Punchinello’s Chronicles

September 9, 2010

How Do We Learn Stuff?

Filed under: Survival 101 — Punchinello @ 2:10 am
Tags: , , ,

When was the last time you picked up (then opened and read) a textbook? How about an instruction manual or reference manual? Do you like to read non-fiction biographies and histories? How about watching documentaries or the History channel or Discovery channel? Chances are you’re busy, you don’t have much time, and when you finally do have a free hour or so, you watch a favorite on TV (or TiVO), or catch up on some light reading. Otherwise, you might read novels, play on the computer, or get the news online.

That’s not a bad thing, nor is this a judgment kind of post. It’s an observation of what happens to many people caught up in living their lives.

The problem is that so many of us these days are totally and completely overwhelmed by the amount of information available in the world. Yet we all feel that we’re fairly well educated, we have a pretty good grasp on current events, and we sort of “know what’s goin’ on.” We definitely feel we’re competent to speak about our opinions, vote in elections and generally carry on as adults. Are we?

Not so long ago I was busy, working and living a typical adult life. I was in my 40s, then hit the 50s and ran into the problems many others are experiencing. Work vanished, I’m overqualified, I’m “elderly” and cost too much in relation to younger folks, so there’s no working with a company. I have the skills to earn some money doing freelance work, and we’ve started our own business, which actually is beginning to get somewhere. Even so, I have a lot more time on my hands than I used to have, and a lot more time than many typical Americans.

I started learning about economics, not to become a professor, nor to really become an expert. No, I just wanted to understand all the jargon and secret language involved. It reminded me of the Priests of Computers, back when I was in the IT field, who didn’t like it when “regular folks” understood all those technical terms. I wrote a book about all that, in fact, and that was exciting. But I also realized that economics is very similar to computer technology, in that so many people try to disguise their knowledge or lack of knowledge by using code words.

Economics means the field of money, business, and exchange of value. It examines how people work and create value, then go into society to exchange that value for another value. The problem is that most professional and degreed economists rarely have ever created anything of actual value, rarely have worked at a regular job, and have almost zero experience with the real world of workaday living. Yet they’re the people who fundamentally define the lives of all of us in our society.

As such, economics is pretty serious. It’s really important. So how come I never was taught much about it? Where do I learn all that stuff? In fact, where do I learn much of anything, after I get out of high school and maybe college?

One of the ways we learn about new things and new information is from commercials on the radio or television. Think about all the money that goes in to making a 30-second or 1-minute spot. Then contemplate the super intense manipulation of those seconds. Every single word, statement, image, personality, vocal tone and so forth are all exactly determined in order to tell a story.

When you listen casually to an annoying commercial, you don’t really pay that much attention. And yet it’s a story. It’s a highly compressed bullet of information, expressly designed to get you to buy something, get you involved with something, and get you interested in something. In order to do that, you often are “fed” a premise of some sort. That premise includes new information about the world.

For example, “Did you know that by age 50, one out of five men will be diagnosed with prostate cancer?”

Let’s not even bother checking that statistic. Forget about the age range, and don’t get lost in the type of cancer. Instead, consider the leading statement in a commercial for “something” as a logical premise. It begins by focusing your attention on medicine and your body. It then “updates” you on current science, research, study, and Very Important Things going on in the field of medicine. Is it true? Who knows?

Do you sit down and immediately research whether or not this alleged fact is true?

You likely don’t have time “right now,” so you allow it to pass into your mind. You might store it, you might vaguely remember it, or it may only act as a cue. Some other time, someone at a party will be talking about the growing incidents of cancer in our society, and you’ll feel a sense of familiarity. “Yeah, y’know…I’ve heard that,” you might say.

To all intents and purposes, you’ve gained knowledge. At least you think you have.

Just for the fun of it, try to focus your self-awareness on your own habits and senses as you go about your personal business. In other words, watch what you’re doing when you’re not at work. See what you do when you’re shopping, running errands, zooming around your home, talking with the kids or your friends. Pay attention to how many little “instant bullets” of information pass through your awareness.

You probably “know” that eBay is the place to go if you want to sell something. But you don’t know that eBay is collapsing ever more rapidly each year. You hear something about “Craig’s List” on the 2-minute top-of-the-hour “news” and recall that it’s an online place where you can place ads for free. Or something. Then you might hear a 15-second “Wall Street Report” that simply gives you a ridiculous number about “The Dow,” which means nothing.

Think about all those magazines and tabloids sitting along the checkout line at the store. You read some blast of a headline, maybe know what it refers to, then pass on by. Yet that headline sort of remains in your mind to the point where you “feel” familiar with some of the information.

You hear on the news that The Democrats are doing this, or The Republicans are doing that. The Tea Party is doing something else. So? Do you actually know what they’re doing? Do you care enough to follow up and research? How about “talk radio,” where the host picks a topic and begins an analysis. Then a few callers add to the conversation. Are they real? Is it all true? What are you learning?

Did you know that “the equity markets” means all those places where you can invest your money in companies? Things like the Dow-Jones (the Dow), the Standard & Poor’s index (S&P 500) reference these places. A company “goes public,” meaning it allows someone (you or me) to own a portion of the whole company. We own some of the “equity” in that company.

Equity is basically what something is worth when it’s free and clear of all debts (claims against it). The equity in a house is what the owner would get after they sell it, pay off ALL debts, fees, and other claims. That’s their actual money, what they actually will be able to go out and spend.

So too, equity in a company is what you would own as your share. The equity is the actual money you would get if the company was sold, closed out, liquidated and all debts were paid. So the Dow and S&R 500 are “equity markets” because people buy and sell pieces of something. It might be a business, or it might be things like oil, gold, silver, tabasco sauce, or miniskirts. If it’s “things,” then it’s more properly the commodities markets, but you can buy pieces of “indexes.” It gets complicated, but they’re all lumped together as “the financial markets.”

Did you know that almost all the “regular folks” (retail investors) have taken their money out of those markets? The only money moving back and forth is between computers. HFT, or High-Frequency Trading is a system whereby computers use “algorithms” (computer logic defining a program) to make decisions about a stock portfolio. Those decisions might be to make a bid, buy something, or sell something. Those computers are owned by the Too Big To Fail investment banks and the gigantic pension funds and hedge-fund operators.

If you think you can personally get into the financial markets and make fair trades, then you may want to do some research. But as far as “most of us” know, those financial markets are just the same as they used to be in the 1990s, or the 70s, or back when America was growing. How do you know? Only because people on CNBC or MSN or the Wall Street Journal tell you so. In headlines. Is it true?

When you hear that the Dow is up or down by some number of points, it means exactly nothing. There aren’t any human beings left, to all intents and purposes, who are trading anything of any real value. And yet, you believe that if The Dow is “up,” then things are going pretty well.

You might believe it when some announcer tells you that the Dow is up “as investors take heart over decreasing unemployment.” No, there aren’t any investors taking heart about anything. Indeed, whatever unemployment figures are being jimmied up by the government are mostly meaningless. Instead, it’s computers making decisions based on some sort of key information.

Did you know that newly-developed scanning applications allow a computer to read news releases, headlines, and the stories being reported around the world? Algorithms define certain key words and key phrases. Depending on how those words appear in relation to the name of a business listed in the markets, the computer will make a buy or sell decision without any human being even involved.

We hear comedians tell jokes, and in those jokes we also learn something. You might not have known that Ms. Obama took a trip to Spain, but if you hear a joke about it on a late-night TV show, “suddenly” you have new knowledge. You now “know” that the trip took place, and it involved The First Lady, and Spain.

Taken all together, these snippets and bullets of instant information pass as continuing education for so many Americans and people around the world. We breathe a big sigh of relief when we finish school, maybe college, and we sort of assume we don’t need to learn much anymore in that sort of environment. We might get trade magazines, and actually spend a lot of time in that subject. Or we might get very interested in some other field and spend a lot of time online.

There are blogs that focus on a particular area, and other blogs that focus on certain types of news. We might, possibly subscribe to a few of those blogs, but lots of people don’t. In fact, not everyone is online. Did you know that In North America, current Internet usage is somewhere around 77%? That means about 1 in 4 people doesn’t use the Internet. How many of those using the Internet actually use it in depth, versus just checking email now and then?

All this knowledge that zips in and out of our head eventually constitutes our culture. It might be pop culture, as different from formal culture, but it’s the general “stuff” we think we know. We hear that The Dow is “up,” and we believe we have economic knowledge. We hear that someone “just discovered” that some drug might help with some new or old disease, and we believe we have knowledge of medicine.

Until we don’t.

Politics, religion, economics, business, law and philosophy are hugely important aspects of our lives. Emotion and feelings, psychology and relationships are at least as important, and many times even more compelling. Yet when do we learn about any of that? Maybe we’ll read “Islam for Dummies,” or the latest self-help book. We might watch some infomercial and come away believing we know “true knowledge.” Do we?

One of the most important jobs for adults in a society is to transfer to the children that society’s culture. That means educating children in the rules, morals, structure, history, stories and legends of the society. It assumes that the society has some sort of unified culture. America used to have such a culture. There no longer is a unified American culture, regardless of what people feel to be true. That’s a shame, and it’s leading to the developing tragedy of a disintegrating society.

Most of what people believe is our “culture” is what they learn from these momentary “tweets” of almost random information. Is that knowledge? Can we accumulate X amount of tweets and converge it into wisdom? If wisdom is the result of combining experience and knowledge with practical application, where will our wisdom of the future come from? Nobody knows. It’s a mystery.

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