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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?"
Mama don't let your sons grow up to be bankers........
cd pub
more beer
...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.
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.
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
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.
Or perhaps because many of these businesses can only afford to pay these people so much because they corrupted the government and got bailouts and handouts? I also don't begrudge sports salaries because I don't make that much, I begrudge them because they can only exist due to the hundreds of millions of dollars corrupted government officials dole out to them to build their stadiums (in some cases, after referendums specifically on the funding were voted down). Take away the corruption, takes away the billions of dollars in unnecessary handouts to these companies, and suddenly the playing field becomes much closer to level for more productive professions.
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?
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.
Yes, but there's fascinating work elsewhere too. And when you're done, you've built a system that does something, as opposed to shuffling money around. I realize that everything comes back to money if you're going to get paid, but most other places have a layer of "actual product" in between their work and the money it generates, and that product has some intrinsic value in itself. My sincere feeling is that working in Finance, you miss out on creating a tangible product that's useful to people outside your 20-person company.
Slashdot needs a "-1, Wrong" moderation option.
The Urban Hippie
I'm sure bank robbers (not you, the types with guns) get the same thrill.
The demonizing isn't coming from ill-informed quarters. It's coming from the people who know what you do, know where you get your money from. The cash you get from HFT isn't just magically appearing from no where. It's being stolen from legitimate investors. You're all a bunch of thieves, skimming money off the top of every transaction, and using every loophole you find so that you don't even pay taxes on it. You've drained the country of its lifeblood, and in a few decades will leave it a rotting husk while you move on to another nation to loot. If telling yourself that I'm just "ill-informed" is what lets you sleep at night, then go ahead. Keep lying to yourself. But when your middle-class friends and family (do you even have any?) are suffering, know that it's because you helped your company loot their savings and run their employers out of business.
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.
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.
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.
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!
Whoa, really? Sounds like it's been explained already.
No company is worth 100 hour work weeks, much less consecutive ones.
OK, I accept that, especially the part about working 100 hours a week to help a company raise enough capital to avoid going bankrupt.
However.
It depends on what the company is doing. If they're developing a new drug to alleviate suffering, fine. But if they're patent trolls who are gaming the system to figure out a way to sell needed drugs for 100 times their cost http://www.arthritistoday.org/news/colchicine-gout-drug-price053.php not so fine.
What percentage of the companies financed by Wall Street are actually producing something socially productive, and what percentage are just manipulating the system and grabbing a percentage for themselves? I honestly don't know, but sometimes the percentage of manipulators seems to be awfully high.
And the more you get into financial instruments and stuff, the less I can follow it. I do know about mortgage default swaps. Sometimes it seems that the more socially harmful it is, the more profitable it is.
Put all the little investment projects together and you get a system that may or may not be doing good for society in the long run.
And of course, the industry protects itself from government oversight and regulation, and even criticism, by huge campaign contributions to politicians. Hell, many of them are ex-politicians.
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 -- 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.
I know this is Slashdot and all, but how did this get modded 5 - Insightful? Pointing out that the wealth gap in the US is absurd and suggesting that we should work to shrink it or just restrain its growth is not the same as advocating communist-style wealth redistribution (which I assume is the indended comparison).
One can easily imagine a scenario in which extreme lack of oversight/regulation results in a wealth gap that grows until the disparity between rich & poor yields undesirable living conditions and possibly even social collapse (perhaps where the US is headed), while too much oversight/regulation and "wealth redistribution" (shrinking the class gap too much, down to near across-the-board equality) stifles competition and financial incentives for improvements in efficiency (i.e. your envisioned communist scenario). Trying to strike a balance in between that maintains most of the capitalist incentive structures without promoting an ever-widening class gap is a rational middle ground. The US is probably leaning more toward the "ultra-captialist" end of the spectrum than that ideal middle ground at the moment, as demonstrated by statistics showing that the class gap growing at an alarming rate, and is substantially wider than historical levels. A more progressive income tax rate is one possible way to counter-balance that growth without unduly harming overall productivity.