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Businesses Math The Almighty Buck Science

Friends Don't Let Geek Friends Work In Finance 732

Posted by samzenpus
from the do-no-evil dept.
theodp writes "If Vivek Wadhwa remade Pinocchio, instead of The Coachman luring naughty boys to Pleasure Island to engage in mischievous behavior and be transformed into donkeys, you might find Goldman Sachs CEO Lloyd C. Blankfein luring bright engineering grads to Wall Street to engage in mischievous behavior and be transformed into, well, asses. While the practice of poaching engineering talent slowed after the economy tanked in 2008, Wadhwa is dismayed to report that thanks to hundred-billion-dollar taxpayer bailouts, investment banks have recovered and gone back to their old, greedy ways, snagging engineering grads who might otherwise solve the world's problems, making them financial offers they can't refuse, and morphing them into quants, investment bankers and management consultants. 'Not only are the investment banks siphoning off hundreds of billions of dollars from our economy with financial gimmicks like CDOs,' writes Wadhwa, 'they are using our best engineering graduates [25% of MIT grads in '06] to help them do it. This is the talent that our country has invested so much resource in producing.' He concludes: 'Let's save the world by keeping our engineers out of finance. We need them to, instead, develop new types of medical devices, renewable energy sources, and ways for sustaining the environment and purifying water, and to start companies that help America keep its innovative edge.' Amen, but how 'ya gonna keep 'em down on the Engineering farm after they've seen Wall Street?"
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Friends Don't Let Geek Friends Work In Finance

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  • keeping engineers (Score:5, Interesting)

    by simoncpu was here (1601629) on Sunday March 27, 2011 @11:23AM (#35629932)

    ...but how 'ya gonna keep 'em down on the Engineering farm after they've seen Wall Street?

    Give them the opportunity to change the world.

  • Silver.. (Score:4, Interesting)

    by anonieuweling (536832) on Sunday March 27, 2011 @11:23AM (#35629934)
    If all Engineers just buy some silver, we can get back at the banksters.
    Google: CRASH JP MORGAN BUY SILVER
  • The problem (Score:5, Interesting)

    by Anonymous Coward on Sunday March 27, 2011 @11:38AM (#35630078)

    Five years out of school and working as an engineer, I make a mid five figure salary. Friends I went to school with who now work in finance make low six figures.

    America is not interested in keeping its innovative edge.

  • by Anonymous Coward on Sunday March 27, 2011 @12:20PM (#35630404)

    We go through early life focusing on personal achievement, and one has to in order to succeed in the highly competitive application process to make it to MIT. You go through a intense regimine of MIT, where despite a number of classes where Teamwork is necessary you are still judged on your individual accomplishment aka Grades.

    Is it so wrong then when an MIT graduate looks at the job opportunities arrayed in front of them, that they see 3 possibilities:

    1) Start a new company/work at a startup, try to create something that will change the world. Payoff potentially astronomical, chance of success relatively slim. Ability for individual success to translate to financial success, medium.

    2) Work for a big corporation, more than likely creating something which addresses the corporations needs, which may or may not help society. Payoff potential medium, chance of success high, ability for individual success to translate into financial success, low.

    3) Enter the world of finance. Payoff potential high, chance of success mediuam, ability for individual success to translate into financial success, Very High.

    Finance remains one of the few industries, where a contributer is able to directly monitor their value added and thus demand/receive incentives to match said value. What upside is there for me to go work for a GE, where even if some radical new design i create revolutionizes their jet engines and makes the company billions over the next 15 years, I'll get a decent paycheck, maybe some stock or options but in reality there is no real upside for my success.

    Until society/companies puts emphasis on engineers and inventors in terms dollars, people will be less inclined to create/invent.

    - An MIT '05 who works in finance.

  • That's a wonderful story about the financial sector and its service to academia, and most of it is actually true.

    It's also a story that conveniently omits the essentially fact that the finance industry is as crooked as a Nigerian oil committee, and that most of their research funding has a hugely corrupting influence on academia, on economics in particular.

    In short, most of your arguments could be equally well applied if the funding was coming from Colombian drug lords, the mafia, the Chinese government, or Colonel Gadaffi. In some cases they have. Strangely though, most would be unwilling to extend the same level of credence to the latter group as they would to financeers.

    And so we come to the essential paradox of our age. Despite the proven record of corruption by bankers and CEOs, despite the massive damage and hardship they have caused, and despite mass public embitterment towards them, somehow collectively, our society still trusts these people with custodianship of our collective wealth, power, and future. What is wrong with us?

  • by SomeKDEUser (1243392) on Sunday March 27, 2011 @12:46PM (#35630626)

    Your feelings are hurt? Didn't you know: your salary is not proportional to your social utility. No one thinks that the "invest in companies" part of banking is wrong. The "create useless products which cause the world to crash" is what people object to. Oh, and the "hold the public to ransom instead of going bankrupt, like honest business do" is pretty bad.

    Also the "think your salary is deserved" attitude -- especially after the crisis -- is particularly grating. You do not work so hard, nor are so clever that the salaries in the banking industry can be deserved. But this is not particularly relevant.

    What is, is that perfectly good engineers go and pursue essentially fruitless careers instead of advancing the lot of mankind because of the salaries offered. This means that people selected for their greed, as opposed to a love for forward looking investments, are concentrated in an industry were they can cause maximum damage. This means that there is a dearth of very good engineers in the technical fields, which destroys the potential investments you would like to make!

  • Re:Mama don't..... (Score:4, Interesting)

    by JAlexoi (1085785) on Sunday March 27, 2011 @12:51PM (#35630654) Homepage
    Problem is that lately, they have been focusing on creating money out of thin air. And in addition to that, by means of HFT cheating people out of their money using an automated tool. How HFT isn't considered fraud, is beyond me... The fraudster on the corner with 3 cups and a ball is just a less tech version of HFT algorithms.
  • Re:Mama don't..... (Score:4, Interesting)

    by JAlexoi (1085785) on Sunday March 27, 2011 @12:56PM (#35630708) Homepage
    I'll add to that this nice drawnimation: RSA Animate - Drive: The surprising truth about what motivates us [youtube.com]
  • by Anonymous Coward on Sunday March 27, 2011 @01:01PM (#35630748)

    Honestly, I'm just surprised I never heard of someone suggesting this before. Of course I never studied world history or political philosophy, so maybe somebody did try this before...

    They have. I think they call it "Western Europe". Or "Canada". Or any other number of places with more progressive tax structures, higher quality of life ratings, and less economic disparity.

    Sure, 100% socialism doesn't work. Neither does 100% free-market capitalism, or 100% anything else. There's no such thing as a system without flaws. Hybrid vigor isn't just for race-mixing.

  • by artor3 (1344997) on Sunday March 27, 2011 @01:04PM (#35630776)

    While you're at it, read this: In Prison for Taking a Liar Loan [nytimes.com].

    Summary, since no one RTFA's:
    Guy takes out "liar" loan from bank, after much encouragement from Countrywide (now BoA)
    Guy defaults on loan, like so many others, losing his home. Bankers make millions.
    Guy runs a marathon for charity across the Sahara Desert
    Federal agent sees marathon coverage, thinks "How can some working stiff afford to do that? He should be keeping his head down like the rest of the slaves!"
    Feds send hot undercover agent to flirt with the guy, extract a confession
    Guy sent to jail, ordered to pay a quarter million dollars restitution to Bank of America

    In short, while you're robbing the banks from within, not only do you have no worries about being prosecuted -- the people you're robbing can be prosecuted and forced to pay you even more!

  • by itsdapead (734413) on Sunday March 27, 2011 @01:38PM (#35631072)

    When rates go up, defaults go up on ALL of them. Systemic risk, which is exactly what bundling things together is supposed to mitigate.

    ...it's worse than that, because when rates go up and defaults go up, the value of property - which is hugely influenced by the price and availability of mortgages - goes down. Oh, and if banks rely on the profit from selling CDOs to enable then to offer cheap mortgages, any glitch with CDOs will put up the price of mortgages which...

    ...and it gets worse still! Suddenly, instead of offering long-term mortgages at competitive rates, banks were offering "bargain" discount or fixed-rate deals for 2 years, after which customers were forced to either re-mortgage or have their payments revert to an exorbitant "standard" rate. Nothing to do with banks making more money trading CDOs and suchlike every time someone re-mortgaged than they would by retaining long-term customers, I'm sure. Of course, this makes the property market even more volatile because anybody who, for whatever reason, is unable to re-mortgage is up shit creek when their bargain deal runs out.

    Ergo, CDO's are a pretty dumb idea prone to catastrophic, self-accelerating failure with all sorts of unintended consequences. If you wanted security, you'd bundle mortgages with gold, oil, cheap vodka futures or something else that tend to go up when the credit market tanks. Even if they don't require outright fraud they make it easier, and tempting.

  • by Weezul (52464) on Sunday March 27, 2011 @02:14PM (#35631330)

    I'm an academic research mathematician who'll soon be leaving his postdoc to look for work in the financial sector.. or any other interesting sector. I've had a lovely time doing postdocs in interesting new cities, but I'm done with the moving, long distance relationships, etc. I love programming too since like age 7, so anything goes. I promised myself however that I'd try several interesting things before taking any job that required a security clearance, i.e. NSA.

    Inside academia, there are literally hordes of well qualified PhDs who'll never ever get proper research jobs simply because the number of good secure research positions grows slower than the national population while every such position produces numerous qualified people (ignore the hordes of under-qualified people graduated by some faculty). We understand this population model when we call the variable rabbits, yet we ignore it when we say academics.

    Academia and industry may be losing many of the best-of-the-best to Wall St. but we've more than enough qualified people for all the high level jobs. If society wants more people in a particular field, then society must allocate the resources. You could for example quadruple the NSF's budget by shaving off just over %2 of the $900 billion military budget [wallstats.com].

    Don't like how Wall St. extracts so much money from the venture capital and IPO process? Fine, allocate $10--$50 billion for federally backed public interest venture capital operations, hell back it from social security, surely better than 3%. There will be no shortage of young engineers choosing $60k per year working on their own ventures over whatever salaries Wall St. offers. Just don't complain about people not doing socially useful work in saturated job markets, especially ones so supersaturated that all the young people end up in long distance relationships.

    p.s. If we actually invested like $20 billion of social security receipts towards, then we'd see employers complain even more about a lack of qualified people, meaning people who'll do highly skilled work for little money.

  • by metlin (258108) on Sunday March 27, 2011 @02:42PM (#35631500) Journal

    ...since when is attempting to convince people to make a specific choice considered slavery?

    It is not. However, Vivek Wadhwa does have a point. As someone who went from a tech/engineering background into management consulting, I have reached a point where I wish I had remained in technology, and in building something tangible.

    Yes, the salary is better and the incentives are great -- I get to travel, I get to work on a variety of problems (marketing, revenue management, even technology recommendations), and in my late 20s, I work with C-level executives. It's great exposure.

    However, as I near my 30s, I have to ask -- have I done anything tangible? Have I built something that made a true difference to the world? I wish I had joined a tech company and worked on my programming capabilities, so that I can build something, even if in my spare time. I wish I had used my undergrad engineering degree in working on VLSI design or something. And with the 60-80 hour work weeks and travel Monday through Thursday, I wish I had enough time for personal interests or activities -- in a past life, I used to do a lot of rock and ice climbing; it's been 2 years since I did any. Open source contributions? Zilch. Even playing with Lego seems like a chore, because I've 3 million other things to do. And you know you've a problem when you start getting worried about play being a chore, since it takes time away from other "important stuff" -- i.e. building pointless decks and excel models.

    The other problem with most of what you do in finance and management consulting is that your skills are limited in the outside world, and you are so busy with your work that you've little time to learn other things.

    So, I've decided to go the entrepreneurial route. I may try and fail, but at least I would have tried. With a couple of my friends (both of whom, incidentally, are from i-banking and quite burnt out themselves), we've decided that it's about time that we started throwing ideas at the wall to see what would stick. I live in Boston, so we're working with college students in the Cambridge area who are interested in working with us for a little equity and cash, and trying to develop new and interesting products.

    The first of which is slated to go live end of this month -- Deal Umpire [deal-umpire.com] -- and a couple of others being worked on. It has been an immensely fulfilling experience.

    Building a 50 page deck that no one will ever look at beyond the first two pages, a complex excel model that you spent weekends developing that gets forgotten and locked away, or making recommendations that get ignored because the client will do as the client pleases anyway -- none of this comes close to the thrill of building something on your own, something tangible and worthwhile (now, arguably, there are definitely clients and engagements that are truly interesting, and the client genuinely cares about what you are building -- but those are rarer than you'd think),

    We have investors eager to fund, but we do not want to take up their offers, because we are afraid that it will be back to building decks and models to do someone else's bidding. So, we're at it on our own.

    If you are an engineer, you probably went into the profession because you like to build things, because you like to open things apart and learn, and because you like the fact that creativity and analysis can often team up in building some pretty awesome stuff. You will not find that in either of those two professions. Yes, you will have money and the perks, but if you don't kindle that spark of creating something, you will soon extinguish it for greed. And that is very, very unfortunate.

    Thankfully, I've a very understanding wife who is a geek herself, and she has been very instrumental in helping me keep my act together. And just the thought of working on something fun and interesting goes a long way to rekindling creativity I'd thought long gone.

  • Re:Mama don't..... (Score:5, Interesting)

    by gbeagle2112 (1839198) on Sunday March 27, 2011 @03:07PM (#35631658)
    Actually the worse thing about scientific research in a university setting (talking as an actual physicist here) is that you work for 15 years (grad school plus post-docs) at low wages just to find out you didn't win the tenure-track lottery. It's too bad, so sad and then you're flushed out of the system. Now you're in your mid-thirties with no job and no real world job experience.

    Then professors wonder why grad students would go off to be quants after their PhD instead of pursuing *non-existent* faculty positions in some sort of fatalistic death march. The funny thing is the lack of permanent positions in physics is not a new thing. It has been like this since the 1970s. Yet the numbers of physics PhDs that universities churn out keeps going up. Heck, for theorists there often isn't any options other than finance, insurance, and consulting.

    I guess it is the same for engineers now too going from the article. One positive, I guess, is that this makes it easier for physicists to beg a prospective employer to give them that job that should have been filled by some EE. ;)
  • by Anonymous Coward on Sunday March 27, 2011 @03:39PM (#35631880)

    I would have applied for welfare, if society offered welfare in the form of praise, women, and tax incentives to pay off student debt and a mortgage. 75k a year is not a lot. It's a meager existence that doesn't make up for not partying in college, not having had the time to vacation and see the world, and doesn't make up for all the extra jobs and no summers off that it took to pay for things. The people who've never even seen 75k don't know what it took to even get to that level.

    I know it's very unpopular to say this, but poor people are poor (and middle class people are middle class) because they're fundamentally lazy, undirected, stupid, or have the incorrect mindset when it comes to making money. It's sad that, as a society, we don't look at poverty as the state in which people lack the sense to make sound economic judgments.

    The fact of the matter is that engineers who choose finance and have the ability to enter the field are making reasonable judgments and taking actions in their own self-interest -- and that's why they're upper middle class, or possibly even rich. In our society, we pour resources into poor people, tell them they are victims of circumstance, and give them zero reason to believe that their own decision making can change the way they see things. It's gotten so bad that people think 75k is "substantial", when in reality, it's like the first stepping stone out of stone-cold poverty -- I mean, one medical mishap, and poverty is right around the corner.

    Well, I've got news for you. 75k is nothing. It's nowhere near enough. And in the next few years, with the way the dollar is losing its value, it will be even crappier. And if you happen to be in a position where 75k is your peak-out level, you're fucked. There's no way around it, other than to accept that you need to wise up and make decisions to take you out of the 75k bracket. So spare me the "only 75k a year" and wake up.

  • Re:Mama don't..... (Score:5, Interesting)

    by omfgnosis (963606) on Sunday March 27, 2011 @04:23PM (#35632068)

    There were government programs that encouraged (or at least tolerated) that kind of abuse, but they were not financial regulations; they were social engineering projects similar to "the projects" of yesteryear, but with a much more innocuous face, largely promoted by "compassionate conservatives" (which is why the Bush administration was able to make claims that minority home ownership peaked during their tenure: poor people were being funneled into predatory mortgages while the other services they depended on were being cut). This was in no way financial regulation, it was manipulation of the market by way of interest rates, coupled with a distinct *lack* of regulation.

  • by phantomfive (622387) on Monday March 28, 2011 @12:17AM (#35635142) Journal
    Every time I see someone make a post with this sentiment, I want to vomit in their face. Are you not aware of what happened? Do you never read anything? Check out this graph [wsj.com]. Note that over one trillion dollars on the fed's balance sheet went to buy mortgage backed securities. That is money that went to banks. Note that this is more than TARP. Note that this is just one of the ways the fed has been subsidizing banks. It's really bad, look at the numbers. Now, sorry for the vomit in your face.

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