Our Economy Needs More Engineers and Fewer MBA’s

October 17, 2008 by  
Filed under Economics

In a previous post, I expressed my opposition to a new consumer spending stimulus package proposed by the Democrats.  Instead, I favored jump starting the economy through increased government spending on energy technology R&D and alternative energy infrastructure.

Shortly after publishing that post, I was driving into work and, as usual, listening to Fox Business Channel on XM satellite radio.  The studio hosts were interviewing an economist who was opining on fiscal and monetary policies that the government should adopt to pull us out of a recession.  The economist had views similar to mine as he talked about government spending on new technologies to achieve greater energy independence.  Good for him. 

Shortly after the interview ended, the studio hosts were reflecting on what the economist had just said, with periodic references to the scrambling and fumbling around by Wall Street investment bankers.  

Suddenly, one of the hosts (a female) had an “ah hah” moment, evidenced by this statement:  “You know, we need more engineers and fewer MBA’s in this economy.”  The statement was so profound (and true) that the two other hosts were compelled to agree, as well they should. 

The problem with Wall Street is that the thousands of MBA types who occupy it do not produce anything tangible.  Even worse, they don’t even know how to produce anything tangible or to manage those who do.  All they know about are credit default swaps, collateralized debt obligations, risk arbitrage, cigar and martini bars, and weekends in the Hamptons.  Most of what they know and do is focused on taking financial risks, packaging the risks, passing the risks on to others (like us), and shoving millions into their pockets.  They are also adept at spelling “bailout” and “rescue” in several languages. 

We need to return to an economy that actually designs, builds, and sells stuff.  By “stuff”, I mean things we can touch, see and use productively.  Wall Street MBA’s don’t know how to do that.  Engineers know how to do that.  In fact, they love doing that.  But we do not train or graduate enough engineers.  MBA programs continue to pop-up like weeds to grab tuition money from students who are taught exciting subjects like “leadership,” “sustainability,” “diversity,” and “money counting.”  (OK, there probably isn’t a class in “money counting” but that’s what the students are thinking about when the “leadership” lectures start.)  Two weeks later, they forget it all because such training has no practical application. 

So, can we please send the Wall Street MBA’s back to school to learn something productive?  If they can’t handle calculus, I know there is a need for good auto mechanics.

Now to those of you getting ready to point out that Mr. ToughMoneyLove is a lawyer, and that we definitely don’t need more lawyers, I say hold on just a minute.  First, I agree that we don’t need any more lawyers.  In fact, we ought to recycle a lot of the lawyers along with the MBA’s.  Second, I was an engineer before I became a lawyer.  I actually designed stuff that people bought and used.  I am proud of that.  I would love to do it again.  Now, I help protect technology that others develop.  I am proud of that also.  I am also very proud to say that I am not an MBA.  

I have a parting suggestion to all of you parents out there.  Remember the Waylon and Willie song about mamas not letting your babies grow up to be cowboys?  Sing that song to your spouse.  Just substitute “MBA’s” for “cowboys” and you are good to go.  Waylon and Willie won’t mind.

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12 Responses to “Our Economy Needs More Engineers and Fewer MBA’s”
  1. doctor S says:

    Could not agree with you more. Everyone and their mother these days is off to get an MBA of some sort. It is becoming the common practice because everyone is chasing that MBA salary. We definitely need to focus more on the R&D issues to help innovate solutions to our countries problems.

    So many other countries are light years ahead of us when it comes to alternate energies. Are they really that much more smarter than us? I think the red tape of our country is holding us back. Great post.

  2. I’ll ditto the doc and say that I could not agree with you more either. An MBA just means that you have learned how to bu&&Sh*t in a convincing enough manner to sell investment products/services – and nothing else!

  3. doc s: Unfortunately it is true that training in engineering is more valued in other countries. Even when I studied 35 years ago, many of my classmates were foreign students.

    ABC: There are some MBA grads who actually do productive work. Very few of them work on Wall Street.

  4. Most of the “Wall Street” folks you assume are MBAs are Ivy grads without MBAs. They’re called investment bankers. Oh, and a large percentage are lawyers or former lawyers.

    Academics complaining about the real-world skills of MBAs is pretty laughable to me, out here in the real business world.

  5. Dogatemyfinances: What real world skills are you referring to, other than accounting? Which complaints from academics are you referring to? Being an Ivy grad myself, I take no consolation in knowing that the folks running Wall Street are from the Ancient Eight. Finally, how scary to think of former lawyers calling the shots on Wall Street. At least a practicing lawyer can be disbarred for engaging in corrupt or unethical behavior. But I do agree with you that we also need more engineers and fewer investment bankers, with or without MBA degrees.

  6. richgirl says:

    I agree with you. It’s too bad that we don’t value people with practical skills in this country, though. In my area, engineering is for nerds and blue collar kids trying to move up in the world. That, and the weed-em-out mentality of many engineering schools (I’m an engineer myself), makes engineering an unattractive option for many people. Also, the MBA-types running companies see engineers as an expense to be minimized, not a resource, so guess which jobs are the first to go in a downturn? Yep, the R&D jobs.

  7. richgirl: Another thing the MBA types do is assign the best engineers to “cost reduction” rather than innovation. That is a huge demotivator. Thanks for visiting.

  8. PBS and CNBC put up some rather frightening stats on this subject several months ago comparing the U.S. to other foreign nations – particularly China. Something like 90% of Chinese grads are engineering/R&D related versus the U.S. in the low teens.

    Like you, I seemingly converted to the dark side since I’m a former scientist turned independent trader. However, my conversion was driven by an economic system that allows a 25 year old Ivy League MBA grad w/ a juiced in resume to have a higher salary than seasoned professionals who are the real IP generators for his or her company.

    Perhaps the adage “those who can’t do, teach” should be converted to “those who can’t create, manage”.

  9. jamal JK says:

    As a design engineer with an advanced degree, I do agree with you on the need for more quality engineers but we need the MBAs too. Engineers in general don’t know much about running a business, so it’s important to have good MBAs in a company. The MBAs on Wall St. who work on financial instruments have their role in the economy as well. The general public need such instruments for investements etc. The only thing is that the investors have to be wise and pay more attention to what they are investing in. Also, the free market should be allowed to work. Those MBAs who mess up should be allowed to fail; the government shouldn’t assume the risk of poor judgement. Failure is essential in free markets since that’s what weeds out poor judgement makers and allows resources to go to those who are better stewards of those resources.

  10. jamal: The problem with Wall Street MBA’s is that they have tried to create an entire industry in securitization and leverage as if these were real products with intrinsic value. The underlying assets (real estate) were produced by others. It’s sort of what Enron was doing with energy “products” until it’s fantasy balance sheet got exposed. We need real products and that’s what engineers bring to the table.

  11. Murfinator says:

    Good article.

    I’m an aerospace engineer. MBA morons are pretty much dismantling our industry. Expect Aerospace to go the way of Detroit in ~10 years. It’s sad. I am going back to Canada…

  12. Jim says:

    While I agree with the sentiment. America needs to return to the idea of making a product instead of selling paper money schemes to each other. However, there is not enough jobs for US engineers, and they are considered like a piece of furniture, easily replaced.

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