Slashdot Mirror
Friends Don't Let Geek Friends Work In Finance
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?"
Heavier taxes on finance income, or some sort of legal restructuring or limitation of finance itself. If you can't get money for nothing... you can't get money for nothing. The wealth gap in the US is absurd. And don't talk about ability, unless I'm completely mistaken these people are not taking any more risks or putting in any more effort than any of the other MIT grads that continue to work as productive engineers.
Emotions! In your brain!
You sir have discovered capitalism at work! Why do people demonize businesses who seek out the best and brightest and PAY them for their knowledge and skill. Perhaps because they didn't get those well paying jobs themselves.
since when is attempting to convince people to make a specific choice considered slavery?
Since thievery became a profession.
Emotions! In your brain!
The author is blaming the financial industry of enticing smart people away from an industry that under-appreciates its talent. Horrors!
Finance needs effective oversight, they need watching. If you solve that problem then your engineers won't be getting the offers they can't refuse.
As a nerd that has a passion for finance, one thing worth considering is that the work of finance itself is tremendously fulfilling (outside of the demonizing that happens from some ill-informed quarters). The problems that you are presented with are fascinating, you are surrounded with motivated people of incredible ability, and have unbelievable responsibility at a young age - where else would I get to advise the CEO of a company on his strategy at age 25? If you have never helped a desperate company raise capital to avoid going bust by working consecutive 100 hour weeks, I suppose I can't really explain the feeling. Most of all, the work is just interesting. Or maybe I'm the devil.
I'd upgrade that to
As long as the government views the biggest firms as untouchables, and pick one or two as examples/targets, this will continue on for some time....
Letting a few of them fail in the last debacle would have been better for the economy
Momma might actually like to get him out of the basement.. ;-)
The truth shall set you free!
1. RollingStone: "Why Isn't Wall Street in Jail?": http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216
2. "Inside Job"(2010): http://www.imdb.com/title/tt1645089/
After reading/watching these, I found myself wondering why I spent all those years accomplishing nothing in IT, when I could have been robbing banks from the inside with no worries about being prosecuted.
If you want more engineers, make the field more attractive. If the industry sucks people are going to avoid it no matter how badly we need it.
And I took exception with the statement "This is the talent that our country has invested so much resource in producing." That makes it sound like we gave them loads of valuable training for free and then they wandered off and left us holding the bag. What a crock. Most of them graduated with smothering debt in order to get that education...so it seems that the greater part of the investment was their own. That debt just further drives them to an industry that will pay big.
Lately I have really been lamenting the fact that I chose to program computers for a living. I see how much money people in the finance industry make. They are in a higher income bracket, and yet they don't seem to be in a higher talent or workload bracket. Why shouldn't I be envious, and why shouldn't I leave my boss high and dry for a different job that pays twice as much?
It's not slavery. Working for the betterment of mankind instead of its hasty demise is liberating. On the contrary, working for greedy pigs is slavery, no matter how much money they give you.
I used to work for the military-industrial complex. It paid very well, but it's a soul-sucking job. After one of my kids developed cancer and 9-11 happened, I decided that I couldn't go on in that line of work, and left the industry. I now work at a university for 1/3 the income, and feel much better about what I do for a living.
The determined Real Programmer can write Fortran programs in any language.
If the career path you choose is to be a thief, robbing the country blind, then yes, the government has every right to try to discourage you from that choice.
Here's a thought. Why not add a stick to that carrot? When Wall Street screws the rest of us, find the people responsible, throw them in prison, and seize their assets to pay back the taxpayers. If current law doesn't allow this, then the law should be changed. This will have 2 outcomes. Fewer people will go after the really lucrative positions (those that involve stealing from the rest of us) if there is an actual real risk of punishment. Second, possibly we might see a Wall Street evolve that actually does some good, rather than the greedy parasite we have now.
It is not completely ridiculous.
While investment banks and the like do make important contributions, their industry just recently had a negative effect on the WORLD economy due to their shady practices. Then when it hit the fan, they used their influence to socialize the risk/losses while still keeping the profits. So the taxpayers lose, and they still win, even when it was their poor decisions that caused the mess.
Some would say that because of the above, any benefit they provide comes at too steep a cost. I certainly understand that not all participants in the finance industry should be painted with this same brush. But none of this has to do with "communistic ideals". And you don't have to find money distasteful to find it distasteful when taxpayers are footing the bill for the mistakes of others.
I'm not saying that I agree with the article (I haven't read it yet). But I would hope that it is not that hard to understand why the finance industry is not very popular...when you put everyone on the planet at risk, that is the kind of blowback you can expect.
The old idea that people working in some specific profession produce nothing of value to society.
I take it you've just come back from Mars: currently, "producing nothing of value to society" would be such a massive improvement for the finance sector that even I wouldn't begrudge them a bonus...
The inventor of the mobile phone fart app has more to be proud of than the inventor of the CDO.
Of course, some people in finance might still be doing useful work - e.g. taking deposits from people with surplus cash and lending it, at a slightly higher rate, to people with short-term cashflow problems. Maybe such people should find a new name for what they do, because that sort of thing ceased to be the main business of the banks when they found that they could play insane money games with our cash, keep the winnings and send us the bill if they lost.
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
WTF?
Look, it's ok. You feel guilty of having sold out, but really, it's alright: we are all free. There is nothing reprehensible in deciding that you need money to support your family/loves/drug habits (bar useless mentions).
However.
Money for research overwhelmingly comes from government and industries. Not the financial sector. And the point of research is that all of Humanity benefits: ideas created/crafted/refined there benefit all. Only in theory is the investment baking industry responsible for better investment. Because as it happens, they are way too much into short-term (crazy short) benefits for that. And they sustain themselves through fees, meaning that they have a strong incentive for the creation of opaque products no-one really knows how to price (but the fees are charged anyway :) ).
If Nash had been a quant, a couple billions would have been added to the bottom line of some Wall Street firm, and the Nash equilibrium would have been called the Smith (or Jones) equilibrium. And been invented later. And game theory would have lost a couple decades. And the whole of Humanity would be a couple decades back in that respect.
This is precisely why it is particularly bad that the financial industry hires the brightest: if they were into banking for the love of it, chances are, they would be indeed be interested in better investment strategies. But most of them hate their jobs, and compensate by loving their lifestyles and trying to be extra-clever for the sake of their egos. Thus the mess we are in.
Did you know? Monetary incentives prevent people from lateral thinking and seeing the big picture. Doesn't it explain a lot?
I take strong exception to everyone in the financial sector being labeled a thief. I've worked for some excellent financial firms that have helped people to manage their finances and invest for the future. That there are amoral scumbags in the world is no shock, but just as most of the lawyers I've known are good people who try to do good in the world through their work (while their profession is tainted by the loudest minority), bankers and other fiduciaries provide an essential service which all too often does not receive the respect it deserves.
The idea is fine. Roll together a bunch of mortgages (debt obligations) backed by property (collateralized) and you have a security. It's actually a useful idea because it gives banks another market to sell these to. It gives people with money to invest another place to invest it.
The problem was basically fraud. Wrapping steaming piles of dog crap together and claiming they weren't risky was an outright lie. CDOs plus outrageous lies were the problem. I still remember well just being amazed at things like low-doc and no-doc loans. I remember applying for a loan from my bank and they offered me more than double what I could actually afford.
We want to blame the finance guys, but the problem was banks giving loans to people they knew couldn't repay them because they could just sell the loan to someone else and not care. The problem was the liars who falsely represented those CDOs that were composed of crap as being safer than they were. The problem was investors not doing due diligence, seeing anybody with a pulse getting $100k+ in money to buy a house, even if they didn't have a job and NOT being damn sure those types of loans weren't in the CDOs they were buying. The problem was investors not seeing a massive streak of systemic risk running through adjustable mortgage rate backed securities. When rates go up, defaults go up on ALL of them. Systemic risk, which is exactly what bundling things together is supposed to mitigate.
People, the very same issue would exist if this happened with savings accounts. There's nothing wrong with savings accounts, but if a chain of people did stupid things with the money in them causing it all to be lost, would we be up in arms that savings accounts are bad, or would we be up in arms about the criminals who misused them? I hope the latter.
Agreed, the 99% of them do make the 1% of you look bad.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
So you don't like working for the DoD because of personal ideological conflicts? I'm a left leaning life-long Democrat who has worked for the DoD for 20 years. My job is very satisfying, I am not a slave, and am well-paid for my work. As a patriotic individual that believes in a strong national defense, I am also supporting the welfare of my country. Don't assume that all "right thinking Liberals" think as you, and those that don't are somehow dupes of the Right Wing Nutters.
If you want news from today, you have to come back tomorrow.
You're describing the financial sector as it existed in the 70s. Back then, it really was about helping businesses grow and finding the next big idea. These days, the pigs on top have discovered that they can get WAY more money by playing around with "creative" instruments. Like bundle a bunch of bad loans, sell them claiming their good loans, and then bet money that they'll fail. Or buy a healthy company, make them layoff of a bunch of their workers so that their stock price jumps, and then sell. Shit like that doesn't create wealth; it just steals it.
This was true when the financial system was focused on directly investing in real businesses and better financial systems meant a better and less costly allocation of capital to those who could use it.
Increasingly however, the talent is being wasted on what are at best zero sum games against other similar players, such as high frequency trading. At worst these activities are actually harmful, and parasitical, on those that benefit the wider economy by profiting traders at the cost of investors (OK those groups are not well defined, you we both know what I mean well enough).
There is also the problem that even on the most optimistic "markets are always right" take on this, there is too much investment in the financial activity because the socialised risk together with privatised profit means that the level of investment no longer reflects the level of risk/
You are defencive, for a happy guy...
I know scientific research _is_ a grind. You do it for the rare moments where you have a brilliant breakthrough. But then, though I program, I am not the whipping boy :)
Again, the issue is that the level of compensation in banking is disproportionate to the value created (but then, it is the other fields which underpay, not the reverse). Which is bad because:
- it does not cause better outcomes in banking
- causes worse outcomes in the rest of the economy.
Of course, if we were to discover that the paying scale in the rest of the economy was imposed by the (banker) investors, then you would be the first against the wall the week after. But clearly, you would not advise another human to try and impose the equivalent of indentured servitude to his employees to improve the bottom line. Especially since you believe that paying well attracts the best employees.
Yeah, I know left-leaning people who work for the military, usually because they wound up there at some point years ago and made a commitment. They thought they could do some good, then George W. Bush got elected.
But. Human beings are evolved to work together in groups to accomplish goals together. They get great satisfaction from doing that. The military does that in a big way.
However, it makes a difference what the goal is. It's one thing to protect your country during WWII. It's something else again to do what Smedley Butler described, which is overthrow elected governments and replace them with dictators in order to let American corporations get rich.
The war in Iraq killed 150,000 (if you believe the New England Journal of Medicine) to 600,000 people (if you believe the Lancet). That's a lot of tragedy. Do you feel sorry for those soldiers coming back crippled from IEDs? There were probably a million Iraqis with similar injuries, who will have to struggle without the benefits of artificial limbs, rehabilitation and disability pay. We destroyed one of the most developed countries in the middle east, and turned it into a battleground for al Qaeda. We attacked Iraq with the excuse of weapons of mass destruction, which turned out to be a lie.
You know all of this. You've obviously reconciled yourself to it. I don't tell my friends to quit the military. It's their decision. Military medicine is less directly responsible for the evil ends than other branches, and easier for me to accept.
But I wouldn't want to support these political ends of the military myself. And I wouldn't like to see my friends do that either.
Investment banking is less and less about investment which is good for the economy, and more and more about arbitrage and pumping transactions to make a fee, ...
So when was it different? There have been many explanations that a great part of the recent worldwide financial disaster wasn't because the finance industry wanted to commit the shady deals that caused it all; it was because the government's financial regulators (and the judicial system) has for several decades been looking the other way. This gave the financial industry permission to do the things that they've wanted to do, but knew they couldn't get away with.
In a sane world, the people who committed the shady financial deals would have been prosecuted and jailed. This has happened to a few, true, but very few. Most have been rewarded, including at taxpayer expense.
The saying "Bad money drives out good" is rather old, and should be recalled at times like this. As long as the crooks in the finance industry know they can get away with it, they will.
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
"This is a completely ridiculous notion"
In fact it is. Do we want our "best engineering graduates" out of financial banks? Easy: pay them more than the banks.
Oh, but we don't want to do that!
That is the real issue - companies want the "best engineering graduates" on the cheap. Guess what - some are motivated by money, and go where it is. You want them, pay the market rate. The market rate, BTW, is not what other companies in your industry pay but what the grad can get at any company.
We should remember then it's a free market economy: you don't want "them" to tell you how do you have to live your life, then you can't tell "them" how should they have to live theirs.
Right now has been known that Moody's CEO has rised his salary this year almost 70%, well over 9 millions a year. And we allow for that. *That's* the problem.
If you believe in the first paragraph you no doubt see the irony in the second.
I'm a consultant - I convert gibberish into cash-flow.
Since you obviously value money more than anything else, let's rewrite those choices for those that are bit more progressive.
1) Start something great
2) Be part of something great
3) Fuck doing anything great and become a parasite