Flashpoint

When did it all start to fall into place professionally? That's a paraphrase of a question Female Science Professor asked a few months ago on her blog. Or specifically in her case, when did most people start taking you seriously (as a science professor)? I am not and never have been a member of the communist party or a science professor. But I did wonder at what point my career would start to feel more solid. When I would feel like I was being pulled up not dragging my broken body up and clawing my way past obstacles and attacks?

I still wouldn't say I've achieved some magical level of respect. When I started working in a technical field I got treated very differently from my clerical days. And when I first started getting mistaken for an engineer (though I wasn't one at the time) that was a big boost to my confidence.

I'm an ambitious person. I'm not going to be a shrinking violet or hide that under a bushel(which apparently some yahoo named Matt originally coined in something called The Bible, who knew). I mean look at this freaking mandarin fish, do you think he gives a @#$ about what you think?

He doesn't. But moving up can be tricky. I've had to employ an almost reverse psychology method of maneuvering the corporate world. Sound like you are too interested in extra responsibility and a couple of things can happen:

1. Your immediate supervisor/lead will feel threatened and try to hold you down.
2. People will think you are an arrogant ass, not want to work with you, and management will think you are demanding.

So I've had to tread water carefully (boy is this post getting fishy with its analogies). But it seems to be working. I've had to focus on projects and pretend like I'm not interested in their promotion potential, visibility, or in any credit I might receive for doing the work (monetary or just the thanks and positive feedback that I think all employees appreciate from their superiors). It seems to be working. If I look glum when they suggest me as a backup, I pretend I am so overloaded and treat it as just another onerous task, the more they seem to make me want to do these things. 

I think managers must have some higher level of sadism than ordinary people. Appear too eager for something and they won't give it to you. Only when you grudgingly agree to take it on as a humble and hardworking employee do they suddenly see leadership potential. So nothing yet, but I seem to be having some initial success gaming the system. Which of course means I'm going to be just like them some day: unrepentant, self absorbed, narcissistic, sadistic asshole. So not much will change really.

Business Friends

If you're in my line of work you deal with a lot of people at geographically disparate locations and on the phone. Sometimes you're on calls with these people numerous times a week and sending emails back and forth. Sometimes you get rather friendly with them (especially if they're your customer and you're sort of obligated to be nice and polite).

Sometimes I get an overly friendly note in response that if taken on its own sure it makes it look like we are pals. But these people haven't even seen me! It's sort of amusing to think how friendly you can get before you see a person. I'm always a little taken aback. It's like hey I could be Jabba the Hutt for all you know. And I don't just mean large with a penchant for eating live food, but also diabolical and vengeful as well. I'm just sayin'.

Awesome Jabba the Hutt birthday cake courtesy here.

Future of Engineers

Tom Gillis writes a post on his blog on Forbes today called The End of the Engineer. It's sort of like reverse STEM recruiting we typically see everywhere else. Which would be refreshing if it wasn't so ignorant. He first posits that post industrial revolution the need for better machines and manufacturing has been outsourced (not going to argue manufacturing has been outsourced). Then he talks about how the slight differences in performance that engineers generally strive for are no longer as crucial. He cites Apple as moving away from the engineering model towards one of marketing and customer understanding. Saying instead that that is what makes Apple successful.

 

He may be right that incremental improvements no longer please consumers. But I think that's always been the case. I think music industry people were surprised when MP3s gained such popularity. Their quality was a lot lower than CDs. However their portability and ease of use with a variety of devices was what had the mass appeal. And the same with cell phones and smart phones. We use them for convenience not because the sound quality is fantastic (anyone remember the old hear a pin drop Sprint commercials?) Now industry executives are surprised that the mainstream way to watch music videos is YouTube. Watch what you want when you want at your own convenience and for free. That's what consumers want rather than the high quality that executives might have assumed consumers would always be demanding. However, these incremental changes are still appreciated when your smartphone or your LCD TV gets slimmer or the next model of car gets a little lighter and a little better fuel economy.

 

So none of this means engineering is no longer crucial. He mentions the hoardes of engineering graduates from India and China. But for now, whether its societal or level of education, these high numbers have not meant Chinese and Indian companies are always able to compete with equal fervor with western companies. Part of Apple's success is certainly marketing based. But a lot of it is a core product that required a lot of fantastic engineering. And just because Chinese companies have no qualms about stealing IP and churning out cheaper products later doesn't mean they actually have the independent engineering knowledge to make another Apple. And as the sole commenter on his blog alludes to, not every American company that relies on engineering talent is a consumer electronics company.

 

True we're no longer innovating as much in agricultural machines, but we are in power generation plants, offshore drilling, mining applications, solar and wind energy, automotive design, aerospace, weapons, military technology and medical and biomedical breakthroughs. I think Mr. Gillis has really been sheltered too long in the bubble that is Silicon Valley. Apparently he is a VP at Cisco and his Forbes profile includes such excellent buzz words as "social networking", "new security paradigm", "leverage today's tools", "strategic" and he goes on to claim credit for making Cisco strong in the security market. I hope none of the engineers on his team who helped him position Cisco as a strong security leader read this article and realize their head honcho doesn't appreciate their technological contributions. For all his flattery of Steve Jobs and Apple one can only assume he's trying to get a job there. I hope Cisco recognizes this and lets him go so he can make his move. If I want marketing and social media BS I'll go talk about it on Twitter. If I want a company that makes reliable hardware and services because I know they have a good engineering core I will continue to go to companies like Cisco. When a VP doesn't see what's right beneath his nose he doesn't deserve the job.

 

Gillis goes on to recommend that people get Liberal Arts degrees and that he will give that advice to his own children. I sincerely hope he's kidding. As a highly paid executive I'm sure he'd have no problems placing his children with jobs after they get their Art History or Communications BA but he's not only living within the soft bubble of Silicon Valley then he's living within the privileged bubble of upper class if he thinks liberal arts degrees are a viable path to a solid middle class lifestyle. Engineering isn't as respected as it used to be (as evidenced by this article) but I wouldn't tell an intelligent young person who had strong math or science skills not to major in it any sooner than I'd suggest a broad liberal arts degree is a good path either. People should follow their passions certainly as success tends to be elusive no matter what path you take. But underestimating the need for some percentage of the population to be engineers is complete ignorance. Just because we aren't always putting these minds to the best use is a limitation of our policies and a focus on short term growth. If we were thinking Apollo Program big again we'd be able to achieve things way beyond what Gillis could imagine. And we'll need engineers to get us there.

Mercenary Engineer

One of my classmates from undergrad coined the phrase mercenary engineer in place of mechanical engineer. At the time, about to graduate, we were all desperate for employment and opportunities. After years of being sold the bill of lies that is STEM recruiting we'd all felt certain we'd have secure and financially rewarding employment very soon. Whether it was all oversupply or just effects of the recession everyone had become a little less picky and us mechanical engineers were willing to work pretty much anywhere doing pretty much anything. Will engineer for pay.

 

One of the reasons I went into mechanical rather than electrical or structural or chemical was how diverse the field seemed to me to be. Don't get me wrong there's a lot more to sparkies than I realized at the time. But whether you're developing a box for one application or another a lot of the design can be the same if you're working within your specialty. I knew mechanical engineers worked in the auto industry, industrial manufacturing, wind power, mining, aerospace and aviation, space, defense...you name it! Developing one product can be wildly different from another. I liked that kind of variety though I'm sure it's not easy to jump between industries. So I thought my classmate's description of the mechanical engineer was pretty apt: a broad set of skills and an engineer willing to work in a lot of different fields.

 

The picture is a miniature from Reaper Minis and is Rosie the Chronotechnician.

Mechanical Engineering Employment and Pay

Continuing this week's theme of jobs jobs jobs for all you hardworking engineers, I was curious what the outlook had been in my own discipline. I already covered employment and salaries in most disciplines between 1999 and 2010 but wanted to zero in on the mechanical engineers.

Mechanical engineers have had a bit of a bumpy past. The general trend is up but it hasn't been easy. My personal theory for the boost is that the wars in Iraq and Afghanistan have acted as stimulus programs for mechanical engineers. Our own Works Progress Administration putting us to work building tanks and humvees and fighter jets and bombs. The first major climb lags us entering the wars but is pretty strong. I give the delay to the delay in starting Department of Defense contracts and actually funding companies.

Maybe the post 2006 boom is due to the surge (I'd have to look it up). Trends in the automotive industry could also be strongly responsible as well as oil drilling, coal mining, etc. I think the strength even in the recession shows the numbers benefit from more than just commercial development alone. For comparison I pulled the civil engineer's chart over the same period of time.

So same boost up from about the same period on. This one has got to be thanks to housing. The quick and consistent line up and the drop right at the housing crash has had a big effect on the employment of civil engineers. How about our friends the sparkies?

It ain't easy being a sparky. The dot com bubble burst and it hurt. A couple of little climbs later and the recession hits and they are knocked back again. Still, given how heavily commercial electrical engineering is it's probably got a much more sustainable path to growth than defense dollars and government bailouts of the auto industry. Something to keep in mind.
Next a quick look at pay for mechanical engineers:

The bottom line is inflation adjusted. Without that the skyrocketing wages look pretty crazy. But even with inflation engineers managed a 10.5% increase to their mean annual salary over the last ten years. What? You're probably thinking. I'm a sprocket and my salary hasn't been going up. Could be what with the recession and choosey employees they're more likely to hang on to somewhat older and more experienced engineers in lieu of hiring younger ones or keeping young ones on. That may not be the personal experience of older engineers, but even if we're taking very minimal trends it can add up. And 10% increase over 10 years for the gain of 10 years of experience seems kind of like a bargain on the employer's side of things.

Still, the war might be to thank (or blame) for the strength in mechanical engineering employment. ME employment is up over 15% from 1999. Despite the bust civil engineers are employed at 19% more than 1999. And as you can see in the graph electrical engineers broke just about even (actually a drop of two tenths of one percent). I don't think engineers should go into a field based on national numbers and national salaries. Locality can make a huge difference. And of course it's important not to chase money but to do something because you think you'll enjoy it.

Engineering Employment Over Time

How has engineering fared as a career during this recession? How has it been doing over time? Must be jobs week here at Design. Build. Play. Since I was so hard on software "engineers" before I made a separate category from today's Bureau of Labor Statistics data. I'm including programmers separately (but still there) from computer/software engineers (which here includes both systems software and applications). So how do we engineers do?

As you can see computer and software engineers have done particularly well. I'd grant the decline to programmers as being employers are ever more demanding specific degrees from their programmers so it's more just a transfer between categories. The recession has only continued the downward trend from before.

In comparison, civil, electrical and mechanical look almost flat. Of course they aren't really. So maybe you went into engineering for the money, how's that been doing? Here's some not adjusted for inflation salaries over time.

Again it's the same breakdown by discipline and again you see the obvious levelling off of the programmers' salaries. Mechanical and civil seem tied like in the previous graph and now electrical has a definitely higher salary. Is this because it has lower employment compared to the other disciplines as seen in the first graph? Does scarcity drive electrical engineering salaries up?

Future Engineers

A couple of links for easy weekend reading.
A summer camp in San Jose teaching kids hands on civil engineering skills.
Will there some day be a 5-stroke petrol combustion engine that does better than a diesel engine?
Bob Gower CEO of United Memories gives a tour of the place that does chip testing for the semiconductor industry right in Colorado Springs before he retires. They gloss lightly over outsourcing, the quality of US engineers, and the worth of keeping jobs here.

Engineers good business people?

Apparently some engineer got booted off some British version of The Apprentice because the British Donald Trump (Lord Sugar?) doesn't think engineers are good at business. The engineer in question goes on to defend himself by citing other successful engineers such as: Bill Gates, James Dyson and Mark Zuckerberg.

 

Now first of all, I'm not sure a "programmer" is always an engineer. I have mad respect for Bill Gates but neither he nor Zuckerberg completed college. And both are largely known for their programming skills. Given the days of early computers Gates might have more street cred as an engineer since "programming" in its infancy was hardware driven. I'm not saying their both not successful and smart, just that I wouldn't necessarily lump them into an umbrella family of engineers for every single purpose. James Dyson, however, designed the best vacuum I ever used and appears to be like the Tony Stark of vacuum cleaners. Though I'm not entirely sure he has a degree in education that would make all three of them just general genius types. I mean two of them dropped out of Harvard. You gotta figure in many cases have you the advantages to get into Harvard you're already at a good spot (whether that's social upbringing advantages or just pure raw natural talent).

 

Second of all, this argument always makes me think of Tom Smykowski from the movie Office Space who defends his job by saying he's necessary because engineers aren't good with people. I know a great many liasons and systems analysts and project coordinators who it would seem have the same responsibility: go between from the technical to the customer (one could almost argue the highly paid Program Manager fulfills this role as well). It's not so much I think that engineers and technical folks are not good with people, but that their technical skills are valued in such a way that's how management wants them to spend 100% of their time. Versus you can hire somebody else to be the facilitator or communicator. But it does seem to be the trap that engineers and probably scientists fall into.

 

What do you think, does that hold technical people back? What about the other way, are liasons and communicators valued in the same way technical employees are?

Catch a falling engineer

CNN International has an article up, why would be engineers end up as english majors. They really mean why they end up as non-engineering majors, but that's besides the point. They follow a student, Amenah Ibrahim, on her journey through her education.

"The first thing the (professor) told us was, 'You should expect to see this class dwindle down as the semester goes on.' It was the first thing they told us," she said.

They article references a study showing that STEM majors take students longer to finish. But it glosses over statistics that show that it's disproportionately a deterrence to underrepresented minorities:

Thirty-six percent of white, 21% of black and 22% of Latino undergraduate students in STEM fields finished their bachelor's degrees in STEM fields within five years of initial enrollment.

I think most of us in engineering would agree that a lot of the academic rigor that discourages people is probably a good thing. As some of the commenters put it, it prepares you for the real world. But more importantly maybe, you want your engineer, or your doctor or a number of other professions, to have gone through a rigorous education. You want the weak to go off to other majors where maybe their real life careers won't have such an impact. Though we know we have a problem that the system is encouragin white people better than it encourages people of other races. And that means we probably need better support systems in place and better university understanding. There's ways of making sure we're not booting out talented people without dropping the standards.

On the other hand, people are focusing too much on the "need" for STEM graduates.

James Brown, executive director of the STEM Education Coalition, said a big problem is that educators don't often realize the urgency of fostering the next generation of American scientists and engineers.

I'm sure they realize the urgency. They realize that the jobs that were available years before are no longer available. That even before this recession, getting a STEM job was not easy. If we aren't funding science, R&D and infrastructure programs graduating a bunch of scientists and engineers is not going to create a demand in jobs that isn't there. I just talked about this a few days ago, how while engineering is still one of the better employable majors out there at under 70% for 2009 graduates it's not a pretty picture.

The guy at the STEM Education group would be better off reaching out to businesses to start spending more of their reserves on research or to anti-tax politicians to start thinking about how we're going to fund future development in this country. We used to be the world leader in manufacturing. And while some might think manufacturing is coming back thanks to the weak dollar we're no longer the science and space leaders of the world. Like the space program and the interstate highway system that all means spending money. So while that's currently out of fashion, I'm not sure we should be putting the pressure on STEM students and universities rather than where it belongs: business and our politicians.

Admitting Our Weaknesses

I am not entrepreneurial. In fact the whole concept of trying to develop something and sell something is terrifying to me. Academics are even more entrepreneurial than I am in my eyes because they must develop ideas for experiments and apply for grants. Some government scientists and engineers must also do the same.

 

I was born to be a corporate cog. I'm not saying I've never had an original idea in my life, but the quick flashes of new ideas I've seen in others is not something I possess. Working for myself doesn't sound like a tremendously freeing and rewarding experience. It sounds like an incredibly draining and exhausting experience. I'm also ready to sell my technical soul when asked and go be a highly paid project engineer. I'm willing to do half the work for twice the pay; I'll start whenever you need me.

 

Sometimes it's a let down. As in sometimes the creative ideas others have in workarounds or new tests we could try make me jealous. But leave me with my spreadsheets and my matlab and I will methodically get to the answer. It won't be new, but it'll work. I can then package that up in a powerpoint or synergistic memo as needed. World needs more cogs. We can't all be snowflakes.

Possession with intent of double-X chromosome

Just stumbled across an oldie but a goodie, how female stars succeed in new jobs from Harvard Business School's Working Knowledge articles. Professor Boris Groysberg looked at top performing equity analysts as an easy to study profession whose yearly metrics he could compare before and after a change in employers. Because most equity firms were located within 1 mile of each other geographical changes would also have less of an affect.

 

What he found was star male analysts performance actually dropped after changing jobs while star female analysts maintained their performance. Because analysts tend to have the same clients and outside contacts after switching companies Groysberg hypothesized the first reason for why women do better as:

One is that they are more invested in external than in in-house relationships. There are four main reasons why star women maintain external focus: uneasy in-house relationships, poor mentorship, neglect by colleagues, and a vulnerable position in the labor market. External focus makes them more "portable" in terms of making a positive move, but can cause problems if they want to progress within their own organization, because you need a solid internal network and good political capital to get things done in organizations. Anyone who focuses mostly on external relationships will not have that.

So kind of depressing. Women do not have good mentors, internal contacts, or internal institutional support at their own companies. Moving to some other company where they don't necessarily know anybody any better than at their previous employer changes nothing for them. Not really a sign of progress I think. His second reason is a little disappointing, indicating that women do more due diligence in a job search to make sure they are not a token female and that they will have more institutional support whether as a female or just as a person.

I don't like hearing this argument that women don't go into higher paying professions like management because they "have more ethics" than men or don't go into science or engineering because they "choose better jobs" than men and that seems like the argument here. I mean at least we've moved on from "women make better secretaries" but it's like saying African Americans dominate professional basketball because they make better choices to get in as opposed to their white sports colleagues not that their white colleagues actually have more avenues of success available to them.

On a side note, being a lego fan I was looking for a cutesey lego picture to top this post and a google image search of "lego figure" is shockingly masculine. I'd say 98% of figures were male, with a few scantily clad female lego figurines popping up or a few female superheroes. I think I got one hit in the first five pages that was just a normal female figure(lego figures do not even have curves, do we really need to sexualize them as well?). No worries, I thought, this is probably selection bias from the sexist interwebs and hopped over to the lego shop. I search through their City series looking to find ordinary women doing ordinary things. Police, fire and rescue are an all male club it seems with one single police woman who works at the police station but doesn't appear to be a part of any of the units that leave. Transportation shows men only as travellers, city workers, officials and mechanics with a woman working a pizza shop, another of unknown occupation and one travelling with her family in a camper.

It seems we women do not fix or run anything but are only a part of larger sets where clearly there should be at least one woman so the population can procreate and not die out. Other sets are even more disappointing with no women dueling with knights or no women wielding swords, no women swimming underwater to fight the weird sea creatures of Atlantis, no women ninjas, and only a few specific character women in the movie sets (Harry Pottery, Star Wars, Prince of Persia). Okay I suppose some of the ninjas could be women, it's not like the lego figures lead to distinct body shapes, but I still expected a little better from a company from pinko-commi freewave socialist Denmark. Getting past the shear lack of numbers, I think of being a little girl and not getting to see people like me wielding swords or building things but instead being in castles wearing less than everyone else and needing to be rescued. Come on Lego, get it together.

Grumpy Old Employees

Is an aging workforce a good thing in this economy? The Fiscal Times thinks so. They argue older employees delaying retirement is good for many reasons, one of which being less pressure on social security with workers not retiring all at once.

Over the past 16 years, labor force participation rates for men aged 62 to 74 climbed 39 percent, reversing three decades of decline. At the same time, participation for older women jumped 66 percent. In 2010, the government reported the highest number of 60-somethings in the work force since age-specific records began in 1948 — 12.9 million. 

They also argue that these workers contribute to the productivity and GDP of the nation being essential in this economy. But I'm not sure there's an evidence that employing these highly experienced workers longer actually helps with productivity. Even the reasons stated that people keep working seem pretty self-centered and not likely to contribute to engagement at work:

An AARP survey found that 69 percent of older workers plan to stay on the job into their golden years, but the majority would prefer part-time options. The top two reasons for wanting to keep working were for money and health insurance. The people who are already working past traditional retirement age tend to hold jobs that are structured differently: more flexible, fewer hours, less office politics and higher satisfaction, according to research by the Families and Work Institute.

And I have to admit the whole thing about them preferring to work part time is sort of ridiculous. I'm betting a huge chunk of the population would prefer to work part time, at least at different points in their lives. Would that we all had the pull and influence at work to make it so, not to mention retirement savings to dip from. But it's telling that this data reflects my own anecdotal experiences: that the older employees I know who keep working tend to do so because they think they can not afford to retire, or are concerned about health benefits (either because they are too young for medicare, think it will be too costly, or are neo-cons afraid that "obamacare" has somehow affected their precious entitlement benefits).

I am sympathetic. I think if you don't have the money that's a perfectly valid reason to keep working longer.

The financial crisis and recession have motivated some workers to delay retirement, as they struggle to recoup losses in their nest eggs. Even a two-year increase in the median retirement age could cut in half the share of households that are financially unprepared for old age, according to a McKinsey Global Institute study.

What with the magic of compound interest, it's no surprise that older workers can make up for retirement losses in a shorter timeframe. If their 401k was already substantially larger than younger workers, it's no wonder a few years could help to really turn it around. Not to mention the stock market's gone up more than 50% from its low in 2008. But here's where the article loses me. It's trying to convince me that all these people staying in the workforce longer is a good thing for the economy: of which I and most people I know care mostly about one thing, jobs.

Rather than seeing these people as crowding out younger workers from jobs, it's important to remember that as they stay in the work force longer, they generate more demand for goods and services — which creates jobs, Stevenson said.

Oh really?

Take the health care sector, where a shortage of nurses has forced employers to focus on retaining older workers, and to view flexibility as a strategic business tool rather than an accommodation, said Ellen Galinsky, president of the Families and Work Institute. Bon Secours, for instance, offers more flexible and part-time work in addition to facilitating transitions to less-physically demanding jobs. The company child care center is available to grandchildren of employees, not simply children. "They've done a lot of things to make the work force more appealing to older workers," Galinsky said.

The utility industry's engineers, executives and field technicians have an average age of 48, five years older than the median U.S. worker. At PSE&G in Newark, about a third of the energy company's 10,000 employees are already eligible to retire, said David Lyons, a PSE&G director. To keep skilled workers, the company implemented a phased retirement program three years ago that lets eligible employees work up to 24 hours a week for two years while receiving pension benefits, in addition to a program to rehire retirees for temporary engagements of up to 24 months.

Yeah I don't think all those brand new nursing graduates who can't find jobs are thanking you for your diligence in hanging on to nurses past retirement age. Like other industries in the past, there was all this talk about how there would be an extreme nursing shortage in this country once baby boomers started retiring. And young and motivated people flooded nursing schools. Last year the California Institute for Nursing and Healthcare was anticipating 40% of nursing graduates would be unable to find jobs. I get why companies would rather hang on to an older worker with much more experience rather than hire a fresh grad. But this to me is a win for the employer at best, and possibly the older worker, but a loss for GenY and GenX workers who have already dealt with the fact that many management positions would be out of their reach for much longer than previous generations and now are having the rug of education and hard work leading to a semi-stable job pulled out from under them.

Engineers also I think will not thank industries for offering juicier benefits to their oldtimers (who will already qualify for social security at much younger ages than successive generations, who do not know if it will even still be there for them). We already saw stability and pensions denied after the generation that retired before boomers and now we're seeing a desperate gamble to give some last, tasty benefits to boomers that no later generations will ever get a whif of. The national unemployment rate of engineers may not seem so bad, but the last career fair I was at included several hundred new graduates, many who had been unable to find their first job still after eight months since graduating and many more who were graduating soon and ten years ago might have already had a job offer but now had only the long unemployment of their peers to look forward to. Many of these bright young engineers would love to be wooed and coddled by utility companies. I agree a fresh engineer is not a decades experienced engineer but I wonder if comprehensive training programs are really much more expensive than increasing pension benefits or extending health insurance.

 

There's a lot of good studies cited in this article but no proof to back up that keeping older workers in the labor force longer has any benefit whatsoever to the economy or the GDP in any real measure. Even if it's good for the GDP, we've already seen that though this recession is supposedly over and GDP starting to rise that does not necessarily trickle down to the average worker. Until then I'm going to see this for what it is: another trick by employers to preserve short term profits and not look ahead towards long term growth.

Design Fridays: Starbucks Logo

The picture above shows the ever changing face of a Starbucks cup of coffee. Now there's even a new logo and they are dropping the words. What do you think? I like the efforts to make the logo more simple, but I don't think the Starbucks mermaid has enough strength in brand symbol recognition to stand on its own. And coffee is such a nice word, evoking such wonderful mental images and emotions for us addicts, removing the word seems almost sad.

 

So +1 for simplicity but -1 for promoting the brand. Any other thoughts on this, what does everyone else think?

The Rational Consumer

How reliable are economic models that depend on economic actors to act in their own best interest? I just watched the Nova documentary, Mind Over Money which displays various theories of economics as modelled by mathematical equations that expect us all to act in our own best interest or those who think emotions and behavior cause us to act irrationally.

 

They talk to Robert Shiller a Yale economist who it could be said predicted both the tech stock crash and the housing market crash as speculative bubbles. He argues against the rational consumer theory, stating that bubbles are not based on self interest. He talks about the "Tulip Mania" in the Netherlands in the 17th century, widely believed to be the first speculative bubble of which there are records. Tulips were relatively new and not unlike today they were trading tulip futures as well as actual tulip bulbs. At the peak, some of the most expensive tulip brands were selling a single bulb for 12 times the yearly income of a typical skilled craftsmen. While many attributed this bubble to crowd irrationality and use it as an example of behavioral economics (as does Shiller) many others try to draw rational explanations from this event. I still found it interesting that there could be such speculation on something that seemed to have very little intrinsic value whatsoever. But then, in the documentary they show that in studies even when "traders" are told a commodity has no value and will be completely without value at the end of they experiment they tend to take risks and buy creating a bubble and ending up busted in the end.

 

It's an interesting documentary, though I think Nova pushes the behavioral model a little too much. Though I agree and think it's folly to think that as a mass people will always act in their own self interest. The fact that people were willing to pay up to $600,000 for a three bedroom home a few years ago and now because they are underwater, but can still afford the payments, they often choose to walk away from their mortgage. If they kept paying they'd likely have some decent equity in their home. And hanging on to the home they can probably expect its price to eventually rise over time. But as is typical, we discount the future and make decisions that appear to be only in our immediate best interest. The immediate value of the home, and the immediate consequence of mortgage payments are more important than a forclosure on our financial records or lost equity or downpayment. The difficulty of obtaining equity in the future is discounted and the advantage of walking away now is considered more important.

 

Documentaries like this always make me worry about the stock market which I invest in, but secretly worry is some house of cards built on nothing. I worry about the price of homes as well as other bubbles and the stagnant wages of American workers right now. But at least you can live in a house. You can't live in a tulip.

Powerful Women, Powerful Words

Over at Dr. Isis's there's a discussion on Time's Time's 25 Most Powerful Women of the Century. No Sarah Palin is not on the list. My mind immediately went to Indra Nooyi, CEO of Pepsi, which goes to show I read too much about business blogs since she's regularly features on lists such as these, 25 Most Powerful Women in Business.

 

Some of the entries on women in the 20th century I question as truly being "powerful" but I guess it depends on how you define your list. For instance, Mother Theresa is on there. I'm not sure I equate "powerful" with Mother Theresa. I'm also not sure what influence she's had on the world at large. Was she a great person? Sure. Did she do good things that changed that world? I don't know about that. She's no Rosa Parks there. But Hillary Clinton, Margaret Thatcher, Oprah or some of the makeup/clothing pioneers I can definitely see as being "powerful."

 

But skip over to Time's Q&A with their business women and you find something else. Most have their heads so far up in the biz-ness their answers are predictable. "What's your best decision ever?" "Duh, coming to work for this company and getting promoted." Doesn't matter whether you've been there two months or twenty years, if you don't say something nice about your current place of employment...better not bother saying anything nice at all.

 

One of the other questions they ask is "What do you think is the most significant barrier to female leadership?" Most answer with some sort of "women aren't confident enough" blame the victim bullshit, or women just don't blah blah blah for themselves, or but it's so hard raising a family and being taken seriously, but that's probably my fault not society's. However, Joanna Maguire, an Executive Vice President at Lockheed Martin has the balls (see? it's always gotta be a pro-male analogy, even on a wanna-be feminist blog) to really nail down where the problem is:

"Cultural stereotypes continue to present significant challenges for women leaders. Stereotypes routinely cause men and women to underestimate and underutilize women's leadership talent. For example, when women leaders act in gender-consistent ways — cooperative and relationship-focused — they "fit in" as women, but are often perceived as soft leaders by both genders. When women act "like men" — authoritative or ambitious — they are often viewed as too tough and overly aggressive. As a result, successful women leaders must learn to effectively thread the needle and call on the leadership attributes of men and women when the time demands."

Now that I've outed her here as a radical feminist who thinks women are damned if they do and damned if they don't she'll probably get moved to Lockheed's Siberia location. But hopefully she'll slip by. I mean, Lockheed probably has thousands of executive VP's but it's nice to know there's one using their brain today.

Please grow a spine, for the economy's sake

Dear America and Obama; you are not some invertibrate or mollusk that does not possess bones. You have spines (the American spine is obviously the [insert geographical landmark here].)

 

It is going to have to get ugly before it gets better.

 

See, the Federal Reserve Bank would like to try this thing called quantitative easing: they print a lot of money, buy treasury bonds, and hope to drive down interest rates. You don't hear conservatives complaining about what this is going to do because hey, they want lower interest rates too. Rich companies want to borrow stuff at lower interest rates, and the Feds hope this means the banks will finally start showing consumers some love again and let them borrow money for slightly better rates. Yeah, right.

 

But you could also consider this some backasswards trickle-down stimulus plan. Which might be better than no stimulus at this point. And given how Glen Beck and the neo-cons are pretty sure Stalin's stimulus package forced the Soviets to adopt crappy clothing, bad hair styles, and taxed Hitler so hard he killed all the Jews, they don't want to try another one in America. So they're okay with quantitative easing (who wouldn't be with Ben Bernanke's beard? That man could sell me a Government Motors car).

 

Unfortunately, a lot of people at the G20 this week are not okay with it. They're worried this will drive down the price of the dollar, give us a competitive edge in selling our goods to other countries, and hurt their economic exports. They think we are "threatening" our trade partners. Even China is concerned, just as we're trying to convince them to stop keeping their currency artificially low. Marketplace's commentator David Frum summed up what I wanted to say (and with fewer expletives):

China keeps its currency cheap so as to promote exports -- especially to the United States -- thus creating jobs for China's needy millions. How extreme is China's manipulation? Well, think of it this way: Since September 2008, the U.S. dollar has declined 30 percent against the currency of number one trade partner, Canada. Against number two, China? Flat until this summer, then down only five percent.

I feel like America and all its free market fanatacism is the only one playing by the rules in this game. We import H1B visa workers who take our educated jobs, allow our companies to go overseas and "outsource" and give them, if anything, lower taxes but nothing to disincentivize them otherwise. We import all of China's and numerous other emerging nations' goods without imposing any sort of tariffs. We struggle to enter China and India's economy as both those companies prevent outside companies from coming in and freely competing with their own companies.

 

If these companies want a trade war I say bring it on. How about America stops competing as the only country who's agreed to tie both its hands behind its back. How about if China doesn't stop manipulating their currency, we start imposing tariffs on their imported goods. How about if India doesn't want us to compete freely there we stop letting corporations outsource. How about we drastically cut back on the number of H1B visas. In Canada or most of Europe in order to hire a foreigner you have to justify that there is no native resident capable of doing that job. Here, we can just cut the pay and say no American software engineer will work for that kind of pay and apparently that's enough for all of silicon valley to important half the Indian population into California. We need to start taxing American companies equally for foreign and domestic employees. Outsourcing should not be a tax break. And if we need to do this one time pseudo-stimulus package and other countires want to whine about it, well let them. It'll probably be short lived that American goods will actually be more appealing to other nations and we can't always be the company carrying the trade deficit. So suck it up, world.

Grow your own shrooms

Used coffee grounds and mushrooms don't usually bring to mind entrepreneurialism. A couple of university business students in California both approached their professor after a class where growing mushrooms in coffee grounds was mentioned, and he paired them up and they've been trying to make a business of it ever since. Apparently growing the mushrooms themselves for local restaurants proved too space inefficient. So now they make these kits, a sort of DIY. Right now they're running all this on their own with very little fixed expenses so it remains to be seen whether they could actually make a profit from this venture.

 

This is timely for me as it is senior project time in my design class. I was surprised to hear my classmates speak up in dismay that projects developed for a private company would be something they would not retain the IP (intellectual property) rights for. I think many will go the academic/research route just to control the rights to the projects they work on. I know not all of them plan to go to grad school, so it's interesting to me how many have that spark of creativity where they would like to keep working on and keep developing their ideas. I, like the characters in Shawshank Redemption, am mostly "institutionalized" and can't see myself working on something that is more research driven than private. However there are lots of good projects. Another classmate of mine was mulling over doing a project that had a lot of meaning and could actually help people versus something that would be more likely to get him a job. I'm trying to push aside any desire I might have to work on some of the more "interesting" projects in favor of something less difficult so I'm not as overwhelmed in the next several months. I guess we all have difficult decisions to make.