Solving Problems in the Real World

I owe my favorite local bookstore, the Harvard Bookstore, for making another day for me. Wandering the tall, packed shelves on a warm and breezy evening, I ran across Schaum’s Outline of Principles of Economics. One subtitle on the cover: “964 fully solved problems.” The problems include, for example (from page 50): “True of false: As used in economics, the word demand is synonymous with need,” or “True or false: A surplus exists when the market price is above the equilibrium price.”

I didn’t long much for either answer.

Instead, as the U.S. mortgage market has, as James Kunstler predicted on October 10, 2005, imploded “like a death star” and dragged “every tradable instrument known to man into the quantum vacuum of finance that it create[d],” as euros flee from Greece, and as bank loans dry up in Spain, I wished that the 964 fully solved problems included one or two of the real problems.

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  1. frankenduf says:

    True or false: if you don’t regulate investment banks, they will encroach upon depositary bank citizen funds

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  2. brian says:

    Well, I’m not familiar with the contents of the book you discuss, but here’s 2 related real-world questions:
    1) Housing prices above equilibrium lead to a surplus of available housing….sounds alot like a real estate bubble…cue “death star”
    2)American families are getting smaller and earning lower real incomes (at the median) yet purchasing larger houses…thus inflating demand for real estate without any increase in “need” for housing
    I’m betting there’s a few other “real” questions in the other 962 problems, but maybe not.

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  3. Matt says:

    These Schaum’s outlines are supplements to Intro classes for undergrads. They’re a supplement to bad textbooks and bad professors. You once had to answer dumb questions like the ones you posted out of the book.

    I used these for Electromagnetics, Digital Signal Processing, Probability and Stochastic Processes, etc. I think they’re valuable, and don’t much long for you picking a few dumb lines out of intro chapters on intro books for freshmen and poo-pooing all over the book. One could easily state that most of Freakonomics is not valuable since it does not deal with issues of the magnitude you’re interested in discussing.

    Based on this post alone, I conclude that your attitude on education and academia is poor.

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  4. Jay-Z says:

    964 problems but that glitch ain’t one.

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  5. vrfy.me/jb says:

    Some possible solution to problems:

    Real estate: First step, waive LTV requirement for those seeking to refinance and have been up to date on payments and clearly able to pay. Would help firm up the market with those more responsible and reliable. Way too many stuck at high rates only be LTV at 81 vs 79. Bridge the gap with personal liability (as a start to transition to the way done in other countries).

    Health care: (a) malpractice reform, (b) admin reform (give health insurers 1 year to come up with a single form for doctors vs the current mess, (c) everyone should have a living will and other steps to reduce the wasteful end of life spending, (d) consumers need to feel the cost of their healthcare (no more 100% free lunch).

    Economy: Increase certainty and transparency. Deal (i) 1 trillion in high rate of return infrastructure/grid spending in exchange for (ii) entitlement reform, (iii) civil service reform, (iv) military spending reforms, and (v) tax reform.

    Gov’t: Take away all the perks and benefits of getting elected or re-elected. Make it public services vs a means to get rich.

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