The "Do Something" Syndrome

This is a topic that I thought I had covered a long time ago and I am sure I have referenced to it. I did a brief search on my Locals site and could not find it.

Perhaps, I was thinking about it, but didn’t. Either way, I was reading this really interesting article about inflation, central banks, etc on the Foreign Affairs website.

Now, I am not an economist. However, just like you do not have to be a biologist to know what a woman is, you do not have to be an economist to have a take on what is happening with the economy.

Noticing that the inflation is surging and that it is a complex problem does not require a PhD. If anything, a PhD might get in the way. Now, I know for a fact that I wrote a short essay on the topic of being wary of the experts: https://darklordofoptics.locals.com/post/1269552/be-wary-of-the-experts

The Foreign Affairs article linked above does a pretty decent overview of different factors and, unlike most things I have seen written on the subject there is something there there that does not get enough coverage. It generally fall into the realm of behavioral economics and, essentially, it talks about impact of human irrationality on economic decisions and also the impact of outside human factors on economic decisions. In this case, it is the discussion of how, because he feared getting replaced by the semi-literate Keyenesian hacks in the Biden administration, Powell ended up delaying jacking up the interest rates to try to tackle inflation.

There is generally a lot of interesting discussion in there, but the bit about political influence is something that does not get enough coverage. Another thing that is not mentioned, but should be a part of every discussion of practical economic governance issues is the “do something syndrome”.

I first started paying attention to it quite a few years ago when discussing global warming with a resident biologist on a cruise ship my wife and I ended up on. The biologist was a rather intelligent young lady. She, naturally, avoided political discussion with cruise ship guests, but there was an educational lecture as a part of the entertainment program by some senior UN bureaucrat on how we must save the world from human cause global warming. The whole warming/climate stuff is really four problems: is it really warming/cooling? is it really caused by humans? is it really a problem? how much in terms of resources should we dedicate to countering this?

I am not going to go over the whole thing, but the way the argument was going, she was not making much headway in convincing me to drop everything and save the planet. She did agree that there is a lot we still do not know about the problem. However, she insisted that there has been too much arguing going on and that she could never forgive herself if we did not do something to alleviate the problem. That was literally two sentences after we agreed that we really were not yet sure of the severity of the issues and whether we had good means to evaluate them.

For her, it sorta came down to the whole “I think I feel” business that I think I have written about in the past. There had to be some action to make her feel better about the situation with global climate and whether that action did anything provably advantageous was not all that much of a concern.

The drive to “do something” whether it will do any good or not, is an incredibly powerful emotion that we should never underestimate. For politicians and political appointees, that drive is even stronger since not only do they want to do something to make themselves feel good, they also have a need to do something to make themselves look good in the public’s eye. Action, even when it is stupid and useless, is much easier to make look good than inaction.

Remember that our politicians, kinda like actors, are professional narcissists with with abundant charisma and profound ignorance of anything and everything other than winning elections.

When it comes to the economy, they really want to be seen “doing something” even when they do not yet know the results of the previous time they did something.

The economy today is incredibly complex and full of secondary, tertiary, etc effects that can also be delayed. I sometimes wonder if the Fed keeps on hiking up rates in rather rapid succession because they can not afford to wait a little bit and do nothing for political reasons. How do they know they have not yet raised the rates enough? Because they have not achieved the desired effect in the two weeks following the previous rate hike? I wonder if sometimes, a little inaction would be preferable to too much action, political ramifications be damned.

When dealing with a truly complex system, you have to be really careful making too many sudden moves. There are always consequences we have not foreseen simply because we do not fully understand the system we are trying to control.