Paul Volcker: More Science, Less Finance

The main speaker at yesterday’s Commencement was Paul Volcker, the former Federal Reserve Chairman (the guy before Alan Greenspan) and current chair of President Obama’s economic advisory council. As you would expect from somebody of his background, the bulk of the speech was about the current economic crisis. The full speech is online, but the relevant-to-ScienceBlogs bit is this:

The past couple of decades have been seen as a triumph of finance – new and more complex financial instruments, a huge growth of financial institutions, enormous compensation for traders, speculators, and finance executives out of line with all previous experience. At one point, profits of financial institutions accounted for 40 percent of all the profits of American corporations, way above any previous relationships.

I think we know now it has been a hollow victory. The real income of average workers barely rose. Chronic deficits in our foreign trade have been the order of the day as our manufacturing became less competitive. In some industries our technological lead has been threatened. Professional analysis bears out what we feel in our daily life: our roads and bridges are decaying; our airports and air control are challenged; our water supply and waste management is threatened.

It seems to me that the current big recession is one big wake up call. It can be and it must be the start of a corrective process. We are forced to reorient our economic priorities, national and personal, reorient them for the better. Right now the priority is to get our private debt under control. Happily, the infrastructure is beginning to get attention.

In the broadest terms, I think we have to move, we are moving, for an emphasis on finance toward science, toward technology, toward engineering – real engineering not the financial engineering that has failed to live up to its promise.

I don’t really have anything to add to that– I didn’t get to meet Volcker, though I was asked to pretend to be him.

(Because I can’t just leave that line hanging, the story is this: The College has a tradition of bringing the honorary degree recipients to the platform in the 1916 model electric car owned by one of the famous professors in Union’s history, Charles Steinmetz. The car is fairly small (Model T-ish), and Volcker is a big guy– 6’7″-ish, 300-ish pounds.

(Thus, there was some concern about whether he would fit in the car. As one of the two biggest members of the faculty (there’s a Mechanical Engineering professor who’s a bit taller than I am, but not as heavy), I was asked to go sit in the car (actually, both me and the ME professor), to confirm that there was enough room for Volcker. The car turned out to be surprisingly roomy.)

(Of course, after all that, I don’t think they actually used the car. I’m not certain, but I didn’t see it in action.)