Taxes and Education Harvard slips in the global rankings

Investment Analysis Clubs Macro Economic Trends and Risks
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On the surface, Trump has slashed spending on US college research. Voters only put him in office to postpone major tax hikes. If not under Trump, eventually our only solution is an industrial policy with much higher taxes on corporations and the wealthy.

The private sector needs to fund research. For that, taxes must be much higher.

https://www.nytimes.com/2026/01/15/us/harvard-global-ranking-chinese-universities-trump-cuts.html

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The private sector does fund research. Venture capital is available. Every corporation has an SARE item on their books. Sales, administration, research, and engineering.

In the glory days of the chemical industry companies bragged about their investment in research. Research led to earnings growth. 4% of sales was the goal.

Companies still invest in research. It’s the blue sky research that usually gets funded by govt. Many foundations fund research in selected areas. Especially the Gates foundation.

Trimming govt funds for research is disaster. Yes, more private funds will help fill the gap. Since Sputnik govt funds for research have served us well.

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Indeed. The business sector funds 75-80% of US R&D. Academia is about 10% and government is in third place.

DB2

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In relative terms, US corporations spend significantly more on R&D now than they did in the 1950s. While total US R&D (combined federal and business) as a percentage of GDP has risen only modestly from its 1960s peaks, the composition has shifted heavily toward the private sector, with business R&D as a percentage of GDP reaching record highs in recent years.

Key Findings on Relative R&D Spending

  • Business Share of GDP: In recent years (approx. 2020–2022), business-funded R&D has accounted for roughly 2.5% to 2.6% of US GDP, whereas in the 1950s and early 1960s, the federal government dominated funding.
  • Shift in Funding Responsibility: In 1953, the federal government funded over 50% of total R&D (driven by the Cold War/Space Race), while business was a secondary source. Today, business funds over 70% of total U.S. R&D.
  • Total R&D Intensity: While total R&D (government + private) has hovered between 2.3% and 2.8% of GDP for decades, it recently breached 3% (reaching ~3.4% in 2020–2022) due to intense private sector investment, exceeding the historical peaks of the 1960s.
  • Relative to Business Investment: Business R&D is a much larger share of total private investment today than it was in the past. As of recent years, business R&D represents roughly 20% of total private investment, up from ~15% a decade prior.

    In summary, the 1950s-60s were characterized by high government spending, while the current era is defined by high corporate spending relative to the total economy.

That last bit, government receipts are far off from the 1960s.

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R&D from the different funder types feed into each other, because the science and innovation ecosystem in the U.S. is a large symbiotic entity. Additionally, each funder group has carved itself a niche, over the decades of their symbiosis, that cannot be easily duplicated or replaced.

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