Whenever something bad happens, or people expect it to happen, the cry goes out to “do something.” This attitude is especially prevalent in the economic and political arena.
The problem, however, is doing the right something because the wrong something can easily make matters worse.
Let’s take a mundane example. Some time ago I got up and started to get ready for work. While I was getting breakfast together in the kitchen I noticed that one of the heating elements on the stove was on with a pan sitting on it. Since I was the first up, that meant the pan had been on since the last person went to bed or maybe somebody got up during the night to fix themselves something to eat. In either case, they’d forgotten to turn it off.
My first instinct was to get the pan off the heat. (Some of you may be seeing where this was heading now.) The pan had been there for several hours. A few seconds wasn’t likely to make much difference. But instinct was instinct and I grabbed the handle (no, that wasn’t the problem) and shifted the pan to an adjacent, empty spot.
There was melted, very hot, grease in the bottom of the pan.
The grease sloshed out of the pan, completely cleared the edge of the stove, and made a beeline right for my right foot. My bare left foot.
I’ve had burns from grease spills before. If you’re an avid cook that’s an occupational hazard. They generally call for a rush to the sink to get cold water on them before too much damage is done. I take one look at the sink and realize that’s not going to happen this time. There’s no way I was going to hoik my foot up into the sink. I’m not as limber as I used to be. These days I can be described more “strong like willow, supple like oak.” So I hobble to the bathroom, get my foot into the tub and start running water over it.
The upshot of all this is the initial, immediate reaction was exactly the wrong thing. A slower, more methodical approach would have been a lot less painful. (Trust me on that one.)
Thus it is in the public arena. In the late 1960’s was zooming. (One comedian–on Rowan and Martin’s Laugh in, I think–said “prices aren’t spiraling upward any more. No, they’re going straight up.”) Public pressure to “do something” was high. The Nixon administration responded with the first of several wage and price freezes. This was a bad idea economically. Indeed, the Administration knew it was a bad idea…economically. Politically, it was gold and a large part of the reason for Nixon’s landslide victory in 1972.
It’s hard for a politician to resist the pressure of people demanding the government “do something” even when that something is not only useless but actively counterproductive. There have, in the past, been many cases where the stock market would “crash”, have stock prices drop precipitously in a short period of time. Since fairly early in the 20th century the government has been wont to “do something” in response to those drops. But looking at the history of when the government “did something” and when it took a hands off approach it’s hard to make a case that intervention makes matters better and, indeed, generally makes matters worse. (Thomas Sowell goes into several examples in his book Basic Economics.)
Prompt, immediate action is sometimes necessary to respond to events but far more often sitting back and assessing first is far more effective. “King Log not King Stork.” “Leave them alone and they’ll come home, wagging their tails behind them.”
Remember: he who moves the pan too fast gets burned with hot grease.