How to Change the World
Technology holds the edge over finance.
By Vivek Wadhwa
When I joined Duke’s Master’s of Engineering Management program in 2005, I had high hopes for my students. I expected that with the knowledge they gained from the program and what I taught them about entrepreneurship, they would do many good things for the world.
I was bitterly disappointed when the majority accepted offers from investment banks and consulting firms. Instead of using their engineering skills to solve humanity’s problems, they signed up to help these companies engineer our financial system— to skim more money off the top. I couldn’t really blame my students, because they had huge loans to repay. Goldman Sachs offered twice as much as engineering companies did.
The finance industry later became a victim of its own dubious successes. The innovations it created—collateralized debt obligations, credit default swaps, and structured investment vehicles— led to subprime loans and the housing bubble. This caused the financial meltdown. Investment bankers became pariahs, and investment banks could no longer siphon off our best engineering talent. You could see the results in New York City, where, separate and apart from Wall Street, a high-tech entrepreneurial ecosystem started flourishing.
With banks’ recent troubles as a backdrop, The Economist magazine recently arranged a debate between Yale economist and Nobel Laureate Robert Shiller and me on the merits of a career on Wall Street versus the technology industry. The issues raised are ones that thoughtful students of electrical engineering and computer science might ponder.
Shiller acknowledged that finance had lost favor with bright, idealistic students as its reputation soured, but contended it is still “the place you can make your mark on the world.” Financial innovations have improved lives, he argued. One, the mortgage, has made houses more affordable. Insurance — another financial innovation — softens the blow of natural disasters. “Every human activity that matters has to be financed,” he said. IPOs provide companies with money to grow; interest-rate swaps allow global corporations to hedge against swings in currency values; and high-yield bonds allow companies to raise money. Shiller insisted that with finance, you learn “to make things happen, on a big scale, on a lasting scale… that has to matter more than getting into Google and programming some little gimmick.”
I conceded that the finance industry provides some value. And I agreed with Shiller that it needs engineering graduates with a “moral purpose.” After all, it was a lack of moral purpose that almost bankrupted finance — and the global economy. But I told Shiller he was dead wrong about Google. I explained – and believe – that advances in technology and engineering are not only going to rebuild our economy but also help us solve humanity’s grand challenges.
Thanks to the tech industry, we now have an ocean of knowledge freely available that we can search. We can watch videos of lectures by today’s leading thinkers, connect via email and social media, and crowdsource solutions to problems. With the apps on our smartphones, we can transact commerce, perform medical tests, and find directions to where we want to go. Soon self-driving cars will allow us to be productive while we commute; they will eliminate traffic jams and reduce accidents. Technologies such as Google Loon will provide ultra fast Internet connectivity everywhere. Advances in 3-D printing will revolutionize manufacturing. Sensor-based apps will help us monitor and improve our health.
Shiller’s and my debate aside, students need to be aware of the tech industry’s shortcomings. For one thing, it’s overwhelmingly male dominated. Still, when it comes to importance, I continue to think technology will outpace finance. That’s because the cost of building world-changing technologies is dropping dramatically as they advance exponentially. And for students who want to make their mark, that’s the place to be.
Vivek Wadhwa is a scholar of entrepreneurship and director of research at Duke University’s Pratt School of Engineering. He is also affiliated with Stanford, Emory, and Singularity universities.