion of students benefit from federally subsidized student loans and other indirect support. At best, Harvard University is a public-private partnership. And it is no exception. Most universities receive 10 percent to 15 percent of their total operating expenses from the federal government; some receive as much as 50 percent.

Second, the federal government is the single biggest donor to Harvard University. And donors call the shots when it comes to the funds they provide. That’s the very point of donor intent. But it’s interesting to note that no university president—to my knowledge—is turning down the pesky federal donor that’s imposing unreasonable rules. The attitude of former University of Virginia president James Ryan is typical, as he bemoans the “hundreds of employees who would lose their jobs,” “researchers who would lose their funding,” and “hundreds of students [who] could lose financial aid.” The universities want to have their cake and eat it too: donations, but without the strings. It’s curious to note that Dr. Chamlee-Wright doesn’t suggest that universities could simply walk away from federal funding if they don’t like the accompanying conditions; they could indeed seek alternate funders with less problematic strings attached.

President Trump is wielding his executive Sharpie in troublesome ways; but that Sharpie is the result of 150 years of executive encroachment and congressional delegation of legislative powers.

[RELATED: Harvard’s ‘Abysmal’ Year Continues]

Third, the federal government isn’t just any donor. It won’t impose any narrow conditions, such as the establishment of a named building, the creation of a program or scholarship, the inclusion of a book in a specific course, or other similar requests. The federal government is a different sort of donor entirely. We the People have given it teeth far beyond the bite of regular donors. As legal scholar John McGinnis recently explained: “Ironically, the left, now alarmed by the federal government’s intrusive reach, bears direct responsibility for crafting the very legal weapons wielded against the universities it dominates.” In 1983, the Supreme Court ruled in Grove City College v. Bell, that—as written—Title IX’s prohibition against gender discrimination applied to private entities, but only to the specific programs that received federal funds. Grove City received federal funding only for its financial aid, in the indirect form of federal Pell Grants to some of its students. The Court ruled that Title IX applied only to the College’s administration of financial aid. McGinnis explains: “This ‘program-specific’ principle allowed self-determination for much of the college’s operations. It implied, for example, that Title IX would not cover a college’s athletic department unless that department itself received federal funds.” By extension, “should a university refuse to end its discrimination in a program, the federal government could only withhold funds from the program that engaged in the discrimination.” Congressional Democrats were enraged by the decision; over President Reagan’s veto, they passed the 1987 Civil Rights Restoration Act, which made all federal funds received by a university subject to suspension if there was alleged discrimination anywhere within the university. Subsequent presidential administrations made ample use of their leverage under this act—an exceptionally powerful leverage, because all but a handful of colleges and universities in the U.S. are handmaidens of federal funding, direct or indirect. The Trump administration is now making use of that power, threatening cuts to universities alleged to be violating civil rights—in this case, the failure to police antisemitism, but the details matter far less than the constitutional principle. President Trump is wielding his executive Sharpie in troublesome ways; but that Sharpie is the result of 150 years of executive encroachment and congressional delegation of legislative powers.

Fourth, there is a deeper problem. That is the myth of government neutrality. The widespread assumption is that the federal government is a neutral entity that serves the common good, through the democratic process. We (rightly) would be suspicious of a study by Coca-Cola claiming that excessive sugar consumption is not detrimental to health. But we trust the USDA, despite the rent-seeking that underlies its nutritional guidance. In 2002, economist Larry White found that 74 percent of academic articles on monetary policy published that year by U.S.-based economists appeared in journals that were either (1) published by the Federal Reserve; or (2) co-authored by a Fed economist. He concluded that “Fed-sponsored research generally adheres to a high level of scholarship, but it does not follow that institutional bias is absent or that the appropriate level of scrutiny is zero.” Milton Friedman less sanguinely referred to “a sort of oligopoly on monetary opinion,” leading to conformity bias within the economics profession. In 2020, the National Museum of African American History and Culture included exhibits asserting that rational linear thinking, politeness, property rights, hard work, and future orientation are not bourgeois virtues necessary to commercial society and growth, but merely “aspects and assumptions of whiteness and white culture.”Critical race theory, one of many approaches to race relations—and a controversial one, at that—won the political day, within alleged government neutrality. By definition, federal funding is not neutral; rather, it is an outcome of the political process, with all of its baggage and biases: interests, ideologies, rent-seeking, campaign donations, and logrolling. At best, federal funding may be administered with strict respect for rule of law, but it still flows from democratic deliberation—and majoritarian whimsy. At worst, in this environment of legislative delegation and executive orders, it will be subject to quadrennial games and U-turns to score political points. Federal funding means politicization of research and education. My plea is against the rent-seeking itself—not a partisan quibble over who will be the King of the rent-seeking.

Finally, there is the problem nobody wants to talk about. That is the classical liberal emphasis on constraints to power, and the corollary separation between the state and civil society. The U.S.Constitution does not grant the federal government the power to fund research or education—if you have any doubts, I refer you to Article 1, Section 8, and the 10^th Amendment. And with good reason. Any Big Player will influence the game—and doubly so if that Big Player has overwhelming force, regulators, a Justice Department swarming with lawyers, and an immigration enforcement paramilitary force that can arguably be ranked as the world’s 10^th biggest army. Slowing the “smash-and-grab on civil society” that Dr. Chamlee-Wright and I both lament won’t come from tinkering with the details and niceties of federal involvement in higher education and civil society—but only from strict separation.

The Harvard case is not a defense of democracy and civic virtue; it’s a hidden plea for constitutional constraint and reducing government’s role in civil society.

The truly principled thing for Harvard and its fellow universities to do, in the face of the Trump administration’s ham-fisted actions, would be to walk away from federal funding. Alas, instead of principle, we see complaining and litigating. What we have here is indeed “Ivy League self‑regard, an affluent institution protecting its perks,” an expedient desire to keep the taxpayer money, but lose the unpleasant conditions that come with it.

Dr. Chamlee-Wright’s closing plea, for us to refuse to “comply in advance” with “petty authoritarians or accommodating functionaries,” and to “[say] no to unjustified impositions,” should be welcomed by friends of liberty everywhere. But the principled, liberty-loving action does not involve a periodic rearranging of the scraps in the federal trough. It calls for getting snouts and scraps entirely out of the trough.

Alas, most Americans are so desperately hungry for largesse from the public treasury.

Image: “Harvard University – Eliot House” by Roger W on Flickr