It’s almost 2010…what’s ahead?
Last night, as I was driving along a country road, I listened to a program on NPR. They were talking about the “jobless recovery.”
What is a “jobless recovery”? It seems to be a situation where the economic indicators are improving, while unemployment numbers remain unchanged, or worse, on the rise.
There were 3 statements that I would like for you to consider:
According to the guest, there seems to be a dichotomy between the economists, who measure the state of the economy by looking at certain metrics, and politicians, who tend to evaluate it based on what they hear from their constituents, many of whom are still unemployed. Economists look at traditional statistical data such as: the GDP (gross domestic product, the dollar value of all goods and services produced in the US in a year), CPI (consumer price index, tracking the prices of certain products, housing starts, the stock market, and tell us that things are improving. Politicians tell us that many of their constituents are still unemployed. (In fact, we've lost 11 million jobs during this recessionary time.) That's why we have the term "jobless recovery."
Seems like a contradictory term to me. Why is that? Why are there no jobs or few jobs being created while the economy is showing signs of recovery? Why are economists seeing one thing and politicians another? Why the difference?
The second fact reported was that while some people are getting jobs, the long-term unemployed (defined as being unemployed over 6 months) are having the toughest time finding jobs. This may seem obvious as the longer one is unemployed, conventional wisdom has it, the more difficult it becomes, and there are some people in the job market who are simply "unemployable." But, this time around, this group is having an even more difficult time, than the long time unemployed during other recessions.
Again, my question to you: why are those people in the longest unemployed group having the most difficult time ever finding jobs, and more difficult than ever before?
Finally, the third point: statistics point to a surge in temporary hiring, and that this surge is used as an early indicator for rising employment.
My question is: what is the meaning of a surge in temporary hiring? Is it predictive? Is it good news, or not?
I wanted to pose these questions to you in an effort to get you to think about the employment situation and unemployment statistics. I have given you three sets of facts to consider. What is the "correct" interpretation of these facts?
The current interpretations are mostly based on conventional wisdom, and looking at the data through a traditional lens. I will share these with you tomorrow. In the meantime, I would like to encourage you to think it through for yourself. Developed critical thinking is one of the two most important skills for the next decade. Practice this ability and create your own interpretation.
And, I'll be back tomorrow... :o)
Showing posts with label Critical Thinking. Show all posts
Showing posts with label Critical Thinking. Show all posts
Wednesday, December 30, 2009
Friday, October 9, 2009
Tuesday, October 6, 2009
Think For Yourself!: Skills for the New Economy
The following NYTimes article caught my eye today: How Nonsense Sharpens the Intellect
This article reports that whenever you and I experience something out of the ordinary, something bizarre even that we can’t explain, we struggle to make sense of it.
When observing something unusual that we can’t interpret through a traditional lens or logical explanation, we feel off-balance, strange, or as the article reports, “disoriented.” But, it is precisely this feeling of disorientation that inspires us to make sense of the situation because we are wired to seek balance and to move away from things that make us feel uncomfortable. With this drive, we move beyond traditional assumptions, logical interpretations and patterns to try to make sense of what our physical senses have presented.
For example, I have written about how, when I flew to Vancouver, British Columbia for the first time, I saw a pink mountain. A pink mountain? And, I tried to reason through what I had seen. Mountains aren’t pink. (It was the sunset reflecting off the glaciers of Mount Baker.)
According to two researchers at the University of British Columbia, our brains are programmed for maintaining meaning and coherence. “The brain evolved to predict, and it does so by identifying patterns."
"When those patterns break down – as when a hiker stumbles across an easy chair sitting deep in the woods, as if dropped form the sky – the brain gropes for something, anything that makes sense. It may retreat to a familiar ritual, like checking equipment. But it may also turn its attention outward, the researchers argue, and notice, say, a pattern in animal tracks that was previously hidden. The urge to find a coherent pattern makes it more likely that the brain will find one.”
What does this article have to do with you and me? Everything.
In this world of unprecedented change, past predictors are less relevant. For example, using the stock market – which is made up of 70% flash trading and short-selling – has little relevance to the health of the economy. The price of a company’s shares has little to do with a company’s health or strength. (I have watched a stock move up and down 15 points in 45 minutes. That has nothing to do with a company’s earnings and everything to do with hedge funds and traders moving billions of dollars in and out of the market ...in a flash!)
Unemployment figures are also an unreliable measurement tool: the way the Department of Labor calculates its number is flawed. Most of the data comes from phone surveys. Long-term unemployed and underemployed aren’t included in the number.
So, what can you do to figure out what’s happening in the economy? Our traditional economic patterns are breaking down, and we need to stop the “retreat to a familiar ritual”, like using traditional cyclical economic indicators which have little predictive value in a world that is getting rocked by massive secular and social change. We need to “look outward” and notice “patterns…that were previously hidden” or at least not obvious. You can do this.
You need to think for yourself and try to make sense of the world. That way you can anticipate and make cogent plans. Develop and use your critical thinking skills.
What is the state of the economy? Don’t measure it by “retreating to a familiar ritual” and looking to the stock market and unemployment. Look for patterns by piecing together information that you can find in the news.
What I do is to look for pieces of data that I can fit into a picture to make sense of the world. For example: I have been reading that the ARM option mortgages are shortly coming due and that many experts believe this default situation will be worst than the subprime mortgage crisis.
I also believe that the state of bank’s balance sheets is worse than most of us know, especially those who have real estate loans on the books. According to what I have been reading, we are about to see a crisis in the commercial real estate market – and certainly retail shops have been hit hard and malls all over America are suffering. I also know that in places like Nevada, Florida and parts of California, the real estate situation is really bad. In Florida, almost 50% of the real estate on the market is either in foreclosure or short sale (meaning that the mortgage on the property is more than the value of the house). In many cases, the banks aren’t foreclosing on properties officially because that means they would have to carry reserves on their books to offset the foreclosure, which means that banks are potentially worse off than they are reporting.
And, on and on and on...My prediction? The Great Recession is not over. Not even close. And, even to call it a Recession is to miss the great significance of this moment. We are going through a massive transformation of our economy, something as great as 150 years ago when we witnessed the beginning of the Industrial Revolution. This is a new revolution. What our economy will look like in the future is any one's guess. Personally, I am optimistic in the long term about the state of our economy. Short term, I think there will be more pain.
Here's what you need to know: one of the two MOST IMPORTANT skillsets you need in the coming economy is critical thinking skills. Forget old models. Start reading and piecing together information into a pattern that makes sense to you. It doesn’t matter if you are not an expert. Experts have a more difficult time seeing things freshly and in many ways, are handicapped by their educated focus.
Ask questions. Challenge assumptions. Think for yourself. Make sense of the world.
And, come back to find out the second most important skill in today’s economy…
This article reports that whenever you and I experience something out of the ordinary, something bizarre even that we can’t explain, we struggle to make sense of it.
When observing something unusual that we can’t interpret through a traditional lens or logical explanation, we feel off-balance, strange, or as the article reports, “disoriented.” But, it is precisely this feeling of disorientation that inspires us to make sense of the situation because we are wired to seek balance and to move away from things that make us feel uncomfortable. With this drive, we move beyond traditional assumptions, logical interpretations and patterns to try to make sense of what our physical senses have presented.
For example, I have written about how, when I flew to Vancouver, British Columbia for the first time, I saw a pink mountain. A pink mountain? And, I tried to reason through what I had seen. Mountains aren’t pink. (It was the sunset reflecting off the glaciers of Mount Baker.)
According to two researchers at the University of British Columbia, our brains are programmed for maintaining meaning and coherence. “The brain evolved to predict, and it does so by identifying patterns."
"When those patterns break down – as when a hiker stumbles across an easy chair sitting deep in the woods, as if dropped form the sky – the brain gropes for something, anything that makes sense. It may retreat to a familiar ritual, like checking equipment. But it may also turn its attention outward, the researchers argue, and notice, say, a pattern in animal tracks that was previously hidden. The urge to find a coherent pattern makes it more likely that the brain will find one.”
What does this article have to do with you and me? Everything.
In this world of unprecedented change, past predictors are less relevant. For example, using the stock market – which is made up of 70% flash trading and short-selling – has little relevance to the health of the economy. The price of a company’s shares has little to do with a company’s health or strength. (I have watched a stock move up and down 15 points in 45 minutes. That has nothing to do with a company’s earnings and everything to do with hedge funds and traders moving billions of dollars in and out of the market ...in a flash!)
Unemployment figures are also an unreliable measurement tool: the way the Department of Labor calculates its number is flawed. Most of the data comes from phone surveys. Long-term unemployed and underemployed aren’t included in the number.
So, what can you do to figure out what’s happening in the economy? Our traditional economic patterns are breaking down, and we need to stop the “retreat to a familiar ritual”, like using traditional cyclical economic indicators which have little predictive value in a world that is getting rocked by massive secular and social change. We need to “look outward” and notice “patterns…that were previously hidden” or at least not obvious. You can do this.
You need to think for yourself and try to make sense of the world. That way you can anticipate and make cogent plans. Develop and use your critical thinking skills.
What is the state of the economy? Don’t measure it by “retreating to a familiar ritual” and looking to the stock market and unemployment. Look for patterns by piecing together information that you can find in the news.
What I do is to look for pieces of data that I can fit into a picture to make sense of the world. For example: I have been reading that the ARM option mortgages are shortly coming due and that many experts believe this default situation will be worst than the subprime mortgage crisis.
I also believe that the state of bank’s balance sheets is worse than most of us know, especially those who have real estate loans on the books. According to what I have been reading, we are about to see a crisis in the commercial real estate market – and certainly retail shops have been hit hard and malls all over America are suffering. I also know that in places like Nevada, Florida and parts of California, the real estate situation is really bad. In Florida, almost 50% of the real estate on the market is either in foreclosure or short sale (meaning that the mortgage on the property is more than the value of the house). In many cases, the banks aren’t foreclosing on properties officially because that means they would have to carry reserves on their books to offset the foreclosure, which means that banks are potentially worse off than they are reporting.
And, on and on and on...My prediction? The Great Recession is not over. Not even close. And, even to call it a Recession is to miss the great significance of this moment. We are going through a massive transformation of our economy, something as great as 150 years ago when we witnessed the beginning of the Industrial Revolution. This is a new revolution. What our economy will look like in the future is any one's guess. Personally, I am optimistic in the long term about the state of our economy. Short term, I think there will be more pain.
Here's what you need to know: one of the two MOST IMPORTANT skillsets you need in the coming economy is critical thinking skills. Forget old models. Start reading and piecing together information into a pattern that makes sense to you. It doesn’t matter if you are not an expert. Experts have a more difficult time seeing things freshly and in many ways, are handicapped by their educated focus.
Ask questions. Challenge assumptions. Think for yourself. Make sense of the world.
And, come back to find out the second most important skill in today’s economy…
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