Finance Career: Q&A for Physics PhD Seeking Advice | TwoFishQuant

[twofish-quant]

That is not an excuse in 2012 with the existence of Google.

It actually is. The trouble with google is that you have too *much* information, and a lot of that information is questionable. There's also the problem of getting the right information, and the problem that a surprising about of information isn't public.

Now as for your point regarding universities, I think it is preferable for universities to simply say "caveat emptor" rather than give bad advice which would have negative consequences to the students involved.

What about giving good advice? The trouble with having universities just say "it's not our job to give advice" is that at that point people wonder why universities are being funded at all. Also, if it's not the universities job, then whose job is it? Maybe google. OK, but if we can't trust Harvard then why should we trust Google? Suppose Google changes it's search algorithm to supress information that's unfavorable to Google. How would we even know that that happened?

It is also worth keeping in mind that universities serve at least two functions: (1) to provide the student with further education to expand their horizons, and (2) to provide skills and training to prepare them for the workforce. Functions (1) and (2) are competing interests that can at times work in cross-purposes, as you are no doubt aware.

That's not the problem. The problem is with goal (3). Universities have as one goal the goal of making money and keeping professors employed. Now, I don't have problems with an institution being "selfish". I do have a problem with "selfish" institutions not paying taxes, and one reason that non-profit universities get away with not paying taxes is that supposedly they are working for the public good.

Further, students technically do not pay the university for advice, they pay for the privilege of being provided an advanced education. Whether that investment is actually worth it for the student is an important matter of debate.

Sorry. This won't work. It's the person that pays the money that determines what they money is being paid for. Also, it *shouldn't* be a matter for debate. If the university takes the students money (either directly or indirectly through taxes), and it's not provide economic growth, then people will ask *why are we paying this money*?

Right now, university budgets are getting cut. Personally, I think that's a horrible thing, and it's going to kill the US economy in the long term. Telling people, "our job is not economic growth" is just going to get your budgets slashed even more.

I often wonder to myself if some of these students may well be better off to pursue more vocational or technical training, through community colleges and the like.

I don't think so. There is this myth of the "happy plumber" which I've seen. I'd actually like to *meet* a happy plumber in the United States. It also doesn't give me a lot of confidence that for-profit vo-tech institutions lie even more egregiously than non-profit universities.

One issue is that people go to universities because a universitiy degree provides "social capital." There is a stigma associated with vocational training in the United States and to change that you really need to change a lot of society. There's the other issue that one additional job of universities is "young adult daycare." Universities provide things like medical services and a buffer to law enforcement, so that you can learn how to handle sex and alcohol. Vo-tech institutions don't do this.

Also, MIT is interesting because MIT is basically a vocational school with powerful friends.

I actually think that such a skeptical approach to authority in general is healthy for a liberal democracy, as it is through this very questioning that changes and reforms take place

The trouble with skepticism is that it can go too far into just giving up on the institutions. Also, there is no reason to think that "liberal democracy" will win. It's a disturbing fact that some of the fastest growing economies are not liberal democracies. In both China and Singapore, people are extremely skeptical of liberal democracies. Something that is interesting is that if you look at peoples perceptions of China, young people have much higher approval of China than old people. It's actually quite disturbing if you think about the long term consequences.

China is just flooding money into science, and I think that this is going to benefit the Chinese economy over the next several decades. The US isn't and that is going to kill the US economy. Now let's go to 2030. Suppose China has planted it's flag on Mars, it has a high speed railroad system, and the US is *still* in the dumps. At that point, people might just think that it's better for the US to be a one party state.

Also, one issue with liberal democracies is that a lot of the arguments are "fake." Suppose you think that universities stink. If they have lobbyists and you don't, then it doesn't matter what you think.

At the very least, I would hope that such questioning will serve as a means for reforms to the way education in general, including higher education, is being delivered to the American public.

If you want something done, you don't ask questions. You organize and hold protests, and think about where the money comes from. One thing that I realized pretty early was that if you don't have money, then no one cares what you think.

Don't hope. Hope gets you nowhere. Act. If I politely question authority, then my suggestions will be given over to a committee and forgotten. If I have a check for $100,000 in my hand, and I have friends with checks with $100,000, then suddenly people aren't talking about committees any more.

Here I agree with you -- the US does not spend enough on science and technology, at least in comparison to its share of GDP (although this is hardly an issue that is unique to the US -- here in Canada where I live, researchers often have to make do with the most limited forms of funding, and I'm always quite amazed at how much they are able to punch well above their weight given the limitations involved).

And China is flooding money into science and technology.

 

[mdxyz]

As much as we as scientists like to pretend, because it's in our interests to do so, there isn't much connectionn between GDP growth and science spending. There are two reasons for this. First, research with direct economic value is done anyway by the market. And second, basic research doesn't work unless it's published, so it doesn't give anyone an advantage they can stop other people getting. China has been growing a lot in the past few years because it started at a level of extreme poverty with terrible institutions, and now has only quite bad institutions. It will grow rapidly until its productive capacity reaches the equibilibrium level of its institutions, at which point growth tends back to the 1-2% rate of technological improvement. This already happened in Hong Kong, which is poorer than the US, and has better institutions than the PRC is ever likely to adopt on the mainland.

Moon bases and high speed trains are the equivalent of the Beijing Olympic opening ceremony - a signal you've arrived, and a symptom of wealth rather than a cause.

A bit off-topic maybe, but I think people would see the career aspect of getting a physics PhD in a more realistic light if they accept that they are essentially being given cash to play with some cool toys by the taxpayer, for little more reason than the government and the public feel that science is something that ought to get done. Not because they'll suffer greatly if it doesn't, like if all the engineers and doctors and lawyers decide not to show up to work one morning.

In some ways trying to become a physics professor is like trying to become an Olympic athlete. A lot of people are competing with you for the enjoyment and the prestige, and most of them will fail. A good thing about physics degrees is that you can learn to do programming, engineering, electronics and so forth in the meantime, so you have more alternate employment opportunities than a failed Olympian.

 

[intelwanderer]

The trouble with skepticism is that it can go too far into just giving up on the institutions. Also, there is no reason to think that "liberal democracy" will win. It's a disturbing fact that some of the fastest growing economies are not liberal democracies. In both China and Singapore, people are extremely skeptical of liberal democracies. Something that is interesting is that if you look at peoples perceptions of China, young people have much higher approval of China than old people. It's actually quite disturbing if you think about the long term consequences.

China is just flooding money into science, and I think that this is going to benefit the Chinese economy over the next several decades. The US isn't and that is going to kill the US economy. Now let's go to 2030. Suppose China has planted it's flag on Mars, it has a high speed railroad system, and the US is *still* in the dumps. At that point, people might just think that it's better for the US to be a one party stateAnd China is flooding money into science and technology.

Really, I don't know if the US is a true democracy so much as it's an oligarchy. It feels horrible to say that, but... Obviously we aren't a totalitarian state or anything awful like that,as we don't have to resort to killing dissidents, but to get anything done, it seems as though you need serious cash-more than most people will ever have. You can SAY whatever you want without being persecuted, and I love that. But it'd be nice if you could also do something, no matter who you are. It's sort of like the Roman Republic.

I might end up changing things more if I get an MBA from a top flight school(like THAT's ever going to happen, but let's be hypothetical for a second), get a lot of money, and fund science rather than do the science. It wouldn't be near as much fun or personally satisfying, so I wish that wasn't true.

Of course, there could be a *spark* for mass change,like the self immolation of Mohamed Bouazizi was in the Arab world, but who knows what that might lead to? It could lead to things getting better or to mass chaos.

Don't China and America have a close economic relationship, really a binding one? I'm no expert, but I'd imagine the collapse or instability of one would hurt the other pretty badly.

A lot of kids-myself included-were told to go into STEM, as STEM would change the world, and we were smart, the usual crap, blah blah blah... I love just walking in my U's labs, seeing all the talent at work, thinking how it might change the world someday... I don't want to have that love crushed. Why the difference in what they are saying and what they are doing? If everyone loves STEM so much, why doesn't the government fund it more?

A bit off-topic maybe, but I think people would see the career aspect of getting a physics PhD in a more realistic light if they accept that they are essentially being given cash to play with some cool toys by the taxpayer, for little more reason than the government and the public feel that science is something that ought to get done. Not because they'll suffer greatly if it doesn't, like if all the engineers and doctors and lawyers decide not to show up to work one morning.

They might not suffer, but their decsendents will, because all the new gadgets stem from new scientific discoveries.

In some ways trying to become a physics professor is like trying to become an Olympic athlete. A lot of people are competing with you for the enjoyment and the prestige, and most of them will fail. A good thing about physics degrees is that you can learn to do programming, engineering, electronics and so forth in the meantime, so you have more alternate employment opportunities than a failed Olympian.

This I agree with. Most physics grads at my U who took a few eng/CS classes on the side had no problems getting jobs, or so my admittedly limited observation has been. I plan on doing that, and besides, those courses are pretty cool too, so why not? :)
You can also go pretty easily from a physics BS to an MSEE-if you pick the right core and plan your undergrad right, you won't even have to take any makeup courses.

 

[twofish-quant]

As much as we as scientists like to pretend, because it's in our interests to do so, there isn't much connection between GDP growth and science spending.

I think there is. There is a lag period of about twenty years. That's why I think things are dangerous. If we cut science spending today, and the lights go off, people will realize that it's a mistake, and fix it quickly. However, any science spending that gets done today, won't have any impact until 2025.

The other issue is that it's hard to run the experiment. If GDP growth today is 1% then I could (and do) argue that if we go back and cut spending then it would be -5%. But I don't have a time machine handy to demonstrate it.

The reason I *do* think that it matter involves looking at the history of things like the internet.

First, research with direct economic value is done anyway by the market.

Yes but that builds on research that has no direct economic value. Also the thing about government spending is that it's an indirect subsidy on the market. If the government does research, and then it goes out for free, then it makes it easier for companies to take that research and make a profit since their costs are low.

And second, basic research doesn't work unless it's published, so it doesn't give anyone an advantage they can stop other people getting.

Disagree. When people do basic research there is a lot of unwritten knowledge that never gets published. For example when I work on supercomputer code, there are things that I just *know* will work or don't work. If you sit someone next to me and have them watch me, some of that knowledge will rub off.

But I couldn't publish a paper on it, because I don't even know that I have this knowledge.

Also, there is a lot of knowledge infrastructure. For example, China probably has the complete blueprints to a Boeing 787 airliner, but that doesn't mean that China can make a 787, because there are critical bits that aren't written down and is in the heads of engineers. You can get a car without any problems. But that doesn't mean that you can build a car factory or car industry.

China has been growing a lot in the past few years because it started at a level of extreme poverty with terrible institutions, and now has only quite bad institutions. It will grow rapidly until its productive capacity reaches the equibilibrium level of its institutions, at which point growth tends back to the 1-2% rate of technological improvement.

And Singapore?

China got itself out of the ditch around 1990. The institutions are bad, but they are improving.

This already happened in Hong Kong, which is poorer than the US, and has better institutions than the PRC is ever likely to adopt on the mainland.

Ummmm... Have you been to Hong Kong lately? It doesn't *feel* poorer than the US. Heck, go to Shenzhen, and it looks as wealthy as most places in the United States. The recession in China ended years ago.

Also Hong Kong is an excellent commercial center. It's not very good at pure science. The center of science in China is Beijing. The big effort is to try to merge the systems so that you get something with the commercial skill of HK with the scientific expertise of Beijing University. Hard and painful. But it's happening.

And then there is Singapore.

Moon bases and high speed trains are the equivalent of the Beijing Olympic opening ceremony - a signal you've arrived, and a symptom of wealth rather than a cause.

Moon bases aren't that expensive. Also high speed rail is *extremely* useful. You quickly figure things out if you want to get from point A to point B in China. Airplanes are hellishly expensive and very inconvenient. Low speed rail is too slow. HSR is going to be wonderful, except that there is this missing link which should be built later this year. Every time a link gets built, you can see the impact it has on the economy.

Also moon bases and HSR provide jobs and keep people employed. Once you figure out how to build a moon base, then people will use this to figure out how to put stuff into LEO. Once you get those costs down, then the skies open up. The thing is that you absolutely need government money for this. You can have private contractors do the work, but for things like SpaceX and Bigelow to go anywhere, you need government contracts. The nice thing about private industry is that often you get things done cheaper and faster, but there is a limit to how cheap and how fast, and I think we are close to it.

There is one commonality between railroads and space exploration. Costs are N+large constant, but usefulness is N^2 + zero. One KM of railroad track is useless. One space station isn't that useful either.

A bit off-topic maybe, but I think people would see the career aspect of getting a physics PhD in a more realistic light if they accept that they are essentially being given cash to play with some cool toys by the taxpayer, for little more reason than the government and the public feel that science is something that ought to get done. Not because they'll suffer greatly if it doesn't, like if all the engineers and doctors and lawyers decide not to show up to work one morning.

Eyes roll...

Let's try this social experiment. You have country A that treats physics Ph.D.'s as if they are a burden on the economy, and then country B that treats physics Ph.D.'s as if they are a national treasure. Let's see where we are in 2030.

There's only so much that you can do. I happen to believe that the US science research system is one of the most beautiful, most productive systems ever created. If Americans are idiots and want to toss this system into the mud, then so it goes. Democracy includes the fundamental right to be stupid. May be I can't stop it, but if it happens at least I can say that I tried.

It makes me sad. It makes me more than a little angry. But sometimes, you just have to face the reality that there is not that much you can do, and if you end up in a country that thinks that physicists are just "taxpayer burdens" then maybe it's better to move somewhere else that people think differently. In the case of China, it's still painfully recovering from the effects of losing the "technology game" in the 19th century. My father saw first hand the importance of physics, because it was because of physics that the US could defeat Japan whereas China couldn't. The scary thing is that when I hear most Americans talk about science and technology, it reminds me a lot about some of the arrogance you saw in China circa 1800 before everything went bad.

In some ways trying to become a physics professor is like trying to become an Olympic athlete. A lot of people are competing with you for the enjoyment and the prestige, and most of them will fail. A good thing about physics degrees is that you can learn to do programming, engineering, electronics and so forth in the meantime, so you have more alternate employment opportunities than a failed Olympian.

Like working in Wall Street.

I like my job, and I'm grateful for the people that give it to me. But I really *wonder* if I'm doing the most social good doing what I'm doing. Yes, it's the best that I can find, but I'm not convinced that the world wouldn't be better off with less quants and more industrial physicists.

 

[twofish-quant]

FYI, according to the CIA and World Bank, Hong Kong is wealthier than the US based on PPP

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html

http://databank.worldbank.org/databank/download/GNIPC.pdf

 

[chill_factor]

self delete, off topic post.

I think there's a simple thing here: if you don't understand it, its probably bad for you to go into it for a career.

 

[twofish-quant]

Of course, there could be a *spark* for mass change,like the self immolation of Mohamed Bouazizi was in the Arab world, but who knows what that might lead to? It could lead to things getting better or to mass chaos.

There's a tricky balance here. One of the big drivers of science in the 1950-1990 was the Cold War. Now it was a good thing that we had advances in science. It was sort of a bad thing that we were always at the brink of nuclear annihilation.

I don't think a new Cold War would be good at all. However, it would be nice to have a "trans solar system olympics". Last person on Mars is a rotten egg. Next stop, Jupiter. I'm a little disappointed that there hasn't been more of a US public reaction to China's space program.

Don't China and America have a close economic relationship, really a binding one? I'm no expert, but I'd imagine the collapse or instability of one would hurt the other pretty badly.

It's one planet with one global economic system. Also, I'm not seriously worried that the US will collapse. What worries me is that the United States will lose the "frontier spirit". Who cares about Mars? The thing about the recession is that the longer it lasts, the more people will think this is "normal".

A lot of kids-myself included-were told to go into STEM, as STEM would change the world, and we were smart, the usual crap, blah blah blah...

Be careful what you tell your kids. They might believe if. When I was in high school, I got to visit the Rose Garden where President Reagan gave a short speech saying how critical science was to the future of the United States. That sort of stuff sticks with you.

I love just walking in my U's labs, seeing all the talent at work, thinking how it might change the world someday...

And one reason I like my job is that I am changing the world. I hope that I'm making it better. There is this nagging worry that I'm making it worse. But what I do matters.

Why the difference in what they are saying and what they are doing? If everyone loves STEM so much, why doesn't the government fund it more?

*They* are different people with different interests, and most people outside of universities have no particular love for STEM. It wasn't love that got science funded during the Cold War. It was good old-fashion *FEAR*. People honestly believed that if the US wasn't funding science, that we might as well start speaking Russian.

If you want to learn how to get things done, you have to learn politics. Also even within the pro-science group there are lots of people with competing interests.

One thing that the astrophysicists in my alma-mater do whenever they get a chance to do it is to try to kill manned space flight. Most astrophysicists believe that the manned space program takes away money from the unmanned program, and that we would get more science with a pure unmanned program. So whenever there is some political issue that comes up, astrophysicists will take a dagger in hand and try to kill the manned space program.

I used to believe that, but I've changed my mind. Without a manned space program, then NASA is going to be completely cut, and you won't have money for anything.

 

[chill_factor]

unmanned program may be good for the pure astrophysics, but the manned program gives us so much things to study in terms of biology, chemistry and engineering such as the crystal growth experiments done on the ISS (I think), designing life support systems which may have application in mines, emergency medicine, etc. in addition to the space science. I actually think that in terms of practical payoffs the manned program is better than the unmanned program.

Also no offense but much of modern physics has strayed so far away from what is experimentally verifiable, let alone applicable, that its best to think about other technical disciplines as the cornerstones of new technology. Even papers in condensed matter, I feel, only a tiny minority is applicable to my research or anything that a company/organization would possibly need, and that's condensed matter! I can't even understand 99% of the other papers in say... particle or astro. Too much formalism and "self consistency" has taken away from what can be experimentally verified even in principle.

The graviton, for example, cannot even be detected in principle. What is the point now?

 

[twofish-quant]

Also no offense but much of modern physics has strayed so far away from what is experimentally verifiable, let alone applicable, that its best to think about other technical disciplines as the cornerstones of new technology.

The thing about big technological breakthoughs is that they are very rarely planned, so it's a good idea to through money at a whole bunch of projects and then see if anything sticks. If even one or two percent of the inventions hit home-runs, then that's enough to pay for them.

Even papers in condensed matter, I feel, only a tiny minority is applicable to my research or anything that a company/organization would possibly need

I've got a different view because I've found that practically everything I learned and researched in graduate school has been useful, relevant, and profitable. I wonder why. Maybe I just lucked out and had a topic with particular usefulness.

However, I think it's more likely that I see a lot of the relevance in what I do because I read a lot of sales and marketing books when I was in graduate school, and I've been around some excellent salesmen and at least seen lobbyists (i.e. idea salesmen) up close. The whole point of sales is to create demand for whatever you have in stock.

The graviton, for example, cannot even be detected in principle. What is the point now?

I'm not a graviton expert, so I couldn't tell you (although I do know one that works in mortgage backed securities). I can tell you how neutrino physics is incredibly useful in finance. Particles are a diffusive process. Stock prices are a diffusive process. There are only a limited number of ways that you can write a partial differential equation. So...

 

[StatGuy2000]

It actually is. The trouble with google is that you have too *much* information, and a lot of that information is questionable. There's also the problem of getting the right information, and the problem that a surprising about of information isn't public.

It is true that there is the problem of too much information and the excess of poor information, as well as the problem of access to non-public information. In the case of non-public information, nothing can be done about that, since neither the general public nor universities for that matter (except to a limited number of researchers) have access to this. As far as filtering out poor information that is actually publicly available, there are ways to get around this problem, through the ranking of websites, investigating multiple sources of information, checking at references, cross-checking with Wikipedia (and the references they provide), etc. Granted, all of this is time-consuming, but it can be done.

What about giving good advice? The trouble with having universities just say "it's not our job to give advice" is that at that point people wonder why universities are being funded at all. Also, if it's not the universities job, then whose job is it? Maybe google. OK, but if we can't trust Harvard then why should we trust Google? Suppose Google changes it's search algorithm to supress information that's unfavorable to Google. How would we even know that that happened?

I'm not arguing that universities shouldn't give ANY advice (including good advice). What I'm stating is that universities (or more specifically, the professors and career counselling services who are currently employed at universities) should be more honest about the advice they are giving, which includes acknowledging their own limitations or lack of knowledge.

In this way, students will then have a means of weighing the advice they are given, and thus be able to make better decisions about the future, and the universities will thus ensure that they maintain their credibility.

That's not the problem. The problem is with goal (3). Universities have as one goal the goal of making money and keeping professors employed. Now, I don't have problems with an institution being "selfish". I do have a problem with "selfish" institutions not paying taxes, and one reason that non-profit universities get away with not paying taxes is that supposedly they are working for the public good.

First of all, is it the case that universities in the US do not pay taxes? Certainly each individual professors and staff members pay income tax, and I thought that businesses owned and operated by the universities pay taxes as well.

Anyways, if in fact universities do not pay taxes is immaterial to me, because universities do work for the public good, in terms of providing higher education and providing high quality research. The point I'm making is that universities can do a better job in those areas and in being relevant to the general public.

Sorry. This won't work. It's the person that pays the money that determines what they money is being paid for. Also, it *shouldn't* be a matter for debate. If the university takes the students money (either directly or indirectly through taxes), and it's not provide economic growth, then people will ask *why are we paying this money*?

Right now, university budgets are getting cut. Personally, I think that's a horrible thing, and it's going to kill the US economy in the long term. Telling people, "our job is not economic growth" is just going to get your budgets slashed even more.

First of all, universities are only one of many factors behind economic growth; an important factor, but only one factor. Second, university budgets in the US are the responsibility of individual states, and their budgets (along with many other state programs) are being cut as a consequence of the budget crises affecting the states, due in no small part to state constitutions mandating a balanced budget and banning deficits.

If you really want to stop university budgets from getting cut, then the only meaningful thing that can be done is for the federal government to bail out the state governments.

I don't think so. There is this myth of the "happy plumber" which I've seen. I'd actually like to *meet* a happy plumber in the United States. It also doesn't give me a lot of confidence that for-profit vo-tech institutions lie even more egregiously than non-profit universities.

One issue is that people go to universities because a universitiy degree provides "social capital." There is a stigma associated with vocational training in the United States and to change that you really need to change a lot of society. There's the other issue that one additional job of universities is "young adult daycare." Universities provide things like medical services and a buffer to law enforcement, so that you can learn how to handle sex and alcohol. Vo-tech institutions don't do this.

Also, MIT is interesting because MIT is basically a vocational school with powerful friends.

I agree that many for-profit vo-tech institutions do not have a great track record on ROI for
its students. However, it is worth keeping in mind that many vocational training is provided by community colleges.

University degrees do provide "social capital" but social capital on its own does not mean all that much unless if it directly leads to meaningful employment. Furthermore, I feel that the stigma associated with vocational training in the US is unproductive, since there is a demand in the US for skilled labor. Combined with the currently high unemployment rate, perhaps we should be re-assessing the value of vocational training.

The trouble with skepticism is that it can go too far into just giving up on the institutions. Also, there is no reason to think that "liberal democracy" will win. It's a disturbing fact that some of the fastest growing economies are not liberal democracies. In both China and Singapore, people are extremely skeptical of liberal democracies. Something that is interesting is that if you look at peoples perceptions of China, young people have much higher approval of China than old people. It's actually quite disturbing if you think about the long term consequences.

China is just flooding money into science, and I think that this is going to benefit the Chinese economy over the next several decades. The US isn't and that is going to kill the US economy. Now let's go to 2030. Suppose China has planted it's flag on Mars, it has a high speed railroad system, and the US is *still* in the dumps. At that point, people might just think that it's better for the US to be a one party state.

Also, one issue with liberal democracies is that a lot of the arguments are "fake." Suppose you think that universities stink. If they have lobbyists and you don't, then it doesn't matter what you think.

You are assuming here that China will continue to maintain their impressive rates of economic growth, which is far from guaranteed; in fact, there is already evidence that China's economic growth is noticeably slowing (the situation with Singapore may be different, but Singapore is a relatively small component of global GDP so I will not consider their situation here). Furthermore, young people's higher approval of China is directly linked to the nation's ability to deliver on employment. Once that changes, I envision that public opinion will very quickly sour, and given the repressive nature of the regime, things could get very ugly very quickly, as is already evident in the number of protests in rural areas against land seizures (and these are protests that have been publicly reported).

China is currently able to flood money in science and technology because they have large reserves of cash (primarily due to the tendency of the average Chinese to save money in state-owned banks, which is due in no small part to insecurity brought on by lack of property rights). Once the Chinese economy will transition to a more consumer-based economy, that large reserve of cash will start to diminish, and China's ability to spend will become more constricted.

If you want something done, you don't ask questions. You organize and hold protests, and think about where the money comes from. One thing that I realized pretty early was that if you don't have money, then no one cares what you think.

Don't hope. Hope gets you nowhere. Act. If I politely question authority, then my suggestions will be given over to a committee and forgotten. If I have a check for $100,000 in my hand, and I have friends with checks with $100,000, then suddenly people aren't talking about committees any more.

Before one can even begin to organize and hold protests, or act, one needs to know what they are protesting for or against, and that begins by asking questions first. It's the act of questioning that serves as an impetus for action.

 

[intelwanderer]

There's a tricky balance here. One of the big drivers of science in the 1950-1990 was the Cold War. Now it was a good thing that we had advances in science. It was sort of a bad thing that we were always at the brink of nuclear annihilation.

I don't think a new Cold War would be good at all. However, it would be nice to have a "trans solar system olympics". Last person on Mars is a rotten egg. Next stop, Jupiter. I'm a little disappointed that there hasn't been more of a US public reaction to China's space program.

You mention, twofish, in several of your posts that it's very important for physicists to learn politics/money. And I agree. Another thing that would be important to learn that I studied this year on my own, is PROPAGANDA.

I know I'm going to get a lot of flak for this, but I have a *grudging* admiration for Josef Goebbels and Pablo Escobar because they were such good propagandists(and the fact I need to point out that I don't support their ideology/trade is another good propaganda point-playing the "Nazi" card, no matter how illogical, works in the public consciousness to discredit, so it is another good trick).

It doesn't have to be a manned space mission to Mars-though that is a cool idea. It could be , who can build the first quantum computer? Who can build the first fusion reactor? Who can break Moore's law-and who can do something with breaking it? Even if it leads to nothing, we might get something cool that was completely unrelated to the original goal.

Make a huge project, and inject it in the public consciousness like the Space Race. America has huge reserves of nationalism-sometimes I think too much for it's own good. USE IT. Just make it friendlier and less deadly than it was during the Cold War...

Or another idea is to get a huge high profile international project together. Science knows no borders. Use that to portray an image of understanding between nations.

University degrees do provide "social capital" but social capital on its own does not mean all that much unless if it directly leads to meaningful employment. Furthermore, I feel that the stigma associated with vocational training in the US is unproductive, since there is a demand in the US for skilled labor. Combined with the currently high unemployment rate, perhaps we should be re-assessing the value of vocational training.

Everyone thinks vo tech schools are a good idea. Just not for their own kids. For the same reason that kids are so obsessed with getting into the "prestige" schools, and the way I was. They are afraid they will "fail" if they don't.

Be careful what you tell your kids. They might believe if. When I was in high school, I got to visit the Rose Garden where President Reagan gave a short speech saying how critical science was to the future of the United States. That sort of stuff sticks with you.

I'll keep that in mind if I ever get married/have kids. In my case, the impetus was attending this research seminar biweekly hosted by a bunch of engineers/scientists from a nearby lab complex.

*They* are different people with different interests, and most people outside of universities have no particular love for STEM. It wasn't love that got science funded during the Cold War. It was good old-fashion *FEAR*.

But the Soviet Union has been gone for two decades now, before I was born. Why do they parrot the "we need more scientists and engineers" line? Why does the President say so? Because they are afraid China will take over if we don't? Why are there so many panicked articles saying how we are utterly behind China and India in scientists(and engineers, but that's a different debate), and refuse to treat them decently?

Before one can even begin to organize and hold protests, or act, one needs to know what they are protesting for or against, and that begins by asking questions first. It's the act of questioning that serves as an impetus for action.

Hence, why Occupy went nowhere.

 

[Moppy]

SFC in London? Did you mean the SFO?

How are they connected to the 'Fed'? Or did you mean the 'Feds'?

EDIT: It seems to me like you are confusing the role of the US Fed, which is a central bank, with the regulatory role of the US Government i.e. the Feds?

It's happening everywhere.

One thing that I find cool about finance is that it's global. The world is sufficiently interconnected so that you just can't think of countries as separate entities. If the US tightens regulations, and the UK doesn't, then everything will just move to the UK.

However, the notion that more regulation is necessary and that bankers need to be put on a tight leash is global. In 2005, if the US regulators were putting in too many rules, then you can threaten to move to UK and vice versa. This doesn't work any more because the regulators are putting together a united front through the Basel Committee. Since the regulators are coordinating with each other, then if the FED orders you to do something, you'll likely find that the SFC in London will order you to do the same thing.

The fact that the regulators are coordinating with each other is something that is very new.

Now there are still a few country-specific quirks (for example the US seems obsessed with gambling and Iran, and the fact that the UK doesn't want to lose control of London to the French and the Germans), but those are minor in the grand scheme of things.

 

[mayonaise]

But the Soviet Union has been gone for two decades now, before I was born. Why do they parrot the "we need more scientists and engineers" line? Why does the President say so? Because they are afraid China will take over if we don't? Why are there so many panicked articles saying how we are utterly behind China and India in scientists(and engineers, but that's a different debate), and refuse to treat them decently?

In my country, one reason is to make it seem important for $ to go from tax payer to government to universities to train more scientists/engineers. Then when there's a glut of MS/PhD scientists and engineers, industry and academia get to treat them worse without loss of productivity.

Now obviously professors don't tell students this. They get tax payer funding to hire tax payer's children to do research. It could also be they don't know and don't care. Industry of course gets cheaper labor trained with tax payer $$. Parents are stuck with their old values, and are proud their children got some advanced degree, something themselves could not get.

This is one scheme that had been very difficult for young people to identify, let alone escape.

 

[chill_factor]

The thing about big technological breakthoughs is that they are very rarely planned, so it's a good idea to through money at a whole bunch of projects and then see if anything sticks. If even one or two percent of the inventions hit home-runs, then that's enough to pay for them.
I've got a different view because I've found that practically everything I learned and researched in graduate school has been useful, relevant, and profitable. I wonder why. Maybe I just lucked out and had a topic with particular usefulness.

However, I think it's more likely that I see a lot of the relevance in what I do because I read a lot of sales and marketing books when I was in graduate school, and I've been around some excellent salesmen and at least seen lobbyists (i.e. idea salesmen) up close. The whole point of sales is to create demand for whatever you have in stock.
I'm not a graviton expert, so I couldn't tell you (although I do know one that works in mortgage backed securities). I can tell you how neutrino physics is incredibly useful in finance. Particles are a diffusive process. Stock prices are a diffusive process. There are only a limited number of ways that you can write a partial differential equation. So...

I think your idea of usefulness is very contrived. Earth scientists, chemists, and environmental/chemical/mechanical engineers also write models of diffusive phenomena. What is special about astrophysics that makes for better model writers? Is there anything an astrophysicist can do that an engineer with a strong computational background could not?

I meant useful as in - the research itself will be directly applicable to new technologies. Most new technological research is highly directed. Why are we researching on graphene instead of say... rocks for new transistors? Because we know for a fact that rocks probably won't be good for this application.

 

[mdxyz]

I think there is. There is a lag period of about twenty years. That's why I think things are dangerous. If we cut science spending today, and the lights go off, people will realize that it's a mistake, and fix it quickly. However, any science spending that gets done today, won't have any impact until 2025.

The other issue is that it's hard to run the experiment. If GDP growth today is 1% then I could (and do) argue that if we go back and cut spending then it would be -5%. But I don't have a time machine handy to demonstrate it.

The reason I *do* think that it matter involves looking at the history of things like the internet.


Yes but that builds on research that has no direct economic value. Also the thing about government spending is that it's an indirect subsidy on the market. If the government does research, and then it goes out for free, then it makes it easier for companies to take that research and make a profit since their costs are low.

Disagree. When people do basic research there is a lot of unwritten knowledge that never gets published. For example when I work on supercomputer code, there are things that I just *know* will work or don't work. If you sit someone next to me and have them watch me, some of that knowledge will rub off.

But I couldn't publish a paper on it, because I don't even know that I have this knowledge.

Also, there is a lot of knowledge infrastructure. For example, China probably has the complete blueprints to a Boeing 787 airliner, but that doesn't mean that China can make a 787, because there are critical bits that aren't written down and is in the heads of engineers. You can get a car without any problems. But that doesn't mean that you can build a car factory or car industry.

I can agree that apparently useless scientific research can increase world GDP growth (though I don't see how lack of it could make GDP growth negative, nor do I think the effect of removing state subsidies would be dramatic), but it doesn't cause disparities between countries. The reason is that by the time it becomes clear to someone somewhere that basic research that has already been done can be used to create enormous amounts of value in the near future, then it becomes industrial research and the market is fine with that. The fastest growing countries are those with the lowest levels of technology, because almost all the work of discovering new technology and how to implement it has already been done by other people. These countries were being held back by their bad institutions.

If you could hide basic research for long periods then there might be more of a point that it can cause a disparity between countries, but note that if you could do that it would also be profitable on the market to do basic research. The reason research is done by the government is that it is regarded as a public good: the people who put up the money can't fully internalise the rewards.

And Singapore?

China got itself out of the ditch around 1990. The institutions are bad, but they are improving.

Singapore has minimal institutional similarity to PRC. It's even more of a free market than the West. It's essentially 1930s Britain projected into a future where the actual Britain had taken a different fork instead of voting for a Labour landslide in 1945. The same really is true of HK, but PRC does at least now own HK. My point is the best case scenario is that, in GDP per capita terms, HK:PRC::NYC:USA, and since PRC assumed control the economy of HK has grown at ~3% annually in real terms.

Ummmm... Have you been to Hong Kong lately? It doesn't *feel* poorer than the US. Heck, go to Shenzhen, and it looks as wealthy as most places in the United States. The recession in China ended years ago.

Apologies, my figures are out of date, the two converged part way through 2010, after previous large US advantage. Although note that it's more accurate to compare NYC or LA to HK, which have, respectively, GDP per capita of $67.7k, $57.5k and $42k (2010).

Moon bases aren't that expensive. Also high speed rail is *extremely* useful. You quickly figure things out if you want to get from point A to point B in China. Airplanes are hellishly expensive and very inconvenient. Low speed rail is too slow. HSR is going to be wonderful, except that there is this missing link which should be built later this year. Every time a link gets built, you can see the impact it has on the economy.

Also moon bases and HSR provide jobs and keep people employed. Once you figure out how to build a moon base, then people will use this to figure out how to put stuff into LEO. Once you get those costs down, then the skies open up. The thing is that you absolutely need government money for this. You can have private contractors do the work, but for things like SpaceX and Bigelow to go anywhere, you need government contracts. The nice thing about private industry is that often you get things done cheaper and faster, but there is a limit to how cheap and how fast, and I think we are close to it.

There is one commonality between railroads and space exploration. Costs are N+large constant, but usefulness is N^2 + zero. One KM of railroad track is useless. One space station isn't that useful either.

I agree HSR is more useful than making a lot of steel and burying it. The question is, is it the best use of resources possible? I don't know. In the EU, short haul flights are very cheap and much more convenient than trains to move between countries, but maybe that wouldn't be true in China even if liberalised airlines. Free markets are very good at answering these questions and ignoring individual peoples' vested interests, biases, and honestly mistaken good ideas. So maybe HSR is good for China, or maybe not, but governments are often mistaken about things, because it seems to be impossible to centralise information in massive bureaucracies and use it effectively. Government projects don't 'create jobs', they move them from what the private sector wants to do to what the state wants to do.

Eyes roll...

Let's try this social experiment. You have country A that treats physics Ph.D.'s as if they are a burden on the economy, and then country B that treats physics Ph.D.'s as if they are a national treasure. Let's see where we are in 2030.

There's only so much that you can do. I happen to believe that the US science research system is one of the most beautiful, most productive systems ever created. If Americans are idiots and want to toss this system into the mud, then so it goes. Democracy includes the fundamental right to be stupid. May be I can't stop it, but if it happens at least I can say that I tried.

It makes me sad. It makes me more than a little angry. But sometimes, you just have to face the reality that there is not that much you can do, and if you end up in a country that thinks that physicists are just "taxpayer burdens" then maybe it's better to move somewhere else that people think differently. In the case of China, it's still painfully recovering from the effects of losing the "technology game" in the 19th century. My father saw first hand the importance of physics, because it was because of physics that the US could defeat Japan whereas China couldn't. The scary thing is that when I hear most Americans talk about science and technology, it reminds me a lot about some of the arrogance you saw in China circa 1800 before everything went bad.

Country B has more and happier people with physics PhDs. I don't see anything obvious beyond that, though there may be more significant effects. I think that China lost to Japan because Japan had more of a Western market economy, and Japan lost to US because US had more of a Western market economy. In principle China could have had the same productivity per worker as the US, with no indigenous scientific contributions required, and built 50 aircraft carriers and 200,000 aircraft and squashed Japan. It didn't because it was ruled by first monarchists, then nationalists and socialists, who all thought that command economies were good.

That's the key issue. It's not that research is bad, but it's a secondary effect, something you get when you're rich because you don't need to focus all resources on survival, and can instead do something charitable for the world in 20, 30 years time. Or maybe not.

 

[Mépris]

Since we're on the subject of the treatment of physics PhDs in various countries...how are things in Northern Europe? Say, Germany, Denmark, Finland, Sweden and Norway. What do the physics PhDs there do?

I hear that in India there are faculty openings at universities and what happens is they often hire Indians who went to the US/EU for their PhDs. I don't have any hard data to back this up but I know people who're looking at going down that road and have seen some fresh post-docs being hired by their alma mater. PhD in the States, post-doc there and in Europe/Israel and then assistant professorship. It's quite easy - just a question of going on the universities' webpages and clicking on the faculty pages.

 

[chill_factor]

self delete off topic post.

 

[mdxyz]

It doesn't. Although you can see here too that the improvements from "really really bad" to "really bad" have been good enough to net 8% growth. India is ranked lower. It didn't copy the British. Post-independence India is actually a very interesting country, because it adopted the Soviet/PRC economic model while remaining a democracy with many of the British-era social freedoms. As it turns out, this didn't work better at producing GDP, though far fewer people ended up as victims of political murders and enslavement.

Adopting market economics would solve the more egregious problems (starvation, etc.) of every country, yes.

edit: the above post is somewhat different to what it was when I replied.

 

[chill_factor]

self delete off topic post.

 

[mdxyz]

It's misleading to view there as being this "you" which is a single unified embodiment of a country, and of other countries. There's no difference in principle between a US company building a railway in a different part of the US, and a US company building a railway in Burundi, or a Burmese company building a railway in Guatemala. North Dakota isn't 'economically independent' but it isn't being 'held hostage' by California. Nor is any sufficiently small locality able to do almost any of that stuff for itself. In developed countries you get the opposite of 'economic independence': everyone is highly specialised, and as a result couldn't survive without everyone else, but it's actually better because they are able to perform their narrow specialism much more productively, and so is everyone else.

So why are there major differences in economic outcome across national borders? The bottom line is that in some countries it is illegal to make investments that would yield a return at the market rate, or the government would take too much for it to be worthwhile, or the other problem, which they have in Somalia, where the law is so weak that some random guy might come and kill you and take it. A market economy is just one where it's generally speaking legal to trade across borders, to trade with other individuals within your borders, and where some money you have today, you will still own next year.

The state could in principle do the same things. The problem is that it doesn't work in practice, and there are good theoretical economic reasons for that.

EDIT: Let's just agree to disagree. This is the career guidance forum and our off topic discussion has not helped anyone improve their academic or industrial careers.

I'm not sure. I find that a lot of physicists don't know much about economics and this gives them funny ideas about how the economy does/should work. That is very relevant for careers.

 

[chill_factor]

self delete off topic post

 

[mdxyz]

Not really. Solid evidence of the 20th century has been that market economies work, and command economies don't. The baffling thing is why people kept trying command economies despite all the failures, and even more so, why a lot of people still favour them today.

 

[Devils]

“There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don't like because you think it will look good on your resume. Isn't that a little like saving up sex for your old age?” - Warren Buffett

The other thing is *fundamental investing*. That's to figure out what fields generate real economic value.

Real businesses generate economic value. All that the banks have done to the US in the past 5 years is nearly send it bankrupt. Sure you can make huge money, but you can lose money too. IQ is correlated with income but not wealth http://thesocietypages.org/socimages/2008/02/06/correlations-of-iq-with-income-and-wealth/ . Using your intelligence to make money is easy, becoming wealthy is an art.

To inject some realpolitik, there is another type of "investing" too - running your own small business where 25% return on capital is not unusual. I've made money by running an IT consulting business. I was reading about somebody with 2 hotdog stands in New York making $120K, hard work and common sense is probably more important then IQ in making money. "The Millionare Next Door" has good insights on how average people can get wealthy, we don't all want to live in New York doing program trading https://www.amazon.com/dp/0671015206/?tag=pfamazon01-20 . And boy have I made some mistakes running my own businesses but I have learned a lot too, and you eventually get to the "lightbulb moment" of knowing how investing & running businesses really works, & to save money, invest wisely, and prosper.My point is do when you like, have a background plan to say make $1 million in 20 years. Do what you like in your 20s and aim to have $1 million by age 40 as your worst case scenario. You can be in the job you love and make money on the side as a hobby like I have done.

 

[Devils]

How would a Phd in physics give you an edge as a quant compared to someone who took a specialized course specifically dealing with the needs and requirments of being a quant?

I have a math degree & have tinkered around with mathematical finance out of interest. Having formally studied real analysis, complex analysis, numerical methods, engineering math, linear algebra etc then mathematical finance is just another textbook application to me. As a math graduate you get a "feel" for the functions, an armory your have learned in solving the math, built up from solving thousands of other math problems.

So when out of interest I wanted to develop personal software for delta neutral trading http://www.optiontradingpedia.com/delta_neutral_trading.htm I did it using knowledge of partial differential equations & numerical methods I have used in many other situations.

The same isn't true for somebody who "wants to be a quant", doesn't have a math background and uses rote learning to understand the math. Sure you learn the equations but without the deeper understanding a mathematician has.

 

[DeepThoughts]

Well guys, I am a finance major. I grew up with finance people. And I still talk with them about this same concept. The problem is your trying to chase the golden goose and EVERYONE is trying to do the same. The hedge fund count has exploded and so have the number of people with physics backgrounds trying to do the same thing as you. In fact, there are university programs now at schools like NYU that are tailoring programs in order to get the exact blend your talking about. These "quant farms" are already at the top of the trend and your competition is going to be just the same. Not that what your doing is impossible, it just has lost its nitch.
As far as trying to get the best education for the demand of the future? No one knows. Thats the next golden goose. And if everyone knew how to get there it wouldn't be the golden goose!
Most of what your talking about is number crunching and patterns. Assuming your going for short-tearm high-frequency investing what you need to be able to do is take a load of data. Find a general pattern. And prey to god the market conditions hold and the computer program has the right parameters.
People in this field also have a tendency to work very long hours. If you don't love the realm of long team unpredictable crap(longer than a week) like I do. I wouldn't sacrifice a solid steady career in physics. I know a nuclear engineer that makes USD$200,000+ a year and works 35 hours a week. Not bad. So the question then becomes. Whats ANY job that meets your Time to Pay equilibrium. I hate to be a naysayer but WallSt. realm is a total meet grinder. It will take you for all your worth and that's it. I would get the PHD as a back up!

 

[twofish-quant]

In the case of non-public information, nothing can be done about that, since neither the general public nor universities for that matter (except to a limited number of researchers) have access to this.

That's wrong.

University researchers can and do have access to lots of non-public information which they can and should filter for public consumption. Let me give you a real example. I can't post here what the research that I'm doing, because I don't know that someone won't take that information and try to make money off the stock market. Even if it doesn't happen, the SEC will can get annoyed if I say something that can be interpreted as promoting a stock.

Now, what I *can* (and in fact do) do is to talk with people in local universities about what we are working on. I can do this because I know and trust the person that I'm talking to is not going to buy stocks with that information, and from the point of view of the SEC, I'm not making a "public offering." The reason I do this is so that the professor can then take that information and then adjust their course offerings to reflect what I've told them.

There is a lot of mathematical research that we are doing that we can't make publicly available. However, we do have a set of academics that are "white gloves." We feed them our mathematical research, they make some adjustments, and then they publish. Our name is not on the papers, and we and the regulators prefer it that way.

As far as filtering out poor information that is actually publicly available, there are ways to get around this problem, through the ranking of websites, investigating multiple sources of information, checking at references, cross-checking with Wikipedia (and the references they provide), etc. Granted, all of this is time-consuming, but it can be done.

But how do you know that you've got it right?

I'm not arguing that universities shouldn't give ANY advice (including good advice). What I'm stating is that universities (or more specifically, the professors and career counselling services who are currently employed at universities) should be more honest about the advice they are giving, which includes acknowledging their own limitations or lack of knowledge.

1) One thing that's fun is that often people don't know what they don't know.

2) I don't think that bad advice is the big problem. The bigger problem involves cultural biases. Yes you *could* go into industry, but you are a rotten nasty loser if you do it.

3) One thing that I found was that getting the skills that I needed to be productive in industry made me much less competitive when I applied for graduate schools. Because I was reading marketing books, I got "B"'s in classes that I could have gotten A's in, and that seriously hurt me when it came time go get into graduate school.

In this way, students will then have a means of weighing the advice they are given, and thus be able to make better decisions about the future, and the universities will thus ensure that they maintain their credibility.

I think that assumes that people are more autonomous than they actually are. One thing that I've found interesting is that one big trick that sales people do is to give people the illusion of choice. Sales people can't point a gun at your head and force you to buy a car, but they have a lot of psychological tricks that they use to push you in that direction.

First of all, is it the case that universities in the US do not pay taxes? Certainly each individual professors and staff members pay income tax, and I thought that businesses owned and operated by the universities pay taxes as well.

Non-profit universities do not pay tax. If the universities owns a for-profit business that's taxable.

Anyways, if in fact universities do not pay taxes is immaterial to me, because universities do work for the public good, in terms of providing higher education and providing high quality research.

But by working for the public good, you are subject to higher standards. If I go to buy a car, I know that the salesman is not acting in my interests, and if the salesman lies to me and convinces me to buy the car, to some extent, it's my fault since I should have known not to trust a car salesman completely.

Because universities are supposed to work for the public good, there are higher standards. The difficulty is that universities have "private interests." Universities are businesses and they are under pressure to increase tuition. If you go to a car salesman, and ask "do I really need this car?" the salesman will say *absolutely* and then pull out every psychological trick that they can to get you to sign on the dotted line.

The difficulty for universities is that they are also under similar pressures, but the rules are different for public institutions. That means that if the provided bad advice in the past, you just can't say "your fault." You can't change the past, but having people say "I'm sorry we screwed up, what can we do to make it not happen again?" would help. I don't hear people saying that.

First of all, universities are only one of many factors behind economic growth; an important factor, but only one factor. Second, university budgets in the US are the responsibility of individual states, and their budgets (along with many other state programs) are being cut as a consequence of the budget crises affecting the states, due in no small part to state constitutions mandating a balanced budget and banning deficits.

1) It's a critical factor

2) University budgets are the responsibility of the individual states, but most of the money is Federal. State constitutions mandate balanced budgets, but there is this big loophole that states receive Federal transfer payments, and if you look at where the money ultimately comes from, it's mostly Federal.

If you really want to stop university budgets from getting cut, then the only meaningful thing that can be done is for the federal government to bail out the state governments.

Well, yeah...

But what you can do is to hold enough protests at the state level to stop cuts, that the state legislatures are forced to beg for money from the Federal government. If the state legislatures can balance their budgets by cutting state universities, they will. Whoever screams least gets cut. If you scream at the state legislatures not to do that, then the numbers won't match, so they'll have to go to the Federal government. At which point you play the game in Congress. The Federal government can do two things that state governments can't. It can run deficits and print money.

One person can't do much, but one person in an organized system can do a lot.

However, it is worth keeping in mind that many vocational training is provided by community colleges.

Which are being cut by state governments. One good thing about community colleges is that getting a two-year degree from a CC is often a stepping stone to a four year degree at a local public university.

Now what I'd like to see is to see an alliance between MIT and community colleges. Personally, I think it's a mistake for MIT to focus on creating a distance education partnership with Harvard. The institution that MIT really should reach out to is Roxbury Community College. One thing that RCC can provide is vocational training so that physics Ph.D.'s don't starve once they get their degree.

University degrees do provide "social capital" but social capital on its own does not mean all that much unless if it directly leads to meaningful employment.

But it does. If you know someone that works in a major bank, they can give you the e-mail of someone that you can send your resume to with a reasonable assurance that someone will at least read the resume. If you hang around managers, HR people, and CEO's, you figure out how they think and that gets you in the door.

Furthermore, I feel that the stigma associated with vocational training in the US is unproductive, since there is a demand in the US for skilled labor. Combined with the currently high unemployment rate, perhaps we should be re-assessing the value of vocational training.

The trouble is that when there is a high unemployment rate, the knives come out. If there are N job openings and 1.1 N job seekers then increasing training is just going to make the problem worse.

One problem with increasing training is that you end up with the Ph.D. problem. If we train 100,000 air conditioning repair men then you will likely end up with 90,000 unemployed air conditioning repair men who are worse off because they have debt.

[QOTE]You are assuming here that China will continue to maintain their impressive rates of economic growth, which is far from guaranteed[/QUOTE]

People in China are looking ahead and seeing problems and they are dealing with them. There are limits to China's current growth model, and it is going to hit them in the next few years. That's why people are working *NOW* to start fixing the problems so that you don't end up with an economic crisis in ten to twenty years.

The general belief in China is that long term, China needs to move into science and technology. This is going to take two to three decades to do, which is why people are starting *NOW*.

The thing about China is that it has a plan. It may be a bad plan, but people are thinking about what the Chinese economy is going to look like in 2050, and it's going to have a lot of science and technology. What worries me about the US, is that no one is even thinking about 2050. I haven't even heard people talk about 2020. This is bad for science. If your time horizon is two years, then science is a waste of money. If your time horizon is fifty years, then it's stupid to cut science now.

The good news for the US is that it has such a good science infrastructure that it's going to take a decade of incompetence to destroy it. People are being stupid now, but there is still lots of time to stop it before things get bad.

Furthermore, young people's higher approval of China is directly linked to the nation's ability to deliver on employment. Once that changes, I envision that public opinion will very quickly sour, and given the repressive nature of the regime, things could get very ugly very quickly, as is already evident in the number of protests in rural areas against land seizures (and these are protests that have been publicly reported).

So rather than sit back and let things fall apart, the government is actually *doing stuff*. If you have lots of unemployed people, they start getting angry and demonstrating. So what can we get them to do to avoid that. Well, there are some railroads to be built.

Employment is essential to keep the government in power, so the government is moving heaven and Earth to get people jobs.

China is currently able to flood money in science and technology because they have large reserves of cash (primarily due to the tendency of the average Chinese to save money in state-owned banks, which is due in no small part to insecurity brought on by lack of property rights). Once the Chinese economy will transition to a more consumer-based economy, that large reserve of cash will start to diminish, and China's ability to spend will become more constricted.

So maybe it's not such a good idea to move to a consumer-based economy. Singapore has high savings rates, and if through science and technology you can maintain high growth rates, you can keep saving massive amounts of money.

Savings -> science -> technology -> productivity -> more savings

The big limit is when people get old and start withdrawing their savings. How do you keep productivity with fewer workers. Science to the rescue!

Before one can even begin to organize and hold protests, or act, one needs to know what they are protesting for or against, and that begins by asking questions first. It's the act of questioning that serves as an impetus for action.

Sometimes you don't. There's something to be said for saying "we are angry, we just want results, you are the people in power, you figure out how to get us stuff." Getting people to think too much is "psychology trick #2343" for making sure that nothing happens.

 

[twofish-quant]

Singapore has minimal institutional similarity to PRC. It's even more of a free market than the West. It's essentially 1930s Britain projected into a future where the actual Britain had taken a different fork instead of voting for a Labour landslide in 1945. The same really is true of HK, but PRC does at least now own HK. My point is the best case scenario is that, in GDP per capita terms, HK:PRC::NYC:USA, and since PRC assumed control the economy of HK has grown at ~3% annually in real terms.

With enough time, you can make large institutional changes. For a developed economy, 3% is outstanding. The question for a developed economy is whether you want 0% without technology or 3% with technology. Historically three percent growth is huge. That was the average growth rate of the industrial revolution.

Over a lifetime, 1% growth means 2x wealth, whereas 3% growth means 8x. Chinese growth rates are going down, and the question is whether they are going to stabilize at 3% or 0%, and to get 3%, you need science and technology.

I agree HSR is more useful than making a lot of steel and burying it. The question is, is it the best use of resources possible? I don't know.

Does it really matter?

The trouble with getting into arguments over what is "best" is that it's an excuse to do nothing.

So maybe HSR is good for China, or maybe not, but governments are often mistaken about things, because it seems to be impossible to centralise information in massive bureaucracies and use it effectively.

BTW, I've read Von Mises, and know about the socialist calculation problem. I actually agree with a lot of stuff that he says, but I think he gets some things critically wrong.

There are some things that governments are horrible at. Some things that governments are good at. In any event, the government in 2007 realized that if it didn't generate employment and fast, it would be faced with what happened in Egypt, so the government went and asked what project would keep people too busy to demonstrate, and if it produces economic value, that's a nice side effect.

Government projects don't 'create jobs', they move them from what the private sector wants to do to what the state wants to do.

No, they move people from "unemployed" to "working." It may be acceptable for the private sector to have lots of people doing nothing, but in China having lots of unemployed people means mass protests, and so it's unacceptable. One reason that the US has higher unemployment than China is that US political system can tolerate 8% unemployment indefinitely without a revolution. China can't.

That's the key issue. It's not that research is bad, but it's a secondary effect, something you get when you're rich because you don't need to focus all resources on survival, and can instead do something charitable for the world in 20, 30 years time. Or maybe not.

The thing about survival is that it's not good enough for most people. No one in the US need to starve and the biggest problem with poor people is obesity and not malnutrition. If you like the way things are, and don't see any need for making things better, faster, cheaper then there really isn't that much need for science.

The thing about China is that it's no longer in starvation mode. The last famine in China was in 1973. So if Chinese people were merely content with "not starving" then you don't need to do anything else. But people aren't content with that. People want more stuff, and for that you need constant economic growth.

China's current growth model is going to hit a wall around 2020. Since the government wants to stay in power past 2020, people are trying to figure out what is going to work. Part of the reason people are worried NOW is that the first plans are going to fail.

Just to be clear, I'm not worried about the United States collapsing economically. What I am worried about is that the US turns into Japan, and loses the "frontier spirit".

 

[twofish-quant]

So why are there major differences in economic outcome across national borders? The bottom line is that in some countries it is illegal to make investments that would yield a return at the market rate, or the government would take too much for it to be worthwhile

I think it's a *lot* more complicated than that. One problem with "market rate" is that you have to have a market, and getting one is non-trivial. One problem is that people sort of assume that if you don't have a "free market" system then you have a Stalinist system when in fact there are other possibilities.

The state could in principle do the same things. The problem is that it doesn't work in practice, and there are good theoretical economic reasons for that.

I find that most theoretical economists just end up formalize how they think the world should work rather than looking at how it really does work.

A "hands off" policy toward the banking system also doesn't work. The trouble is that the state is the ultimate guarantor of the banking system, so if the state isn't heavily involved at regulating the system, what people will do is to make "head I win, tails the state loses" bets.

Now in principle, you could have things work with a "no bailout" policy. The trouble with that is that you can set up a situation in which "no bailout=the world blows up". At that point the state is forced to do a bailout. The trouble is that if people know that the state is going to to a bailout you get back to the previous situation. You *say* that you aren't going to bail me out, but I don't believe you.

 

[twofish-quant]

Not really. Solid evidence of the 20th century has been that market economies work, and command economies don't.

Not so clear. The Soviet economy seemed to work very, very well in the 1950's. It fell apart around 1970. Now *why* it fell apart is an interesting question. I would argue for Vladimir Popov's model in which the Soviet Union stopped infrastructure investment in the 1950's.

Essentially, the trouble was that because Soviet planning was based on production quotas rather than profit, there was strong disincentive to replacing aging machinery. You lost your quota, and there was no way of calculating the economic benefit of the new machines. This didn't matter in 1950, because the Soviets had to repair everything because of WWII, but it started to kill the economy in the 1970's. If that's the explanation, then it's going to be pretty bad for the US (however, unlike the Soviet Union, the US has a strong enough political system to prevent total collapse).

The baffling thing is why people kept trying command economies despite all the failures, and even more so, why a lot of people still favour them today.

Because no one arguing for a Soviet command economy. One thing about China was that since 1950, "Soviet=bad" so that in the late 1970's, there was strong resistance to reinstituting Soviet style economic planning. One thing about Soviet economic planning is that it requires something like a Josef Stalin, and the Communist Party in 1980 (or now) simply does not have that sort of power or economic unity.

Having some central planner order a factory to produce 500 locomotives just will not work well for the reasons that von Mises and Kornai pointed out. Now what I think will work is to have a pricing system in which you reflect economic costs. So a government bureaucrat looks at the cost of 500 locomotives and can compare that with the price of say 10 aircraft carriers. By changing tax rates and purchasing things at market prices rather than forcing people to build them, you get around the socialist calculation problem.

There are some similarities between the Chinese economy and the theories of Oskar Lange. It's not a concidence since there was a lot of Eastern European influence in Chinese thinking circa 1980.

I used to wonder why people clung to Soviet models after it seemed obvious that they wouldn't work. Then I see people cling to neo-liberal economic ideas after it is pretty clear at least to me that there is something seriously wrong with them, and it makes more sense. One issue is that you can't replay history, so when the Soviet model fails, you can try to argue that there wasn't enough "real communism", and I've seen similar arguments that things fell apart because we don't have "real markets." You can get into large arguments over this, but the counterargument that I find convincing is a political one. If you can't realistically have "perfect communism" then it's pointless to argue about whether it is a good thing. Similarly if you can't have "perfect capitalism" then it's pointless to argue that it's a good thing.

One problem is the idea that if you oppose X you must support Y. I think that Soviet economic planning doesn't work, but Chinese style economic planning works in China (whether it would work or not in the US, I don't know, and I doubt it).

 

[twofish-quant]

I think your idea of usefulness is very contrived. Earth scientists, chemists, and environmental/chemical/mechanical engineers also write models of diffusive phenomena. What is special about astrophysics that makes for better model writers?

Astrophysical simulations use a lot more compute power than most engineering simulations. Also most engineering simulations can be done with "canned programs". Essentially the equations are the same from situation to situation whereas the boundary conditions are different.

In oil/gas and finance it's the opposite. The boundary conditions are trivial whereas the dynamics changes.

 

[atyy]

Singapore has minimal institutional similarity to PRC. It's even more of a free market than the West. It's essentially 1930s Britain projected into a future where the actual Britain had taken a different fork instead of voting for a Labour landslide in 1945. The same really is true of HK, but PRC does at least now own HK. My point is the best case scenario is that, in GDP per capita terms, HK:PRC::NYC:USA, and since PRC assumed control the economy of HK has grown at ~3% annually in real terms.

How can Singapore be more of a "free market" when a majority of its population lives in (really good) government housing?

 

[twofish-quant]

I think that China lost to Japan because Japan had more of a Western market economy, and Japan lost to US because US had more of a Western market economy.

So how did Russia win? One reason people in China were attracted to the Soviet model in the 1950's was watching the Russians just annihilate the Japanese army. Gee. Wish we could do that...

In principle China could have had the same productivity per worker as the US, with no indigenous scientific contributions required, and built 50 aircraft carriers and 200,000 aircraft and squashed Japan.

Don't think so. Aircraft was invented in 1903, and you just can't copy an aircraft carrier or build aircraft factories. It's actually both sad and enlightening to see the problems China has now trying to build civil aircraft and aircraft carriers. It's pretty clear that Chinese civil aircraft manufacturers and military shipyards are pretty clueless. But if you don't try to build a rotten airplane, you'll never build a good one.

There's also the little matter of whether other countries will let you copy their stuff. I'm sure that China would love to have the latest designs for American aircraft carriers. One big reason China is working on high-speed rail rather than aircraft is that most countries are much less annoyed when you copy their railroad designs than if you copy aircraft designs, because there are fewer military applications.

It didn't because it was ruled by first monarchists, then nationalists and socialists, who all thought that command economies were good.

Because of Russia. Also, if you are in a life and death struggle for national survival, you can make the argument that command economies are good. Militaries are not run on market principles, and one way of thinking of China in 1940 was to imagine the entire population being one big army. This also happened in the United States. Once you are on a war footing, then you have price controls and rationing.

Now you can argue that people in 1950 were mistaken, because once Russia got to 1970, things fell apart. But one wonders if the same thing is happening to the "capitalist model". I can imagine someone in 2020 looking at the "neo-liberalism" the same way that people in 1995 looks at communism.

There's also generational issues. The Cold War was an important part of my childhood, and the fall of the Soviet Union was one of the important defining events of my youth. So it's interesting to know that people in college today didn't experience that and their view of the world is likely to be quite different because there are things in my memory that aren't in theirs.

 

[twofish-quant]

How can Singapore be more of a "free market" when a majority of its population lives in (really good) government housing?

So does much of Hong Kong. Hong Kong is "central planning done right." The HK leaves some things to the market, but it is extremely intrusive in other things (such as health care where HK copied the British model). There are some areas (land policy) where you see the PRC copying Hong Kong.

The Singapore government is also pretty intrusive with things like Temasek holdings.

 

[intelwanderer]

Seconded.

 

[StatGuy2000]

The trouble is that when there is a high unemployment rate, the knives come out. If there are N job openings and 1.1 N job seekers then increasing training is just going to make the problem worse.

One problem with increasing training is that you end up with the Ph.D. problem. If we train 100,000 air conditioning repair men then you will likely end up with 90,000 unemployed air conditioning repair men who are worse off because they have debt.

The problem that the US is currently experiencing is not just a high unemployment rate, but also a mismatch between the skills currently possessed by those who are unemployed (or not yet employed) and those jobs that are currently in demand as of this moment. (There's also a problem with mobility of workers, which for the moment I will not address)

The situation we're facing is that there are N job openings, but out of the 1.1N job seekers, only, say, 1.1N/10 = 0.11N of them would possesses the necessary skills or qualifications to actually be even hireable. Therefore, many of these N jobs end up being unfilled even though you have a large pool of job seekers.

So given that situation, wouldn't it make economic sense to provide some form of vocational training to reduce the mismatch and ensure that more of the N jobs end up being filled? I would argue yes.

So rather than sit back and let things fall apart, the government is actually *doing stuff*. If you have lots of unemployed people, they start getting angry and demonstrating. So what can we get them to do to avoid that. Well, there are some railroads to be built.

Employment is essential to keep the government in power, so the government is moving heaven and Earth to get people jobs.

I agree that China is indeed "doing stuff" to avoid the scenario of masses of unemployed people causing problems. All I'm stating is that there may be limits to China's ability to provide the levels of growth to ensure low unemployment, especially if their reserves of cash will diminish or the rest of the world economy goes into recession (a very real possibility given the problems with the Eurozone).

So maybe it's not such a good idea to move to a consumer-based economy. Singapore has high savings rates, and if through science and technology you can maintain high growth rates, you can keep saving massive amounts of money.

Savings -> science -> technology -> productivity -> more savings

The big limit is when people get old and start withdrawing their savings. How do you keep productivity with fewer workers. Science to the rescue!

First of all, Singapore has high savings rates because the vast majority Singaporeans do not own any property (given the lack of land in an island-state like Singapore, that shouldn't be all that surprising). And the high economic growth rates in Singapore is not based primarily due to investments in science and technology, but more due to its unique position as a trading hub with the rest of Southeast Asia, and by extension the rest of East Asia (access to cheap labour from nearby countries such as Indonesia and the Philippines is a notable contributor as well, along with high immigration rates).

On your other point, China as of this moment is already transitioning into a consumer-based economy (as it inevitably would given the growth of the middle class), so it is only inevitable that savings rates will diminish. This will only accelerate given the rapid aging of the Chinese population (due in no small part to the one-child policy).