Bloomberg Audio Studios, podcasts, radio news.
This is Wall Street Week. I'm David Weston, bringing you stories of capitalism. This week we travel to the depths of the world's oceans to explore the world of undersea cables carrying ninety nine percent of the world's communications and where there may be investment opportunities to address the ever increasing demand. And in the wake of the Trump administration's telling Harvard it could no longer have international students, we look at the costs and benefits of the government going
to war with its universities. But we start with the continuing focus on the nation's air traffic control systems. With the Trump administration committing to fixing it. What does fixing it mean? How long will it take? A safe in the meantime.
There's always a challenge that has to come with whatever system they choose to do. But you're right in saying the FA's air traffic control system is by far the busiest, most complex, but at the same time the safest in the world. So as we approach this, it's got to be a unified approach, a collaborative approach with support of all the stakeholders.
Could just put vector.
Out Mike McCormick went to teach air traffic management at every Riddle Aeronautical University after a career at the FAA as a control tower operator. He says that addressing the outages and making the necessary changes are going to take longer than we would like.
It's like changing to tire on a bus while the bus is rolling down the road. You can't shut down the air traffic control system to upgrade it or to fix it. You need to be able to keep the system up and running while you deploy new technology and
you upgrade old equipment. Fixing the FAA's air traffic control system requires a very structured, very formalized approach to what is going to be done, When is it going to be done, how is it going to be integrated into the current system, and then how is it going to be waterfalled or to the rest of the air traffic control facilities across the country. So it's not going to be an overnight and it's not going to be simple.
We hear various stories about the system now using floppy disks and using copper wires and things. At the same time, I also understand there's been some modernization going on over time. Are we going in the right direction right now or do we need to change direction?
Absolutely, the Federal evased miministration is going in the right direction. They have been engaged in a multi tie decade improvement program of the air traffic control system and they have updated all the controller facing technology on the displays for the controllers to state of the art to be able to handle not just today's air traffic, but tomorrow's air traffic.
What needs to happen now is to support systems. A lot of the backroom equipment that supports the larger system has a definite need for an upgrade, and that's where you hear things like still using floppy disks, still using CDs because that equipment over time has not been able
to be upgraded due to lack of funding. So, with improvement to the system a critical component of it, there has to be reliable multi year funding available in order to strategically plan and implement any improvement to the air traffic control system.
Reliable multi year funding you talk about. That's one of the issues that we've heard about. Congress doesn't necessarily do things in a regular way over a long period of time. Is that a fundamental problem the way we funded.
The Federal Evation Administration is generally funded on an annual basis. They have an operations budget, then they have a facility's equipment budget, and that budget is generally only good for one fiscal year, so from October first to September thirtieth. After that the money disappears.
The need to reform air traffic control is becoming more urgent as outages in the system and the resulting delays become more frequent. The government agency responsible for reporting on government programs and policies has taken a hard look at the existing air traffic control system and found it to be unsustainable.
I FADE did this risk assessment to understand of the existing systems, which ones are unsustainable, which ones might be potentially unsustainab and need investments to modernize them. Many of these systems are aging in face long standing challenges.
Heather Kraus is the managing director of Physical Infrastructure at the GAO, which produced a report on the overall state of the air traffic control system in the United States in March. She testified before Congress about its findings.
So around seventeen, we found to be somewhat concerning in terms of the timelines that they have as well as four of those systems not having baselines, so not knowing when those systems will be delivered, so important that FA focuses on what are the most critical systems? How are they going to mitigate risks in the meantime as they are working through the modernization efforts and then delivering on those modernization plans.
Modernization is part of the problem, but far from the only part. What about the controllers who run the system? There's general consensus about their being outstanding professionals.
States Federal Aviation Administration is short over three thousand air traffic controllers across the entire system, and that came about not just overnight, but it took decades to reach that level of shortfall. And essentially what happens whenever there is a government shut down, the FA cannot hire or train air traffic controllers. This was disacerbated by the pandemic when over year the FA could not hire a single controller
and could not train new controllers. That has led to where the system is today with over three thousand controllers short across the country. The only way out of that is to hire and train new controllers and every Reddal Aeronouk University is proud to be a part of that initiative.
As we enter into agreement with the FAA, we are authorized and certified by the FAA to test our students to the same level that the FA Academy does, enabling them to be hired directly to fair traffic control facilities upon graduation. Previously, it would take one to two years post graduation for one of our students entered the controller workforce. Now can happen within days.
By the time that the air traffic controllers can get a new piece of equipment, it's about seven or eight years old. It's not as modern as there should be. It took forever for the air traffic control system to have a GPS system.
Elaine Chow was the Transportation Secretary under President Trump during his first term.
It's a tribute to the men and women of the air traffic control that they can keep the system kind of safe and maintained with their expertise.
Secretary Chow agrees that the path to overhauling air traffic control in the United States is long, but the problem may be in the very structure of the system.
In twenty seventeen, there was an effort under the first Trump administration to reorganize the structure of the air traffic control and basically it would take the air traffic control. It's not privatizing yet because it's being put into a nonprofit organization, but rather I call it liberating the FAA and the air traffic control. Basically liberating the air traffic control from FA and even more succinctly, the federal government, so that air traffic Control, like many others structured like
this around the world, would be their own entity. They would have their own nonprofit status, they would have their own board of directors, but more importantly, they would use their own funding of resources and be able to use it for long term planning.
As you look around the world, has anyone done this? Can we go to school in any other country in the way they've handled this well.
Canada is a primary example, Great Britain, Australia. There are many other countries who have taken air traffic control out of the government process and put it separately in its own nonprofit organization. And by doing that it allows this nonprofit air traffic control system to plan ahead have control over one hundred percent of its budget and be able to purchase equipment at a very timely rate and very efficiently as well.
There's been discussion for over twenty years now on what to do about the United States air traffic control system. The US is the only Western nation that still has air traffic control system fully operated by the central government. All the other Western nations, including our neighbors to the north and south and across the Pacific and Atlantic, have transitioned to either a privatized or corporatized air traffic control system.
In general, that has worked out very well for those They ran into a bit of a problem during the pandemic because it's based upon user fees and that is apportion generally of a ticket tax that would fund it. The FA's air traffic control system is by far the busiest, most complex, but at the same time the safest in the world. So as we approach this, it's got to be a unified approach, a collaborative approach, with support of
all the stakeholders. So you have to have support a passengers, support of aircraft manufacturers, supporting airlines, support a generally vasue community, and of course support of the whole government. In order to make a decision on which we had to go. Unfortunately, to this point that has not.
Existed coming up connecting the world from Rio to Tuvalu. This is a story about connection, no matter what the distance, no matter what the conditions, whether it's air traffic controllers connecting with airplanes landing at Newark Airport.
We lost our radar, or.
President Trump connecting with British Prime Minister Cure Starmer for a joint transatlantic news conference.
This looks like the kind of a hookup that's not going to be causing any problems, and your voice comes through beautifully gear. So I just want.
To do it.
When it comes to connecting, there is no substitute for undersea cables. Thousands of satellites may orbit the Earth, but more than ninety nine percent of global Internet traffic still flows through fiber optic cables laying on the ocean floor. A single high capacity cable installed today can transmit half a peti bit over a million home high speed internet connections.
Private networks for the largest of the companies, rely upon subse cables for their logistical planning, their transport, their just in time deliveries, logistics, finance, health, education, science, technology, sharing, It all goes over subsea cables, the loss of which would mean life as we know it would be gone.
If you think about that, you will start to understand how incredibly important undersea cables are, both in terms of our connectivity, our ability to communicate across the world, our ability to run digital technology, but also essentially the national security risk.
Some one point three million kilometers of those cables snak across the world's ocean floor. Eduardo Matteo is head of strategy for NEC's Submarine division.
The basic anatomy of subse cables are very long, these stunts pipes that have optical fibers inside a certain amount of optical fibers and every certain amount of kilometers ninety one hundred kilometers, these signals that travel along the fibers need to be re energized, amplified, energized from the sea from the landing stations. So it's a very unique network. That amplifier that sits in the middle of the ocean receives power from thousands of kilometers away.
As important as undersea cables are to all global communications, most of us don't hear about them until there's an interruption, which happens about two hundred times a year, sometimes because of wear and tear, but sometimes in suspicious circumstances. That's why experts like NJFX CEO Gill Sentilles and Norwegian infrastructure builder Petter Narbo have a system to reroute traffic and keep the data moving.
So while we get to shallow water, we bury it on. The need the sea bed to protect the cable so it's not hit by some troller vessel or an anchor by a chance. But you can wonder, like northern parts of Norway, in Slowbart we had an incident like two and a half years ago where one vessel had traveled across the cable one hundred and thirty times and then it was able to ram the cable and make.
A power outage on the cables.
And you can question whether that was intentional or not, but it was a Russian vessel. If there's an outage, that's why we come to places like the New Jersey Fiber Saints that interconnects with you know, six or seven of these different Subsey cables, so.
Our facility is prepared to support subse cables and these cables need redundancy on land as well. It's no longer possible at a single point of failure. We've got twenty six terrestrial cables that lead the NJFX in four directions aerial underground, which allow diversity for these subse cables have options. Something happens on land, whether it's a highway or railroad, we could reavert that traffic in a different bath.
The first undersea cable was laid in the eighteen fifties, stretching from Ireland to Newfoundland, with Queen Victoria christening it by sending a telegram to President Buchanan. In the twentieth century, telegrams gave way to telephone calls, and then the US deregulated the telephone companies just as the Internet arrived on the scene, opening up the market to new players and fueling a boom in competitive investment in submarine cables.
We have always been focused on being the best in the world at moving optical bits.
Gary Smith runs CNM, whose technology powers the modern global Internet, providing the networking systems and software that increase each cable's capacity even as more and more are installed.
Basically, down each end of a piece of fiber, you put different colors of light and pull them out at the ends into you know, virtual fibers, and the first technology we had in this space, we think we can make you know, four fibers out of the single fiber, and they said, that's fantastic. We don't think we'll ever need four. By the time we got to deploy it, it was eight and they said, we're never going to
use eight fibers. And now we're putting literally, you know, thousands of virtual fibers down a single fiber.
In the boom years of the nineteen nineties and early two thousands, building transoceanic cables seemed like a great business to be in.
I was like, where do we build the next one? How do we leverage the debt and equity markets to get the capital? And then this deploy it very very quickly.
Mike Constable was a global crossing during that time, a company that pre sold capacity to telecom carriers before cables even hit the water. But then the music stopped, and.
At that stage, the all the sculation about how much data the world was going to need was not being accurately analyzed and forecast. So suddenly the debt levels were super high and they couldn't pay off that debt. So ultimately there was a collapse. Investment pretty much stopped. Around two thousand and two, investment in subse cables effectively stopped, and it took a long time to see investment come back.
Everybody built so much capacity with this kind of technology because all of a sudden we could scale up the fibers. The challenge was no one knew what to do with that capacity, right, and no one would pay for it.
For years, nothing new was built. But the twenty first century brought new demands, this time for financial transactions measured not in milliseconds but in microseconds. Michael Lewis captured it in Flashboys a World War. Speed meant profit. Joe hilt Now, with a Nova Financial new Works, led the commercial team
behind a bold new cable called the Hibernia Express. You were particularly involved, as you say, in the financial part of the business, and obviously people really want to be able to trade fast.
Yeah, And I think we saw that there was a cable system that was built between New Jersey and the Chicago Mercantyle Exchange that was built as a straight line, right, and we said, wow, we're a cable system provided in the Atlantic. Somebody must need between the two financial pillows of the world in New York and London. Twenty eleven, we'd started begun signing clients that would become financial customers on the system, and when we did that, we started to do subse surveys.
Wall Street helped finance it alongside Chinese partner Huawei, but that set off alarm bells in Washington, and as the pressure mounted, the message was clear the project wouldn't get approved if it relied on Chinese technology.
We originally had started out with Huawei. Global Marine had decided to move away from wahweih Global Marine about mid project right, and most of that was based on the United States and feelings towards companies like Huawei and H three C.
At that time, Huawei was out along with its technology, and in came te SubCom and Sienna.
So we did need to make a change in our equipment, and we chose to have a bigger relationship with Siena, you know, so much like we laid the cable systems with t SubCom. We decided to make Sienna at that point in time our the facto standard for wavelength services.
Frankly, the whole Huawei piece was really a wake up call for the West you know, in general around the criticality of this infrastructure. By deploying this infrastructure, letting someone you know else have that infrastructure was you know, was a real challenge.
Unlike others, Sienna hadn't partnered with Chinese firms for years. That was seen as a mistake until it wasn't.
And we decided really to be sort of in some ways the sort of our main competitor around the world was Huawei, so we decided to be, you know, the antithesis of that. We had no manufacturing in China. We were very unusual in that regard, but that was a strategic decision on our part. Now you look at the marketplace now and you see a very bifurcated market between those that utilize Huahweh and those that don't want to, which is really a proxy for geopolitical divide that you're
seeing in the world. Governments are very conscious of it now. It's not just left to normal commercial decision making, for sure.
Mike Constable was tapped to lead Huawei Marine as the Chinese giants sought to push past US resistance. But as geopolitical tensions continued to rise, the US stood firm.
So that was really quite damaging at that time. Slowly the our access to vietitions to bid on a number of projects started to dry up. Way while our marine weren't able to build cables into the US, we were not able to build cables into Europe and to other nations such as Australia. In fact, at the time we had won a contract to build a cable from Solomon Islands to Australia and that was subsequently terminated.
The US intervened in several planned Transpacific cables, including the Pacific Light Cable Network linking Hong Kong and California. According to Jennifer Bacchus, acting head of the State Department's Bureau of Cyberspace and Digital Policy, it came down to one word trust.
What started to become apparent to us is that we do not see the world in the same way that China sees the world, and that ultimately, while we view this as a positive way to work together, to bring people together, I think the Chinese view it as a way to control, surveil and steal, and so as a result, I think it's been a gradual realization that we don't have the same worldview. We don't share the same values.
Specific light cable was one that was going to go to Hong Kong got shut down. Is that why you decide not to allow them to have a land station in Hong Kong?
So on the Pacific like cable, Yes, What it would do is if it landed in Hong Kong, the Chinese government could very easily access that landing station and both take any information they wanted to exfiltratee it, steal it, call it what you want. They also could potentially use that access to interrupt the data flows, to reroute the
data flows. There's no way to tear apart espionage from intellectual property, theft from essentially having the dagger poised at your neck that you're going to cut off somebody's communications network.
Is there a cost here in protecting so the data that you suggest to potentially US businesses competing with their Chinese counterparts in third parts of the world.
What we found in going around the world is that there's enthusiasm for trusted connectivity, especially when you're talking about subse cables and when you talk about how do you attract investment into a country, whether you are a small island state or a large country. They want advanced Western technology, they want AI, they want data centers, they want hyperscale cloud.
You look at sort of the share of the market that HMN Tech, which is the Huawei company, is had worldwide where they were five years ago versus where they are today. They're on a downward trajectory as countries, economies, and people embrace the idea that they want to have sovereignty and control over their information and over their future success and prosperity.
And that's where we turn next to the investment prospects for the boom and bust business of undersea cable. Who's doing the investing, what are the economics, and what are the opportunities. Undersea cables may be ubiquitous, they may be something all of us use every day without even knowing about it. But are they a good investment and who's doing the investing? Enter the hyperscalers, led by Google with its investment in the trans specific Unity cable.
In twenty ten, Google invested in a single fiber pair, which we thought initially was going to be enough capacity. But the one thing Google and all of the hyperscalers always get wrong is forecasting and demand models. Demand has always outstripped actual need. So shortly after completing Unity, we started on a second transpact cable called Faster, because that's what we kept getting told, build it faster, we need it now.
Jane Stowell was the first employee for Google's subse unit when the Hyperscaler moved into the business, connecting their data centers around the globe.
There was definitely a rising need with Google driving that need. So I had never done Latin American cables before, so I turned my attention there and put together a consortium to build from the US to Brazil, and then a second mini consortium to build from Brazil to Uruguay and then onward to Argentina. One of the important things to understand about putting together consortium is sometimes it can take as long to build a consortium as it does to build a cable. If you build it yourself, you can
move much faster. There are three primary reasons. One is cost, the second is speed to market, and the third is network architecture technology. Google wanted control all three elements.
You said that historically it's been very difficult to predict demand, that often people are wrong with demand. What is the risk today that there's overbuilding going.
On, I think relatively low because we had been building cables for the Internet and for the cloud, for cloud computing. The next advent is AI. This is not just about cables. This is about cables that are connecting the lifeblood of data centers and for artificial intelligence. You need to build the the artificial intelligence models first before you can have the inference for anything that's useful for you and me.
So building those models requires mass, mass amounts of data transport to key data centers that are modern, energy efficient, plentitude of energy and nearby access to subsea cables. So you will see a whole new model of data centers moving outside of city centers to locations with the large amounts of reliable power and ready access to big fat types of subsea cables.
One such fat pipe is the Hafru cable connecting New Jersey to Norway's low cost renewable energy. Petter Narbo, executive Chairman of Bulk Infrastructure with Google and Meta on the project.
Norway has about one hundred percent of releuble energy, so and we have a surplus of it because we have one hundred years a history of building hydropower plants from high altitude lakes that runs intracts to the river into the ocean where we harvest the energy several times. So that's why Norway is such a good place for laws and computes and the new power hunger industry that we see today.
For hyperscalers like Google and Meta, building and owning subsea cables became much more than simply a cost of doing business. It was the backbone of their growth, and they decided they couldn't rely on others. They had to invest and build for themselves and work directly with firms like SubCom for the cable and gear and Siena to provide the optical technology.
The entry point for us was actually aligned around the cloud players coming into that space, because all of a sudden you needed very high speed performance and capacity step function more than you'd seen in the past. And so the timing of that, you know, was such that these cloud players really wanted a very high performance you know,
submarine cables. Their ambitions are you know, into all the you know, most of the countries around the world and submarine without that submarine cable capacity, and no one was going to build it for.
Them given the demand. Why is it that others didn't step in to build what the Hyperscalers needed. Projsbenergy is infrastructure managing director at KKR and says that the economics are quite different for subc cables than for other private equity investments.
What has happened historically is that though data demand has gone up exponentially, the price of data has come down substantially over time. So if you owned the cable itself and you owned the fibers, you would have effectively a depuciating asset from a pricing power perspective. Data centers are quite different because data centers, again, yes you're in a specific availability zone or connected into network architecture, but the value of that land should be appreciating overtime, right the
value you're not selling bandwidth and connectivity. You're selling power and real estate, very strategic real estates within a certain availability zone on network architecture.
So if it's the hyperscalers who are destined to be the dominant investors in the undersea cables themselves, what does that leave for other investors?
Where we do say private equity and digital infrastructure funds coming into the market is in the services or the support companies. The support the market. So the digital infrastructure frunds and private equity appliers aren't investing in grain failed networks or building cable systems themselves. They are very focused on broadly speaken on the service industry that supports this critical infrastructure.
Kkrc's opportunity in the services surrounding undersea cables, providing critical functions that hyperscalers need but prefer not to manage themselves.
Subsea cables are to data centers what railway tracks are to railway stations. You can't just upgrade the stations in the terminals and have those tracks lying completely unrepaired and having them break down. You know, as traffic goes up, you've got to invest in both parts of the ecosystem to ensure that you have uninterrupted service, especially today when the cost of the downtime right for the OTTs, for the hyperscalers, for the e commerce players, the cost of
network interruption has gone up meaningfully. It's mission critical infrastructure services provided through asset heavy companies, but not exposed to the actual volume and the price of that data that goes for that piper system.
As an industry, we have a global flight of around sixty ships, and around thirty percent of that flight is going to reach its end of use by date within the next decade. So while we are putting tens of billions of dollars of investment into new cable systems as an industry, we're not putting the same sort of capital to help maintain these systems.
Nobody wants to build a navy right to service their own subs needs, because that's also inefficient. You need independent service providers who can use those same vessels to service other people. To let us build the cable ships and service all the hyperskillers and the tel course, let them focus on their core competence, their revenue drivers, you know exactly what they want to be using their capital budget allowances towards, and let us stick on the button of managing the subscen needs.
First came deregulation and the Internet boom and a rush to lay undersea cables. Then came the bust when overbuilding and deal making got ahead of business fundamentals. Now we're in the middle of a new boom powered by hyperscalers and the rise of AI data centers. So what's next? Smith says, Sienna is busier than ever, and they are just getting started, so.
We're still at the very early days of this. If people are going to monetize all this investment that they're making in GPUs and AI, it's got to come out onto the network. It's got to come out of the datacience. I think as an ecosystem, as an industry, we're grossly underestimating how much capacity will be required.
Is there a grete investment opportunity that demand drivers say there are, but really it is who is going to move into this space because it is dominated by the people who are moving the most data around the world. From the cable industry perspective, we're not quite sure exactly what the development of AI is going to do to the deployment of cables. I think, you know, it's obviously going to require a lot more cable deployments, just how much we're not sure.
Coming up. Since World War II, the US government has partnered with the American universities on a wide array of research projects, but that partnership may be coming to an end. We take a look at what it could mean for business in the economy. This is a story about the cost of privatizing American innovation. For many years, the US has led the world in innovation, driven in large part
by government funding of university research. But President Trump ramped up efforts to get higher education back into line with cuts in research funds and last week saying international students have to leave Harvard altogether. As Scarlet Food reports, the ramifications extend far beyond lecture halls and science labs.
US research universities are the envy of the World Prize for their ability to attract top students and faculty who specialized academic work often seed economic clusters of innovation on and off campus, and that has led to technological breakthroughs from the birth of the Internet and GPS to life saving mRNA vaccines. Backstopping all of this uncle sam last year, the federal government funded sixty billion dollars of research at American universities.
I signed an order creating the Department of Government Efficiency, which is now really waging more on government waste, fraud, and abuse.
But this TREU re cycle is now under threat as President Trump targets elite schools in multiple ways, notably by pulling public funding and cracking down on immigrants, including international students reliant on student visas. All of this leads to an erosion of American soft power, a phrase coined by the late Harvard scholar and NIC director Joseph Nye.
Soft powers the ability to get what you want through attraction ratherland, coersion, or payment, a.
Power that the US has capitalized on for most of the last century.
During World War Two and the United States leveraged its scientific excellence and the high quality scientists we had in universities and some of those that we attracted from abroad. And in the wake of World War Two, the government vastly expanded the amount of funding that it provided two American universities in order to conduct research on behalf of
the American people. So this has led the United States to be a leader in innovation, in building the information economy that we have today, in health care, and in a wide variety of other fields that help us support
our economic prosperity, in our security. And when you ask why is it that's such a huge proportion of Nobel Prizes get awarded to Americans, Why is it that the best scientists and engineers from all over the world want to come to the United States, It's because of this extraordinary partnership we've had here where the government says we're going to do research through these universities, We're going to fund that, and we're going to enable these universities to
become the best in the world and produce these extraordinary innovations on behalf of the American people.
But first we start with the money.
One of the most important initiatives is DOGE and we have cut billions and billions and billions of dollars. We're looking to get it maybe to a trillion dollars if we could do that.
Under President Trump, the latest federal budget proposal slashes one hundred and sixty three billion dollars in non defense programs, including student aid and research funding. It's already led to the suspension of more than two billion dollars and funding for Harvard, eight hundred million in grants for Johns. Hopkins, four hundred million in funding cuts for Columbia. The list goes on.
It's deeply worrisome. This pact between the government and research universities has been fundamental to the excellence of American research universities, and it has contributed tremendously to the prosperity, health and security of our country. And that pact has depended on the idea that the American government will come to universities and ask them to do research that is in the interests of the American people, and universities have done that spectacularly,
making both the country and the universities stronger. Throughout that time, the American government has respected this principle of academic freedom. That means that when that research has undertaken, universities and their faculties can pursue the truth as they see it.
What we're seeing now is the use of research and funding and the leverage that it gives the government over universities as a lever to try to change what it is they take, and that threatens to disrupt the quality of our universities and the principles that are fundamental to them.
The funding that the government provides isn't easily replaceable either.
There's no way the private sector could substitute for what American research universities are doing now, both on their own and in partnership with the government. And I suspect if you ask the private sector, right our tech companies or our farmer companies, they would agree with that. And the reason is because we do the kind of long term research that doesn't have the predictable immediate term or medium term payoff that is going to matter to our corporations.
And the ripple effects stretch well beyond a university's physical campus.
Many of our students, about three quarters of them live on campus.
Michael Samwellian is a founding director of the Jacobs Urban Technology Hub at Cornell Tech in New York City. Cornell Tech and Johns Hopkins received donations from Michael R. Bloomberg, founder and majority owner of Bloomberg LP.
So we work on building bridges between university research and and the city.
He says, US universities have evolved beyond just places to learn in two key drivers of industry specific growth.
Well, I think there's a really interesting shift that's happened over the past generation. Increasingly universities are urban. We're in the middle of New York City right now at Cornell Tech. There's an increasing shift of universities to be far more urban because that's where talent is and that's where diversity is. So in many cases, I think cities are learning that universities are economic powerhouses. I bicker with my dean every once in a while on is Cornell Tech a school
or are we an economic development project? As an urban planner, I think of us as an economic development project one that New York City over a decade ago saw the power of universities in terms of increasing the tech talent that New York has and diversify in New York City's economy. So Cornell Tech was a mechanism to basically help diversify us not away from finance, but also make sure that New York City was going to be a tech powerhouse. We are a visual manifestation of tech in New York.
New York City is probably the number two kind of VC destination for my the in for technology companies across the country, and back in twenty twenty you probably know this. There are more tech jobs in New York City than finance jobs that would not have happened without places like Cornell Tech and deep investment in the tracting schools in
New York City. We recently did a report back in twenty twenty four to look at the economic impact of Cornell Tech, and every year we're bringing about three quarters of a billion dollars to New York City economy, and that's just six undred graduate students.
One of the universities most dependent on federal funding is Johns Hopkins in Baltimore. From twenty twenty to twenty twenty three, Washington DC was responsible for just under twelve billion of its more than thirteen and a half billion dollar R and D expenditure, and people like Christy Weiskill, the head of Johns Hopkins Technology Ventures, are working to make sure there's a return on the government's investment.
Our role is to take the great ideas from our faculty in students and bring those to market. We really leaned into this a little over a decade ago when we realized that there was an opportunity to think about the application of so much of the amazing research here
at Johns Hopkins, and also the opportunity for Baltimore. So we built a team that goes and speaks to our researchers and faculty about their most promising research ways that can change lives for the better, and then we connect them, help them pitch to the VC industry, help them connect with corporate America. And we've seen a dramatic increase in venture funding as a result of that.
Why Scille says more than four billion dollars in venture capital has flowed into companies incubated by Johns Hopkins.
There's a company in Boston called Lantheas that licensed Pilarify. It's a prostate cancer diagnostic that helps over two hundred thousand men a year with metastatic prostate cancer. Without this technology, clinicians would not be able to treat patients as well. And we are thrilled that this diagnostic allows a patient to basically view in technicolor what earlier clinicians had described as trying to diagnose a patient in black and white TVs.
So this diagnostic, which is a product that brings in over a billion dollars a year for Lantheus, was developed here with nih dollars at Johns Hopkins.
So given all that is, the US now at risk of losing its edge as a global destination for that scientific talent and innovation.
Anytime there's uncertainty that can create potential problems. People might rethink where they study, what they study, how they study. We have the chance to seed that global dominance to China. China has increased research spending nine hundred percent in the last decade as a percent of GDP. Unless we continue to fund research, they will outstrip US in terms of patents companies innovation.
Decades of government funded research has attracted a pipeline of talent, homegrown and increasingly from outside the US. When you think of America's most cutting edge companies, they often share some common traits. Giant market caps, global reach, and oftentimes founders and or CEOs born and raised abroad and educated in America.
I believe that it's nearly half of fortune five hundred CEOs that are either immigrants or children of immigrants.
Who's the next leader of a big multinational American company. They're the one to five chance that they were an international student.
The US represents the premier destination for international students around the world.
What's become clear is as much as US research universities depend on federal government money to operate and fund their research, they also depend on international students for the same starting with paying tuition that has come under direct threat when the Trump administration announced it would bar Harvard from enrolling international students. While the State Department halts interviews for student visas, a federal court has temporarily blocked the ban on Harvard.
Over two hundred thousand international students work in the US.
Mirriam Feldbloom is the president and CEO of the President's Alliance on Higher Education and Immigration.
Overall, the Department of Commerce has simated that international students contributed fifty billion dollars to the US economy in twenty twenty three, twenty four. That actually makes international education of the tenth largest export in the US even though the students are coming here. International students are only six percent of total student enrollment and higher education, so we're not
talking about a large population. But the contributions that international students provide by their skills, their talents, what they buy, what they do is far greater than what the six percent would indicate.
As the Trump administration cracks down on public funding to universities and visas for international students, other countries like Canada, Australia, and the UK are stepping up their recruitment efforts. The administration's rhetoric would just discourage international students from choosing the US as a destination, and they'd end up gravitating away from the country. Is that something you can think about every day?
There's no doubt that if there's continued rhetoric, policy proposals, and actions that discourage international students from coming. That impact will be seen in decreased enrollments in the fall.
Does it lead to the closure of certain programs or innovative programs, or certain potential research breakthroughs.
We know with based on history, based on research, that our research productivity will diminish. Probably the number of patents being filed will decline based on past history. We don't know what will be lost. We know things will be lost. And this isn't about internationals students or international talent or
domestic talent. The US needs talent. I think one of the things that we have to acknowledge is that the climate of fear and anxiety and uncertainty that international students are feeling across the country at big and smaller institutions, public and private, highly elite, and those who are not known except to their community where they're beloved, is that it's also generating uncertainty and anxiety among researchers, staff, faculty, and others in these campus communities in which I am
hearing from campus leaders that some of their faculties, some of their star faculty, are saying, I'm not quite sure if I should remain in the US. So again, the loss is not only about individual students who may be directly impacted, but it's about a community of generation of students, graduates, faculty, researchers who we may lose, and we're going to feel the impacts of that loss.
That does it for us Here at Wall Street Week, I'm David Weston. See you next week for more stories of capitalism.