<p>Mainlonghorn,
I really haven’t noticed that the conversation has drifted from OP - I never read a post that’s more than 1 screen. Especially from either conversationalists-every year they say the same thing. </p>
<p>Try vanilla with strawberry and blueberry. Red/white/Blue :)</p>
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<p>Not exactly. All I have to show is that they would contribute more value in engineering than they would in finance. Even if they contributed zero value in engineering, that’s still better than contributing negative value in finance - which many of them surely did, as the events of the last few years clearly indicate. However worthless the engineering profession may be, at least they didn’t sunder the world’s economy, throwing millions of people out of work. At least they didn’t produce a chain of events that resulted in a multitude of nations, including two (and counting) from the Eurozone, to beg for bailouts.</p>
<p>^ This is a very interesting post.</p>
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<li><p>Regarding negative impacts from finance, unless you show that elite engineering school grads are more likely to cause financial meltdowns than other college grads the only way to solve for this is to eliminate most of the finance sector. Regardless of whether that might be a good idea, it certainly is not relevant here.</p></li>
<li><p>If the engineering graduates who currently take jobs in finance were to move to professional engineering jobs the only way you could avoid the burden set in my quoted post is if there is such a demand for engineers that they could be hired without forcing out others. Such a claim would be very relevant to this topic; are you prepared to defend it?</p></li>
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<p>Well, I don’t think I have to do it: that case seems to have already been made by Scott Patterson and others who have documented the pernicious effects of deep quantitative financial models in the financial crash. </p>
<p>[Amazon.com:</a> The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (9780307453372): Scott Patterson: Books](<a href=“http://www.amazon.com/Quants-Whizzes-Conquered-Street-Destroyed/dp/0307453375]Amazon.com:”>http://www.amazon.com/Quants-Whizzes-Conquered-Street-Destroyed/dp/0307453375)</p>
<p>Now to be fair, I think Patterson’s story is incomplete. I don’t think it was the quants themselves who were specifically to blame, but rather the misuse and misunderstanding by others of the models they built. But the problem is that those models are deeply prone to such misuse and misunderstanding. People are naturally loathe to question mathematical models that they don’t understand, because their quantitative nature provides them with the veneer of scientificity. Furthermore, most people don’t want to have to publicly admit that they don’t even understand the underlying mathematics (and many bankers surely did not understand the models that they traded upon). The quants were therefore forging machine-guns for children: is it any wonder that we all got shot? </p>
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<p>We don’t necessarily need that: all we do need is to make engineering a more attractive profession such that the best engineering minds are less tempted to emigrate to finance. </p>
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<p>Absolutely. </p>
<p>First off, your premise is incorrect: engineering is a service occupation, and unlike a piece-rate occupation, there is no such thing as a fixed demand for a service occupation. That is to say, there is no “correct” number of engineers to hire. You can hire as many or as few as you need to, depending on their cost and their (perceived) value. </p>
<p>Where would the company obtain more money with which to pay extra engineers? Simple. By paying less for consulting and financial services. Consider General Electric, one of the largest engineering employers in the world…but whose largest division (until perhaps recently) was the finance division GE Capital, which not only employed numerous financiers at far higher wage rates than GE engineers were making, but was also responsible for gutwrenching losses and risks during the last few years that caused its stock price to plunge nearly 80% from its peak and caused GE to surrender its prized AAA bond rating. GE Capital not only was forced to beg for taxpayer bailout funding just like the other banks were, but actually became the #1 recipient of funds from the government TLGP bailout facility, and without even needing to comply with all of the legal strictures of the program due to cunning political lobbying. </p>
<p>*…The company did not initially qualify for the program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE…GE’s ability to live in the best of both worlds – capitalizing on the federal safety net while avoiding more rigorous regulation – existed well before last year’s crisis, because of its unusual corporate structure…Unlike other major lenders participating in the debt guarantee program, including Bank of America, Citigroup and J.P. Morgan Chase, GE has never been subject to the Fed’s stress tests or its rules for limiting risk. Also unlike firms that have received bailout money in the Troubled Assets Relief Program, or TARP, GE is not subject to restrictions such as limits on executive compensation. *</p>
<p><a href=“http://www.washingtonpost.com/wp-dyn/content/article/2009/06/28/AR2009062802955.html[/url]”>http://www.washingtonpost.com/wp-dyn/content/article/2009/06/28/AR2009062802955.html</a></p>
<p>CEO Jeff Immelt freely admits that he allowed GE Capital to become far too large and powerful, and he aims to sell financial assets and reduce its prominence to reinvest company funds into actual engineering-oriented projects. Would that he had done so before the crash! {But of course all of those GE Capital financiers who pocketed excessive pay before the crash aren’t giving any of it back.}</p>
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Regardless of the above, quants are primarily drawn from STEM PhDs or MFE programs. Nick Pearce’s undergraduate friends who chose finance probably didn’t become quants. Quants really aren’t relevant to a discussion about undergrad engineers.
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<li>Do you have any advocacy for how we should do that?
Right now, in the status quo, why doesn’t GE employ more engineers?<br></li>
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<p>If funds that you claim are currently lost to finance and consulting are needed to pay for more engineers, doesn’t that imply that adding engineers is not profitable? Why should GE spend the money they save by firing consultants on engineers?</p>
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<p>Actually they did, or at least, they became quant analysts - hence, assisting the ‘real’ quants, perhaps with one day hoping to become a quant themselves. After all, an MIT engineering graduate, even if leaving engineering, would probably still desire a job where he could exercise his well-honed quantitative talents. </p>
<p>But it is indeed true that many MIT undergrad engineers do indeed decide to become quants either right after graduation or after a few years of Wall Street experience …with some enrolling in MIT’s own MFin program. The upshot is that we still have many MIT engineering graduates who choose not to actually work as engineers. </p>
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<p>See above regarding the quants. </p>
<p>Now, again, to be fair, I don’t blame the quants themselves. What I blame are the financial managers who then misused quant products, and also I blame ourselves for then agreeing to bail out those managers who misused quant products, but then doing little to ensure that such a catastrophe won’t happen again. </p>
<p>However, I don’t think we need to concentrate on strictly on the phenomenon of engineers entering finance. The problem would solve itself if the finance industry were to simply regress to pre-1980’s relative pay levels. Then engineering would be a (relatively) attractive career option and the problem would take care of itself. </p>
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<p>How we should do what? Reform the financial system? Convince engineers not to join finance? </p>
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<p>That’s actually the question I myself have been asking: why doesn’t everybody employ more engineers? Or pay more to the ones they do hire? </p>
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<p>I advanced that notion simply to stem the counterargument that companies don’t have the money to hire more engineers. They clearly do have the money - they just choose to foolishly waste it on consulting and financial services, as evidenced by the debacle at GE Capital. </p>
<p>And besides, as I think we had established in the prior discussion we engaged in with TomServo, companies are not entirely economically rational actors, and never will be. Just because something is profitable for a company doesn’t mean that they will necessarily do it. Hiring in any organization has to undergo an internal budgeting process, which is strongly affected by the political and social dynamics within the organization. Any extra spending allocated to one unit will inherently be viewed as a political challenge to other units within the organization. Even if you were to show that the extra spending on one unit does not actually mean that spending on the other units will decline, those other units will inevitably view that extra spending as something that could have been allocated to itself, but was not. Herbert Simon actually won a Nobel Memorial Prize in Economics for precisely this sort of investigation of real-world organizations. </p>
<p>Yet, now is precisely the time when GE can hire more engineers at a time when the GE Capital division has been politically discredited. After all, it wasn’t the engineering divisions that caused GE to lose its precious AAA bond rating. It wasn’t the engineering divisions that forced GE to embarrassingly call upon the taxpayers, hat in hand. The CEO has himself declared that he should not have allowed the finance division to metastasize and should be reduced. Hence, the finance division right now is in no position to object if GE decides to allocate more funding for the hiring of engineers. {And actually, I believe they now are doing exactly that.}</p>
<p>The problem of course is that GE Capital is just one small piece of the financial services sector as a whole. Heck, if anything, because of recent mergers necessitated by the crash, the banks are now ironically bigger and stronger than ever.</p>
<p>I’m an engineering graduate who now has a job and is involved in hiring. I obviously can’t speak for all companies but can speak to some degree to the ones I interviewed with and the one I currently work for.</p>
<p>It depends on many, many factors. Where you go to school is important due to the prestige of the school, its career services and its location. The ‘better’ a school is the more companies will be looking to hire from there, and the better the career services are the more likely you are to find out about it. Location is important as well, especially in niche fields. Looking to get into chemical engineering and located near several plants/labs? Awesome. Looking to get into steel industry and you went to Alaska Tech? Learn the following phrase: “I am very open to relocation.”</p>
<p>Also important is who you are. Do you have decent grades? It’ll vary from school to school and company to company, but over a 3.0 is good enough for most places. Some places (government mostly it seemed like) wanted a 3.5. If you’re over the cut-off your GPA really doesn’t matter, and if you try to bring it up during the interview the interviewers will laugh at you once you leave the room. More important than GPA is experience, especially through internships. Relevant experience is of course best, but not necessary. The fact that you can show up, do a job and take some initiative while there will put you above most other people. You also need to be able to interview well, so go outside and start talking to people until you’re generally likable. To be honest once you get to the interview this is the most important part for most jobs. If they don’t think you’re going to fit in with the company culture/be a semi-normal human being you aren’t getting hired.</p>
<p>So basically if you’ve got a decent GPA (not as important) interview well (most important) and experience (most important also) AND you’re either located somewhere convenient or open to relocation you will probably get a job. You are going to have to work for it, especially if you want options, but there are jobs out there. You may have to take a non-traditional engineering job, but non-traditional engineering jobs LOVE engineers, so you’re in luck there.</p>
<p>Put another way: Not as hard as if you were any other major.</p>
<p>Good post Chuy and very informative. Not sure why a high GPA should be laughed at though. Isn’t that a source of pride in some people and evidence of a strong work ethic?</p>
<p>I would think so. I know a guy who is smart as hell but too lazy to do the homework. a low gpa is (most often) an indicator of either laziness or lack of understanding - take your pick. would you hire either?</p>
<p>Maybe the post was meant to be interpreted as once the GPA is over 3.5, there’s not much need in boasting about it, as the difference over that mark really doesn’t not matter and probably won’t indicate work ethic. Will a 4.0 really mean that a person’s work ethic is better than someone with a 3.0 work ethic? Perhaps some, but most likely not. Put that GPA with work experience, esp a 3.0 (Or at least over the cutoff) and I would think that would go a long way in the hiring process. Sure a 4.0 GPA looks fabulous, but without any work/internship experience? Think about it!</p>
<p>I think that a lot of points brought up by Sakky are valid. Engineers are not paid as well as other professions even though they require more training. However I believe there is a reason for why this is.
First off, the sectors that yield the highest fiscal return are those that structuralized as commission-based. Dont believe me? Well think of it this way: In finances, what matters is how much of an income you generate for the company. If manage to play the stock market and change 50 million into 65 million, you will see a big, fat check. If you dont, your pay will get cut. My sister saw this first-hand. And do not tell me about how Wall Street destroyed itself, because Wall Street is not a single unit! These were VERY smart people who generated HUGE returns for THEMSELVES in the SHORT-RUN. What do they care if your uncle got laid off? In law: the more you generate based on winning big cases, the faster you will move up. A divorce lawyer who just won 20 million for his client will get a bigger bonus than one that won 4 DUI cases worth 50 thousand each. In medicine: who do you think makes more? A doctor who utilizes holistic techniques and spends lots of time with individual patients, nurturing them to health, or a one that just spews out prescriptions and manages to get as many people as he can through the medical system? Sorry its the guy that creates more money for the hospital- the prescription guy. Its all about what returns- the more you generate the more you earn.</p>
<p>For engineers it is not quite this simple. We only utilize tools already provided. Civil, for example, you already have the concrete mixes, the steel rods, etc. and an understanding of how to put those together to make this thing last. But so does the next guy (civil engineer). You are expected to make this work, so you are not creating extra income for the company. Mechanical? Its the same thing. So is nuclear. Face it- we use the stuff provided to us my liberal science people. The researchers at national labs etc…
So, how to make money for yourself? Make money for the company! Basically, either make a process more efficient WITH A PRODUCT OF YOUR OWN, or create a new product. Invention is, in my opinion, the only way to serious cash in engineering. Think about it: if you manage to cut production cost of a billion dollar product line by 15%, you will be banking. Better yet if you create this billion dollar product line.
So here are the steps I would recommend:
-get an education: and I mean that. Swallow every piece of information you can get your hands on. Hate chemistry? Too bad. Not interested in what teenage girls like? Well than you might miss out on that new lip gloss that changes colors (or whatever). So learn about the world, and learn how to make that invention work through the actual engineering education.
-either get a job at a company that has a history of rewarding innovation, or try to design stuff at home (tough)
-look for an opportunity: any imperfection in any process you see can be fixed-by you. Same goes for product gaps- why isnt there a drink that makes your breath smell minty?
-INNOVATE
-Lastly make sure that you plan your strategy on how to incorporate your innovation- do not get robbed!
So yes you can make MILLIONS but it takes ingenuity in our field
not just skills
sorry for the length by the way.</p>
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<p>Yet it’s not quite that simple, as the last few years have demonstrated in excruciating detail. I agree that plenty of people on Wall Street generated giant returns for themselves in the short-run…but only by creating not ‘true’ returns, but rather ‘fictitious’ returns where the risks were secretly bundled only to appear later like a baleful jack-in-the-box. Or, put in financial jargon, future-laden beta was disguised as alpha. All of the bankers who synthesized toxic securities throughout the early to mid-2000’s whose risks only became apparent years later earned huge annual bonuses, and they’re not giving any of it back. Hence, the employees managed to shift downside risk to bank shareholders. Bank employees therefore enjoyed the ultimate ‘call’ option: during high times, they make huge bonuses, but when times are bad, they just lose somebody else’s money. {Bank shareholders then in turn propagate the chain of risk by shifting a chunk of their downside to the taxpayers who are summoned for bailouts.} </p>
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<p>And here I believe we have the seeds of what I had hoped cosmicfish and others would have provided. I had set the foundation for just such a litany of non-obvious but actionable steps that engineers can take to capture more of the value that they create. Consider the following points:</p>
<p>*Learn as much about the patent system as you can. Ideally, you should try to pass the exam to become a patent agent as soon as you can. (You do not need a law degree to become a patent agent).</p>
<p>*Take college lab courses that teach you how to develop inventions that are actually patentable (and where you, and not the university, control the patent). </p>
<p>As a case in point, MIT offers a product design & development course that is cross-listed between the mechanical engineering and the Sloan School of Management where teams of students are tasked to build their own invention. At the end of the course, many students will actually apply for patents for the projects they developed, where such patents will be under their own names and control, not under the control of MIT. </p>
<p>Other courses may not be specifically geared towards teaching you how to design/develop a product, but can nevertheless be useful by teaching you practical design skills. For example, your electric circuits lab course can actually teach you how to build actual working circuits, including how to use a breadboard, multimeter, oscilloscope, and various electrical components. For every new lab skill you learn, you should be thinking about where to procure the gear for yourself should you want to use it for a project on your own (i.e. on Ebay, Radio Shack, etc.). A good chemistry lab textbook can teach you a multitude of useful techniques that you can replicate for yourself with a cheap home lab. The real goal is then to develop a skillset of practical skills that can be used to build a real project, all by yourself. For example, I believe that every graduating electrical engineer should know how to build a basic working radio and every graduating mechanical engineer should know how to build a basic toy car out of parts bought from Ebay. </p>
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<p>But this I cannot agree with. As I said, a defining feature of strategy is not simply determining what you should do, but also what you will not do (or, at least, do as little as you can possibly get away with). To say that you should learn everything is not a workable suggestion, the key is to figure out what you should learn and what you should not learn.</p>
<p>Hence, I would say that you should probably not learn the upper reaches of engineering theory, for that is not patentable. As a matter of law, you can’t patent basic ideas, but only implementations of ideas. Hence, pure theories are largely unpatentable. Learning how to derive theories from first principles is then, frankly, not a very useful skill. You may need to know it to pass your exams, but frankly, unless you are heading for an academic career, you have no long-term use for that skill.</p>