Friday, September 18, 2009

Making Sense Of It

My son, my boss, my economy

When my son Aaron was in the first grade, he came home from school one day all upset. I asked him what was wrong. He said, "They told us we have to study. I don't know how to do that."

It wasn't a big problem, really. And he since became an engineer.

At work I have this big Excel sheet I use to count up the parts and sub-assemblies we need for the steel frames we make. And I do mean big. It lists every component we need for the job, and parts from previous jobs too. But I can click my button and hide all the parts that have zero quantity. That shortens the list and gives me just the information I need.

Of course I have to put that information in first. So maybe it's hard to see what advantage there is to using my Excel sheet. But the sheet is really a bunch of lists that work together. There's a list of steel frames. A list of parts and sub-assemblies for the frames. And a list of parts for the sub-assemblies.

And then there's the result list. It tells me how many parts are needed for all the frames listed, including the sub-assemblies and the parts to make them. It's a lot of work filling out the inputs correctly. But it's less work, and easier than counting it all up with pencil and paper.

So anyhow, the boss had a look at my printout the other day, and thought it was 'way too much information. And then he wanted to simplify it for me. But of course he found that difficult, because this was the first time he ever looked at it.

My boss is like my son when he couldn't study. He doesn't know how to approach the problem. Boss wanted to understand every little piece of information on the page. Well, you can get there, but you can't start there!

Let your eyes sweep across the page, looking for the big font items. There it is! There's one that says FABRICATION REQUIREMENTS. There ya go, Boss, that's what you're looking for. Now focus on that part of the page and try to understand just that part. Now it's easy, right?

Me? I'm the guy that has to work things out to my own satisfaction. If it happens to get complicated along the way, that's because there is so much to be worked out. I can't help that.

I enjoy the process. It's fun to write the code for the button that hides the rows that have zero quantity. It's interesting to use array-formulas. It's satisfying to tidy up the sheet with borders and cell formatting and color. It's satisfying to work out all those little details. For me.

I know not everybody likes that sort of stuff. But the economy works the same way. All the little details have to be understood. None of them is difficult, but there are many. And I don't really know how to end this, except to say: Don't be like my boss. Don't try to understand every picky little detail, all at one sitting. Rather, look for things that make sense to you, and build on that.

1 comment:

The Arthurian said...

At work I make fabrication drawings, so our shop can build what our customers want. We get drawings from the customer; that's how I find out what the customer wants. I get to look over the customer drawings, discover what's there, and put it in a form useful to the shop.

Sometimes it's hard to figure out a customer's drawing. So I'll look for some piece of it that makes sense, and start with that piece. To make sure I have it right, I look at surrounding parts of the drawing and see how they fit in with what I think I know.

If the parts fit together and make sense, I figure I understand that part of the drawing. If not, then probably I got it wrong.

I understand the economy by the same process.

I'm a little concerned about this. It seems to me that the popular understanding of what's wrong with our economy uses a less rigorous analysis than I use with drawings at work.

People grab an idea, like printing money causes inflation, and they run with it. They don't investigate: Why does printing money cause inflation? Does the explanation make sense? What insights can we gain from it? How can we use these insights to solve an economic problem?

Most people (I think) don't ask such questions. I think that's the reason our economic problems remain unresolved. The accumulation of debt is a problem from the 1980s that remains unresolved. The sluggishness of growth is a problem from the 1970s that remains unresolved. And the instability of prices is a problem from the Viet Nam era that remains unresolved.

Look for things that make sense, and build on them. But test them, too. Don't be satisfied with fragments. Demand a coherent argument. Demand a theory. Demand a good answer.

If the problem is excessive government spending, then why are the streets paved with potholes instead of gold?

If the problem is that they print too much money, then why do we have all this debt?

If this is the richest nation in the world, then why does the solution call for 'shared sacrifice'?

If these people really are economists, then why do they use buying cheap from China as an anti-inflation policy?

If 'supply and demand' is a valid concept, then why don't rising health-care costs lead to profitability for hospitals? and to an increase in the availability of doctors? and thus to lower-cost doctor visits?

If everybody knows the answer, then how come we still have the problem?