I know, this is a long first post. I've had this on my mind for some time. My apologies in advance.
Do we really want to have a Financial Engineering degree at the University of Illinois?
<Help Wanted from News Gazette>
University of Illinois at Urbana-Champaign, Master of Science in Financial Engineering, Academic Hourly. The Department of Finance seeks an academic hourly employee to assist with student admissions, program marketing and general administrative duties for a new graduate degree program in financial engineering jointly offered with the Department of Industrial and Enterprise Systems Engineering. A bachelor's degree is required, relevant experience preferred....
A little background: Back in February (2009) I wrote a letter to editor of the Wall St Journal complaining about their use of the term 'Financial Engineer'.
I thought they were trying to use the verb 'to engineer' as in 'engineering a business deal' and had incorrectly used the noun, an Engineer.
Surely there's no such thing as a Financial Engineer!
I received a reply and my letter wasn't wasn't printed because "it's an actual degree" from real schools like Columbia and University of Michigan.
Now the University of Illinois, my alma mater, is joining the herd!
Here's my case against this new degree from the U of I:
The U of I's requirement to apply for the "new college" of Industrial and Enterprise Systems Engineering is that you have an undergrad degree from an accredited engineering program.
Engineers are productive units of an economy. They design, build, improve the quality of life of society. The average person in the 21st century in the U.S. lives better than kings and queens of the 18th century due to engineering advancements (flush toilets, potable water, indoor air conditioning, etc, etc).
I agree there are exceptions but by and large, this is the goal of an Engineer.
Financial "math-magicians" are the source of the most recent world economic meltdown. I can't say it any better than the post from economic populist -Pricing CDO not only bad math bad computation too:
"What Arora et al. prove is not only are many derivative mathematical models impossible to compute, never mind in real time, because they require more computing power than the world possesses, the missing information to run a mathematical model is a very good place to cheat with.......Translated to Populist blog speak: Derivatives are a way to scam and screw investors out of their dough through a lot of high fallutin' gobbledygook that sounds real technical."
Wired Magazine's article "Recipe for Disaster: The Formula that Killed Wall Street" explains the most recent problem with the minimum amount of math.
The U of I has an acclaimed Engineering College that has been hard earned (and defended) by the real world performance of every alumni of the College.
Do we want a future Illini to be the next financial wizard to come up with a great formula to cheat and steal?
Will this bring us acclaim or shame?
Clearly the U of I is copying other major universities and will say that we need to have a similar program to compete for the best students. This argument comes down to money.
The question is whose money? and what is the greater good?
Think about that bright shiny new Engineer who graduates from the new Financial Engineering program from the U of I. This is a person who has trained their mind to rigorously approach problem solving and to consider factors of safety because there are always unknowns.
Now 2-1/2 years or so into their big Wall Street job the Engineer has figured out that the whole thing is a scam.
Their job is to obfuscate and confuse to get buyers to part with their money in a no win casino. How do you think this new Alumni will will reconcile the fact that the Emperor has no clothes AND they were trained to ignore this fact by the University of Illinois?
I shudder to think what we have done to that person in the name of money.
