Colleges as a Strategic Initiative

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[Note: this was written before massive defunding of USAID in early 2025 and before the US governments attack on the US university system. The ideas expressed here hold true yesterday, today, and tomorrow, independent of the current decisions.]

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The US is spending roughly $2.2T on defense in 2025 (that’s trillion with a T). It’s one of the largest budgets in the world. I’ve long argued that it’s misallocated, spending too much on kinetic risks and not enough on cyber, biological, and economic threat vectors. Today I’m going to go further and say that we need to invest in more colleges. This isn’t the typical liberal “buy books, not weapons” morality argument, but one based on a better ROI for our defensive dollars.

I’ll start with my general arguments as to why the current allocation is wrong. I grew up in the 1980s when we had movies and TV miniseries like Red Dawn, The Day After, and Amerika about the “inevitable” war between the US and USSR. (CNN recently had an interesting historical piece on the impact of The Day After on US-Soviet relations and arms reduction.) Thankfully it never happened and it likely never will (at least not in the foreseeable future). The major nations of the US, Russia, and China (and I’d include growing military power India) all know that when it comes to global thermonuclear war, the only winning move is not to play. Even assuming we could assure a non-nuclear conflict, there is simply no way any of those countries could subjugate and then occupy another. The “crazy” dictators like Kim Jong Un are rational enough to recognize that a war with the US would leave them worse off (even if it leaves the US worse off as well).

Even if a foreign nation crossed the oceans and got passed the US Navy with limited losses, and even if no US citizens participated in the initial defense (only military), and even if somehow the foreign nation beat the US military; they simply would not be able to logistically maintain control over a large (in numbers and geography) populace for an extended period of time. There’s the old saying, amateurs talk strategy, professionals talk logistics. It’s not that strategy doesn't matter, but logistics is key to an extended use of force. For the record, the same is true if the US tried to invade and control any of these countries. (The US, with one of the largest, most powerful militaries in the world, couldn’t even occupy Afghanistan.)

The real primary threats are economic and cyber. Just behind those is political manipulation (but it’s moving up fast), and far behind, biological or chemical attacks as well as small (physical) impact terrorist acts. For these reasons I’ve argued we need to reallocate some of our physical defense budget to cyber defense, economic monitoring and resiliency, and supply chain / critical response infrastructure (for a biological or chemical attack, as well as just a large natural disaster). We could divert a few tens of billions of dollars annually to these fronts and get a great return (economically, as well as defensively) with minimal degradation of our kinetic (physical) defensive capability.

We do have a large physical capability because we have historically protected US interests, political (e.g., friendly leaders and nations) and economic (e.g., companies with overseas locations, including oil fields). We have needed (and still need) to defend a (geographically) wide range of interests.

This is where colleges come in. But first, let’s look at foreign aid. Most Americans, due to poor education, think the US gives away a significant portion of tax dollars to foreign governments. This is absolutely false. Putting aside current aid to Ukraine in Israel who have recently received acute funding while in active wars, the US typically spends less than 1% on foreign aid. In 2021 (before the wars) it was $56.3B out of a $6.8T budget. https://foreignassistance.gov/ can show you who got how much money for what purpose for a given year. [It could when this article was written in April 2025; current government policies may have chosen to remove historical information.] Less than 25% goes to governments, with most of it going to NGOs or multilateral organizations. (source) US Foreign aid is widely supported by both political parties in the US. I highly recommend these articles and op-eds about it

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What every American should know about US foreign aid (Brookings Institute)

Foreign Assistance Promotes America’s Economic Prosperity (US Global Leadership Coalition).

A Brief History of U.S. Foreign Aid (Council on Foreign Relations)

Cutting Foreign Aid is Not the Answer to Our Debt Crisis (George W. Bush Institute)

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I would argue that USAID can be seen as the ounce of prevention. The small price we pay helps create stability and democracy (not to mention human rights) preventing costlier military intervention down the road. But even if you don’t believe that (it’s hard to measure, although not impossible, what might have been in an alternative timeline), it’s well established that there is a huge economic impact.

“USTDA generates $85 in exports of U.S.-manufactured goods and services for every $1 programmed for priority development projects in emerging markets. The Agency’s programs have generated over $56 billion in U.S. exports, supporting an estimated 300,000 U.S. jobs, since USTDA was established in1992.” “Looking at these issues as a businessman, I believe that investing in the world’s poorest people is the smartest way our government spends money.” – Bill Gates. “American companies and workers depend on a global economy, and it is essential that they are in a position to take full advantage of global markets. The worst thing that can happen is for America to be shut out of these markets. In Texas alone, more than 40,000 companies export $325 million in goods annually.” – Rep. Kay Granger (R-TX) (The US Global Leadership coalition is the source for all three quotes taken May 12th, 2025.)

Colleges can have a similar impact. Take any set of colleges, say the Ivy League. The number of students they can teach per year has not grown significantly. This is because they can only add so many buildings and teachers on their limited campuses. However, the number of students wanting to attend those schools has grown significantly. Forty years ago, there weren’t many applicants to those schools from India and China, or even Mexico and France. And while the Ivy League may have global name recognition, it applies to other schools at all levels (e.g., the University of Nebraska had 3,000 international students in 2024). Many more students would go to US colleges if they could.

What does this mean to US national interests? Let’s begin economically. Students who come to school are more likely to stay and work in the US. Even those concerned about immigration recognize that US college educated foreigners will be net-positive to the US economy. This is well established from analysis done by bi-partisan Congress, Center on Budget and Policy Priorities, The Goerge W. Bush Institute, and in one of my favorite pieces of research showing that immigrants generate more patents (here’s a less technical article on it from BU, and an HBR podcast episode on the same topic). Limited immigration leads to depressed economic activity, for example, as homebuilders can’t find enough laborers.

Even if they return home, they are more likely to have US connections, leading to business relationships (supplier, customer, partner) of their future employers more likely to connect back to the US. Again, this furthers US economic interest.

There are also direct economic benefits. Foreign students don’t receive student loans and often pay full freight. They also pay for food and housing, and well as recreation. Those are foreign dollars flowing into the US economy.

Beyond economic advantages, there is the “American values” argument. During the cold war the US would broadcast on Radio Free Europe and use similar information sharing approaches to win mindshare. The thinking of the US opening up relations with China was that democratic values would spread more easily. (Unfortunately, only capitalistic ideas spread, and with mixed success, due to the Chinese Communist Party’s restrictions.)

Bringing foreigners to the US will continue our long-standing tradition of selling American values. Whether you see that as democracy, capitalism, freedom, or something else (e.g., even particular religious views that are not officially endorsed by the US government but which some people still believe is part and parcel to US values), it’s sold best when it’s sold in person. To do that, we need to bring students here.

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