Page 174 - Educating the Engineer of 2020: Adapting Engineering Education to the New Century

Educating the Engineer of 2020: Adapting Engineering Education to the New Century
http://www.nap.edu/catalog/11338.html

THE IMPORTANCE OF ECONOMICS 157

was in my time. It now includes more case studies, more teamwork,
more of the “real world,” largely in reaction to popular rankings pub-
lished in Business Week magazine and other publications. Based on my
experience interviewing Chicago students, recent graduates are more
verbal, less one-dimensional, “slicker” than we were, but also less sub-
stantive. In exchange for more immediate market value, they appear to
have surrendered foundations and skills I believe are of lifelong value.
Although they may be better at addressing questions of the moment, I
suspect they lack the ability to adapt readily to unpredictable changes,
and therein may lie a lesson for the education of engineers.
To complete this short story, I ended up joining the corporate fi-
nancial advisory arm of the Chase Manhattan Bank, from which, in
1982, a group of us left to start our own management consulting firm
specializing in valuation, financial management, and incentive compen-
sation. And in this work I have found my training as an engineer to be
of real value, not so much in specific ways, although there certainly were
specifics, particularly in the early years, but in the rational, systemic,
problem-solving mind-set engineering education fosters. That is a gift I
have cherished, and I owe it to the outstanding and dedicated engineer-
ing faculty at Princeton. I have been fortunate, and will not forget it.
And that brings me at long last to my first pertinent comment,
based on my particular set of experiences. Engineers must learn eco-
nomics. Not high-faluting Keynesian macroeconomics, but basic
micro-economics, the setting of prices, the determinants of market
value, and so forth. If engineering is about designing solutions to prob-
lems in a world of constraints and tradeoffs, which I think is a fair
definition, the best engineering solutions can emerge only in the con-
text of market prices and market forces. And engineers should take the
lead in insisting that market forces be permitted to work as broadly as
possible.
For example, pollution taxes and the trading of pollution credits are
preferable to outright pollution controls or mandated solutions. The
former allow an economic calculus of tradeoffs to enter the engineering
model, and the later, not. To take another example, the Engineer of
2020 report cites the shortage of water as a pressing global need, and
surely it is. But why? Because, universally, the price of water is regulated
and held below a price that reflects its true value. The engineering solu-
tion ought to be to develop the right price and let market forces operate,
not to waste precious resources solving a problem that fundamentally
may not exist.

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