on student loan rates in congress, for the next hour, booktv brings you portions of author presentations about the cost of higher education. we start with the panel from june that included william bennett. author of "is college worth it" the former u.s. secretary of education presents his thought of higher education and whether going college is worth the expense. ;'8'8'8'8g8'8'8'8'8

so how prevalent is this problem? there was a survey recently of 800 scientific papers published in a range of biomedical journals, and it found about 1/3 of the authors had a significant financial interest in their own research. when i say a significant financial interest, that could be anything from holding a patent to the drug that's being tested, having equity stakes in the company funding the research, or holding an executive position in the company. so the other problem is it's not simply that universities are drawing more of their funding from industry, but in fact, that universities themselves are what do i mean by that? well, universities -- now research universities throughout the country now run their own industrial parks, run their own venture capital funds, they run

extensive patenting and l licensing in exchange for royalty income. there's, you know, increasingly universities are investing in start-up that was launched by the professors. there was a famous case at boston university where boston university invested about a fifth of its endowment, approximately $85 million in serajen that was funded by the own professors. the university's president himself invested in this. he encouraged trustees to invest in the company. finally, when the financial situation of the company deteriorated, the university was accused of egregiously mismanaging the endowment, in order to prop up the company. so those kinds of financial conflicts are unprecedented and it's a kind of commercial activity on the part of the university that is significant.

so why is all this happening? well, in my book i spend a lot of time looking at the various different forces that converged to create the situation. but here i'll just talk about a few. one is obviously cutbacks in support for higher education. i'm sure a lot of people in this room are quite aware of this. most of the state-funded universities have experienced serious financial strain. since 1980, the share of state budgets that goes to fund higher education has dropped by approximately 1/3. at many, many universities now that used to receive about 50% of their funding from the state now receive only 30% or less. the university of virginia remarkably received about 8% of its funding from the state of virginia. so understandably university administrators are feeling a lot of financial squeeze.

so that's one explanation. the other explanation is that in the 19 -- in the latter part of the 1970's t united states was experiencing serious rising competition from germany and japan. we were facing a lot of economic stagnation, and the u.s. congress decided to pass legislation known as the bidole act. it was passed by senators biden and dole. although we don't know much about it's an important part of the book. it's fascinating how it goes passed. the various different forces that came together and the evidence on which it was based. which by the way, was very flimsy. so the idea of this legislation was essentially this. we're going to give universities automatic rights, automatic intellectual property rights to federally funded research and we will allow those universities to license it to private industry

in exchange for royalties. the idea was that this would encourage -- this would give universities a financial incentive to move academic research out of the laboratory into the commercial marketplace more quickly. and it was thought that this would spur innovation. so, you know, a lot of people have been singing the praises of the bidole act. it's remarkable when you look back at the congressional hearings to see that there was absolutely no attention paid to what this might do to the university as an institution. so i have talked a bit it a bow how important the independence of the university is. now the university had a direct financial interest in its own professor's research. u.s. universities have long had a role the play in transferring academic inventions to industry and all of this is a good thing. and i certainly believe that

universities should have collaborations with the private sector. but now you had the university itself trying to profit off of its own research and you opened up a huge pandora's box. so what happened? essentially, universities started to try to justify themselves to state legislators and governors and the governors in turn expectexpected universio be economic growth. it wasn't enough for them to focus on training top-notch scientists and new world leaders and teach people to think creatively. it wasn't enough for them to produce academic research that would be transferred to industry and be commercialized. they were to play a more direct role in generating high-tech jobs, and literally creating the next silicon valley in their own background. much as stanford had been able to do and m.i.t.

so this is a little bit of a digression, but when you look at how silicon valley and route 128 got created, it turns out that the university did not play a direct role in creating those high-technology centers around those universities. yes, it was very important that they spun off all of this incredible talent, mostly in the form of talented students and people who left the university to start those companies. but they didn't actually play a direct commercial role themselves. and now because of this blurring of the lines between commercial and academic, universities see it -- see it as their role to engage in these commercial activities to a degree that we have not seen in the past. so why is all this bad? i mean, we obviously want to see academic research transferred to companies, so we can all profit from the products that they manufacture.

the problem as i see it is really threefold. one, it erodes the university's capacity to of the public interest. it confuses what the role of the university is in our society. and we really have to ask -- we have to really ask to what extent do we want universities to be accountable to the public or to the private interest? the conflicts of interest that i have alluded to that have arisen are very serious. increasingly as there have been a number of scandals that we have all read about with vioxx and the various anti-depressant drugs turns out that academic scientists stand behind much of the research that brought the drugs to the public. in the past, academic investigators played a very, very important role in performing these clinical drug studies to make sure the drugs were safe and to perform that research independently of the drug industry. now, increasingly industry's

hands are all over the research and universities are not defending their academic freedom enough. many university contracts allow the drug companies to control the raw data from the clinical trials. that makes it very, very difficult for the academic investigator to truly hold on to his own autonomy and publish the research as he sees fit. literally the drug company can say, well, you don't have access to the complete clinical trial data, therefore, you can't say what the outcome of this study was. so professors are becoming complicit by signing their names to research papers, lending them an aura of prestige. professor of harvard signs to a drug study by bristol-myers and there's no evidence that bristol-myers lay behind that study. and yet that academic cannot actually vouch for the research that was finally published. this became such a problem that various academic -- sorry, various medical journal editors

have come out with very serious books critiquing what's happening to medicine. and academic medicine in particular. the editor of the lancet, the british medical journal went so far as to say that academic medical journals have become little more than money laundering operations for the drug industry. meaning that the drug industry finances the study but it's published under the name of the prestigious academic and looks as if it's been conducted academically but it's foil for the drug industry's spin. so how does this effect us? even the antidepressants that were recent he pulled off the market, i turns out academic scientists had conducted the early research that said that they were safe for the teenagers but when the f.d.a. went back they found that it wasn't in fact consistent with what the academics had published in their own research. then you go back and look at the

academic scientists who published the papers and find out nearly all of the lead authors had significant ties to the antidepressant manufacturers. clearly, we lose one of our centers of independent critical thought in this country and that's very troubling. i really want to make sure that we keep focused also, this is not just about the sciences this is really concerns students i think very directly. we have always had a problem in this country that university -- there's been a tension between research and teaching, but it's my argument that this commercial ization -- commercialization of higher education has exacerbated this problem. what do i mean by that? at the same time that the universities are pouring the money into the patenting office, many of which are not even profitable, they're actually eliminating full-time professorships and relying on part-time graduate students and

adjuncts to handle most of the undergraduate instruction. at the same time that universities are charging tuition, higher tuition prices than ever before, partly because of cutbacks in state support, you're seeing that undergraduate education is undervalued. the entire core humanities disciplines are being underfunded. more and more, the resources of the university go to the fields, the subjects that make money, study money or attract money. the salaries of professors are increasingly tied to how much money the faculty can bring into the university. in the past, it certainly was not the case that a salary levels were relatively equal. it was believed that your salary should be based on intellectual standing. now, increasingly, if you're a mathematician who one of the most prestigious prizes in mathematics, the field -- the field medal, you might be paid

the same salary as someone just a few years out of the ph.d. in the economics department. simply because the economics department is more luke lucrative discipline. to the extent that universities send out the message that what mat has value is the almighty dollar, i think that's a disturbing trend. i think it's bad for students. i think it sends the wrongs me is message that they have downsized so quickly. the last thing, i want to open it up for questions s to just talk about what the effect is on the u.s. innovation system. interestingly, the bidole act was passed to spur innovation, but increasingly, it's something i show in the book. i interview various different economyists, historians of scientific innovation who are

very troubled by what's happening. the bidole act encouraged universities to patent their research even when it was very basic research. and this is troubling because often basic research, its greatest value is in its ability to spur new research. it wants to be free. it wants to be broadly available. and when universities patent that research and license it restrictively, they impede innovation. there's a really wonderful example that's pretty telling from the university of utah. when the university of utah professor there discovered the human gene that's responsible for hereditary breast cancer, the university didn't make that research broadly available as it would in the past. that research was funded with about $4.6 million of taxpayer funding. yet, the research -- yet the university licensed the research exclusively to myriad genetic, a

start-up company founded by the inventor and then they horded the gene and prevented others from gaining access to it. they charged exorbitant fees to access it and essentially many, many researchers concluded they couldn't continue their work on breast cancer research because