From The Faculty Chair
MIT's Sputnik Moment
I am pleased that a good portion of this Newsletter is devoted to discussion of MIT’s growing international activities. As stated in this column in September, my hope was that this would be a year of extended dialogue to help clarify and communicate MIT’s international vision and strategy. The Provost’s thoughtful paper advances this dialogue, and the faculty forum we have organized for February 17 will provide an opportunity to discuss both the paper and a potential initiative in Russia. I hope you will join us at that session.
As we become more active on the global stage it is equally important to ask what MIT’s contributions will be to addressing the enormous challenges we face here in the U.S.
The first MIT150 symposium took up this issue with gusto. A cadre of Nobel Prize winners and their world class peers reviewed the lessons of the past few years for the economics and finance professions. The economists opened the first day with a sober assessment of the economy and called on each other and those now studying to enter the profession to broaden their models and methodologies, to more fully engage the evidence coming out of behavioral economics and related social sciences, to carefully design experiments focused on key social problems, and to avoid knee jerk positive or negative views of the role of government in the economy and instead promote smart and efficient government spending and regulations.
The finance experts echoed this sentiment on the second day by urging their colleagues to examine what went wrong with the risk management systems supposedly in place in both the private and public sector and to more carefully examine how finance theories and models are used or misused in practice. In introducing the first finance panel, Professor Andrew Lo challenged his profession to go a step further; to ask how its theories and models could be applied to the great economic and social problems of the day.
My hope is that we follow up this discussion and call to action by putting this good advice and forward thinking to work in our research and teaching, so that future Nobel Prizes go to individuals whose theories and research help to build a twenty-first century with a sustainable and broadly shared prosperity, and a healthy society.
As someone whose day job focuses on studying work and employment, I share the concerns expressed at the symposium over the inability of our economy as presently functioning to generate sufficient high quality jobs.
The jobs crisis we face today is both one of quantity and quality. Unless something changes, it will take most of the rest of this decade to generate the jobs needed to replace the eight million lost in the recession and to keep up with labor force growth.
Moreover, median worker wages have been stagnant for the past three decades for high school graduates and only the small proportion of college graduates with advanced degrees have seen their compensation levels keep up with productivity growth. Instead, as all sorts of economic studies have shown – including those by MIT faculty – too much of the nation’s income growth has gone to the top one percent and even to the top 0.1 percent of the population, leaving more and more families stuck in neutral or falling further behind. The frustration, polarization, and anger felt by so many today should be a wakeup call that we need to redouble efforts to develop ideas, policies, institutions, and organizational innovations capable of restoring trust and confidence in the future.
MIT has a leading role to play in this process, especially if, as we all believe, our best hope for the future is to build an innovation-led economy. Innovation, i.e., the process of generating scientific and technical breakthroughs and transforming them to new policies, products, and services, is part of our DNA. This commitment to innovation is why a recent study led by Professor Ed Roberts and Charles Eesley estimated that MIT’s living alumni alone have created over 25,000 companies, employing 3.3 million people, with $2 trillion in sales [entrepreneurship.mit.edu/article/entrepreneurial-impact-role-mit].
Attacking the big problems of our time will require a renewed commitment to interdisciplinary research and collaboration, again something that MIT is well suited to do.
MIT researchers have shown that the greatest returns to new production and information technologies are generated by the creative integration of technical and human, organizational, and social forces.
We need to keep this principle in mind as we move forward in search of solutions to the major challenges in health care, manufacturing, poverty, energy, the environment, and other issues that rise to the top of our agendas.
So as we continue celebrating MIT’s 150 birthday, let us look back not just with pride but with an eye to learning how our predecessors attacked and solved the big challenges and problems of their day, and then challenge ourselves to do the same today and in the future.