“We have to do something.”
Famous last words.
When people say, “We have to do something,” it is usually right before they do something remarkably damaging.
We see this all the time in team sports. One of the most notorious examples in football was the 1999 Buffalo Bills. They had been one of the dominating teams in the league for 12 seasons, but had not won a Super Bowl. So on January 8, 2000, they replaced their quarterback for the first playoff game of the post-season. The quarterback, Doug Flutie, had been performing brilliantly, but the team felt as if they had to try something different.
It was a colossal blunder from which they have not yet recovered. The team lost that game and have squeaked out only one winning season in the eight years since.
We are now seeing the same effect in Washington, as Congress tries to figure out what to do about the banking system, which threatens to collapse any day now. The proposal to give Henry Paulson a $700 billion slush fund to try to make the banking industry feel a little better is off the table now, shouted down by a chorus of angry voters, but we still have 535 worried legislators stumbling around the halls of Congress muttering, “We have to do something.”
Congress might want to take a look at the recent polls, in which more than 60 percent of voters thought that any further government intervention in the economy would be likely to make matters worse.
It is like hitting your alarm clock with a hammer. The physical principle of entropy says there is only the slightest chance that this will fix your clock if it is broken. More likely, the hammer blow will damage it further. If you don’t know what you’re doing, but you’re determined to have an impact, that is the kind of impact you can expect to have.
Sometimes there is nothing you can do. When no one has a good plan, instead of choosing the least bad plan and getting started on it, it is often better to hold out, to wait for a good plan to emerge.
“We have to do something” is a phrase that makes physicians cringe. Sometimes it means they are being asked to do an ill-conceived surgery that is likely to only add to the misery and hasten the death of an already dying patient.
The U.S. economy is not dying — far from it — but people are talking about it as if it were. There is not even a significant chance of a depression unless Congress, in its haste, does something enormously bad.
Yet there is still a chance that that is exactly what they will do. I hope there is a way to calm them down so they don’t add to the damage that has already been done.
If you talk to Congress today, this is what you might say:
This is not the time to blow up the U.S. economy. Vote no on the Wall Street bailout. Save the U.S. dollar.