Other Evidence of Inadequate Thinking

Resulting in the Economic Crisis of 2008

In Complex Problem Solving (edited by Sternberg and Frensch, 1991) Wagner states:

Mintzberg's influential studies of what managers actually do, as opposed to what they are supposed to do, or what they say they do, provided unwelcome news to proponents of rational approaches to managerial problem solving. Mintzberg found that even successful managers rarely, if ever, employed rational approaches. Rather than following a step-by-step sequence from problem definition to problem solution, managers typically groped along with only vague impressions about the nature of the problems they were dealing with, and with little idea of what the ultimate solution would be until they found it. Isenberg reached a similar conclusion in his analysis of how senior managers solve problems.

While the above was written in 1991, and the quote below in 1982, my research shows that there has been no real change. Our leaders have never been adequately trained in problem solving and decision making.

The following was excerpted from the Proceedings of the International Interdisciplinary Conference on Thinking, held at the University of South Pacific (1982), and published in Thinking & The Expanding Frontier (1983).

The teaching of thinking skills, historically, occurs very early in all societies by a host of other devices as well: puzzles, games, detective stories, long narratives requiring complex memory strategies and heuristics, etc. Yet, despite the cultural universality of the teaching of thinking skills, there is general agreement that all societies, without exception, today do a poor job of teaching problem-solving skills that are necessary to live in the modern world.

Variety of Formulas Offered for Problem Solving

Go to my website www.problemsolving.net and look at Research Report P100, "Model Problem Solving Formulas from the Literature." While many authors writing on problem solving offer no definite formula, those that do offer a wide variety. I show 11 different formulas, and a lot more than that are offered.

Variety of Formulas Offered for Decision Making

Go to my website www.decisionmaking.org. Same story. Look at Research Report #4. Here 21 formulas are shown. Again authors offer a lot more than just 21.

Variety of Formulas Offered for the Scientific Method

Go to my website www.scientificmethod.com. Same story.  Look at Research Report #11. Here 23 formulas are shown.

Only One Good Basic Formula Is Needed, Such as SM-14

This inefficient situation could be corrected by teaching SM-14, which is the best available formula for all three subjects.

Information About Economic Crises Has Been Available

The book Manias, Panics and Crashes by Charles P. Kindleberger and Robert Aliber, published in 1978, 1989, 1996, 2000, and 2005, gives an excellent history of financial crises. If our economists, MBAs, and business students had been properly taught some of the material in this book, they would have recognized the housing bubble as a danger to safe economic growth.

Economist Professor Nouriel Roubini's Doom Forecast in 2006

His bleak forecast was ignored and even laughed at. Here is a quote from Stephen Mihm's article in the New York Times Magazine, August 17, 2008:

On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crises was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac. The audience seemed skeptical, even dismissive.

Manufactured Home Industry 1997-2000 Debacle

See Berkshire Hathaway, Inc. 2008 Annual Report to Stockholders.

In his message to shareholders, Warren E. Buffett says:

This 1997-2000 fiasco should have served as a canary-in-the-coal-mine warning for the far-larger conventional housing market. But investors, government and rating agencies learned exactly nothing from the manufactured-home debacle. Instead, in an eerie rerun of that disaster, the same mistakes were repeated with conventional homes in the 2004-07 period: Lenders happily made loans that borrowers couldn't repay out of their incomes, and borrowers just as happily signed up to meet those payments. Both parties counted on "house-price appreciation" to make this otherwise impossible arrangement work. It was Scarlett O'Hara all over again: "I'll think about it tomorrow." The consequences of this behavior are now reverberating through every corner of our economy.

More crises will occur in the future if the inadequate teaching of the scientific method is not corrected.

Pressure and encouragement should be put on our educational leaders to teach the scientific method of problem solving from preschool through our universities and adult training courses.

They should recognize that:

Claims That the Scientific Method Doesn't Exist Are False

In Chapter 7 of my book I show that these claims are false. Many educators have relied on these claims as justification for not teaching the scientific method.

The Scientific Method Improperly Defined

Many authors define the scientific method too narrowly. They often claim it is only a method for scientists. This too is false. It is basically, as hundreds of authors claim, really a general problem solving method suitable for all domains and all solvable problems.

Good Formula for Teaching the Scientific Method Is Now Available

For years there was no good formula for the scientific method available. Now SM-14 is ideal for a standard formula for teaching the scientific method of problem solving and decision making.

Summary

Just the fact that the economic crisis of 2008 occurred and was so widely unexpected is proof that our business leaders, their advisors, economists, financial analysts, our educators, and others are not adequately trained in thinking.

I have also provided here evidence to support this.