Saturday, November 28, 2015

The Benefits of Critical Thinking and Self-Awareness

Naturally each of us holds bias in the way we think about and understand the world around us. Critical thinking is a process of thinking about thinking using our meta-cognitive abilities in ways that ensure we understand how our thinking impacts our conclusions. Being self-aware of our own thoughts and needs creates higher order thinking that leads to better final conclusions.

Almost all human beings have blind spots in their thinking that damages their ability to think critically about issues. Many of these blind spots come from memories, feelings and identity that lead to a particular way we view the world and formulate an understanding of our being. For the vast  majority of the world, we are stuck in a vicious cycle of bias where we self-confirm our being in nearly all of our conclusions.

That makes us poor critical thinkers seemingly doomed to always push our personal beliefs and fallacies onto each situation. Only when we are able to used critical thinking to weigh and explore alternative explanations can we uncover all the possible solutions and make the best possible decision. Without critically evaluating all alternatives we can make no worthwhile judgement.

To see all the alternatives for each situation means we must be aware of ourselves so that we do not discard those explanations we hold personal and emotional judgement over. Wise decision makers have knowledge of themselves and knowledge of the possibilities in any problem to make proper evaluations. They can use their meta-cognitive abilities to manage their thought processes.

Critical thinking can help us in many ways in our lives. Whether we are deciding to buy an expensive product, pondering an important family affair, or settling on a belief critical thinking can help us make the right choices for us. When each decision leads to a beneficial outcome our entire lives can become defined by our many choices. Success is created by those who are self-aware enough to use critical thinking skills to their maximum benefit.

Thursday, November 26, 2015

Allowing Higher Education Institutions Be Incubators for New Ideas

Universities serve an important function in society as incubators of new concepts. Sometimes these new ideas create groundbreaking scientific discoveries that changes entire industries. Other times it might be a new way of looking at the world which in turn creates paradigm shifts in thought that advances civic and governmental interest.   Keeping universities as places where thought is advanced which means we need to accept new ideas as part of the process even when we don't like their implications.

We should not stifle intellectual thought because it can destroy its development that may lead to ideas that have practical benefits for society. We often are quick to criticism an idea because all of the details have not been thought out and its use not immediately apparent. However, over time beneficial ideas will grow and adjust as they become confirmed through testing while poor ideas die off because they are not confirmed through testing.

Ideas take time to develop. They start out kind of goofy and not well thought out. Over time these ideas become better defined, compared against various scenarios, and tested against other models. Eventually, a solid idea will develop that can be used to solve a complex problem. It may not be the same idea as the original but a more mature well thought out idea.

Good ideas are never fully developed. Think of how something as simple as Thomas Edison's Light bulb sparked a revolution of thought, created entire industries, and sparked new innovative developments that will likely continue long into the future when humans are sitting on other planets. He was not immune to criticism for his eccentric ways and crazy ideas.

Universities are places were many great ideas are developed, explored and sometimes patented. The value of some universities are based in their research and patents while other are more associated to their publication amounts. In either case, it is more important to avoid criticism of infant ideas and encourage greater freedoms in higher education to ensure that immature ideas cav develop to full fruition without molestation.

Wednesday, November 25, 2015

Consumer Spending Slides! Animal Spirits at Work?

Consumer spending slows to a walking pace. According to the Commerce Department both September and October saw very modest .1 % growth in consumer spending from the previous third quarter 3%. Is this dip based in real market concerns and expected to be prolonged or are something else like animal spirits at work that indicate a shorter time-frame?

The reason why the slowdown might not be long-term is because of other indicators such as jobs, inventories, wages, and investments don't seem to be doing too bad. If multiple data sets across varying industries show the same trend this could be indicative of a problem. At present it isn't.

Of course projections can always be wrong and I take some fun in seeing if I can find some accurate way of perceiving future trends based on present data. I see people being more cautious than anything else. Yes...I know what a few polls have said but.....there is no economic basis for it if other aspects of the economy have improved.

If unemployment actually is decreasing, wages are moving up, saving rates are stable, and manufacturing is making a turnaround despite the inflated dollar, than how does the average person come to a conclusion about the market? In many cases these are feelings based upon other aspects in their environment. 

Lets look at an example. If politics is brutal, negative rhetoric about doomsday in the economy, international conflict brewing, and fears of personal safety related to terrorism talk impacts the thinking of a significant population of society there is bound to be some pessimism. People don't spend when they are not sure of the future. They covet and hold their money.

Animal spirits are wild and often uncontrollable. These phantoms of doom do have an impact on spending. Considering that over 3/4 of our economy is based on consumer spending pessimism can have an impact on consumer choices and the economy. Therefore, a dip in consumer spending may be more of our own making than any real issues in the market. Future information and data changes the assumptions. 

Tuesday, November 24, 2015

A Holiday Season Drop in Consumer Confidence Confuses Economists

Consumer confidence for November plunged (99.1 to 90.4) to their lowest levels in a year frustrating retailers who hope the holiday season starts out well. Economists are at a loss over how to explain it as the economy is zooming forward with labor increases, contrary reports, and lower gas prices. When all other factors don't seem to jive it is beneficial to look at how questions are being perceived and what else might be going on.

These types of surveys have been around a long time and are commonly used raising its external validity. Internal validity is a little more difficult to gauge as it is based on how the study is conducted and the potential confounding variables the study has within it. Sometimes an answer about optimism of the U.S. economy may be mixed with other factors related to the participants frame of mind.

It is also possible that at the time the poll was conducted something else was going on, a bad sample, or some news came out creating pessimism. The questions elicited a more emotional response based upon a wider frame of reference than expected. For example, some participants might feel the economy is doing well but they are not able to do well with it.

The drop is significant but doesn't seem to be matching much else around it. If there is a bigger factor unknown to the study and mucking up the results it will make itself known radically different results in other polls leading into the holiday season. At present I wouldn't get too excited about the results until they are confirmed by other related polls and data.

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